Sunday, January 27, 2008

Subsidies 97 per cent of farm profit

Subsidy income now represents 97 per cent of farm profits, according to the annual Farm Profits Survey by the Institute of Chartered Accountants' Farming and Rural Business Group. This is despite a small rise in turnover and profitability during 2006/7.

The survey of agricultiral accountants revealed that average farm turnover for 2006/7 was £312,000, yielding an average net profit of £46,300, up by £8600. This figure coincided with average drawings and was little more than the average receipt from subsidies of £45,000. Figures for 2007/8 should, of course, be better for cereal farmers in particular.

This survey emphasises the resistance that could be encountered if subsidies were ended or severly cut back. It also reinforces the case for a once and for all 'buying out' of subsidies through a bond scheme.

Monday, January 21, 2008

Lisbon and the CAP

The debate on the Treaty of Lisbon is about to start in the UK. It will be mainly focused on fears of loss of British 'sovereignty' and doubtless very little will be said about the CAP, other than as an example of what is wrong with the EU.

However, if ratified, the Treaty will have some profound effects on CAP decision-making. The decision-making process is likely to become more complex and longer (as if it wasn't already) which is why there is a rush to get dossiers completed by the end of the year. The Farm Council will no longer be able to ignore what the Parliament says as they effectively can at the moment.

The Parliament has been hardly in the vanguard of progressive thinking about the CAP and has got itself into a real muddle over pesticides policy, taking decisions that work against its own intentions. However, rather than being a spokesperson for farm interests, the Agriculture and Rural Development Committee will have to move into the political mainstream while other committees such as Trade and Budget will have to keep a closer eye on what it is up to.

Admittedly, some progress has been made under the former chairmanship of Joseph Daul and now Neil Parrish (representing South-West England). The recent wine reform agreement reflected what MEPs had advocated on grubbing up.

The new Treaty does make a clearer distinction between 'delegated acts', i.e., real legislation and 'implementing rules'. The Commission is understood to have suggested that there may have to be revisions to the existing comitology rules in order to clarify when decisions can pass to the Management Committee and when they stay in Council.

Perhaps most interesting of all the Treaty will bring about a reduction in the number of Commissioners from 27 to 15 by 2014. Coincident with what is hoped to be a radical reform of the CAP, the Agriculture and Rural Development post could disappear. If it was merged with say, environment, this would embed a new approach to agricultural issues.

Friday, January 18, 2008

Getting decisions on the Health Check

With 27 member states the whole negotiating process in the Farm Council has become a lot more difficult, not that it was ever easy. Another complication is that fisheries matters are now dealt with in the Farm Council and this means that the December meeting is the scene for an inevitable battle between fisheries ministers over quotas.

The only effective way to proceed is to forge compromises outside the Council chamber through bilaterals between the Presidency/Commission and individual ministers. A lot then depends on the negotiating skill of the Presidency, but the Portuguese Presidency is judged to have been a success. Slovenia is the first transition state to be in the chair, but both its farm minister and its officials enjoy a good reputation.

The Health Check will have to be finalised at the end of this year under the French presidency. France will probably try to get a deal in November as it can then include some direct reference to the Health Check in its final Summit conclusions, presumably providing some form of wording that would support French ambitions in the 2009 review of the EU budget with the objective of maintaining high levels of CAP spending after 2009.

Another reason to get a deal before December is that this would leave little time for lawyers and linguists to check it before the end of the year. This could then open up the prospect of a challenge from MEPs on the grounds that they should have had co-decision powers on the Health Check. Life under co-decision will be interesting once the new Lisbon Treaty enters into force (as anticipated) in January 2009.

Friday, January 04, 2008

The challenges of livestock production

At a recent meeting of its Business Forum, the Food Ethics Council reviewed livestock production in the context of climate change and the following key points emerged:

*Livestock contribute about eight percent of total greenhouse gas emissions from UK consumption. Meat accounts for more than two-thirds of that.
*UK consumption of poultry meat has doubled over the past 20 years, whereas red meat and pork has remained static. UK per capita consumption is well above the world average.
*Changes to production can increase efficiency and reduce emissions, but producers should be alert to potential trade-offs with other sustainability criteria and animal welfare.
*Policy makers are exploring the scope to reduce emissions by reducing meat demand. The economics of this are uncertain and, though potentially costly for UK meat producers, would not necessarily harm them.
*Initiatives to promote sustainable production and consumption must consider: (a) differences between livestock species, business models and production systems; (b) opportunity costs of sustainability strategies; (c) what foods we would eat instead if we ate less meat.
*Businesses should expect a range of public and private sector initiatives intended to improve the sustainability not only of specific products, but also of the diet that we produce, sell and eat.

The last two points should be relevant to the CAP, but there is little evidence that they are being considered in any systematic way.