Commission backs down on greening agriculture

The European Commission has thrown in the towel on plans to cut climate change emissions in agriculture: https://www.euractiv.com/section/agriculture-food/news/eu-commission-backtracks-on-agricultural-emissions-cuts/

The recent farmer protests across Europe have undoubtedly been a factor, but there has also been concern about far right gains in the upcoming European Parliament elections which could undermine the European project as a whole.  The desire of Urusla von Ley en to secure a second term as Commission president is also part of the context: https://neighbourhood-enlargement.ec.europa.eu/news/speech-president-von-der-leyen-european-parliament-plenary-conclusions-european-council-meetings-2024-02-06_en.

Reducing climate change emissions in agriculture are not an optional extra.   In France, for example, they account for 12 per cent of emissions, far exceeding the contribution of agriculture to GDP or employment. Unfortunately, governments in general have a tendency to back away from effective measures of climate change once they threaten current lifestyles or working patterns.   This is in spite of increasing evidence of  a climate emergency.

Apparently the intention is to have a policy that covers the food sector as a whole which is not without merit but undermined if other measures are dropped.   The Greens are calling for a windfall tax on the profits of agri-food companies.

The plan to halve pesticide use by 2030 is to be dropped.   This is, of course, not directly related to climate change.  It would have an impact on production.   Biological alternatives to synthetics are being developed and are increasing market share, but there are not enough of them and they are not suitable for all crops. This policy might also have been onerous for farmers in terms of form filling.'  According to von Leyen, the pesticides measure has become a symbol of polarization.   Shares in Bayer, the EU's biggest pesticides producer, rose by 2 per cent.

Animal welfare rules are set to be watered down and unpopular (and largely ineffective) set aside requirements abandoned.

Why farmers are in revolt

It's been no surprise to see French farmers blocking motorways.   Such demonstrations are part of the political culture of France and farmers are particularly likely to resort to them.

However, all over Europe farmers are in revolt.   In the Netherlands they have given support to an insurgent party while Polish farmers are threatening to block the border with Ukraine to halt grain shipments.

All this is happening when farmers receive quite generous subsidies with the CAP still accounting for around a third of the EU budget.    Admittedly, input prices went up sharply in recent inflation.

The grievances cited by the farmers are many but among them are imports which under cut them and are produced used pesticides no longer permitted in the EU.   The EU's whole green agenda is seen as a threat, not least because of the form filling burden it imposes.

Four per cent set aside is unpopular as the land still has to be maintained and it does little to boost biodiversity.

Farmers have attracted some support from the public, not least in France where gastronomy is so central to the national identity.

So what is the answer?   There isn't a simple one.  Blocking imports would harm developing countries and put up prices for consumers.  Up to now the CAP has not been modified to take account of climate change and the green agenda was intended to address this and other environmental issues such as biodiversity.   It cannot be abandoned.

Over ten years ago I wrote an article emphasizing the importance of policy instruments in the CAP and the need for them to be better designed - more closely related to policy objectives while imposing fewer transaction costs on farmers.

However, simplification has long been a call in the CAP and not much progress has been made.  Indeed, complexity is almost what defines the policy, deterring policy outsiders from probing too closely.

Alan Matthews has an interesting perspective.   He argues that the evidence shows that farmers have made steady gains in their income from agriculture over the last two decades (since 2005) and agricultural income levels have been at their highest in the past three years, despite higher input costs: http://capreform.eu/what-is-actually-happening-with-agricultural-incomes/

Progress on greening CAP 'stalling

Progress on the greening of the CAP is stalling according to the OECD: https://www.euractiv.com/section/agriculture-food/news/tie-farming-subsidies-to-performance-oecd-tells-eu/

The OECD calls for a more results oriented CAP.

The CAP after 2027

The debate about the CAP post 2027 is starting and Alan Matthews looks in depth at an IEEP paper on the green transition: http://capreform.eu/how-to-advance-the-green-transition-in-the-next-cap-post-2027/

EU in retreat over animal welfare?

The EU is considering scrapping plans to impose regulations designed to improve animal welfare in the farming industry over concerns about the impact it could have on food inflation, according to senior officials.

The European Commission had promised to act after public pressure to stop practices such as the use of cages for livestock, the killing of day-old chicks, and the sale and production of fur. But concerns that the proposed changes could add to food costs, which rose sharply after Russia invaded Ukraine last year, have led Brussels to reconsider the plans.

Three EU officials with knowledge of the matter told the Financial Times that the Commission had dropped the proposals completely — along with a sustainable food law designed to boost green food production across the bloc. But another official said it was reviewing the animal welfare plan and would propose a scaled-back version.   This sounds like a trial balloon to judge reactions.

“Some in the commission are worried about the cost,” said Joe Moran, director of European policy for Four Paws, an animal welfare campaign group. The legislation is among the few remaining parts of the EU’s Green Deal climate package, laid out in 2019 to pivot the bloc to a more sustainable economy. But ahead of EU-wide elections in 2024, conservative politicians have pushed back against the environmental regulations.

Typically, the reaction of farm organizations is to call for more subsidies.  Pekka Pesonen, secretary-general of Copa-Cogeca, the EU farmer’s group, told the FT it could support many of the changes as long as they received financial aid to implement them, and if imported meat was subject to the same standards. That would in effect ban many imports from trading partners such as Brazil, Ukraine and Thailand. Such a measure would also be opposed by trade commissioner Valdis Dombrovskis.

The UK was one of the strongest advocates of animal welfare measures and its voice is no longer heard in the EU.

Green food plan under attack

The European Parliament is due to vote on the Commission's Farm to Fork strategy this week, but is facing a lobbying blitz from farmers, agribusiness and even the US Government.  It is being argued that the strategy will reduce crop yields and force up prices: https://www.politico.eu/article/meps-vote-eus-green-food-plan-farm-to-fork/

Pressure for green farm subsidies is mounting

Pressure for a greening of domestic farm subsidies after Brexit is mounting. Indeed, one might say that it is becoming the new conventional wisdom.

Such pillars of the agricultural establishment as former Defra ministers Caroline Spellman and Richard Benyon, along with agriculture select committee chair and former MEP Neil Parish, are among 36 MPs who have written to Theresa May urging her to shift farm subsidies towards protecting the environment. It may be that they think that this is the best way of maximising continuing payments for farmers.

The influential RSPB is expected to launch its 2016 State of Nature report this week, claiming that intensive farming methods are putting more than 120 species of wildlife at risk.

The NFU is seeking to put food security, which it sees as its strongest subsidy card, back at the heart of the debate. They claim that the food and farming industry is worth £108bn a year, but that includes second stage food processing which is not reliant on domestic ingredients and necessarily has to import ones like cocoa.

Tim Lang from City University admits that farmers are being squeezed by a vicious cycle of increasing costs and lower returns. He says that what we need is less farming and more horticulture.

However, the sector is being hit by a double whammy of the National Living Wage and difficulties in recruiting labour after Brexit. Wages are a particular problem in Scotland where the National Living Wage is not age banded so that you cannot pay less to under 25s. Foreign workers are concerned about Brexit and a large UK supplier of foreign workers to UK agriculture has seen applicants to its Bulgarian office drop by 70 per cent compared with a usual 25 per cent at this time of year.

Greening proposals watered down

Agra Europebroke the news last week that member states are demanding greater flexibility when it comes to the ‘greening’ elements of the proposals for the CAP post-2013.

It has now reported that the proposal for an alternative ‘menu’ with a range of options was said to have been warmly welcomed by a majority of states at a subsequent Special Committee on Agriculture meeting. This could mean that the European Commission’s much-vaunted plan to tie 30 per cent of direct payments to just three EU-wide ‘greening’ measures from 2014 is dead in the water.

As the influential CAP commentator Chris Horseman has argued, it could be said that by not making crystal clear the purpose of ‘greening’ the direct aid payments to farmers under Pillar 1, the EU’s decision-makers have allowed the more influential member states to grasp the nettle and shape a more politically-palatable proposal in its place.

Although the new menu proposal is almost certain to be more acceptable to member states, it is unlikely that they will allow for a more environmentally-sound policy than the original ‘greening’ measures put forward by the Commission and environmental groups such as Birdlife International have already made their feelings known, claiming it will mean 'Europe’s most environmentally harmful farmers to get away without changing anything.'

However, it is arguable that the original proposals were too inflexible and would simply create transaction costs without a favourable environmental outcome. It is not easy to devise cost effective policy instruments for agri-environmental policy that also avoid the 'additionality' problem, i.e., paying farmers for doing something they would have done anyway. Many farmers do see themselves as trustees of the land they own or rent on a long-term basis.

However in the UK the practice of taking on additional parcels of land away from the main farm to make it a commercially viable unit may not help this notion of stewardship.