Wednesday, December 23, 2009

Franz Fischler

I name Franz Fischler as a politician I admire on one of my other blogs: Fischler

Friday, December 11, 2009

New farm boss faces confirmation battle

The European Parliament always likes to assert itself by refusing to confirm one or two nominated commissioners in its confirmation hearings and the designate new farm commissioner Dacian Ciolos could be in their sights as the youngest and least experienced of the nominations. Although nominally an independent, he has been embraced by the centre right European People's Party, but they could easily drop him if the heat is turned up.

He got the nomination despite a late push by 'old' member states to nominate Ireland's Marie Geoghegan Quinn who was acceptable to France. However, they had left it too late to get the nomination for their candidate. Finland's Olli Rehn and Slovenia's Janez Potocnik were also in the frame at one time, while the favourite for a while was Latvia's Andris Pieblags who had shadowed Franz Fischler in 2004. To many it was a surprise that Ciolos got the nomination.

There have been complaints that Ciolos is 'too French' in the sense that his postgraduate education was undertaken in France and that his family and France's Michel Barnier's family are personal friends. He also has a French wife whom he met when both of them were trainees in DG AGRI. Ciolos was in fact appointed a director in DG AGRI earlier in the year, but was not able to take up the post.

His defenders argue that he is committed to a 'modern concept' of European agricultural and rural development policy in line with Commission thinking.

The appointment of John Dalli as the new Health Commissioner is also significant for farm policy. His appointment was perhaps even more surprising than that of Ciolos. Although the 61-year old is a big name in Malta where he was the longest serving Minister of Finance, he is less well known at a EU level.

DG SANCO will now take over responsibility for GMO cultivation and pesticides which currently resides with unit D.4 in DG ENVI. It is thought that this is because Commission president Barroso is looking for a more scientific, depoliticised approach to the GM debate.

Dalli has no prior experience of the food safety and animal health issues for which he will now take responsibility.

Cross-compliance is not delivering

Cross-compliance has no clear objectives, does not reflect the 'polluter pays' principle and is not being properly enforced, and is therefore not providing concrete diversity promotion, according to a new report. Published by Birdlife International it is entitled 'Through the green smokescreen. How is CAP cross compliance delivering for biodiversity.' It can be found here: Birdlife

Birdlife highlights that some of the biggest burdens imposed by cross-compliance are perversely felt by extensive livestock producers, i.e. the production systems which are most important for biodiversity and for which subsidy levels are usually lower than more intensive farms. It advocates a complete and urgent overhaul of the whole system and the need to realign the whole CAP to the principles of Rural Development.

Monday, December 07, 2009

Scotland 'on message' on farm subsidies

Scotland is far more in tune with current thinking on farm subsidies in mainland Europe than England and Wales, claims Scotland's rural affairs minister Richard Lochhead.

Addressing farmers at a Christmas Carcass competition in Inverurie, Mr Lochhead brought them glad tidings about the deep divide in agriculture policies on the two sides of the border. 'My opinion on CAP reform is very different from DEFRA's view that all direct subsidies should be removed and we should rely on a free market. Scotland should not go down that route and our thinking is much closer to the mainstream of Europe which is that the pendulum is swinging back towards support for active agriculture.'

The minister felt that outgoing farm commissioner Mariann Fischer Boel didn't envisage that pendulum swinging too far, ruling out headage payments, but new commissioner Dacian Ciolos could bring in a new era.

There are certainly those in Brussels who think that Ciolos will favour more market support and help to smaller farms. However, others take the view that he is on message with the Commission view on reform and has been playing down his linkages with France to reassure pro-reform countries.

However, Christmas has come early for some English farmers, with over 80 per cent of farmers receiving £1.3bn in Single Farm Payments to date. That's approximately £15,116 per recipient. Not quite a banker's bonus, but welcome all the same. Organicduck tweeted from Devon, 'Hurrah and thank you RPA. Maybe off Christmas shopping or maybe pay off some overdraft.' Payments are also well advanced in Wales and Scotland.

Sunday, November 29, 2009

New farm commissioner a setback for reform

The appointment of Romania's Dacian Ciolos as farm commissioner looks like a setback for reform. Romania has a bloated farm sector and has been in trouble for its management of EU funds.

The smart money recently was on the appointment of Andreas Pilebags from Latvia. France was hoping for an Irish appointment, but then swung behind Ciolos who undertook his postgraduate study in France.

Wednesday, November 25, 2009

CAP budget report has been 'binned' - or has it?

A controversial draft report which advocated cutbacks in CAP spending after 2014 has now been ditched according to Farm Commissioner Mariann Fischer Boel. She denied having backed the report which called for agriculture to account for a lesser share of the EU budget that it does at present. Fischer Boel claimed that the paper was now a 'non paper' and was 'in the bin'.

However, the position may be a little less straightforward than it appears. It was a small group of Commission President Barosso's advisers that drafted the review with his explicit approval. With Barosso back for a second term it is quite likely that the final version of the budget review document, to the tabled in the New Year, will contain views not dissimilar to those in the draft, including linking Single Farm Payments more closely to the provision of public goods.

Budget Division sources indicated that just how much the CAP's budget will be reduced is still up for grabs, but considerable cuts are considered to be necessary to focus spending on other higher priority investment areas. These include climate change and the promotion of growth and jobs.

Friday, November 13, 2009

A new style CAP

A group of agricultural economists has launched a new attempt to reform the CAP with an emphasis on public goods provision: CAP

Thursday, November 12, 2009

G-21 an anti-reform bloc?

At various times in the history of the CAP, member states have formed informal groupings to address particular issues, e.g., 'the Aachen Five' and the agri-monetary system. The G-21, in effect led by France, is a much larger grouping which constitutes a qualified majority in the Council.

It become the G-21 rather than the G-20 at a meeting in Vienna when Greece joined. This left only the four leading reform countries (UK, Denmark, Netherlands, Sweden) outside the grouping, plus Cyprus and Malta - countries that have small farm sectors and may not have thought it worth the time and effort.

It's evident that this grouping forced the Commission to climb down on the Milk Fund issue and allocate an extra €280m to dairy farmers. This decision was apparently taken by Commission President Barrosso rather than by farm commissioner Mariann Fischer Boel.

A real concern is that this grouping could constitute a basis for mobilisation against further reform of the CAP.

Sunday, November 01, 2009

Budget directorate wants to cut CAP

Leaked copies of a document from the European Commission's budget directorate reveal an aspiration to substantially cut agriculture's share of the EU budget from 2013 onwards.

The paper says that it is too early to see what the future reform of the CAP will look like, but argues that it should be driven by two objectives. 'Firstly, it should resolutely pursue the modernisation of the CAP, concentrating spending where it most adds value. Second, it must stimulate a further significant reduction in the overall share of the EU budget devoted to agriculture, freeing up spending for new priorities.'

The paper argues that direct aids should be reduced and linked more strongly to the delivery of public goods. A Pillar 3 should be established dealing purely with climate change.

The full communication is expect to be published in November.

Thursday, October 29, 2009

Sweet tooth

The International Centre for Trade and Sustainable Development has produced a paper on how a trade deal on sugar would affect importing and exporting countries. You can read it here: Sugar

The paper finds that a significant amount of sugar trade is conducted under preferential trade agreements which encourages sugar production where it is not competitive at the expense of low-cost sugar producing countries.

The EU sugar reforms had an adverse effect on higher cost producers in the Global South such as Fiji, Guyana and Mauritius. Full access by LDCs to the EU sugar market once the Everything But Arms Initiative is in operation should help countries like Sudan to boost their EU market share.

Wednesday, October 28, 2009

Sarko: the answer lies in the soil

French president Nicholas Sarkozy has unveiled a €1.65bn rescue package to help French farmers cope with lower commodity prices and shore up his support among rural voters. It forms part of a broader thrust to reaffirm French 'national identity' and also to deflect criticisms over local tax reforms and allegations of nepotism in relation to the promotion of his son's career. Mr Sarkozy is facing difficult regional elections next year and needs the support of rural voters.

In a speech in the Jura, the president claimed that 'The word "soil" has a special meaning in French and I was elected to defend French national identity'. The package of subsidies is made of €1bn in subsidised loans and €650 in cuts to land and energy taxes and social charges (which have particularly hit fruit and vegetable producers weighed down by high social charges on seasonal labour).

Mr Sarkozy insisted that the plan, with its focus on tax cuts, would not contravene EU rules on state aid. He attacked the Commission for dragging its feet on proposals to help dairy farmers. French dairy farms are on average smaller than their competitors in other large member states.

The package signals a tougher stance by Paris as the EU prepares for the debate on scaling back CAP subsidies. Mr Sarkozy said that he wanted tighter regulation of the milk market from next year.

Mr Sarkozy has described a complete U turn from the first speech he made to farmers as president in 2007 when he told his audience they had to learn to make a living from market prices rather than subsidies. But now he needs to consolidate his traditional centre-right base and he has reverted to a more typical French stance.

Tuesday, October 20, 2009

Dairy sector measures do not set pulses racing

4000 dairy farmers with 900 tractors demonstrated outside an EU agricultural ministers meeting in Luxembourg yesterday calling for more aid for the sector. Inside, ministers faced a Franco-German memorandum backed by 20 member states with a series of demands for market distorting measures. In the event the concessions the Commission made are probably the least they could have got away with in the circumstances. Farmers' organisation COPA immediately condemned them as insufficient.

The main move was to make an additional €280m of public money available under the Article 186 'disturbance clause' which allows the Commission to step in at short notice when the market collapses. The milk market has hardly collapsed and this is something EU finance ministers may wish to consider when they meet to consider the approval of the move on 19 November.

What the money is to be spent on is yet to be decided, although private storage for cheese has been mentioned. No, this doesn't mean that members of the public can get a subsidy for filling their fridges with cheese, although anything is possible in the Alice Through the Looking Glass world of the CAP.

What is significant is what was in the Franco-German document that has not been acted upon: official intervention buying of chesse, additional funding for school milk schemes (funding for fruit yoghurt had already been agreed) and more targeted export assistance and subsidies for skimmed milk powder to be used in animal feed.

It was this last measure which had the greatest potential for damage. Commissioner Fischer Boel dismissed it by saying that she had not received any convincing evidence that it would increase demand. What it has done in the past is seriously distort other markets, e.g., for pigmeat.

The notion of freezing quotas had already been knocked off the agenda in September, a singularly ill thought out proposal which would have done nothing in the short run and delayed adjustment in the longer run.

It is worth noting that milk prices have been increasing, by 2 per cent in August while butter has gone up by 4 per cent in France, 8 per cent in Germany and even more in the UL. Intervention buying of skimmed milk powder has virtually come to a halt because the market price is higher that the intervention price.

Sunday, October 18, 2009

Watchdog slams farm payments mess

In one of its most critical ever reports, the National Audit Office has slammed the way in which the Rural Payments Agency has administered Single Farm Payments to farmers. It accused the agency of showing 'scant regard to protecting public money'.
The agency has wasted around £700m, the capital equivalent of building thirty secondary schools.

The average amount paid to about 107,000 English farmers is about £15,300 a year. However, the watchdog found there were substantial overpayments totalling between £55m and £90m but the data was so unreliable the auditors were unable to find out the precise sum. £280m has been set aside to pay Brussels penalties for administrative errors and late payments to farmers, but a further £43m of overpayments are likely to be irrecoverable.

What the report brings out is the high transaction costs incurred even in a supposedly simplified system of subsidies. It is estimated to cost £1,743 to process each farmer's claim for cash, a rise of 20 per cent in four years.

It is argued that some of the problems arise from the payment system chose by Margaret Beckett, at one time in charge of Defra. The devolved regions opted for a simpler system based on historic payments made to farmers. In Scotland the cost of administering payments is £285 per farmer. However, one reason for choosing an area farmed system was to try to break away from the 'to him that hath shall be given' aspect of the subsidies system.

Of course, some might think that we would better off by phasing out subsidies altogether.

Wednesday, October 14, 2009

Nasty surprises in the green box

Governments are increasingly putting their subsidy payments into the 'green box' of the WTO, but there is evidence that these subsidies are harmful to the environment and farmers in the Global South. Read more here: Green box

Tuesday, October 13, 2009

Who will be next agriculture commissioner?

The next agricultural commissioner will have the chance to shape the future development of the CAP. So who will it be?

We can eliminate three sets of member states. By convention the post cannot go to a large member state, ruling out the UK, France, Germany, Italy and Spain (and presumably Poland).

Former Romanian farm minister Dacian Ciolos is the name formally mentioned, but indications are that a candidate from a member state with such a large agricultural population, and possible problems with the use of its EU funding, would not be acceptable. Indeed, one can rule out the new member states altogether as the only two other possible candidates - former Slovenian farm minister Iztok Jarc and his Cezch counterpart Petr Gandalovic - have now left office and are unlikely to get support from their governments.

We can also rule out member states who have appointed non-agricultural commissioners: Belgium, Finland, Luxembourg and Portugal. While it would be interesting to have someone without an agricultural background in the post, it is unlikely to happen in practice. Sweden is also thought not to want the dossier.

Given the recent election in Greece, the unstable political situation in Ireland, and no agricultural expert being discussed from those countries, they are unlikely to provide a viable nomination - although Ireland could spring someone out of the hat at the last minute: remember that Fischer Boel was a late and unexpected appointment. An Irish nominee would certainly be welcome in Paris.

We are really left with Denmark, the Netherlands and Austria. A second Danish appointment seems unlikely. If climate minister Connie Hedegaard is the Danish nominee, she could occupy a similar portfolio at the European level. Farm minister Eva Kjer Hansen is also in the frame but could get a food safety/SANCO dossier if she comes to Brussels.

The Netherlands has perhaps the best qualified candidates in the form of current agricultural minister Gerda Verburg or former minister Cees Veerman.

But the smart money is on another Austrian, former farm minister Wilhelm Molterer, even though Vienna would prefer him to have the budget portfolio. It's certainly not a done deal and there could be a last minute surprise.

Sunday, September 27, 2009

Back to butter mountains?

It's a familar scenario: the milk price falls; farmers come out to the street; and the Commission starts to panic.

Following a 'milk strike' across Europe, an emergency meeting is to be held by farm ministers on October 5th. Nineteen member states have signalled support for a Franco-German initiative for an aid package for dairy farmers. However, farm commissioner Mariann Fischer Boel, insists that there is no prospect of reversing the decision to abandon dairy quotas as part of the CAP reform process.

Global prices surged in 2007, but this led to more production which came on to the market as the recession ended.

The simple fact is that there are too many inefficient dairy farmers in Europe. A slimmed down dairy sector would be more globally competitive. However, despite the opposition of Britain and Denmark, one suspects that a policy fudge is on the way.

Friday, September 18, 2009

Fischer Boel steps down

Mariann Fischer Boel has confirmed that she is to step down as farm commissioner, citing her age (66) and the wish to spend more time with her family. An assessment of her time as commissioner can be found here: Boel

The race is now on to succeed her. Ireland has already thrown its hat into the ring, although no name has yet emerged. A successful Irish candidacy would not assist reform.

Wednesday, September 09, 2009

Will Fischer Boel stay or go?

Agra Focus is still 60 - 70 per cent positive that farm commissioner Mariann Fischer Boel will step down. At 66, the attractions of retirement from a demanding role might seem clear. Manuel Barosso, the Commission president, would like her to stay as he thinks she is a skilled negotiator. The Danish prime minister, Anders Rasmussen, would also like her to stay to give the Danes a key portfolio.

If she does go, there will be more uncertainty about the future direction of policy. Romania is reported to be pushing for the agriculture portfolio and is receiving backing from France and Poland on the basis that a Romanian commissioner would be more resistant to a genuine reform of the CAP. Moreover, the favoured candidate, former Romanian farm minister Dacian Ciolos studied in France, has a French wife and is a personal friend of former French farm minister Michel Barnier.

However, would a candidate from a new member state with a large and inefficient agricultural sector really be favoured when CAP reform is on the agenda? Nearly 30 per cent of the Romanian population is employed in agriculture, more than five times the EU average. Another problem is tha at some stage the Commission will have to start investigating how Romania and Bulgaria have been implementing CAP aid schemes since they joined the EU in 2007. Their record in relation to the SAPARD scheme for pre-enlargement funds was none too good.

So perhaps the choice could again fall on a smaller northern member state like the Netherlands?

Monday, August 31, 2009

Consumer aversion to GM declining

Consumers are less averse to GM crops and foods than they used to be, according to results from a quarterly tracking survey carried out on behalf of the UK Food Standards Agency. See FSA

Worries about food safety in general continued a general downward trend, from 64 to 61 per cent in this quarter. The top concerns were food poisoning (47 per cent) and the amount of fat, salt, sugar and saturated fat in food (responses in the 36 to 41 per cent range). Food prices and the conditions in which animals were raised were both mentioned by a third of respondents.

GM foods ranked 22nd out of 24 concern categories with only 2-4 per cent expressing spontaneous concern, rising to 21 per cent when prompted. In the previous survey conducted in the spring thse figures were 6 per cent and 26 per cent respectively.

The news comes at a time when livestock feed supplies in the UK are under increasing threat. UK livestock farmers are dependent on soya feed imports from Argentina and Brazil. These two countries supply about 90 per cent of UK imports. But they are increasingly switching to GM production and a joint Defra/FSA report suggests that livestock feed costs could soar by 300 per cent if Europe maintains strict import rules.

Admittedly this entails a worst case scenario in which there were no imports from the two Latin American countries. Should that happen, it is forecast that there would be a 24-29 per cent reduction in UK pig production and a 10 to 68 per cent reduction in poultry production.

The report argues that the risk to food supplies could be avoided if the EU allowed a low-level preesnce of some non-EU approved GM material rather than operating a strict zero tolerance policy as at preesnt.

The situation is complicated by poor harvests in South America last season, active purchasing there by China and the halting of imports from the US after the discovery of traces of unapproved GM maize in a shipment.

Consumers may at some point have to make a choice between lower food prices and an insistence on strict GM-free standards for animal feed. This particular problem is symptomatic of more general debates about the role of technology in ensuring food supplies.

Four legs good, two legs bad

A leading scientist is the latest person to warn that the bickering over whether conventional or organic farming is environmentally superior is getting no one anywhere in mitigating climate change. In an interview with Farmers Weekly Ian Crute, shortly to become chief scientist at the Agricultural and Horticultural development board, said it was vital to reduce greenhouse gas emissions from all types of agriculture. The former director of Rothamsted Research commented, 'The notion that this is a case of organic farming, conventional farming bad, doesn't get us anywhere.'

More investment in scientific research was needed to uncover beter ways that agriculture could help in the mitigation of climate change. 'There is no good data which would say that the emissions of nitrous oxide from organic systems compared to systems which are using synthetic fertiliser are necessary any worse or any better. I could argue very strongly that efficient pest, disease and weed control using pestcides was a far greener system in terms of the efficiency with which nitrogen us used than an inefficient system using far more land and inputs inefficiently.'

NFU policy director Martin Haworth endorsed Professor Crute's comments. More money needed to be spent on research and development to address 'market failure' issues. He commented, 'We need to reduce greenhouse gas emissions from all systems and science is key.'

The comments came after a study by the Institute of Grocery Distribution (IGD) found that four out of five shoppers are turning their backs on organic produce in favour of cheaper, conventionally-produced food. They found that 10 per cent of shoppers have found alternative products offering the same perceived benefits as organic food at a lower price.

A further 8 per cent are focusing their organic spend on fewer products where they think it really makes a difference, while another 8 per cent say they are not sure what organic stands for anymore. More than 40 per cent of shoppers say they have never been interested in organic.

The hard core of dedicated organic shoppers make up nearly one in five of the UK population. They tend to be younger and more affluent. However, some of them are looking for their ethical values in products that meet high animal welfare standards, local foods and Fairtrade. Nine per cent of shoppers will buy more organic food when they have more money.

Soil Association director Patrick Holden admitted that many people saw organic as a lifestyle choice rather than a sustainable farming system. 'We need to work at changing these perceptions,' he said.

Saturday, August 29, 2009

The iceing on the cake

With the approval by the Icelandic Parliament of arrangements to pay back money owed by failed Icelandic banks to depositors in the UK and the Netherlands, the way is now clear for Iceland's application to join the EU to proceed.

The opening of negotiations has already been approved by the Parliament, but membership would have to be approved by a national referendum and approval rates have been dropping sharply as the nation's population consider that they have been harshly treated by the international community for the failures of a few financiers.

Fish is normally seen as the main obstacle to Icelandic membership, but agriculture also poses many challenges. Iceland has a PSE of around 70 per cent, one of the highest in the OECD (along with Norway and Switzerland, although reforms have been introduced in the latter country) and twice the OECD average. The OECD has commented that since the last 1980s there has been limited progress in policy reform with only a slight drop in levels of producer support.

Sheep farming has been the main activity, but this has been in decline. Scarcely any crops are grown in the country. There are around five hundred dairy farms, presumably to ensure a liquid milk supply given the country's isolation. At least until recently, dairy prices were still administered.

The EU's net trade balance with Iceland is just over €150m for agricultural and food exports. The value of EU food exports has risen 25 per cent in the last four years. However, there is a trade deficit of more than €1bn in fish products.

In any negotiations account has to be taken of Iceland's special circumstances in terms of climate and location. There is no doubt that agriculture as well as fish is a sensitive subject in terms of the already wounded national pride of the Icelandic nation. The main potential gain for Iceland is membership of the euro and relief for their own battered currency.

We shall be paying special attention to negotiations as they proceed.

Friday, August 28, 2009

The impact on CAP on developing countries

This interesting report from the International Centre for Trade and Sustainable Development shows how the CAP can often undermine the development goals that member states are pursuing: Millennium Goals

Wednesday, August 26, 2009

New Ag committee line up

With co-decision on agricultural issues likely to come into force from next year, the European Parliament's Agriculture Committee has assumed a new importance and there was plenty of competition for places. However, one unasnwered question is whether the Budget Committee will have a stronger influence on plenary voting patterns than the Ag committee.

Many of the leading lights from the old committee have gone. Former chair UK Conservative Neil Parish is standing for the UK Parliament and may have a role in Dave Cameron's government at a junior level. I am grateful to Parish for getting me a glass of champange after German Green landowner Freidrich-Wilhelm Graefe zu Baringdorf had attacked me when I appeared before the committee as 'not a real scientist.' (It then all kicked off with a German CDU member heckiling the Green Junker).

The new committee chair is Paulo De Castro, the second Italian to chair the committee and just the second Social Democrat. The fact that he is chair owes much to the priority which the European People's Party gave to chairing other committees under the D'Hondt points system for allocating committee chairs.

De Castro is well qualified for the job, having been a Professor of Agricultural Economics at the University of Bolonga and Italy's farm minister from October 1998 to April 2000. He also served as a special adviser on agricultural issues to Commission President Romano Prodi from June to December 2000.

Agra Focus commented that De Castro 'is arguably as well-qualified as anyone in Europe to head one of the EU Institutions going into the debate on the post-2013 Common Agricultural Policy.' It remains to be seen whether the 1st reading vote on the reform proposals occurs while he is chair, or after the halfway point in the mandate (early 2012) by which time there could be a different chair.

De Castro used encouraging terminology in a short interview with Agra Focus. There have been concerns that co-decision (if the Irish get the vote right at the second time of asking) could slow down and dilute reform because of farm interests on the EP Committee. However, De Castro emphasised the importance of goals of concern to all EU citizens such as public goods, food safety and animal welfare.

Monday, August 24, 2009

Organics: it all kicks off

We haven't yet looked at the Food Standards Agency (FSA) report earlier this month that stated that 50 years of evidence on nutrition and health effects found that there was little difference in the nutritional value of orgainic produce. The small nutritional differences which did occur were not large enough to be of any public health relevance.

This is not a message organic farmers and growers wanted to hear at a time when sales have been slumping in the recession. According to research by the Institute of Grocery Distribution earlier this year, the number of people buying organic produce dropped from almost a quarter to 19 per cent. Prince Charles' organic food range, Duchy Originals, has seen a dramatic slump in sales. Profits fell from £1.53m in 2007 to £57,400 last year.

Organic goods were coming to be seen as a luxury in the recession as consumers search for value. Admittedly, there have been some signs of a recent recovery. Last month Tesco said that the sector was seeing 'green shoots of recovery'. Organic milk buyer OMSCo reported earlier this month that sales of organic milk had increased by 10.5 per cent in four weeks.

In any case the FSA report misses the point about why consumers buy organic. It was evident from vox pops after the report came out that the main concern for many of them was pesticide residues rather than nutrition. There is little point in telling them that pesticide residues are minimal or that they are strictly monitored both by the regulator and by supermarkets who don't want any damage to their brands.

Unfortunately the debate has become pivoted around an artificial divide between organic and conventional methods of farming when more attention should be paid to how conventional farming can be made less intensive and environmentally damaging through integrated crop and pest management. It is evident, however, that the position of many organic proponents is deeply ideological in the sense that they hold entrenched positions that dismiss any contrary arguments or evidence.

There is a sense in which 'organic' has become a diluted brand that is confusing to customers. In many ways it is 'local' that is the acclerating brand, particularly through the farmers' market movement. In supermarkets 'local' is sometimes really 'regional'. The big boom in the last year, as many garden centres could attest, has been in the 'grow your own' movement in allotments and gardens.

As was pointed out at the ESRS conference in Vaasa last week the notion of locality is linked to a narrative of producers' pride but also links into the willingness of consumers to pay more as part of a search for excellence. Wealthy and concerned consumers provide a basis for the protection of European agriculture not through traditional market barriers but by reinventing old forms of quality and developing new ones.

For retailers there is an imperative to strengthen consumer loyalty through an appeal to ethical and moral values as well as competition on price. This, of course, brings us into the debate about 'choice editing' as a means of dealing with problems such as obesity. But that is another story.

Thursday, August 20, 2009

Productivism by any name

Vaasa, Finland: Geoff Lawrence told delegates at the ESRS conference today that one should be careful about terms like neo-productionism and post-productivism that had been used at the conference. Liked productivism, they amounted to a triumph of output over sustainability.

He emphasised the way in which the financialisation of the world food regime has encouraged speculative trading which in turn had resulted in more volatile prices. In 2003 $13bn have been spent on agricultural futures trading and it had soared to $260bn in 2006 as traders saw an opportunity as prices rose.

This theme was emphasised by Peter Feindt and Terry Marsden who argued that short-term and long-term resource shortfalls fuelled speculation. They also drew attention to the carbon dependant nature of the current world food regime.

Unfortunately, the articulation of sustainability concerns often di not got beyond reports, leading to an incoherent articulation which did not change policy. Cracks in the current regime offered up real opportunities for change, but more attention needed to be paid to the politics of transitions.

Mark Tilzey presented an analysis informed by Marxist categories, drawing attention to the attempts of fractions of capital to restore class hegemony. Delegates wondered if they had stumbled into a time warp, but Tilzey argued that the export of productivism through globalisation opened up spaces for the affluent at home. He questioned whether the production of staples could be undertaken by a sustainable rural paradigm, but did not call for machine tractor stations.

In discussion it was argued that supply chains were the dominant form of governance in the current agri-food system. These were potentially highly flexible strategic devices, but did they have the absorptive capacity to deal with challenges like the decreased availability of fossil fuels?

Later discussion emphasised the increasingly close links between food, the environment, energy and finance.

Monday, August 17, 2009

Big Phil Lays It On The Line

Vaasa: Philip Lowe is a leading figure in the rural studies community in the UK and he issues a stark warning about the so-called 'new productivism' in an interview that was issued to delegates at the ESRS Congress where he gave the opening plenary.

Asked if we were moving towards a 'new productivism', the Duke of Northumberland professor at Newcastle University said: 'Much of what I hear sounds like the old productivism. The characteristic of the old productivism that prevailed until the 1990s was that it sought recklessly to boost primary production. Although it claimed to do this with attention to efficiency, this only embraced the so-called factors of production: land, labour and capital.'

The RELU boss continued, 'So we encouraged a form of agriculture that was wasteful in its use of water, energy, soils and caused pollution problems and diminished biodiversity. We must not return to the old-style productivism - of expansion of food production at any cost.'

'No,' Lowe declared, 'the new productivism msut be constructed on the basis of economic and ecological efficiency which thereby protects the capacities of individual ecosystems to deliver a range of valued a life-supporting services.'

Greetings from Finland

Vaasa, Finland: This week I am here at the European Rural Sociology Conference. There are many panles and papers that look relevant to this blog and I will reporting on them as time allows.

Thursday, August 13, 2009

So, farewell then, Fernand Boden

Don't know who he is? Well as Luxembourg's farm minister he was on the Agriculture Council for 14 years and hence its longest-serving member. This included two presidencies. Now, as he approaches the age of 66, he has stepped down and also shed his portfolios of the Middle Classes [sic], Tourism and Housing.

His replacement is Romaain Schneider, the former Secretary-General of the Socialist Workers' Party [sic] who comes from the city of Wiltz and also takes on the sports portfolio. This is not a surprise as he is the President of the 2nd Division ('Division of Honour') football club FC Wiltz 71.

At one time members of the Farm Council remained there for a long time and this had quite an effect on its culture and decision-making. Given that the members were generally male and had some kind of agricultual background, even if only as a bureaucrat, this created something of a 'club' atmosphere. Now only 6 of the 27 members were in office in two-and-half years ago.

Monday, August 10, 2009

Food security

The follow-up report one year after the publication of the Cabinet Office report on 'Food Matters' can be found here: Food Matters

You can see a short video by Hilary Benn in which he says 'Overall we're doing ok' here: Benn . For some baffling reason this has been recorded in a particularly noisy street location.

Sunday, August 09, 2009

Threat to cross-border trade

The internal market is arguably the greatest achievement of the European Union and from time to time we are told that it is now almost complete. However, regulatory decisions can easily derail it and a threat has arisen to cross-border trade between England and Scotland.

The Scottish Government is planning to capitalise on its low incidence of Bovine TB by applying to the European Commission for TB-free status. They have held back from making an immediate application after auctioneers and meat wholesalers expressed reservations. They warned that the sustainability of abattoirs and markets could be threatened as cross-border trade dried up.

It might also be counter productive in terms of containing the disease. Scottish finishers typically buy cattle from the north of England where TB is less common. However, if they are not prepared to pay the cost of pre-movement testing, they might start buying from high-risk areas in Wales and the West of England.

Another complication is that some farmers have holdings on either side of the national border. It is also unclear whether livestock taken from Scotland and not sold at an English market can then be returned north of the border.

It's sometimes a bit of an Alice in Wonderland world in agricultural policy. No doubt the move is seen as a patriotic one in Scotland, but whether it is good policy is another matter.

Eurosceptic MPs deny they had snouts in trough

Eurosceptic Conservative MPs have argued that there is nothing inconsistent in receiving payments from the CAP whilst being critical of it - which is indeed the case. The three MPs were the subject of an investigation screened by More4.

Former Conservative Party chairman Michael Ancram was said to have received £11,451 for his farm in the Scottish borders (not an unusual figure for a large business). David Heathcoat-Amory received £114,000 for his Scottish farms while Philip Dunne received £201,000 for his farm in Herefordshire.

The three MPs were among 45 who last year supported Eurosceptic Bill Cash's amendment to the Lisbon Treaty. All three of them mounted a robust defence of the farm subsidies received by businesses in which they had an interest. Mr Ancram pointed out that as a non-active partner, he only received money if the farm made a profit, which it hadn't done in the 12 months to May 2009. The year before it had only made a small profit. He commented, 'I'd love to see the CAP reformed - as long as it exists I'm entitled to claim.'

Mr Heathcoat-Amory said his arrangements were part of a farming partnership and the money didn't go into his bank account. Mr Dunne, who is MP for Ludlow, said the farm support arrangements enabled him to employ 20 people and farm effectively to award-winning environmental standards. He agreed that the CAP was in need of reform, but said it should be done at a European-wide level so UK farmers were not disadvantaged (which is indeed the only level at which it could be done).

If a flawed system exists, it is difficult to blame individuals who are entitled to claim for doing so. Nevertheless, as the countdown to a general election begins, it is evident that there are some contradictions in Conservative policy on Europe. Part of this arises from a tension between the Eurosceptic views of Conservative activists and many MPs and the need to pursue a strategy at the European level which protects British interests. Antagonising the EU over a range of issues could reduce the political capital at Britain's disposal to pursue CAP reform, although it could be argued that Labour has not made as much progress in that direction as it originally hoped.

Wednesday, August 05, 2009

'Can't pay, won't pay' say French farmers

French farmers have been told that they have to pay back hundreds of millions of euros after the Commission ruled that the subsidies were paid out illegally. Moreover, the Commission doesn't just want the €330m back, it is also charging interest of up to €150m.

With Sarko disporting himself in the Mediterranean as he recovers from his recent fainting fit, Francois Lafitte, president of the fruit and vegetable producers' union Fédécom has warned of a 'fiery' summer if the government pushes ahead with plans to claw the money back in September.

According to Mr Lafitte, recovering the money for taxpayers would bankrupt farmers. He also claims that Brussels has got its sums wrong (which is possible). But the French state has admitted that the subsidies, paid over a ten year period, were illegal under European law.

Mr Lafitte claims that the subsidies were needed to see off competition from Spain and Portugal. They were producing more cheaply at a time when French producers had a surplus. No mention of the consumer here.

France has launched an appeal at the European Court of Justice, but thinks that the process of repayment should start even before a decision is taken, otherwise they could end up paying even more. They don't sound very confident about their case.

The subsidies have to be paid back by January 2010, but new farm minister Bruno Le Maire has said that he would 'do nothing to compromise the future of the industry' which is being hit by current low prices.

He didn't explain how he would square this particular circle other than to say 'I will be very careful that the situation of each farmer will be analysed on a case-to-case basis in order not to penalise the most fragile.'

1. Decisions will be subject to political pressures as I don't want to blot my copybook.
2. The most efficient will be hit hardest.

Sunday, August 02, 2009

Have milk prices turned the corner?

Problems in the EU dairy sector have led the Commission to resort to the tired old policy instruments of intervention buying of skimmed milk powder and export subsidies. To be fair to the Commission, they have had to resist a lot of political pressure for even more intervention, including backing off the planned phasing out of quotas which have ossified the EU dairy sector and made it less internationally competitive.

However, there are a few signs of an improvement in prices. In the UK the NFU believes the corner has been turned for dairy farmers supplying the liquid market after Robert Wiseman Dairies announced that it was raising its price by 0.3p a litre. This increase follows a period of better returns from the cream market and will take the standard litre price for about 900 direct suppliers to 24.3p before seasonality deductions.

Prospects for milk used in manufacturing are less good. Skimmed milk powder continues to flow into intervention stores throughout Europe. While President Obama enjoyed one of the best publicised beers in history, the USA continues to distort the world market with subsidised exports.

Prices on global commodity markets are still under pressure. Butter is quoted at about £1160/t, while skimmed milk powder has slipped back recently to £1227-£1288/t. EU prices are somewhat better and the butter price has climbed above the intervention level. But significant volumes of skimmed milk powder are still being sold into intervention at about £1450/t. These stocks will eventually have to be sold into the market with an inevitable depressing effect.

What is evident is that supermarkets have been creaming off profits. According to a new market situation report from the Commission, 'the pronounced fall in the prices of milk and dairy commodities since the end of 2007 has only triggered a slight decline in consumer prices for dairy products.'

Since the end of 2007, Commission figures show that the wholesale butter price has dropped by 39 per cent, skimmed milk powder by 49 per cent, cheese by 18 per cent and milk by 31 per cent. Yet the price consumers pay in the shops for dairy products has dropped by just 2 per cent.

The Commission's conclusion is that 'the EU dairy supply chain does not function efficiently.' The market power of supermarkets, particularly in Britain, but increasingly in other member states, is considerable.

Competition policy authorities seem reluctant to act. Admittedly, it is sometimes difficult to get hard evidence of exploitation of market power as suppliers feel they are vulnerable, even with guarantees of confidentiality.

However, there is also a broader political context as supermarkets help the less well off by holding down food prices. Given the importance to New Labour of working people and their families, it is not surprising that they are unwilling to back strong action, but I would not expect Dave Cameron to take a very different line when he is in charge.

Meanwhile, the Commission has proposed extending intervention purchasing for 13 months. Even more worrying, it has suggested allowing state aids of up to €15,000 per dairy farmers. This will do nothing to solve the industry's structural challenges.

Monday, July 27, 2009

Franco German alliance revived

France and Germany are seeking to revive the Franco-German alliance on CAP reform, seeking to agree a mutual deal which they can then impose on others. This may, however, not be so easy in a 27 member state EU. France and Germany may, however, be able to exploit the existence of a lame duck administration in Britain, the main champion of liberal solutions, combined with a likely change of government next year.

Paris and Berlin haveannounced the creation of a Franco-German working group to frame reform of the EU's Common Agricultural Policy (CAP) after 2013. The working group was established on 2 July, a day before newly-appointed French Farm Minister Bruno Le Maire met with European Commission President José Manuel Barroso to explain France's stance on the future reform.

Le Maire said Barroso had shared his views on the 'strategic importance' of agriculture to the EU and on guaranteeing European food security.' It is absolutely necessary to regulate production,' Le Maire told the press after the meeting, insisting that the agricultural sector is far too strategic to be left to market forces alone.

'More regulation' will be France's guiding line in negotiations on farm reform, he added. But regulation does not necessarily mean quotas, he added, a reference to ongoing protests over milk prices.

'Our main political objective must be to guarantee stable and decent revenue for farmers,' he went on, noting that French farmers had lost 20 pet cent of their income since 2008. Such price volatility and decreases are 'not economically viable' and 'farmers cannot live with such instability,' he stressed. In other words, they must be funded by European taxpayers.

Franco-German cooperation on CAP reform will be very tight, Le Maire said, indicating that he would add a German official to his cabinet to prepare the work. Similarly, a French official will be sent to Berlin, he said.

The working group is open for others to join, he added, announcing a charm offensive tour of EU capitals that will start in London before going to Madrid, Rome, Bucharest and Warsaw. Paris and Berlin expect to table their first guiding principles for CAP reform 'in the coming months,' he added.

The appointment of Marie, formerly junior minister for European affairs, as farm minister in the 23 June reshuffle was itself significant. An ENArque, he has no clear agricultural experience or background. He is, however, a fluent German speaker and made numerous visits to Berlin in the first half of the year.

Tuesday, July 14, 2009

Superficial change

Santiago, Chile: it was argued in the panel on agricultural policy and trade at the IPSA conference yesterday that the so-called ´paradigm shift´ in discussion of the CAP had not occurred in 2003 as some had argued or, if it had, it had had few concrete results. Supposedly the state assisted paradigm was replaced by a new multifunctionality paradigm. However, it was argued by Carsten Daugbjerg from Aarhus University that the multifunctionality paradigm provided cover for the continuation of state assistance.

Another paper looked at ´rent seeking´ interpretations of agricultural subsidy. From the ensuing discussion a view emerged that whilst such models might not be able to explain the origins of subsidy policies, they might be useful in understanding their continuation.

Sunday, June 28, 2009

UK can compete - so does it need subsidies?

Russia and Romania may be two of the cheapest places in the world to produce wheat, byt the UK is only a little way behind. Releasing the result of its Global Cost of Production Challenge, Bidwells Agriculture head of research Carl Atkin, said that despite the higher unit price of inputs in the UK, cost of production per tonne is only marginally higher than in eastern Europe. 'This is because of the considerable yield advantage the UK has, based on first-class soils and a maritime climate.'

Western Europe's temperate maritime climate produces one of the longest and most suitable growing seasons in the world for wheat, Mr Atkin explained. While the soils in eastern Europe and the former Soviet Union are often of equal or better quality, climatic and weather constraints temper output. In addition, there is considerable yield volatility in other parts of the world, where occasional crop failures need to be factored in. This is partly why UK what production costs per tonne are lower in Australia, Brazil and Canada.

Moreover, post-farmgate costs needed to be factored in. These can be substantial if infrastructure is poor and costs-to-market are high, as is generally the case in Russia. Costs are rsing in places such as Russia and Romania faster tham in, say Australia and Canada, as land and labour costs escalate.

If UK wheat can compete on world markets, do large-scale arable operations in East Anglia really need subsidies to be viable? Of course, re-directing CAP payments elsewhere could simply subsidise efficiency. Introducing a measure such as a cap on payments to large farmers would disadvantage the UK relative to other member states. But this analysis does raise questions about whether blanket subsidies are still required.

Could Doha be back on?

India's new government is eager to resume the Doha round of world trade talks, according to the country's new minister for commerce and industry. Anand Sharma told the Financial Times that India was keen to break the impasse in negotiations. Mr Sharma's tone marks a significant shift from his predecessor, Kamal Nath, who was known for his uncomprising stance in the Doha talks.

Many countries blamed India for the breakdown of ministerial talks a year ago intended to forge a blueprint for concluding the Doha round. The meeting ended in disarray after India and the US failed to reach a compromise over the special safeguard mechanism, designed to protect farmers in poor countries from surges of agricultural imports. Washington said imports should have to increase 40 per cent to trigger safeguard tariffs, whereas India wanted a very low 10 per cent trigger.

World trade negotiations have been the most significant driver for CAP reform for nearly two decades and a resumption of them could counter balance strengthening protectionist forces in Europe.

Friday, June 26, 2009

The debate on the post-2013 CAP

The debate on the future of the CAP after 2013 has now started following the informal Farm Council in the Czech Republic earlier this month. Those who want to influence the debate have about twelve months before the Commission publishes a Communication (effectively a White Paper) on future policy in the summer/early autumn of next year. Formal legislative proposals will then be published in the middle of 2011 together with the proposals for the financial perspectives from 2014 to 2019 or 2020.

At the Farm Council there was a surprisingly strong consensus on maintaining a strong 1st Pillar after 2013, principally in the form of Single Farm Payments (SFP). Britain sent a junior minister, Jane Kennedy, who has since resigned and she made a ritual reptition of the UK Government's position of wanting to phase out direct payments altogether. However, it is clear that this argument is going nowhere and that the French subsidisation discourse is back in the driving seat.

Justifications advanced for subsidy

What are the justifucations for continuing SFP? Are they an income support or are they there to support the provision of public goods? If the former, they are remarkably inefficient as most of the money goes to larger farmers. Commissioner Fischer Boel, however, made the argument that dairy farmers would be in even worse trouble without direct payments.

The Commission has estimated that 40 per cent of farms would disappear in some sectors if the CAP budget was stopped tomorrow - and farmer incomes would drop by more than two-thirds, from levels already below the EU average. No serious analyst is recommending withdrawing the budget overnight. We would rather not be here, but we do not start with a blank sheet of paper. However, objectives need to be clearly stated and prioritised and there needs to be a measureable link between objectives and policy instruments. In other words, no blanket subsidies that do not lead to demonstrable outcomes.

It is argued that the ovearching objective is to maintain farming across the EU, i.e., to avoid rural exodus and abandonment of the land. Leaving the land unfarmed would certainly have negative biodiversity impacts and also impair landscapes, affecting rural tourism. However, there needs to be more emphasis on the overall vigour of the rural economy, reducing its dependence on farming and ensuring that infrastructure such as broadband is in place everywhere.

A widely used argument at the Council was that the higher environmental, food safety, food quality, traceability, animal health and welfare standards that EU producers face in relation to non-EU producers cannot be rewarded by the market and therefore justify subsidies. There is certainly a case here, but the monitoring and enforcement of cross-compliace needs to be substantially improved if these subsidies are to be justified.

The food security argument was also raised and the difficulty with this is that it can become a portmanteau argument for 'business as usual', rather than taking a careful look at what might be required, for example, in terms of climate change adaptation.

Abandoning old forms of calculation

There was broad agreement that the historical reference base must be abandoned to legitimise payments after 2013. The adoption of a regional flat rate payment for all member states seems likely, although Finland is pressing for a differentiation between different types of farms, e.g., arable and livestock. Decoupling is also important, but Finland has argued in favour of coupling in sensitive regions where farming might otherwise stop.

Some are nore equal than others

Retiring European Parliament Agriculture Committee chaurman Neil Parish paraphased Orwell by stating that while all Member States are equal, some are more equal than others. New member states receive less than €200 per hectare in SFP compared with an EU average figure of just over €300. Greece receives more than €500 per hectare and Latvia barely €100.

However, French Minister Michel Barnier made it clear that 'equity was not the same as equality', arguing that a wide range of other criteria should be considered. Commissioner Fischer Boel made it clear that she thought that a flat rate payment across the EU was unrealistic.

Commissioner Fischer Boel has reserved her position about serving a second term as Farm Commissioner, but acknowledged that she would have to come to a decision in the near future.

Saturday, June 06, 2009

SFP to stay - Fischer Boel

Farm commissioner Mariann Fischer Boel expects Single Farm Payment (SFP) to stay after 2013. 'I believe that some kind of basic income safety net will be needed,' she told an informal farm council meeting in the Czech Republic. Why that cannot be provided by the social security system was not explained.

However, SFPs should be linked to the delivery of public goods 'to avoid further intensification and industrialisation of farming which could entail serious environmental, economic and social consequences.'

She also made it clear that payments should no longer be made on an historic basis. Her view is that there is no sense in two neighbouring farmers getting widely different levels of payment on the basis of what they were doing ten years ago.

Sunday, May 31, 2009

EU could do better on environmental farming

Millions of pounds of txapayers' money intended for environmental projects is instead being used to prop up damaging farmning practices across Europe, according to a report Could Do Better compiled for the Royal Society for the Protection of Birds by Birdlife International.

The report highlights some of the positive work being done in EU member states with CAP funding which is helping farmers create and protect habitants for wildlife. 'In principle this European funding is great news for wildlife because it supports agri-environment schemes which protect biodiversity - but the truth is that implementation of the policy by many member states is weak,' warned RSPB's head of agriculture policy Gareth Morgan.

'In compiling this report we found examples of agricultural schemes receiving large amounts of public subsidy from the EU which had no environmental benefit at all, in fact some were causing the degradation of the environment.'

Farmland bird species are in decline across Europe and this is often linked to changes in agricultual activities. Many of these threatened species are extremely senistive to changes in their habitat caused by intensification of farming. For example, the Spanish imperial eagle requires large areas of sparse wood picture rich in rabbit and the eastern European red-footed falcon requires traditional farmland with ponds rich in dragonflies.

'The findings of this report make it clear that the CAP is still not functioning properly and requires radical reform,' Gareth added. 'Agri-environmental schemes can and do deliver great results for farming and wildlife, but only if member states commit to them properly - otherwise it is simply an exercise in handing out money for nothing.'

'Some EU governments are clearly unprepared to stand up to the vigorous lobbying of their agricultural sector. If they continue to put forward dodgy agri-environmental schemes which have no positive impact on biodiversity then Brussels should have the backbone to kick them out.'

Examples of money down the drain included €790m in Portugal that has been invested in irrigation projects which will destroy wildlife habitats and increase water over-abstraction. In Cyprus conservation money is being spent on opening forestry roads and creating forest firebreaks which fragment bird habitats and disturb populations. Italy, France and Ireland also get the thumbs down for spending money on agri-environmental schemes that have no impact on normal farming practice and no benefit for the environment.

However, in England agri-environment schemes are judged to have been well designed and to be delivering benefits for biodiversity.

The full report can be downloaded here: Birdlife

Saturday, May 09, 2009

Sterling fall gives farmers subsidy cash windfall

British farmers are set for a cash windfall worth hundreds of millions of pounds because of the fall of the pound against the eurp. Within the next fortnight farmers must tell Defra whether they want to receive their subsidies in pounds or euros ahead of the figure being fixed in September.

The last single farm payment was worth about £3bn to UK farmers when it was paid out at the end of last year based on an exchange rate of 79p to the euro. Since then, the euro has appreciated to about 90p.

Peter Kendall, chairman of the National Farmers' Union said that if the exchange rate stayed the same payments would be about 13 per cent higher than last year. This would add up to an extra payout of more than £300m to farmers.

Many farmers have used hedging strategies to fix their payments in advance at 92p per euro or higher. However, that is an option that is only really available to larger farmers. Less prosperous farmers with smaller farms have not been able to do so and are still exposed to market fluctuations.

Perhaps they should set some of the extra money aside to pay their tax bills. Tax liabilities will be higher after increased profits during the last two harvest. Accountants Grant Thornton warned that many farmers faced substantial tax bills next January and July.

Monday, May 04, 2009

Grain supply deficit by 2009-10

Grain stocks are projected to rise by 39 per cent this year to 160m tonnes after Russian and the Ukraine planted large crops in response to rising global prices. But, according to Societé Generale, the global wheat crop could shrink to around 642 million tonnes in 2009-10.

This still a bumper harvest by historical standards but significantly lower than last year. With consumption expected to increase to 657m tonnes, the market could see a supply deficit by the end of 2009-10. This could contribute to what is expected to be an era of volatile prices.

An important factor in the situation is the disapperarance of Argentina as a reliable exporter. Farmers there are due to start planting the 2009-10 crop in less than a month and there could be a fall of some 30 per cent on the 2008-9 season and the lowest since 1902-03 when Argentina was starting to earn a reputation as the bread basket of the world.

The decline stems from three years of misguided government intervention in wheat trading in which farmers are periodically banned from selling overseas; a 23 per cent tariff on exports; and a serious drought that has slashed exports. A long-running conflict between the government and soyabean farmers will slash export income this year. Lower wheat planting levels will lead to a bigger shift to soya, though, which is Argentina's biggest cash crop.

El Tejar, one of Argentina's leading agricultural groups, has frozen investments at home and is looking elsewhere in the region, such as neighbouring Uruguay and Brazil, where the regulatory hurdles that plague Argentina are absent.

The whole history of Argentina over the last hundred years is an object lesson in how political meddling can undermine a country's propserity. As far as farm trade is concerned, export taxes are just as much a distorting mechanism as import barriers.

Wednesday, April 29, 2009

Blanket subsidies to continue after 2020

Pillar 1 subsidies are likely to continue after 2020, forecast Professor Allan Buckwell, the Policy Director of the Country Land and Business Association, in an interesting talk at the President's Seminar of the Royal Agricultural Society of England (RASE) in London yesterday.

He emphasised that agriculture should be able to look after itself. What it needed was imagination and drive, having the ideas about what customers want and having the energy and determination to see it through.

There was a possibility of big change in the next CAP reforms comparable to what happened in 1992 and 2000. However, he was concerned that we might not take the opportunity.

Trade liberalisation was in suspense. There was a real debate about going on about the extent to which we believed in international trade. Countries in Asia might think that the solution to their food security was to buy up land and rights to farm in Africa.

The 20th century trend in agriculture was for prices to fall in real terms, despite the growth in world population and income. However, this downward trend had slowed in the last twenty prices. Now we were in an era of more volatile prices. But if scarcity did produce systematically higher prices, what did that mean for policy? More support for farmers or less? It was hardly likely to lead to more support.

In seven out of the last eleven years farm income without support payments in the UK would be negative and even when positive was miniscule. The rapid removal of farm support would require structural adjustments.

Farmers thought that Pillar 2 was too bureaucratic and inaccessible to many farmers. For governments the administrative costs were high, there was the requirement for co-funding and the issue of whether benefits were discernible.

The status quo position on the Single Farm Payment was to cut, but how far and how fast. There was a wide distribution of payments among member states - Greece with its cotton and tobacco subsidies at one end with high payments and new member states like Latvia at the other. The distribution per beneficiary was even broader, although here the Czech Republic, Slovakia and the UK came out on top.

Would there be more uniform payments? What is the purpose of the payments? France favoured a basic husbandry payment. Which features of Pillar 2 could be dropped?

Putting the case for a food and environmental security policy, Professor Buckwell asked who is against food and environmental security? Who disputes that these are threatened? Europe faced the task of feeding its own population and possibly others as well.

The key point in food security was long-run production capacity - not letting good land to be built on or go under salt water. Knowledge and skills and research and development were also of key importance. One had to achieve food security as the key goal but without avoidable environmental degradation.

€53 billion (the CLA's estimate of the total cost of the policy) was not an obscene amount to be spending. He was not saying that the current policy was right, but any policy would need a significant budget.

Agricultural economist Sir John Marsh intervened from the floor to point out that subsidies kept resources in use which were les than optimal. We needed to be specific about what it was were were trying to create. CAP was originally created because of what seemed to be a fairly straightforward relationship between food availability and consumption. It then became a social policy because there were farmers with low incomes. Environmental aspects was too broad a term. The measurement of value to the public as a whole was less well defined.

There was an interesting exchange between Professor Buckwell and Martin Haworth of the NFU revealing 'differences of emphasis' between the two organisations. Haworth quetsioned whether both food and environmental security were under threat. He didn't agree that there was environmental degradation as things were getting better.

He disagreed with Allan Buckwell's suggestion that one should work with green organisations. It was dangerous to form an alliance with environmental organisations as this involved accepting that agricultural production was part of the environmental problem. In the set aside debate, environmental oganisations had convinced themselves that the only solution was to de-intensify agriculture in the form of set aside.

Haworth told Buckwell, 'What you are proposing is quite a dangerous way forward and not one we would support. We support the current architecture of pillar 1 and 2.'

Sunday, April 26, 2009

Changes proposed for LFA payments

The European Commission has unveiled proposals to make changes in the way in which Less Favoured Area (LFA) payments are made. A policy review was set in train following criticism by the European Court of Auditors in 2003 (these things take time) that some countries were abusing the definition of 'less favoured'. This particularly applied to so-called 'intermediate' areas.

In its Communication the Commission suggests that payments should be made in future on the basis of 'biophysical' rather than socio-economic criteria. The Commission's view is that future payments should be based on soils, drainage, climate and terrain rather than socio-economic disadvantage to satisfy the public that the money is being well spent.

The proposals have caused alarm in Scotland where 83 per cent of the land area is deemed intermediate LFA and attracts funding of about £61m a year into livestock farming into this areas. Wales also has 80 per cent of its land area designated as LFA.

Wednesday, April 22, 2009

CAP bonanza for big Irish dairy companies

Figures obtained through a freedom of information request to the Irish Department of Agriculture show that the country's top dairy companies did well in securing CAP money in the form of export refunds and intervention aid.

It was actually Greencore, which owns Irish Sugar, that topped the recipient's list with restructuring funds that amounted to a cool €84m.

However, the Irish Dairy Board received €6.5m, followed by Kerry Ingredients with €5.1m. In third place was the company behind Baileys cream liqueur, R & A Bailey, owned by the drinks giant Diageo, which received €2.9m. It is believed that most of the payments were for export refunds, but that the IDB received money for limited butter intervention in 2008.

Given that dairy markets were relatively strong in 2008, these payments are well down on the levels of 2007 and earlier years. Given the widespread current use of export refunds, the 2009 figures are likely to be significantly higher.

In all cases the companies have defended the payments, claiming that they were a mechanism used to support the milk price to farmers. However, it is unlikely that all the money reached farmers.

Sunday, April 19, 2009

Australia re-thinks drought subsidy

Even in an irrigation district, conditions in Australia can be dry

Australia is re-thinking its subsidy to drought hit farmers. This has a wider relevance, both in terms of how one adapts agricultural policy to climate change and how a subsidy can grow almost unnoticed. Australia has pursued a policy of eliminating agricultural subsidies, other than in investment in knowledge and R and D which most commentators would support.

The drought income supplement was an exception and it is mainly that subsidy which has pushed Australia's PSE up to a (still low) 7 per cent. What was once a 1 in 20 experience is now more likely to be 1 in 5 calling in question the notion of 'exceptional circumstances'. This is no surprise as work by Linda Botterill at ANU showed that it was difficult to come up with an objective definition of drought and the definition used is largely a socially constructed one.

In an interview with Agra Focus top Australian agricultural civil servant Stephen Hunter discussed the challenges that his country is facing in relation to climate change. He noted that Australia has always tended to have a higher variability in climate than most countries. However, the available evidence on the impact of climate change suggests that the south of the continent will become much drier with a higher variability in climate and the north will face increased rainfall. He commented, 'We have always had droughts. It's just that Climate Change is making it more likely.'

Flood irrigation is a less common sight now

On a visit to the irrigation district around Griffith, NSW a few years ago I was surprised at the amount of rice, a water intensive crop, that was being grown. But Hunter reveals in the interview that this has fallen drastically in recent years to as little as 2 to 5 per cent of normal levels. On farm, there has been a marked move away from flood iririgation and towards drip irrigation rather than sprays. One major lesson for Southern Europe in particular is the desirability of having a system of water trading in place so that it can be used at its highest value.

Hunter admits that there are limits to the extent to which the commercial market can provide multi peril crop insurance. The approach being used is to equip farmers to understand their local climate better and to outline management changes they might make to respond better to those conditions, e.g., low tillage farming to deal with soil problems.

Another interesting arrangement which allows market smoothing without distorting interventions is the Farm Management Deposit Scheme. This allows farmers to even out their income by putting into deposit surplus funds in a good year that will help them in less good years. What is distinctive about the scheme is that it is attached to tax incentives.

Australia often has some interesting policy lessons. Anyone who is interested in what I learnt on my recent visit about the management of cattle diseases can E mail me for a Power Point presentation.

Tuesday, April 14, 2009

Fischer Boel defends export subsidies

Farm commissioner Mariann Fischer Boel has reiterated the EU's commitment to phase out all export subsidies by 2013, but in the meantime has insisted on their use to defend EU market share. Responding to concerns that the dairy export refunds, reintroduced in January, mean 'dumping' cheap produce on developing countries, Fischer Boel said that the EU cannot risk losing its market share to other major exporters.

The return of the subsidies has been widely criticised by agricultural exporting countries such as Australia. But concern has also been expressed within the EU itself. Germany is known to have been concerned that the subsidies are creating a damaging dumping effect in some developing countries.

Fischer Boel explained that in countries such as the Dominican Republic, the impact of subsidised EU exports is not to directly harm domestic produce. These markets are in fact a battleground between the EU and other developed world exporters, she argued.

Of course the EU is not directly competing on the liquid milk market in these countries. However, I recall reading studies by Oxfam and Cafod relating to the Dominican Republic and Jamaica. Small local dairy farmers found that their market in local processing factories was driven out by skimmed milk powder from the EU.

Friday, April 10, 2009

Overdoing the gloom

I regard climate change as a major challenge. As it is a global public bad, it requires action by governments, individually, at EU level and globally. However, these actions will be insufficient if there is not an adequate response by business and by citizens.

In my view excessively gloomy predictions about climate change actually have a disempowering effect on citizens. They start to think it is all hopeless and they might as well continue with their existing environmentally unfriendly lifestyles.

Some of those putting forward these views have a broader agenda which is well served by taking an excessively pessimistic view of the prospects for climate change mitigation. (Adaptation is only now really starting to get on the EU agenda in a serious way).

This was the case with one of the speakers at the recent meeting of the Franco-British Council that I attended. I have so much material from this meeting that it is going to take some time for me to blog it all.

I thought that this particular speaker made some good points, but he undermined them through overstatement. He started by stating that we were just nine meals from anarchy because of our over reliance on retailers for buffer stocks. We do sometimes rely too much on leading supermarkets as a private governance mechanism, a subject which I am personally interested in. Indeed, I believe that Cobra, the civil contingencies unit in the Cabinet Office, has taken an interest in the subject of potential threats to food stocks.

The speaker argued that national food self-sufficiency was in long-term decline. The UK was increasingly reliant on imports when the ability of the rest of the world to provide for us was weakening. The fabric of biodiversity, nature's insurance plan against disaster, was wearing thin.

The speaker went on to argue that intensive farming defied ecological gravity. I think that this depends on how it is done. In arable farming, one needs the use of methods of Integrated Crop Management and Integrated Pest Management, subjects I have written on with my biological science colleagues. Livestock farming needs to observe animal welfare standards. All these objectives can, and are, being pursued through appropriate EU policies and it this dimension of the CAP that needs to be developed and strengthened.

The speaker argued that obesity is a climate change issue and that we need to consume less. The food crisis had been coopted to promote asymmetric market liberalisation and particular commercial agencies.

Where I did agree with the speaker was his emphasis on the importance of the planet's hydrological cycle. The proportion of the earth's surface subject to extreme drought had already increased from one to three per cent and could increase to one third by the end of the century [this is a worst case scenario in my view].

A person associated with DG Agri asked whether there was really a problem about generating a sufficient food supply. Yields had improved in the past. This commentator also defended biofuels, arguing that higher energy prices in the longer run would mean that they would be used without public policy.

The speaker asserted that biology must become before economics and politics. Scientists, however, were prone to pander to politicians. This is not my experience of working with natural scientists. It is not a question of biology coming before politics, but the insights of economics, political science, law, biological science and many other disciplines being brought together as in the RELU programme: RELU

A person from a farmers' organisation argued that the model of a richer country outbidding everyone else on the world market was not sustainable in the future.

The speaker concluded by celebrating the return of dirigiste politics and said that we could fundamentally re-engineer the economy as we did in the run up to the Second World War. The state rules ok!

For some of my work on ICM and IPM go to: Biologicals

On animal welfare: Livestock

Sunday, April 05, 2009

Re-education for Commission officials

On a visit to China a few years ago I met an elderly professor who had been sent with his students to the countryside during the Maoist period for 're-education' by the peasants. He struck a deal with the local peasants that allowed them to work on their books two days a week.

Now farm commissioner Mariann Fischer Boel, a large-scale farmer with her husband in Denmark, has decided that Commission officials in DG Agri need re-education. She considers that they are too detached from farmers and don't understand their problems.

The so-called Harvest Experience programme means that all agriculture staff will be sent to stay on farms from 2010. One goal is to encourage Commission officials to use simpler language.

It will be interesting to see where the farmer hosts are found from. I suspect that many of them will be drawn from farmer organisations and will have an axe to grind.

Historically, DG VI as it once was had a reputation of being particularly close to farmers. Its head official was always drawn from France and was usually close to large-scale French grain interests. Many of the officials were French and those Brits who worked there were usually Francophiles. One compensation was that it was said to have the best canteen in the Commission.

The Kinnock reforms ended the French domination at top level. Mind you, a lot of nonsense still comes out of DG Agri. A British academic was telling me about a talk given to students by one of its officials. He claimed that the livelihood of one person in five in Europe depended on the CAP. He worked this out by adding up those working in farming, those in food processing and those in input industries.

It was pointed out to him that it would be possible to have a healthy and competitive food sector in Europe without subsidy and protection.

Saturday, April 04, 2009

The French official view

At the meeting of the Franco-British Council I attended last Monday, it was interesting to hear the current French official view expressed by a senior French person.

A food security theme was heavily emphasised with the food riots being invoked, it being argued that the health and well being of one billion people was threatened. Reference was made to the challenge presented by volatile prices. It was argued that food was a strategic asset and that we had lost sight of this in recent decades.

European policy ensured the food security of half a billion Europeans. Far from being a fortress, the EU was the world's leading importer from the developing world.
It was claimed that we had now reformed the CAP. This may be true, but it has not been transformed and many of its undesirable features remain in place.

It was argued that we should move away from the old stereotypical arguments about productionism versus environmentalism or markets versus self-sufficiency. We must produce more in a more sustainable way.

Monday, March 30, 2009

Into the lion's den

The Franco-British Council invited me to a large seminar in London yesterday on the Common Agricultural Policy. It was a very interesting day, although it was somewhat disconcerting to be asked questions in French about the policy from its defenders. Those present were a mix of academic and practitioners.

The meeting was conducted on Chatham House terms, but it gave an interesting indication of both current French and British thinking on the future of the CAP. Over the next week or so, I will reflect on some of the arguments put forward. The overall atmosphere was one of constructive dialogue, although one French speaker had to get in a dig about Britain not having learnt anything from BSE.

Much of the discussion focused on Pillar 2 issues in terms of rural development and how the CAP could be developed to meet the challenge of climate change. Indeed, one argument put forward from the British side was that the distinction between the pillars had become unhelpful and what was needed was a blended rural and environmental policy.

I wouldn't claim that the French participants necessarily bought into this, but I think there was an acceptance that there had to be debate about the underlying principles and goals of the CAP and without this one would not be able to arrive at better policy.

Sunday, March 22, 2009

Why CAP reform happened

The latest Journal of Common Market Studies (vol.47, 2, March 2009) contains an important article exploring the determinants of CAP reform. It is written by Alan Swinbank, a distinguished agricultural economist and a leading proponent of reform and Arlindo Cunha who was chair of the Agriculture Council in 1992 at the time of the MacSharry reform.

They have used a particular method, the Delphi technique, to survey a range of key influentials including Ray MacSharry and Franz Fischler. It allows them to analyse how the drivers of reform have changed over time through the 1992, 1999 and 2003 reforms.

Among the key findings were:
1. The Agriculture Commissioner has a key entreprenurial role (as I argued in my 1997 book on the CAP, 'the Commissioner makes a difference'
2. International trade negotiations were a major driver of reform (in this case providing confirmation of a widely held view)
3. Pressures from environmental groups, and from the media and public opinion, were identified as of growing importance, from a low base in 1992 to real significance in 2003. By contrast, farmers' organisations, the food processing indsutries, consumers and academics were judged to have had little influence on the reform process.

The European Parliament was seen as being of little influence in the reform process. Pressures from the European Council and the finance ministers in ECOFIN were seen to be more important in promoting the reform agenda than the Farm Council. Views on the role of the Farm Council were more divergent than almost any other subject covered in the survey. Some thought it had been conservative for a long time, running behind events, others took the view that it softened the Commission position.

The need for a better relationship between agriculture and the environment was seen as of little importance in 1992 but became particularly important in 2003. The need to find more funds for rural development also became important in 1999 and 2003. Ensuring the international competitiveness of agriculture also showed an increasing importance over the three reforms. Consumer concerns about food safety also became more important over time, but the importance of the 'European Model of Agriculture' seems to have peaked in the Agenda 2000 discussions when it was first presented.

Sunday, March 15, 2009

A disappointing interview

I realise that opposition politicians have to say all things to all persons and jump on any bandgwagon that's going on, but I must say that I found an interview with Nick Herbert, the shadow Defra secretary, in Farmers Weekly a bit disappointing.

It remains to be seen whether the MP for Arundel and South Downs will be Defra secretary in Dave Cameron's government, or even whether Defra will remain in his present form. However, if his thinking is typical of that in the shadow cabinet on agriculture and food matters, it's a bit worrying. It looks as if we could be lurching back towards productionism.

Perhaps that is not entirely surprising as there has always been quite a close informal relationship between large-scale farmers and the Conservative Party. Unlike smaller farmers (who often vote for the Lib Dems or the Nationalists or even Labour), they are overwhelmingly Conservative voters. Many of them hold office in local Conservative associations.

Herbert thus goes for a badger cull, even though the scientific evidence is contradictory and culling can actually spread Bovine TB by disturbing social groups of badgers. It is also unlikely to win the Conservatives friends among the well-organised badger lobby. I would not rule out culling in any circumstances, and it will be interesting to see whether the proposed policy experiment in Wales goes ahead and, if it does, what its effects are. Herbert is chair of the all-party group on badger TB and one would have hoped that he could have been a bit more cautious before trying to score a few partisan points over Hilary Benn, whatever the latter's shortcomings.

What really concerns me is the following set of statements: 'We need to re-address the balance of food production. Total self-sufficiency isn't the right objective, but we do need increased production on the foods we can grow and rear domestically. We are a trading nation with important export markets and, while I'm not a protectionist, it's madness to import food we could be producing ... We should be maximising food production in a sustainable manner.'

Let's try and deconstruct these statements:
1. Addressing the balance of food production. This is part of the current fashion for re-balancing the economy, but I am far from sure that governments should set targets for the share of the economy undertaken by particular sectors.
2. Autarchy is impossible (good), but we should maximise domestic production. How? At a cost to the taxpayer or to the environment?
3. It's madness to import food we could be producing. Supposing that food is cheaper and of an equivalent quality or offers a better price/quality mix. The only way to keep that food out of the UK market is through protectionism which is what the CAP does at the moment.
4. How does one maximise food production in a sustainable manner? Of course, there are policies like Integrated Pest Management that need to be pursued, but there is something of a contradiction in this statement.

On the CAP, Herbert says, 'I would rather make decisions here. There's too much nonsense coming out of Europe and we need to minimise here.' Of course, the Conservatives are Eurosceptic, but I have never heard them advocating withdrawal from the CAP (unlike the CFP).

To be fair, there is a possibility of greater co-responsibility in the post-2013 CAP. Member states might be able to vary the level of subsidy provided. The problem with that approach is that it undermines the internal market which is one of the major achievements of the EU. Herbert's own answer is to have greater scrutiny of regulations in the Commons. There's nothing wrong in that, but I don't think it's the answer.

More thinking needs to be done between now and the election.

Spending money to pay it out

One of the many drawbacks of the CAP is that it costs a lot of money to run which reduces the sums that reach the supposed beneficiaries.

It has now emerged in response to a parliamentary question that each claim for the Single Farm Payment (SFP), irrespective of its value costs £742 to process. Junior Defra minister Jane Kennedy said that the figure was obtained by considering the direct processing costs and the total number of claims received.

A significabt number of SFP claims are worth around half of what it costs to process them, although this should change after the implementation of the Health Check reforms which are intended to cut very small payments to, for example, 'hobby farmers'. There were 14,465 payments under £400 in 2007 and 636 under £50. There were five payments made under £5.

It's a classic example of deadweight loss at the expense of the taxpayer. And it isn't helping farmers.

Thursday, March 12, 2009

Vision for the future of the CAP

The influential Land Use Policy Group will be launching their vision for the future of the CAP after 2013 in Brussels on March 30th. This will be an important event in the long-term effort to clarify thinking about future policy so that it delivers benefits to the environment and rural communities.

The Group wants to progressively transform the CAP so that it is focused more clearly on rewarding the environmental services arising from land management where the market fails to do so. These rewards should reflect the services provided and the costs incurred. The new policy should in the Group's view:

• Have a clear role in mitigating and adapting to climate change, addressing water and biodiversity management and ensuring that farming and forestry have the capacity to deliver environmental security and sustainable production in the long term.

• Promote the sustainable use of the natural resources on which all production depends through the use of good practice guidance together with agreed environmental standards, enforced by risk-based regulation which is binding on all land managers.

• Reward the positive management of existing biodiversity, cultural landscapes, carbon and water resources whilst securing improvements in the environmental quality of all rural land.

• Help reduce the environmental footprint of agriculture and forestry, by targeting capital investment on environmentally beneficial technology and infrastructure.

• Integrate sustainable land management with economic and social policy in order to encourage integrated land use that enables rural communities to benefit from the economic potential of their environment.

• Ensure that progress towards environmental, social and economic objectives is monitored, evaluated and regularly reported on.

The group admits that, 'Transforming the CAP in this way will take time. Any income support retained in the short term should be targeted, with conditions, on those farming systems making the greatest contribution to the management of environmental services for the benefit of society. Research and development should be focused on the challenge of enhancing long-term productivity in ways that reduce environmental impacts and help adapt to climate change.'

The Group states, 'We see our proposals as providing a sustainable justification for a “new contract” between predominantly urban taxpayers and those who manage rural land.' It will be interesting to learn more about the proposals when they become available. The principles are good ones, but to an extent the devil is in detail.

There is also the political problem of overcoming the resurgence of support for productionist solutions, the argument being advanced that protecting the environment is a luxury good that can be set aside in a recession. As evidence accumulates about the effects of climate change and their possible acceleration, future agriculture and rural policy must embed measures to mitigate climate change as a key priority.

Tuesday, March 10, 2009

The future of the CAP

An excellent new site on the future of the CAP is now available organised around the theme of '2020: debating the future of the CAP': CAP 2020 . It has a particular emphasis on environmental issues, but has a broader focus than that.

Backed by the knowledge and expertise of the Institute for European Environmental Policy, this is going to be a key resource for analysts of the CAP. Indeed, it is going to eclipse anything that can be offerd on this blog or even what Jack Thurston has been able to achieve on CAP HealthCheck. He has been reorienting his interests in any case: Health Check

This blog will be kept going as from time to time I may be able to draw on my experience and contribute something to the debate. However, the debate is clearly moving on.

A document I saw recently suggested that the UK Government now has the ambition of phasing out the CAP as a protectionist and subsidy providing policy package by the year 2020. Even before the recession, I would have been sceptical about that ambition, given the strength of the political constellation that defends the CAP.

However, we now face a long and deep recession that it is going to have profound implications for the future role of government. Although the 'regulatory state' will probably be strengthened as a result, whatever government is in power in a particular country, it is going to have to cut public expenditure and raise taxes to pay off debt.

This might seem a golden opportunity to reduce the large sums that are spent on subsidising agriculture. However, even though the debate on the CAP has become more transparent, and significant changes have been achieved in the way in which it is delivered, the politics of bringing about change in the CAP remain challenging and complex. The policy will probably outlive me.

Wednesday, February 25, 2009

Do subsidies keep the cost of food down?

Canberra, ACT: Jack Thurston over at the CAP Health Check blog recently set me a challenge. An argument that is increasingly heard is that farm subsidies are a good thing because they keep the cost of food down at a time of economic recession.

First, it's an inefficient way of delivering the subsidy to those most in need. In so far as the cost is reduced, the benefit reaches the rich as well as the poor. It would be better to ensure that the least well off members of the population had enough money for a balanced and nutritious diet.

Second, the protectionist aspects of the CAP mean that consumers in the EU do not have unhindered access to agricultural goods at world market prices. The EU price is generally above the world price.

What about the single farm payment? Much of the money spent on the CAP does not reach the farmer, but is absorbed by administrative costs (pushed up by the complexity of the system), traders and food processors (just look at how much Tate & Lyle has received) and by criminal organisations.

As a rational decision-maker, the farmer is not going to use the subsidy to lower prices. He may invest in the farm, thereby benefiting suppliers of agricultural equipment which is why they favour the CAP so much. Or he may decide to use the money for personal consumption - or more likely some mixture of both.

Some of my colleagues at Warwick HRI think that food is too cheap. By that they mean that it costs so little that people do not value it enough and the emphasis is on low cost production, regardless of some of the negative externalities. There is something in this, but one has to consider the impact of higher food prices on the constrained budget of the typical family.