More regulation urged in French presidential election

One would not expect candidates in the French presidential election to advocate less spending on the CAP or looser regulation, but there are significant differences of emphasis.

President Sarkozy said that he would focus his efforts if re-elected on improving the competitiveness of French farmers. 'Farmers are entrepreneurs, they want to live from work, not from direct aid.' he said.

One might question how far the CAP in its current form encourages them to be enterprising. However, Sarko was clear that France 'would fight against all attempts to reduce the CAP budget.'

Francois Hollande said that basing aid on farm size was unfair to specialist producers who had holdings of only a few hectares. Aid should take employment on farms into account. Needless to say, some French producers would benefit.

He also said that there should be more regulation of supply, saying that there too few policy instruments and specifically regretting the phasing out of milk quotas as a regulatory tool.

Many commentators, of course, favoured getting rid of the rigidities which this system introduced and which did nothing to boost the international competitiveness of the EU's dairy sector. But then that is clearly not a concern for Hollande.

Sarko's regulation crusade makes modest progress

President Sarkozy of France has been on a crusade to regulate agricultural commodity markets and he made modest progress at a two-day G20 conference in Paris last week. France made food security and commodity regulation a centrepiece of its G20 presidency after the 2007-8 food crisis and the rise of more than a third in global food prices over the last year.

France was able to secure a diluted deal to recommend that G20 finance ministers tackle the regulation of financial commodities markets. The communiqué agreed at the end of the Paris summit echoes an earlier deal by finance ministers to study limiting the number of contracts speculators can hold.

However, some argue that commodity markets bring a much needed liquidity to the farm sector. Last week the World Bank took the rare step of encouraging developing countries to buy insurance in the derivatives market against sudden changes in food prices with a deal that would allow the nations to hedge some $4bn worth of commodities.

The World Bank has struck a deal with investment bank JPMorgan who would offer simplified hedging instruments to the private sectors of developing nations, including farming co-operatives and food processing companies. The World Bank would underwrte $200m in credit risks while JPMorgan will take on a similar amount. It is anticipated that other banks will join later. Some critics would, of course, just see this as evidence that the World Bank is hand in glove with global capitalism.

The real problem with the G20 summit is that it backed away from action on biofuels and export bans. The subsidised encouragement of biofuels has boosted food prices. Marie Brill of ActionAid said it was a shame that the G20 had ignored a clear recommendation in a commissioned report from international groups to remove subsidies and mandates for biofuels. There are, of course, powerful interests in the US in particular linked to biofuels which are seen as a means of underpinning American energy security.

On exports, a report from the World Bank and the UN's Food and Agriculture Organisation said that 'export subsidies by major food exporters had strong destabilising effects on international markets' and recommended that the G20 use them as a last resort.

Sarko accepts budget cuts

President Sarkozy has accepted the reality of CAP budget cuts, provided they are offset by greater import protection for farmers: Sarko

Farmers do not lack protection as it is with many tariffs in the three figure range. Sarko says that imported products should be produced to the same standard as in the EU which sounds reasonable enough but in fact is a way of excluding developing country exports altogether.