Saturday, May 28, 2011

MEPs side with Commission

MEPs on the Agriculture Committee have sided with the Commission over the question of scaling farm payments so that bigger farms receive less: Scaling .

Such an idea has always been unpalatable to Britain, Germany and the Czech Republic which have a disproportionate share of larger farms. It was rejected by the Farm Council earlier this year, but farm commissioner Dacian Ciolos has continued to favour it. It has never been clear how practical it is, given that a farming business could be constituted as single different legal entities.

The MEPs assumed that the farm budget will remain the same as it is now. The CAP has some stout defenders but in a time of austerity and with many competing uses for the available funds, it is difficult to see some cutback being avoided. The MEPs also favoured the 'greening' of the policy but it is often Pillar 2 schemes that suffer when the budget has to be cut.

Of course, cutting back payments to larger farms would give some headway in the budget, but not that much. Underlying all this is the perpetual muddle about what the priority ordering of CAP objectives is, but in practice fostering an efficient and competitive European agriculture (which is what most larger farms do) often loses out.

Wednesday, May 25, 2011

Disciplining agricultural support

The WTO may have rules in place to discipline domestic agricultural support, but in practice this is quite difficult given the propensity of countries to evade or fail to fully implement the rules given what they perceive as being their national interests. Three leading agricultural economists have produced a report on the subject which covers four developed countries (including the US, EU and Japan) and four developing countries (including India and China). It can be found here: Agricultural support

The report raises the question of the legitimacy of green box support which has been discussed on this page before. It notes that this has been treated as 'decoupled income support by the United States, the European Union, and China. There are large differences in the levels of such payments. The extent to which decoupled income support affects production remains uncertain but may be consequential. Limits might therefore be envisioned for this type of support to achieve a balanced set of future commitments.'

The EU has always taken the view that the SFP can be protected by putting it in the Green Box, but is always possible that this might be challenged in the WTO's Dispute Settlement Mechanism - although this would incur political costs for the country concerned.

Wednesday, May 11, 2011

Is a radical approach to CAP reform off the agenda?

In the latest issue of Eurochoices the editor John Davis suggests that 'Those who favour a more radical approach to policy development [in the CAP] may now be considered "outliers".' He notes that CAP reform has followed an evolutionary path, which is certainly the case, and that as a consequence the Producer Support Estimate (PSE) has been reduced from around 35 per cent in the late 1990s to about 24 per cent in 2009 which is close to the OECD average (although the US figure is 10 per cent).

Of course, in the absence of any radical impetus, we may not progress much further. Those who take a relatively radical position may help to produce compromise positions which still lead to real progress on reform.

It is interesting that elsewhere in the issue an article by David Harvey and Attila Jambor point out the flaws in the conception that Single Farm Payments should now be interpreted as payments for public goods.

They note, 'In fact, these payments derive from and largely reflect previous coupled and production related support. They are a supplement to production-related market returns, and are treated as such by farmers.' As for cross-compliance it is 'often regarded as an unnecessary and irritating condition attached to deserved support for commercial farming.'

Friday, May 06, 2011

Commission insists on transparency

The Commission has reacted to a court judgement on publishing details on farm subsidies by insisting on a commitment to transparency: Subsidies

While the judgement means that data cannot be published on 'natural persons' (individual farmers) the Commission's view is that it could and should be published about 'legal persons' (companies).

Given that many large farm businesses are constituted as companies, this could mean that taxpayers would still have access to data about the really big payouts. However, much depends on the follow up action taken by member states.