French farm leaders have asked President Sarkozy to organise a Special Summit of EU heads of government on 'EU ambitions for the agriculture and agri-food sectors.' Perhaps the word 'EU' should be replaced by 'French'.
French Farm Minister Michel Barnier has already made it clear that he wants to have an in-depth discussion on the post-2013 CAP at the Informal Farm Council in Annecy in late September. This has received a cool reception from Commissioner Mariann Fischer Boel who told Agra Focus, 'I am not sure that it is properly timed, to discuss this before we finalise the Health Check - but it is always a prerogatve of the Presidency to decide on the discussions during its tenure.'
Agra Focus also notes that during recent months 'French officials - and Farm Minister Michel Barnier in particular - have been omnipresent in Brussels, taking every occasion to raise issues, present memorandums or reports, and launch new initiatives. No one in our editorial team can remember a Member State ever being quite so keen to take office.'
France no doubt sees the food prices 'crisis' and the way that food security has moved up the political agenda as an opportunity to advance its agenda of subsidy and protection.
Thursday, July 10, 2008
Thursday, July 03, 2008
Thinking about food security
The Food Ethics Council has established an enviable reputation for reflective thinking about the challenges facing the food chain. It is therefore interesting to read a report from its Business Forum about food security.
The report points out that one reason that food security has risen up the political agenda is 'in part down to opportunism, as interest groups use a period of crisis to advance their agenda.' Although the report doesn't make this point, this has been particularly evident in relation to the CAP which its defenders seizing on rising food prices as a justification for maintaining subsidies, some even advocating the revival of discredited policy instruments such as intervention buying.
The report points out that 'Raised food prices may also put pressure on the environment, threatening to undo improvements in sustainability that have been achieved in recent decades. On the demand side, some consumers may "trade down", potentially compromising on premium products that make environmental, social and animal welfare claims. On the supply side, higher prices may drive producers to farm harder, potentially compromising biodiversity and other ecological benefits.'
The report commends the notion of 'food capacity' developed as an alternative to 'food security' by City University. In this approach, 'Building production capacity means improving the production base and supply chain governance, promoting labour skills and investing in R & D that supports sustainable agriculture.'
The report points out that one reason that food security has risen up the political agenda is 'in part down to opportunism, as interest groups use a period of crisis to advance their agenda.' Although the report doesn't make this point, this has been particularly evident in relation to the CAP which its defenders seizing on rising food prices as a justification for maintaining subsidies, some even advocating the revival of discredited policy instruments such as intervention buying.
The report points out that 'Raised food prices may also put pressure on the environment, threatening to undo improvements in sustainability that have been achieved in recent decades. On the demand side, some consumers may "trade down", potentially compromising on premium products that make environmental, social and animal welfare claims. On the supply side, higher prices may drive producers to farm harder, potentially compromising biodiversity and other ecological benefits.'
The report commends the notion of 'food capacity' developed as an alternative to 'food security' by City University. In this approach, 'Building production capacity means improving the production base and supply chain governance, promoting labour skills and investing in R & D that supports sustainable agriculture.'
Tuesday, June 24, 2008
Has rural development money been wasted?
This is the question posed by Professor Harald von Witzke, Chair for International Agricultural Trade and Development at Berlin's Humboldt University, in the latest of the Agra Focus series of interviews on the future of agricultural policy.
He argues that a lot of white elephants are being financed with 2nd pillar money because there is more money available than good projects. In particular, some job creation projects are not creating the jobs.
He considers that it would be better to shift money into research and development than rural development policy. Of the increase in production between 1961 and 2000, only 22 per cent was due to an increase in land area. The remaining 78 per cent was due to improvements in yields. That is why increasing productivity remains the key.
He points out that the justification for direct payments to farmers keeps shifting. Initially, he thought they were made in order to compensate farmers for quality regulations they have to observe that competitors outside the EU don't have to observe and that they are being compensated for the production of public goods.
However, he had not seen any analysis that suggested that the amount of public goods and the competitive disadvantage for farmers is as high as €400 a hectare. Farm payments should be reduced to a reasonable level that reflected the public goods being produced by agriculture and represent some compensation for the competitive disadvantage for quality regulations in the EU.
He argues that a lot of white elephants are being financed with 2nd pillar money because there is more money available than good projects. In particular, some job creation projects are not creating the jobs.
He considers that it would be better to shift money into research and development than rural development policy. Of the increase in production between 1961 and 2000, only 22 per cent was due to an increase in land area. The remaining 78 per cent was due to improvements in yields. That is why increasing productivity remains the key.
He points out that the justification for direct payments to farmers keeps shifting. Initially, he thought they were made in order to compensate farmers for quality regulations they have to observe that competitors outside the EU don't have to observe and that they are being compensated for the production of public goods.
However, he had not seen any analysis that suggested that the amount of public goods and the competitive disadvantage for farmers is as high as €400 a hectare. Farm payments should be reduced to a reasonable level that reflected the public goods being produced by agriculture and represent some compensation for the competitive disadvantage for quality regulations in the EU.
Sunday, June 22, 2008
Sarko blames Mandy for referendum result
French president Nicolas Sarkozy has blamed trade commissioner Peter Mandelson's stance on trade for the Irish referendum result. Sarkozy said, 'A child dies of starvation every 30 seconds and the Commission wanted to reduce European agricultural production by 21 per cent during World Trade Organisation talks. This was frankly counter productive.'
Apart from the fact that the Commission has never suggested a specific cut in production, which is beyond its control, only cuts in tariffs and subsidies, developing countries would be able to raise their standard of living if they had a more commercial agriculture which had better access to world markets.
Peter Mandelson hit back, saying'Any suggestion that Europe can turn its back on open trade or reverse globalisation is a dead end for the people of Europe.' He added, 'Europe cannot possibly feed the rest of the world but Europe can help the rest of the world to feed itself by reforming its trade-distoring agricultural policies.'
This does not bode well for the French presidency, although the likely delay to implementation of the Lisbon treaty would also postpone the introduction of co-decision to the CAP - which could make reform more difficult.
Apart from the fact that the Commission has never suggested a specific cut in production, which is beyond its control, only cuts in tariffs and subsidies, developing countries would be able to raise their standard of living if they had a more commercial agriculture which had better access to world markets.
Peter Mandelson hit back, saying'Any suggestion that Europe can turn its back on open trade or reverse globalisation is a dead end for the people of Europe.' He added, 'Europe cannot possibly feed the rest of the world but Europe can help the rest of the world to feed itself by reforming its trade-distoring agricultural policies.'
This does not bode well for the French presidency, although the likely delay to implementation of the Lisbon treaty would also postpone the introduction of co-decision to the CAP - which could make reform more difficult.
Wednesday, June 18, 2008
Animal welfare dilemmas
One of the advances made when Franz Fischler was farm commissioner was to recognise farm animals as sentient beings rather than agricultural products. This provided a basis for treating animal welfare as one of the planks of multifunctionality. However, a vet who is an animal welfare expert suggested in a talk (under Chatham House rules) that I attended that this could face a challenge under WTO rules at some point in the future.
She noted that most intensive, behaviourally restrictive systems had been or were being phased out – battery chickens, veal crates, sow tethers (the latter only in the UK). Things like veal crates were very obvious system which coud readily be understood by the interested public. The animal welfare problems we were running into now are more complex to do with breeds and genotypes of animals and whether they are fit for the systems they are in. Things like stocking density, length of journey, consciousness after being stunned were easy to measure. Which genotype was going to fit into a production system was more complex.
Of course there can be important differences between member states. The ban on sow tethering in the UK resulted from private members' legislation and did not apply in Denmark. Consumers in the UK seemed to be generally unaware of this difference in production methods. The UK pig industry was on its knees and got little reward for its more animal welfare friendly systems.
She noted that most intensive, behaviourally restrictive systems had been or were being phased out – battery chickens, veal crates, sow tethers (the latter only in the UK). Things like veal crates were very obvious system which coud readily be understood by the interested public. The animal welfare problems we were running into now are more complex to do with breeds and genotypes of animals and whether they are fit for the systems they are in. Things like stocking density, length of journey, consciousness after being stunned were easy to measure. Which genotype was going to fit into a production system was more complex.
Of course there can be important differences between member states. The ban on sow tethering in the UK resulted from private members' legislation and did not apply in Denmark. Consumers in the UK seemed to be generally unaware of this difference in production methods. The UK pig industry was on its knees and got little reward for its more animal welfare friendly systems.
Friday, June 13, 2008
The food price 'crisis'
An analysis of the factors underlying the recent increase in food prices is provided in a Commission document: Prices
The document notes that the largest increases in agricultural prices are observed in the wheat and rice markets, where the two major causes commonly used in the press to explain the recent price increases - demand for biofuels and increased demand in China/India - have had the mallest impact. For rice and wheat, supply side factors - both in terms of unfavourable climate conditions and lower yield growth - are the main causes.
In the cases of maize and soya, however, strong demand for biofuels and increasing imports in China explain most of the price rises. The failure of wheat and rice production to respond to increased market demand is in contrast to development in the maize sector.
Slow yield growth, most notably for wheat, has been an important factor. Combined with short term weather factors, world stocks have fallen to significantly low levels, stimulating the sharp increase in prices. Maize and soybean markets have been mainly driven by a strong growth in global demand - mainly for increased meat consumption (through feed use) and to a lesser extent for biofuels use. In 2007, the Australian drought, high temperatures in central and eastern Europe, and a cold spring in Ukraine and Russia substantially reduced harvests.
The failure of agricultural output to keep pace with demand growth, the Commission says, is likely to be linked globally to lack of public research in agriculture - notably in seed improvement, as well as to the rise in production cists and the decline in farming profitability (until recently) in developed countries. Environmental legislation in some countries, particularly in Europe, is also said to be likely to be hampering production increases.
The document notes that the largest increases in agricultural prices are observed in the wheat and rice markets, where the two major causes commonly used in the press to explain the recent price increases - demand for biofuels and increased demand in China/India - have had the mallest impact. For rice and wheat, supply side factors - both in terms of unfavourable climate conditions and lower yield growth - are the main causes.
In the cases of maize and soya, however, strong demand for biofuels and increasing imports in China explain most of the price rises. The failure of wheat and rice production to respond to increased market demand is in contrast to development in the maize sector.
Slow yield growth, most notably for wheat, has been an important factor. Combined with short term weather factors, world stocks have fallen to significantly low levels, stimulating the sharp increase in prices. Maize and soybean markets have been mainly driven by a strong growth in global demand - mainly for increased meat consumption (through feed use) and to a lesser extent for biofuels use. In 2007, the Australian drought, high temperatures in central and eastern Europe, and a cold spring in Ukraine and Russia substantially reduced harvests.
The failure of agricultural output to keep pace with demand growth, the Commission says, is likely to be linked globally to lack of public research in agriculture - notably in seed improvement, as well as to the rise in production cists and the decline in farming profitability (until recently) in developed countries. Environmental legislation in some countries, particularly in Europe, is also said to be likely to be hampering production increases.
Sunday, June 08, 2008
GM feed ban crisis
A row over the banning of GM feed by British supermarkets raises wider issues about how far new technology can be used to solve problems of world food shortage. There have been calls for a second 'green revolution', but the first green revolution was based on intensive use of fertilisers and irrigation. Fertilisers are rocketing in price while irrigation is a less environmentally friendly option in a time of climate change.
The next technological revolution is likely to involve GM crops, but they face intense resistance in Northern Europe with the concerns of consumers fanned by environmental groups. This applies as much to imports as to local production. The phrase 'Frankenstein foods' has lodged itself in consumers' minds.
Spiralling food prices are placing supermarkets under pressure from farmers' leaders to put poultry fed with genetically modified products back on the shelves. The English National Farmers' Union has held talks with the product managers of all the major supermarkets to explain that shortages of non-GM soyabeans - the key protien source for poultry - was making it both extremely expensive and increasingly difficult to source the GM-free products demanded by retailers.
There is no sign yet that the campaign has forced a change in policy. Supermarkets are very jealous of their green image which they see as giving them an edge over competitors, particular in value added markets where price is not the only differntiator. Sainsbury's have sad that they are investigating 'potential sustainable solutions.' Two of the greenest supermarkets, Marks and Spencer and Waitrose, have said that they will not change their policy.
As the world's biggest exporters have devoted more land to GM crops, the cost of unmodified soyabeans is rising. British farmers are currently paying around £276 per tonne for GM soya and £293/t for non-GM. With the US, the world's biggest producer, now 95 per cent GM, the UK has looked to Brazil for a GM-free alternative. But Brazil, the world's second biggest soya exporter, is expected to increase GM plantings from 54 per cent of its total crop to 65 per cent next year and 80 per cent over the next decade.
The next technological revolution is likely to involve GM crops, but they face intense resistance in Northern Europe with the concerns of consumers fanned by environmental groups. This applies as much to imports as to local production. The phrase 'Frankenstein foods' has lodged itself in consumers' minds.
Spiralling food prices are placing supermarkets under pressure from farmers' leaders to put poultry fed with genetically modified products back on the shelves. The English National Farmers' Union has held talks with the product managers of all the major supermarkets to explain that shortages of non-GM soyabeans - the key protien source for poultry - was making it both extremely expensive and increasingly difficult to source the GM-free products demanded by retailers.
There is no sign yet that the campaign has forced a change in policy. Supermarkets are very jealous of their green image which they see as giving them an edge over competitors, particular in value added markets where price is not the only differntiator. Sainsbury's have sad that they are investigating 'potential sustainable solutions.' Two of the greenest supermarkets, Marks and Spencer and Waitrose, have said that they will not change their policy.
As the world's biggest exporters have devoted more land to GM crops, the cost of unmodified soyabeans is rising. British farmers are currently paying around £276 per tonne for GM soya and £293/t for non-GM. With the US, the world's biggest producer, now 95 per cent GM, the UK has looked to Brazil for a GM-free alternative. But Brazil, the world's second biggest soya exporter, is expected to increase GM plantings from 54 per cent of its total crop to 65 per cent next year and 80 per cent over the next decade.
Thursday, June 05, 2008
Back to the bad old ways
In a paper I gave in Norwich last week, I rather optimistically expressed the view that even if the current 'food crisis' shored up existing protectionism and subsidies in the European Union, we would not see a reversion to old, discredited policy instruments. One such instrument I had in mind was intervention buying which created a risk free market for farmers and produced the notorious grain and butter mountains.
I may have spoken too soon. The latest edition of Food Ethics produced by the estimable Food Ethics Council is devoted entirely to the 'food crisis', although quite what the food crisis is remains undefined. However, the editorial calls for 'rebuilding public stocks, which provide an important buffer against price volatility.'
Inevitably, Moses gets brought into one of the articles. Another article calls for 'public stocks .. to be re-established, with planning for local, national and regional roles. Such stocks provide an important buffer against price spikes and food insecurity.' Of course, they also provide a buffer between consumers and producers because the price mechanism cannot function as a transmitter of information. The writer does admit that they are expensive and there is 'lost theoretical market efficiency'.
That lost efficiency is not theoretical in the abstract sense of the word, it has real implications for whether we make optimal use of scarce resources.
I may have spoken too soon. The latest edition of Food Ethics produced by the estimable Food Ethics Council is devoted entirely to the 'food crisis', although quite what the food crisis is remains undefined. However, the editorial calls for 'rebuilding public stocks, which provide an important buffer against price volatility.'
Inevitably, Moses gets brought into one of the articles. Another article calls for 'public stocks .. to be re-established, with planning for local, national and regional roles. Such stocks provide an important buffer against price spikes and food insecurity.' Of course, they also provide a buffer between consumers and producers because the price mechanism cannot function as a transmitter of information. The writer does admit that they are expensive and there is 'lost theoretical market efficiency'.
That lost efficiency is not theoretical in the abstract sense of the word, it has real implications for whether we make optimal use of scarce resources.
Saturday, May 31, 2008
Rethinking Less Favoured Areas
The Less Favoured Areas directive is one of the few examples of British influence on the design of the CAP. It was originally conceived as the Mountain Areas Directive with France pressing for a definition that would have excluded Britain's hills and uplands. But the British emphasis on latitude rather than altitude won the day in 1975. Other member states saw the Less Favoured Areas directive as a good route to justify more cash for their farmers and by 1995 56 per cent of the utilised area of the EU was designated as less favoured. In Scotland, 85 per cent of the farmed area has LFA status.
Not surprisingly, the Commission thinks that too many farmers get rewarded under the directive. As part of the 2005 reform of rural development policy, it tried to remove all socio-economic considerations from the delineation of the LFAs and to cut the rates of payment. But this was fiercely resisted by many member states and the issue was 'parked'.
Now the Commission has come up with fresh proposals for a new LFA system by the end of 2008. A consultation suggests only four options:
Option 1. Maintain the status quo linking LFAs to areas of natural handicap, but excluding socio-economic criteria. This option is effectively dimissed by the Commission as failing to meet Courts of Aufitors criticisms, but farming unions are saying it is the only one that is acceptable, but even then consideration must be given to socio-economc criteria.
Option 2. Set certain 'common criteria' for LFAs relating to natural handicaps, such as temperature, soil drainage and slope.
Option 3. As Option 2, but with each farm assessed for its environmental contribution.
Option 4. As Option 3, but with payments further limited to High Nature Value farmland.
COPA has expressed the hope that because the issue is so complex it will get bogged down in the decision-making process. However, the time has surely come to take a long, hard look at these arrangements and to see whether they deliver realistic objectives.
Not surprisingly, the Commission thinks that too many farmers get rewarded under the directive. As part of the 2005 reform of rural development policy, it tried to remove all socio-economic considerations from the delineation of the LFAs and to cut the rates of payment. But this was fiercely resisted by many member states and the issue was 'parked'.
Now the Commission has come up with fresh proposals for a new LFA system by the end of 2008. A consultation suggests only four options:
Option 1. Maintain the status quo linking LFAs to areas of natural handicap, but excluding socio-economic criteria. This option is effectively dimissed by the Commission as failing to meet Courts of Aufitors criticisms, but farming unions are saying it is the only one that is acceptable, but even then consideration must be given to socio-economc criteria.
Option 2. Set certain 'common criteria' for LFAs relating to natural handicaps, such as temperature, soil drainage and slope.
Option 3. As Option 2, but with each farm assessed for its environmental contribution.
Option 4. As Option 3, but with payments further limited to High Nature Value farmland.
COPA has expressed the hope that because the issue is so complex it will get bogged down in the decision-making process. However, the time has surely come to take a long, hard look at these arrangements and to see whether they deliver realistic objectives.
Saturday, May 24, 2008
Health check contains few surprises
The CAP Health Check proposals have been trailed and leaked so extensively that the package contained few suprises. As Gareth Morgan, the head of agriculture policy at RSPB commented, 'The CAP is long past its use-by date and the Commission should be creating a policy fit for 21st century challenges.'
A few points are worth picking out. A new definition of 'farmer' is to be introduced to prevent companies with marginal farming interests from claiming subsidy. It will be interesting to see how 'mud on the boots' is translated into Community legal jargon.
The idea of capping payments has been dropped as anticipated. However, there will be higher compulsory modulation levels for larger farms: an extra 3 per cent for farms receiving €100,000 a year, 6 per cent for those receiving more than €200,000 and 9 per cent for those receiving more than €300,000. Predictably, this hasn't gone down too well in Britain.
The so-called Article 68 measures are a concern given that they are intended to buy off French opposition. These will allow member states to skim another 10 per cent off Single Farm Payments to pay for certain strategic programmes. The chances are that some countries will use this money for targeted, production-linked subsidies rather than environmental programmes.
On the positive side, the money could be used for crop insurance schemes and animal disease programmes. But it is also available to help milk, sheep and beef producers in disadvantaged regions like France's Massif Central. As a French farmer was saying on television earlier this week without such help there would be no sheep left in France. Would this be a national catastrophe?
A few points are worth picking out. A new definition of 'farmer' is to be introduced to prevent companies with marginal farming interests from claiming subsidy. It will be interesting to see how 'mud on the boots' is translated into Community legal jargon.
The idea of capping payments has been dropped as anticipated. However, there will be higher compulsory modulation levels for larger farms: an extra 3 per cent for farms receiving €100,000 a year, 6 per cent for those receiving more than €200,000 and 9 per cent for those receiving more than €300,000. Predictably, this hasn't gone down too well in Britain.
The so-called Article 68 measures are a concern given that they are intended to buy off French opposition. These will allow member states to skim another 10 per cent off Single Farm Payments to pay for certain strategic programmes. The chances are that some countries will use this money for targeted, production-linked subsidies rather than environmental programmes.
On the positive side, the money could be used for crop insurance schemes and animal disease programmes. But it is also available to help milk, sheep and beef producers in disadvantaged regions like France's Massif Central. As a French farmer was saying on television earlier this week without such help there would be no sheep left in France. Would this be a national catastrophe?
Sunday, May 18, 2008
Farm land price boom
The cost of agricultural holdings across the EU has risen to record levels. However, this is not entirely good news for farmers. It makes it even harder for those who do not inherit to enter the industry, while only farmers wanting to retire can cash in. Tenant farmers face higher prices making life more difficult for them.
Several funds have been set up to buy farmland, particularly in the UK where prices have risen 40 per cent over the last year. Manchester-based group Braemar had to close a fund it launched after two weeks. Higher commodity prices have also attracted institutional investors such as Blackrock and Schroeder.
Good quality arable land in the UK is fetching £6,000-£8,500 an acre in many parts of the country. Buyers from Denmark and Ireland have been piling into the UK for several years. Some estimates suggest that as many as 30 to 40 per cent of buyers in the eastern countries of England are coming from overseas.
Land prices fell between 1997 and 2003 in the UK after the BSE and foot and mouth crises. The price could rise to £8,000 - £10,000 an acre, close to the price in parts of Denmark, but industry experts predict that it will rise more slowly from now. One factor who has been 'lifestyle buyers' who run farms as hobbies rather than businesses, while field sports are a factor in purchases within reach of London.
There are considerable variations in land prices across the EU. In Lithuania a hectare of agricultural land cost €734 in 2006 compared with €164,340 in Luxembourg, the most expensive country. In Poland the average price rose 60 per cent between 2003 and 2006. Foreigners cannot buy land in Poland until 2016 but it is easy for investors to set up a local company to bypass the rules.
In France land is about €6,000 a hectare because it must be offered first to young local farmers. However, land prices are still 50 per cent up on 2003.
Several funds have been set up to buy farmland, particularly in the UK where prices have risen 40 per cent over the last year. Manchester-based group Braemar had to close a fund it launched after two weeks. Higher commodity prices have also attracted institutional investors such as Blackrock and Schroeder.
Good quality arable land in the UK is fetching £6,000-£8,500 an acre in many parts of the country. Buyers from Denmark and Ireland have been piling into the UK for several years. Some estimates suggest that as many as 30 to 40 per cent of buyers in the eastern countries of England are coming from overseas.
Land prices fell between 1997 and 2003 in the UK after the BSE and foot and mouth crises. The price could rise to £8,000 - £10,000 an acre, close to the price in parts of Denmark, but industry experts predict that it will rise more slowly from now. One factor who has been 'lifestyle buyers' who run farms as hobbies rather than businesses, while field sports are a factor in purchases within reach of London.
There are considerable variations in land prices across the EU. In Lithuania a hectare of agricultural land cost €734 in 2006 compared with €164,340 in Luxembourg, the most expensive country. In Poland the average price rose 60 per cent between 2003 and 2006. Foreigners cannot buy land in Poland until 2016 but it is easy for investors to set up a local company to bypass the rules.
In France land is about €6,000 a hectare because it must be offered first to young local farmers. However, land prices are still 50 per cent up on 2003.
Germany backs 'European preference'
Germany has signalled its support for France's 'European preference' programme, possibly reflecting a mood in Germany which is critical of business and market liberalism. Horst Seehofer, Germany's farm minister, has said that China, India and the US should be forced to adopt higher environmental and health standards if they want to export to the EU. Poorer developing countries would not be affected.
British Chancellor Alastair Darling has claimed that the CAP is exacerbating the world food crisis. He is calling for the dismantling of the CAP, claiming it is costing consumers in Europe billions of pounds a year in higher food bills, while hurting farmers in the developing world.
Mr Seehofer dismissed Alastair Darling's arguments as 'complete rubbish'. We can rely on a lively debate, if not a very constructive or productive one.
British Chancellor Alastair Darling has claimed that the CAP is exacerbating the world food crisis. He is calling for the dismantling of the CAP, claiming it is costing consumers in Europe billions of pounds a year in higher food bills, while hurting farmers in the developing world.
Mr Seehofer dismissed Alastair Darling's arguments as 'complete rubbish'. We can rely on a lively debate, if not a very constructive or productive one.
Saturday, May 17, 2008
Richest farmers benefit from CAP funding
An approximate 80:20 Pareto rule continues to apply to the funding of EU farmers from the CAP. Roughly 82 per cent of CAP farms receiving direct payments in 2006 received less than €5000 whilst just 23,000 of the 7.33 million farms claiming aid received more than €100,000.
The Czech Republic heads the proportion of farms receiving more than €100,000 at 3.5 per cent followed by the UK with 2.9 per cent and Slovakia with 1.9 per cent. In total 84.5% of CAP funds went to just 17.9 per cent of farms.
The Czech Republic heads the proportion of farms receiving more than €100,000 at 3.5 per cent followed by the UK with 2.9 per cent and Slovakia with 1.9 per cent. In total 84.5% of CAP funds went to just 17.9 per cent of farms.
Thursday, May 15, 2008
Loss of pesticides threatens EU food production
European arable cropping could be made uneconomic if proposed EU legislation to reform pesticides approvals is passed, a group of leading European scientists and researchers have warned. Drawn from seven countries, they issued a 'Declaration of Ljubljana' warning that the sustainability of European farming was at risk.
The ongoing EU re-registration process has already eliminated 530 out of 952 existing products, but the revision of that legislation could go much further. When the European Parliament discussed an EU Commission proposal for the revision of 91/414 in October 2007, they added criteria that would potentially remove 70 to 85 per cent of the remaining active substances.
I have some personal knowledge of this subject as I am on a stakeholders committee concerned with the implementation strategy of the Pesticides Safety Directorate. At a recent meeting, there was a discussion of the fact that we were now down to two actives to deal with carrot fly and one of those is not entirely desirable in terms of its impact on watercourses.
Pesticides are toxic and they need stringent regulation, which they receive. However, there has to be a balance in terms of food security, the availability of fruit and vegetables in particular at affordable prices and the desirability of a healthy and balanced diet. New detection methods can pick up miniscule residues which pose no threat to health. Indeed, where there are problems, they tend to be with produce imported from outside the EU.
Biopesticides can make a contribution, particularly in protected crops: See our RELU research project page Biopesticides . Despite what advocates claim, all our food needs cannot be met economically through organic production (which in any case uses so-called 'traditional compounds'). Synthetic pesticides are a precious resource that need to be used sparingly within a philosophy of integrated pest management. But we couldn't do without them.
The ongoing EU re-registration process has already eliminated 530 out of 952 existing products, but the revision of that legislation could go much further. When the European Parliament discussed an EU Commission proposal for the revision of 91/414 in October 2007, they added criteria that would potentially remove 70 to 85 per cent of the remaining active substances.
I have some personal knowledge of this subject as I am on a stakeholders committee concerned with the implementation strategy of the Pesticides Safety Directorate. At a recent meeting, there was a discussion of the fact that we were now down to two actives to deal with carrot fly and one of those is not entirely desirable in terms of its impact on watercourses.
Pesticides are toxic and they need stringent regulation, which they receive. However, there has to be a balance in terms of food security, the availability of fruit and vegetables in particular at affordable prices and the desirability of a healthy and balanced diet. New detection methods can pick up miniscule residues which pose no threat to health. Indeed, where there are problems, they tend to be with produce imported from outside the EU.
Biopesticides can make a contribution, particularly in protected crops: See our RELU research project page Biopesticides . Despite what advocates claim, all our food needs cannot be met economically through organic production (which in any case uses so-called 'traditional compounds'). Synthetic pesticides are a precious resource that need to be used sparingly within a philosophy of integrated pest management. But we couldn't do without them.
Sunday, May 11, 2008
EU rejects French call to limit food imports
France and the European Commission have clashed over the future of farming with the European Commission dismissing French calls to curtail food imports as self-defeating and backward-looking. 'Autarky is not the future. We are not aiming at a closed market where we are self-sufficient,' a spokesman for farm commissioner Mariann Fischer Boel stated.
French farm minister Michel Barnier favours domestic production and requiring imports to match EU welfare needs - moves the spokesman said would invite retaliation: 'It is not in our interests to become a fortress. If we erect new barriers, so will our trade partners,' he said. 'We are a major trader in agricultural products. We are the biggest exporter and importer of farm products in the world. What we believe in is trade. We are seeing increasing exports of our high-quality food products.'
In 2007, the EU exported €75bn of produce and imported €77.3bn. France's trade surplus with non-EU members was €8.3bn.
New protectionism
Imports had to meet basic health and safety standards, said Ms Ficsher Boel's spolesman, adding 'That does not mean we can impose on our trading partners to put in place exactly the same legislation we have.'
However, French proposals on 'European preference' that are expected to be circulated to agriculture ministers next month were gaining support. 'There is a growing feeling it is only fair and reasonable that imports are subjected to the same technical standards as our own producers,' an EU official said. The point is, of course, that it would be difficult for developing countries to meet these standards, and for many of them agricultural exports offer the best route to prosperity which would then enable them to import more manufactured goods.
EU farmers complain that their costs are rising because of increased environmental and animal welfare rules that the rest of the world do not have to meet. After a recent vocal campaign by cattle farmers, the Commission restricted imports of beef from Brazil, where foot-and-mouth disease is rampant.
The Barnier interview
The present debate was started by an interview with Michel Barnier in the Financial Times. He recommended that Africa and Latin America should adopt their own version of the CAP which would be the first time a policy disaster has been exported. However, Mr Barnier believes that the developing world should form self-sufficient regional blocs with a redirection of development aid.
Mr Barnier claimed, 'What we are now witnessing in the world is the consequence of too much free-market liberalism. We can't leave feeding people to the mercy of the market. We need a public policy, a means of stabilisation and intervention.'
This reveals the fundamental difference between British and French perspectives. Britain has a history of liberalism, France one of state intervention and protectionism. From a British perspective, the market is an effective way of transmitting consumer preferences through the price mechanism. The market should be able to supply food like any commodity. The only qualification is the effect that weather fluctuations have on production. But this does not justify an elaborate apparatus of subsidy and protection, rather the development of new and innovative mechanisms for offsetting risk.
Predictably, Mr Barnier criticised the WTO, stating that he was 'not sure' that it was 'the right place to discuss the relationship between food and agriculture.' He noted that the agriculture budget would be 37 per cent of the EU's budget, down from 81 per cent in 1985. However, that is still a considerable multiple of the sector's contribution, even if one adds in food processing which uses some imported ingredients anyway.
Farmers are already responding to high prices and strong demand for grain. According to the US Department of Agriculture, the world will produce a record 656m tonnes of wheat in the year starting in July, up 8.2 per cent on the previous year. However, this may not be enough to restore a comfortable supply buffer to the world market given that global wheat stocks have shrunk to their lowest level since 1978.
However, the report did project that global soyabean stocks would decline. There has been a large increase in US land devoted to soyabean production, but global demand is rising even faster. Moreover, corn (maize) output is expected to fall 7.3 per cent this year while demand for ethanol use is expected to rise by one-third. Ethanol will eat up 33 per cent of next year's US corn harvest, up from 22.9 per cent in 2007-8. All this suggests continuing upward pressure on prices.
French farm minister Michel Barnier favours domestic production and requiring imports to match EU welfare needs - moves the spokesman said would invite retaliation: 'It is not in our interests to become a fortress. If we erect new barriers, so will our trade partners,' he said. 'We are a major trader in agricultural products. We are the biggest exporter and importer of farm products in the world. What we believe in is trade. We are seeing increasing exports of our high-quality food products.'
In 2007, the EU exported €75bn of produce and imported €77.3bn. France's trade surplus with non-EU members was €8.3bn.
New protectionism
Imports had to meet basic health and safety standards, said Ms Ficsher Boel's spolesman, adding 'That does not mean we can impose on our trading partners to put in place exactly the same legislation we have.'
However, French proposals on 'European preference' that are expected to be circulated to agriculture ministers next month were gaining support. 'There is a growing feeling it is only fair and reasonable that imports are subjected to the same technical standards as our own producers,' an EU official said. The point is, of course, that it would be difficult for developing countries to meet these standards, and for many of them agricultural exports offer the best route to prosperity which would then enable them to import more manufactured goods.
EU farmers complain that their costs are rising because of increased environmental and animal welfare rules that the rest of the world do not have to meet. After a recent vocal campaign by cattle farmers, the Commission restricted imports of beef from Brazil, where foot-and-mouth disease is rampant.
The Barnier interview
The present debate was started by an interview with Michel Barnier in the Financial Times. He recommended that Africa and Latin America should adopt their own version of the CAP which would be the first time a policy disaster has been exported. However, Mr Barnier believes that the developing world should form self-sufficient regional blocs with a redirection of development aid.
Mr Barnier claimed, 'What we are now witnessing in the world is the consequence of too much free-market liberalism. We can't leave feeding people to the mercy of the market. We need a public policy, a means of stabilisation and intervention.'
This reveals the fundamental difference between British and French perspectives. Britain has a history of liberalism, France one of state intervention and protectionism. From a British perspective, the market is an effective way of transmitting consumer preferences through the price mechanism. The market should be able to supply food like any commodity. The only qualification is the effect that weather fluctuations have on production. But this does not justify an elaborate apparatus of subsidy and protection, rather the development of new and innovative mechanisms for offsetting risk.
Predictably, Mr Barnier criticised the WTO, stating that he was 'not sure' that it was 'the right place to discuss the relationship between food and agriculture.' He noted that the agriculture budget would be 37 per cent of the EU's budget, down from 81 per cent in 1985. However, that is still a considerable multiple of the sector's contribution, even if one adds in food processing which uses some imported ingredients anyway.
Farmers are already responding to high prices and strong demand for grain. According to the US Department of Agriculture, the world will produce a record 656m tonnes of wheat in the year starting in July, up 8.2 per cent on the previous year. However, this may not be enough to restore a comfortable supply buffer to the world market given that global wheat stocks have shrunk to their lowest level since 1978.
However, the report did project that global soyabean stocks would decline. There has been a large increase in US land devoted to soyabean production, but global demand is rising even faster. Moreover, corn (maize) output is expected to fall 7.3 per cent this year while demand for ethanol use is expected to rise by one-third. Ethanol will eat up 33 per cent of next year's US corn harvest, up from 22.9 per cent in 2007-8. All this suggests continuing upward pressure on prices.
Wednesday, April 23, 2008
Ag Committee To Give It Large
The European Parliament's Agriculture Committee is preparing to flex its muscles with the new powers given to it in the Lisbon Trety, which will give the committee co-decision in many areas. MEPs on the committee have served notice on the Commission that they would battle to get their full powers under the new Treaty, fighting issue in the European Court of Justice if necessary.
The Committee also decided to have a turf fight with the Environment, Public Health and Food Safety Committee to get the lead on related dossiers.
UK MEP Neil Parish, who chairs the Agriculture Committee, said that after the Parliament elections next year, he expected there to be stronger demand for membership of the Committee because of its new powers. The key question is: will these new members represent rural constituencies, or have links to the farming and food industries, like many existing members. Or will they be interested in pushing forward the reform debate forward?
The Committee also decided to have a turf fight with the Environment, Public Health and Food Safety Committee to get the lead on related dossiers.
UK MEP Neil Parish, who chairs the Agriculture Committee, said that after the Parliament elections next year, he expected there to be stronger demand for membership of the Committee because of its new powers. The key question is: will these new members represent rural constituencies, or have links to the farming and food industries, like many existing members. Or will they be interested in pushing forward the reform debate forward?
Sunday, April 20, 2008
Colbert lives!
France has launched a political campaign to restore protectionism to the CAP. French farm minister Michel Barnier has called on Europe to establish a food security plan and to resist further cuts in the EU agriculture budget. The EU should resist WTO pressure to cut farm subsidies. In contrast, Gordon Brown has called for a world trade deal that cuts subsidies to richer countries.
One might think that tighter supply and demand, producing higher food prices would mean that farmers would need fewer subsidies to carry out the commercial aspect of their work as they would be better placed to obtain a return from the market. Admittedly, the buying power of supermarkets that allows them to be price makers and often makes farmers price takers is an issue, especially in the UK, but what that requires is a more effective application of competition policy. Input costs are also rising, but smarter farmers are working out what they can do to use fertilisers more sparingly and more intelligently.
As the Financial Times commented last week, 'The bias towards home production in richer countries betrays ... a historic affection for farming that is often bound up with emotional attachments to culture, cuisine and landscape.' Interventionist measures that boost farmers' incomes may create shortages in global markets, accentuating the problems of those who have to depend on imports: what has been called a 'starve your neighbour' policy.
France says that the EU should increase aid to farmers in developing countries, but that often does not really help the farmers themselves and is really a political fig leaf for continuing the European subsidies game. Just as it seemed as if the skids were under subsidies, a new set of justifications has appeared.
One might think that tighter supply and demand, producing higher food prices would mean that farmers would need fewer subsidies to carry out the commercial aspect of their work as they would be better placed to obtain a return from the market. Admittedly, the buying power of supermarkets that allows them to be price makers and often makes farmers price takers is an issue, especially in the UK, but what that requires is a more effective application of competition policy. Input costs are also rising, but smarter farmers are working out what they can do to use fertilisers more sparingly and more intelligently.
As the Financial Times commented last week, 'The bias towards home production in richer countries betrays ... a historic affection for farming that is often bound up with emotional attachments to culture, cuisine and landscape.' Interventionist measures that boost farmers' incomes may create shortages in global markets, accentuating the problems of those who have to depend on imports: what has been called a 'starve your neighbour' policy.
France says that the EU should increase aid to farmers in developing countries, but that often does not really help the farmers themselves and is really a political fig leaf for continuing the European subsidies game. Just as it seemed as if the skids were under subsidies, a new set of justifications has appeared.
Stefan speaks out
Professor Stefan Tangermann, Head of the OECD Department for Trade and Agriculture
Before he joined OECD, I would run into agricultural economist Stefan Tangermann from time to time at conferences. I was always impressed by his contributions so it is interesting to read his interview with Agra Focus, one of the latest in an excellent series. In a long interview, he had many interesting points to make and the publication itself is essential reading for those with a serious interest in agriculture and food policy. Below a few of his key themes are picked out.
Helping remote regions
This is a big item with the French presidency on the horizon. The French want to retain 'coupled' payments to areas like the Massif Central. Tangermann points out that coupling makes it harder for people to quit production if they want to. If one wants to maintain agricultural activity, a more efficient way of doing that would be to pay people to keep the land 'open' which means not allowing anything to grow above a given height. If this led to the disappearance of cows (or sheep in the UK case) tourists should be prepared to pay for them - it already happens in Austria, Tangermann points out.
Targeting
Payments need to be targeted, argues Tangermann (and the OECD). Payments need to be targeted towards specific objectives that have been well defined, and according to how much the farmer contributes to attaining these specific objectives. 'So it's a three-step process that our paradigm uses - old-fashioned directly coupled policies move to decoupling, and from decoupling to targeting. And in terms of the structure of EU policies, you find targeted policies much more in the 2nd pillar than the 1st pillar.'
Food security and biofuels
Biofuels add a further element of demand for agriculture products (and implicitly one that is under the control of policy-makers, unlike increasing demand in India and China). 'Moreover, it is extra demand which is very price-inelastic. In other words, demand is there irrespective of what the price is of these products.'
Tangermann states that according to OECD estimates the achievement of the EU's binding target of replacing 10 per cent of road fuel by biofuels would require something like 50 per cent of the area that is under the 'grand cultures' in the EU, i.e., cereals, oilseeds and sugar. [It should be noted that the EU estimate is much lower at 20 per cent]. 'So, all in all, the benefits of the current biofuels policy are relatively small, but the costs are obvious.'
New technology
Tangermann argues, 'It is high time that we put more resources into agricultural research and technology development. We must also make a better and more successful effort to explain to consumers and the general public what the benefit-risk ratio is in modern biotechnology and their products. People in Europe need to be aware that is a big luxury to say we don't want this modern food on our plates. And it is a luxury that will become more and more expensive.'
Wednesday, April 16, 2008
Who gets the money?
We are used to statistics that tell us that France is the biggest beneficiary of the CAP, but a novel way of looking at beneficiaries is to count subsidies per hectare. The EU-15 average is nearly €300 per hectare, but even extrapolating forward to full payments, it is less than €200 per ha for the twelve new member states, Latvia receiving less than €100 per ha.
This is less than 20 per cent of the rate in Greece and Malta, the top beneficiaries per hectare. Of course, Malta has a small agricultural area and the Greek figure reflects the high rate of aid formerly available for tobacco. It is interesting that the liberal (on the CAP) states of Denmark and the Netherlands receive nore than €400 per ha, along with Belgium. The UK is below the median.
In the EU-25, the average SFP payment is equivalent to €6000 a holding, but in Slovakia it is nearly €32 000 a farm and in the Czech Republic €50 000 a farm. The UK average is less than €25 000 a farm. Malta and Cyprus receive the smallest payments and there are eight countries in all, including Italy, which average less than €3000 a farm.
This is less than 20 per cent of the rate in Greece and Malta, the top beneficiaries per hectare. Of course, Malta has a small agricultural area and the Greek figure reflects the high rate of aid formerly available for tobacco. It is interesting that the liberal (on the CAP) states of Denmark and the Netherlands receive nore than €400 per ha, along with Belgium. The UK is below the median.
In the EU-25, the average SFP payment is equivalent to €6000 a holding, but in Slovakia it is nearly €32 000 a farm and in the Czech Republic €50 000 a farm. The UK average is less than €25 000 a farm. Malta and Cyprus receive the smallest payments and there are eight countries in all, including Italy, which average less than €3000 a farm.
If you had an empty sheet of paper ...
It is often observed that if you had an empty sheet of paper, you wouldn't design the Common Agricultural Policy as it is today. Of course, you probably wouldn't create it at all.
Agra Focus has been having a little bit of springtime fun thinking up a new name for the CAP on the lines of 'a rose by any other name.' The two most plausible suggestions to come forward were FARMER (Food, Agriculture and Rural Measures in the European Union) and SAFE (Sustainable Agriculture, Food and Environment). The latter suggestion certainly encompasses the direction in which the CAP should be going.
The agri-humourists were out in force and the old chestnut of Common Rural and Agricultural Policy came up, as did the newer suggestion of Agricultural, Rural and Sustainable Environment policy. Someone obviously worked hard on 'Special Agricultural and Rural Key Offensive for Zestful Yields.'
Perhaps the corny and somewhat flakey character of the CAP was embodied in COmmon Rural Network for Food, a Living Agriculture and Keeping the Environment Sustainable = CORNFLAKES to save you the bother of working it out.
Agra Focus has been having a little bit of springtime fun thinking up a new name for the CAP on the lines of 'a rose by any other name.' The two most plausible suggestions to come forward were FARMER (Food, Agriculture and Rural Measures in the European Union) and SAFE (Sustainable Agriculture, Food and Environment). The latter suggestion certainly encompasses the direction in which the CAP should be going.
The agri-humourists were out in force and the old chestnut of Common Rural and Agricultural Policy came up, as did the newer suggestion of Agricultural, Rural and Sustainable Environment policy. Someone obviously worked hard on 'Special Agricultural and Rural Key Offensive for Zestful Yields.'
Perhaps the corny and somewhat flakey character of the CAP was embodied in COmmon Rural Network for Food, a Living Agriculture and Keeping the Environment Sustainable = CORNFLAKES to save you the bother of working it out.
Tuesday, April 08, 2008
Food security fears mount
Fears of unrest are increasing in developing countries as shortages develop of staple foods or prices increase substantially. Governments have cut import tariffs to cope with the problem, but hoarding to take advantage of future price rises has exacerbated the difficulties being encountered.
Some of the most serious problems have arisen in relation to rice where prices have risen by 50 per cent in two weeks. Leading exporting countries including Vietnm, India, China and Egypt have banned foreign sales.
Another policy response is to resort to export taxes, a strategy being followed in Argentina, although raising revenue appears to be as much of a motive of ensuring domestic supply. Indeed, the strategy has backfired as farmers have gone on strike and mounted road blocks, emptying cattle markets so that Argentinians cannot get their steaks. President Cristina Fernandez has resorted to the classic Peronist trick of trying to rouse the 'masses' against an alleged privileged group, in this case the farmers.
Given the importance of Argentina as an agricultural exporter, increasing soyabean taxes from 35 per cent to 40 per cent affects world supplies. Grain exports have also been disrupted.
All this is grist to the mill of those who have been calling for self-sufficiency targets in Europe, backed up by the continuation of blanket subsidies. As we have suggested in earlier postings, this rhetoric has had a substantial influence on decision makers. There is a danger of a reversion to a simple minded productionist paradigm, already being celebrated with an element of triumphalism by some farming spokespersons.
A leading exponent of this position is Norfolk farmer and Farmers Weekly columnist David Richardson who has played his cards on this issue well. His paper on the issue suggests that 'it would not be much of an exaggeration to suggest that within the forseeable future it will be necessary to deal with the production of food as during the war.' In the UK it was, of course, the experience of wartime production which led to the 1947 Agriculture Act, creating privileged access to government for the National Farmers' Union and substantial subsidies for its members. Could these halcyon days return?
You can read David Richardson's full paper on line at Richardson . It's a concise statement of an increasingly influential viewpoint.
However, we must avoid a retreat into neo-Malthusian gloom. The gains available from new technology and better agronomic techniques must not be overlooked. Where there has been a policy error is in running down research on improving food production. The privatisation of the state extension service, something that was not done in the United States or, for example, Denmark, was also a mistake which means that there is no neutral body disseminating knowledge to farmers.
Some of the most serious problems have arisen in relation to rice where prices have risen by 50 per cent in two weeks. Leading exporting countries including Vietnm, India, China and Egypt have banned foreign sales.
Another policy response is to resort to export taxes, a strategy being followed in Argentina, although raising revenue appears to be as much of a motive of ensuring domestic supply. Indeed, the strategy has backfired as farmers have gone on strike and mounted road blocks, emptying cattle markets so that Argentinians cannot get their steaks. President Cristina Fernandez has resorted to the classic Peronist trick of trying to rouse the 'masses' against an alleged privileged group, in this case the farmers.
Given the importance of Argentina as an agricultural exporter, increasing soyabean taxes from 35 per cent to 40 per cent affects world supplies. Grain exports have also been disrupted.
All this is grist to the mill of those who have been calling for self-sufficiency targets in Europe, backed up by the continuation of blanket subsidies. As we have suggested in earlier postings, this rhetoric has had a substantial influence on decision makers. There is a danger of a reversion to a simple minded productionist paradigm, already being celebrated with an element of triumphalism by some farming spokespersons.
A leading exponent of this position is Norfolk farmer and Farmers Weekly columnist David Richardson who has played his cards on this issue well. His paper on the issue suggests that 'it would not be much of an exaggeration to suggest that within the forseeable future it will be necessary to deal with the production of food as during the war.' In the UK it was, of course, the experience of wartime production which led to the 1947 Agriculture Act, creating privileged access to government for the National Farmers' Union and substantial subsidies for its members. Could these halcyon days return?
You can read David Richardson's full paper on line at Richardson . It's a concise statement of an increasingly influential viewpoint.
However, we must avoid a retreat into neo-Malthusian gloom. The gains available from new technology and better agronomic techniques must not be overlooked. Where there has been a policy error is in running down research on improving food production. The privatisation of the state extension service, something that was not done in the United States or, for example, Denmark, was also a mistake which means that there is no neutral body disseminating knowledge to farmers.
Sunday, April 06, 2008
Farm subsidy disclosure angers farmers
The Farmers Union of Wales has attacked the decision of the EU to make all farm subsidy receipts public from next year. While farmers in Wales, Scotland and Northern Ireland already have their single farm payment details displayed on the devolved administrations' websites, it is intended to add full names, addresses and postcodes to the published details.
One objection is that this information could be used for criminal purposes such as identity fraud. It is also argued that such information is commercially sensitive. For her part, farm commissioner Mariann Fischer Boel argues that 'This is taxpayers' money, so it is very important that people know where it is being spent.'
The NFU's SPS adviser said that one key concern was whether the data was accurate. In the NFU's experience there were many inaccuracies. For example, a shortfall in the 2005 payment might be added to 2007 to give an inflated figure. (Strictly speaking, this is not an inaccuracy as it reflects the amount paid, but it could still be misleading).
He also complained that such information could raise the 'unwarranted' interest of the taxman, although I would have thought that if farmers have made an accurate declaration of their income there should not in principle be a problem. It has been argued, however, that the Revenue sometimes misuse their power to investigate the affairs of individual taxpayers.
The issue here is to balance conflict considerations such as transparency and privacy. Transparency is highly valued by economists and public policy analysts, while privacy is a value deeply embedded in British culture. For the information currently made available by some member states, visit Subsidies
Of course, the fundamental concern of some farmers is that more information could lead to more public demands for the abolition of subsidies. However, the relatively diffuse interests of consumers and taxpayers have always been overcome by the more concentrated interests of farmers. For all the criticism they sometimes receive from some farmers, the main farming organisations have done a very effective job of looking after their members' interests.
I was interested to read a letter by a farmer in Farmers' Weekly criticising the recent House of Lords report that called for farm subsidies to be ended. The writer makes the complaint that we are governed by 'intellectuals' which is news to me. I think what he really means is the political class.
He does make the valid point that farmers have become price takers because of the growth of retailer power. The remedy here would be effective competition policy rather than perpetuating subsidies, although politically this is not that easy to achieve.
One objection is that this information could be used for criminal purposes such as identity fraud. It is also argued that such information is commercially sensitive. For her part, farm commissioner Mariann Fischer Boel argues that 'This is taxpayers' money, so it is very important that people know where it is being spent.'
The NFU's SPS adviser said that one key concern was whether the data was accurate. In the NFU's experience there were many inaccuracies. For example, a shortfall in the 2005 payment might be added to 2007 to give an inflated figure. (Strictly speaking, this is not an inaccuracy as it reflects the amount paid, but it could still be misleading).
He also complained that such information could raise the 'unwarranted' interest of the taxman, although I would have thought that if farmers have made an accurate declaration of their income there should not in principle be a problem. It has been argued, however, that the Revenue sometimes misuse their power to investigate the affairs of individual taxpayers.
The issue here is to balance conflict considerations such as transparency and privacy. Transparency is highly valued by economists and public policy analysts, while privacy is a value deeply embedded in British culture. For the information currently made available by some member states, visit Subsidies
Of course, the fundamental concern of some farmers is that more information could lead to more public demands for the abolition of subsidies. However, the relatively diffuse interests of consumers and taxpayers have always been overcome by the more concentrated interests of farmers. For all the criticism they sometimes receive from some farmers, the main farming organisations have done a very effective job of looking after their members' interests.
I was interested to read a letter by a farmer in Farmers' Weekly criticising the recent House of Lords report that called for farm subsidies to be ended. The writer makes the complaint that we are governed by 'intellectuals' which is news to me. I think what he really means is the political class.
He does make the valid point that farmers have become price takers because of the growth of retailer power. The remedy here would be effective competition policy rather than perpetuating subsidies, although politically this is not that easy to achieve.
Sunday, March 23, 2008
The dilemma of Sunk Island
Sunk Island is neither an island nor is it sunken. See Sunk Island . It is a 600 acre area of land south-east of Hull reclaimed from the River Humber more than 200 years ago. A row about its future exemplifies current tensions between food security and environmental concerns.
Farmers there are angry that the prime agricultural land there could be surrendered to the Humber as part of the Department for the Environment's policy of managed realignment. Tenant farmer Geoff Buckie said, 'It is madness that they want to do away with such high-quality land apparently to create more wildlife habitat. They seem to care more about wildlife - at a time when English farming desperately needs to grow more food.'
I don't know enough about the specific case to comment about it, although I can see where the local farmers are coming from. However, in the rush to jump on the food security bandwagon, we must be careful not to start treating the environment as a luxury good again. Climate change deniers are looking increasingly intellectually isolated and a relatively small rise in sea levels could make low lying areas prohibitively expensive to defend.
Farmers there are angry that the prime agricultural land there could be surrendered to the Humber as part of the Department for the Environment's policy of managed realignment. Tenant farmer Geoff Buckie said, 'It is madness that they want to do away with such high-quality land apparently to create more wildlife habitat. They seem to care more about wildlife - at a time when English farming desperately needs to grow more food.'
I don't know enough about the specific case to comment about it, although I can see where the local farmers are coming from. However, in the rush to jump on the food security bandwagon, we must be careful not to start treating the environment as a luxury good again. Climate change deniers are looking increasingly intellectually isolated and a relatively small rise in sea levels could make low lying areas prohibitively expensive to defend.
Friday, March 21, 2008
Co-financing likely, says Parish
Co-financing of the CAP is likely to come in said Neil Parish, British Conservative chair of the European Parliament's Agriculture and Rural Development Committee in an interview with the excellent AgraFocus. This would reduce discrepancies between net contributors and net beneficiaries. However, he admitted that such a move could be difficult for the new member states, especially if they couldn't afford to introduce co-financing. It might therefore be necessary to have lower co-financing rates for them in the early years to make the change politically acceptable.
Parish noted the current turn towards food security commenting, 'The amazing thing is is that one year ago, most taxpayers would have been looking for a much more environmentally-based farm policy - not so much interested in the agriculture, but more in the landscape, which they still are. One year on, food security is back on the agenda. Taxpayers not only want a good environment, but if food supplies are tight, they will also be expecting the farmers to produce food.'
Other key points:
* It's proving difficult to get the CAP to work in the New Member States. Any further enlargement should be delayed until at least 2013 with the possible exception of Croatia.
* Taxpayers are 'questioning how we spend the money and why ... there has to be more transparency on how taxpayers are paid. In reality now with the SFP - in a lot of member states - you could go on to the websites and find out how much individual farmers are being paid.'
* He paid tribute to Mariann Fischer Boel as a very open Commissoner: 'I believe that a Danish Commissioner and a British Chairman is not a bad combination.'
Parish will be standing down after the next election as he is standing for the Westminster Parliament.
Parish noted the current turn towards food security commenting, 'The amazing thing is is that one year ago, most taxpayers would have been looking for a much more environmentally-based farm policy - not so much interested in the agriculture, but more in the landscape, which they still are. One year on, food security is back on the agenda. Taxpayers not only want a good environment, but if food supplies are tight, they will also be expecting the farmers to produce food.'
Other key points:
* It's proving difficult to get the CAP to work in the New Member States. Any further enlargement should be delayed until at least 2013 with the possible exception of Croatia.
* Taxpayers are 'questioning how we spend the money and why ... there has to be more transparency on how taxpayers are paid. In reality now with the SFP - in a lot of member states - you could go on to the websites and find out how much individual farmers are being paid.'
* He paid tribute to Mariann Fischer Boel as a very open Commissoner: 'I believe that a Danish Commissioner and a British Chairman is not a bad combination.'
Parish will be standing down after the next election as he is standing for the Westminster Parliament.
Saturday, March 15, 2008
Capping plan dropped
Capping payments to large farmers - which would have particularly hit the UK, Germany and the Czech Republic - appears to have been dropped from the latest version of the CAP 'health check' circulating in Brussels.
Farm commissioner Mariann Fischer Boel originally intended to make large, progressive cuts to farmer' single farm payments when she launched her health check last November. Her plan was to start with a 10 per cent cut on payments of more than €100,000 (£76,000) increasing to 45 per cent off for payments more than €300,000(£228,000).
The plan would have hit more than 6000 British farmers, including some of the most influential ones such as the Duke of Westminster and others such as Oliver Walston (who is one of the few farmers who opposes subsidies to the ire of the rest of them).
The money was to be retained by each member state and used for so-called 'Article 69' measures - Pillar 1 subsidies targeted at specific sectors. But the lobbyists (including no doubt UK PermRep in Brussels) have been at work and the plan is for additional rates of modulation for larger farmers instead of capping. These would range from 3 per cent modulation for payments in excess of €100,000 to 9 per cent for payments in excess of €300,000.
Of course all this is a sideshow to the need to get rid of subsidies. I was taken to task for this yesterday by someone who argued, quite reasonably, that the battered livestock subsidy could not survive without subsidy. That may be so. It is supposed to be a commercial activity, but the argument then is that we need subsidies for food security reasons.
Even Gordon Brown has bought into this discourse following the recent (good) Cabinet Office Strategy Unit report on food policy. The prime minister is an intelligent man who is justly proud of his academic origins. He should know better.
No one believes that subsidies should disappear overnight. Farmers have to be weaned off them. That is why I think a farmers' bond scheme is a good mechanism for getting rid of them once and for all.
Farm commissioner Mariann Fischer Boel originally intended to make large, progressive cuts to farmer' single farm payments when she launched her health check last November. Her plan was to start with a 10 per cent cut on payments of more than €100,000 (£76,000) increasing to 45 per cent off for payments more than €300,000(£228,000).
The plan would have hit more than 6000 British farmers, including some of the most influential ones such as the Duke of Westminster and others such as Oliver Walston (who is one of the few farmers who opposes subsidies to the ire of the rest of them).
The money was to be retained by each member state and used for so-called 'Article 69' measures - Pillar 1 subsidies targeted at specific sectors. But the lobbyists (including no doubt UK PermRep in Brussels) have been at work and the plan is for additional rates of modulation for larger farmers instead of capping. These would range from 3 per cent modulation for payments in excess of €100,000 to 9 per cent for payments in excess of €300,000.
Of course all this is a sideshow to the need to get rid of subsidies. I was taken to task for this yesterday by someone who argued, quite reasonably, that the battered livestock subsidy could not survive without subsidy. That may be so. It is supposed to be a commercial activity, but the argument then is that we need subsidies for food security reasons.
Even Gordon Brown has bought into this discourse following the recent (good) Cabinet Office Strategy Unit report on food policy. The prime minister is an intelligent man who is justly proud of his academic origins. He should know better.
No one believes that subsidies should disappear overnight. Farmers have to be weaned off them. That is why I think a farmers' bond scheme is a good mechanism for getting rid of them once and for all.
Thursday, March 13, 2008
Lords Slam CAP
Farm subsidies should be phased out for good and a significant proportion of the funds released channelled into rural development says a new report from the House of Lords European Union Committee: Lords
The report points out that farm subsidies in their present form are a poorly focused policy instrument. The committee therefore advocates a phased reduction in farm subsidies from 2014.
The chair of the committee, Lord Sewel (who was a junior agriculture minister in Scotland from 1997 to 1999) commented, 'Agricultural interests can no longer be equated with rural interests. Public money should be targeted directly at environmental benefits and rural development goals, rather than being spent on income support for farmers and landowners in the hope that this will produce the desired knock-on effects. We are not persuaded by the argument that the risk of future food shortages should be hedged against by freezing current production patterns.'
NFU economist Carmen Suarez specified five conditions that would have to be met before Pillar 1 supports were removed, including 'policies to enhance agricultural competitiveness' which could well be a device for subsidies under another name.
The report points out that farm subsidies in their present form are a poorly focused policy instrument. The committee therefore advocates a phased reduction in farm subsidies from 2014.
The chair of the committee, Lord Sewel (who was a junior agriculture minister in Scotland from 1997 to 1999) commented, 'Agricultural interests can no longer be equated with rural interests. Public money should be targeted directly at environmental benefits and rural development goals, rather than being spent on income support for farmers and landowners in the hope that this will produce the desired knock-on effects. We are not persuaded by the argument that the risk of future food shortages should be hedged against by freezing current production patterns.'
NFU economist Carmen Suarez specified five conditions that would have to be met before Pillar 1 supports were removed, including 'policies to enhance agricultural competitiveness' which could well be a device for subsidies under another name.
Sunday, March 09, 2008
The great land use debate
Do try and take part in the great RELU land use debate. I have in an effort to argue against attempts to revive productionist approaches to agriculture which threaten to reverse years of effort towards a more rational approach to farm policy. To find out about the debate, go here: RELU
Monday, February 25, 2008
The milk quotas mess
As the debate goes on in the EU about whether milk quotas can be increased by 2 per cent as part of the soft landing when they are eventually abolished in 2015, it is an opportunity to reflect how milk quotas have affected the UK dairy industry.
They were introduced in 1984 to ease the severe budgetary crisis brought about by the structural surplus of milk in Europe. They worked in terms of limiting production growth and coping with the budgetary crisis, but they brought a lot of unintended (or intended) problems in their wake.
The basic problem is that milk quotas ossify structures. Some member states do permit trading of milk quotas within their boundaries, but despite the existence of an internal market, they cannot be traded across national borders. Hence, it is difficult to transfer production from less efficient producers to the more efficient or from less efficient regions to the more efficient.
Of course, some politicians welcome this as a means of enabling farming to survive in these areas. French politicians proudly proclaim that quotas are the reason that milk is still produced in every corner of France. In many areas of Europe only the quota system can guarantee prices high enough to keep farmers in business.
But all this comes at a price. Europe's share of world dairy markets has been falling. Third country markets for dairy products are being captured by more efficient producers in North and South America.
Dairy farmers like them, of course. Their arrival gave them a windfall capital gain and a retirement pot that can be worth as much as €1m.
There was a bare qualified majority in the Special Committee on Agriculture for the quota increase. Germany with a Bavarian farm minister is against, as are Austria, Finland (where there are quite a lot of dairy farmers) and Malta (where there are very few). France would like to delay, but the change will probably be go through and a small step will have been taken towards a more market oriented system.
They were introduced in 1984 to ease the severe budgetary crisis brought about by the structural surplus of milk in Europe. They worked in terms of limiting production growth and coping with the budgetary crisis, but they brought a lot of unintended (or intended) problems in their wake.
The basic problem is that milk quotas ossify structures. Some member states do permit trading of milk quotas within their boundaries, but despite the existence of an internal market, they cannot be traded across national borders. Hence, it is difficult to transfer production from less efficient producers to the more efficient or from less efficient regions to the more efficient.
Of course, some politicians welcome this as a means of enabling farming to survive in these areas. French politicians proudly proclaim that quotas are the reason that milk is still produced in every corner of France. In many areas of Europe only the quota system can guarantee prices high enough to keep farmers in business.
But all this comes at a price. Europe's share of world dairy markets has been falling. Third country markets for dairy products are being captured by more efficient producers in North and South America.
Dairy farmers like them, of course. Their arrival gave them a windfall capital gain and a retirement pot that can be worth as much as €1m.
There was a bare qualified majority in the Special Committee on Agriculture for the quota increase. Germany with a Bavarian farm minister is against, as are Austria, Finland (where there are quite a lot of dairy farmers) and Malta (where there are very few). France would like to delay, but the change will probably be go through and a small step will have been taken towards a more market oriented system.
Sunday, February 24, 2008
Cameron bangs food security drum
The popularity of the new rhetoric of food security is shown by its adoption by British Conservative Party leader, Dave Cameron, in address to the 100th anniversary conference of the National Farmers' Union. He revealed that he is himself a NFU member, although presumably one of the 'green welly' variety.
The job of the Leader of the Opposition is to question government policy and one can't blame him for jumping on any convenient bandwagon that comes on. Food security gave a coherent theme to a speech that was otherwise trying to push every possible button. Raising the spectre of a return to food rationing is a good way of dramatising some of the current changes in global food supply.
It's a bit harder to tease out from the speech what his remedies are. What he does make clear is that he is against a return to protectionism and trade barriers and to production linked subsdidies.
He seems to think that British farmers could produce more food for the domestic consumer if the burden of regulation was reduced. Standards in Britain are claimed to be more onerous than elsewhere in the EU. So, it is argued, one needs regulation that is based on outcomes, not processes, and on trust. What this seems to mean is more self-regulation and reliance on peer pressures with penalties only for the tiny minority of farmers who abuse trust.
All fine in principle, but how does this square with his emphasis on failings in animal health regulation at the beginning of his speech? Of course, the NFU is now blaming 'hobby farmers' for the second wave of the foot-and-mouth outbreak in Surrey last September. Smallholders have hit back by claiming that they often spend more on proper prevention practices than do commercial farmers, while others have argued that hobby farmers should not be demonised.
In time Dave Cameron may come to learn that the politics of farming brings you few votes and a lot of grief.
The job of the Leader of the Opposition is to question government policy and one can't blame him for jumping on any convenient bandwagon that comes on. Food security gave a coherent theme to a speech that was otherwise trying to push every possible button. Raising the spectre of a return to food rationing is a good way of dramatising some of the current changes in global food supply.
It's a bit harder to tease out from the speech what his remedies are. What he does make clear is that he is against a return to protectionism and trade barriers and to production linked subsdidies.
He seems to think that British farmers could produce more food for the domestic consumer if the burden of regulation was reduced. Standards in Britain are claimed to be more onerous than elsewhere in the EU. So, it is argued, one needs regulation that is based on outcomes, not processes, and on trust. What this seems to mean is more self-regulation and reliance on peer pressures with penalties only for the tiny minority of farmers who abuse trust.
All fine in principle, but how does this square with his emphasis on failings in animal health regulation at the beginning of his speech? Of course, the NFU is now blaming 'hobby farmers' for the second wave of the foot-and-mouth outbreak in Surrey last September. Smallholders have hit back by claiming that they often spend more on proper prevention practices than do commercial farmers, while others have argued that hobby farmers should not be demonised.
In time Dave Cameron may come to learn that the politics of farming brings you few votes and a lot of grief.
Friday, February 15, 2008
Fischler speaks out
Alpine farmer and CAP reformer Franz Fischler
I have recently been working with others on an edited collection to be brought out from the Centre for Policy Studies in Brussels which re-visits the Fischler reforms of the CAP. The discussions held in relation to the book, which involved some people who knew Fischler's work well, confirmed my view that he was someone who combined strategic vision with a wily use of tactics and an understanding of which political buttons to push when.
Now the former farm supremo has provided a rare interview to Agra Focus. One of the intresting points he makes that two much is made of the difference between the two pillars: 'They are man-made and we should not make an icon of these structures.' What is important is that the money goes to the right recipients.
Fischler clearly thinks that it doesn't and he considers that rural development funding gives 'too much emphasis ... to agriculture, and not enough recognition of the countryside as a whole, including the non-agricultural population.' He also thinks that co-funding of the Single Farm Payment will come back on the agenda, thereby removing one of the main differences between the first and second pillars.
Fischler thinks that there will be 'start-up problems' with the co-decision process in the European Parliament, for example in terms of potential conflicts between the Agriculture and Budget committees. If these problems cannot be overcome, there is a high risk of delay to all reforms. He thinks that in the longer run the driving force behind EU reform packages will be the budget.
With the disapperance of the traditional intervention mechanisms, Fischelr revives the argument about the need for new forms and mechanisms to cover price volatility such as private-public partnerships in insurance systems or even concepts linked to futures markets.
He raises the issue of concentration in the retail sector, suggesting that an international competion regulator is needed, perhaps the WTO. However, this would seem to lie outside its remit. Moreover, competition authorities have not had much success in tackling this issue at the domestic level.
Sunday, February 03, 2008
Our farmers need handouts insist Scots
Scotland's rural affairs minister Richard Lochhead said he will be pulling out all the stops to ensure the UK government is in no doubt of Scotland's desire to maintain support for farmers and crofters. Scotland will take a tough line over the issue, even if its policies diverge from those of the UK Government.
Mr Lochhead insisted that there was an ongoing need to support Scottish agriculture, especially livestock. Scotland was not happy to move away from support mechanisms at the same pace as the UK. Scotland has a strong EU representation through its Brussels office and a dissident voice could prove embarrassing for the UK in its efforts to reform the CAP.
There is a genuine issue about how Scotland can deliver environmental benefits without viable farm businesses. There is a substantial issue about remote, small-scale farming in the Highlands and Islands. However, a proper European rural policy could help Scotland more than the current CAP.
Mr Lochhead insisted that there was an ongoing need to support Scottish agriculture, especially livestock. Scotland was not happy to move away from support mechanisms at the same pace as the UK. Scotland has a strong EU representation through its Brussels office and a dissident voice could prove embarrassing for the UK in its efforts to reform the CAP.
There is a genuine issue about how Scotland can deliver environmental benefits without viable farm businesses. There is a substantial issue about remote, small-scale farming in the Highlands and Islands. However, a proper European rural policy could help Scotland more than the current CAP.
Sunday, January 27, 2008
Subsidies 97 per cent of farm profit
Subsidy income now represents 97 per cent of farm profits, according to the annual Farm Profits Survey by the Institute of Chartered Accountants' Farming and Rural Business Group. This is despite a small rise in turnover and profitability during 2006/7.
The survey of agricultiral accountants revealed that average farm turnover for 2006/7 was £312,000, yielding an average net profit of £46,300, up by £8600. This figure coincided with average drawings and was little more than the average receipt from subsidies of £45,000. Figures for 2007/8 should, of course, be better for cereal farmers in particular.
This survey emphasises the resistance that could be encountered if subsidies were ended or severly cut back. It also reinforces the case for a once and for all 'buying out' of subsidies through a bond scheme.
The survey of agricultiral accountants revealed that average farm turnover for 2006/7 was £312,000, yielding an average net profit of £46,300, up by £8600. This figure coincided with average drawings and was little more than the average receipt from subsidies of £45,000. Figures for 2007/8 should, of course, be better for cereal farmers in particular.
This survey emphasises the resistance that could be encountered if subsidies were ended or severly cut back. It also reinforces the case for a once and for all 'buying out' of subsidies through a bond scheme.
Monday, January 21, 2008
Lisbon and the CAP
The debate on the Treaty of Lisbon is about to start in the UK. It will be mainly focused on fears of loss of British 'sovereignty' and doubtless very little will be said about the CAP, other than as an example of what is wrong with the EU.
However, if ratified, the Treaty will have some profound effects on CAP decision-making. The decision-making process is likely to become more complex and longer (as if it wasn't already) which is why there is a rush to get dossiers completed by the end of the year. The Farm Council will no longer be able to ignore what the Parliament says as they effectively can at the moment.
The Parliament has been hardly in the vanguard of progressive thinking about the CAP and has got itself into a real muddle over pesticides policy, taking decisions that work against its own intentions. However, rather than being a spokesperson for farm interests, the Agriculture and Rural Development Committee will have to move into the political mainstream while other committees such as Trade and Budget will have to keep a closer eye on what it is up to.
Admittedly, some progress has been made under the former chairmanship of Joseph Daul and now Neil Parrish (representing South-West England). The recent wine reform agreement reflected what MEPs had advocated on grubbing up.
The new Treaty does make a clearer distinction between 'delegated acts', i.e., real legislation and 'implementing rules'. The Commission is understood to have suggested that there may have to be revisions to the existing comitology rules in order to clarify when decisions can pass to the Management Committee and when they stay in Council.
Perhaps most interesting of all the Treaty will bring about a reduction in the number of Commissioners from 27 to 15 by 2014. Coincident with what is hoped to be a radical reform of the CAP, the Agriculture and Rural Development post could disappear. If it was merged with say, environment, this would embed a new approach to agricultural issues.
However, if ratified, the Treaty will have some profound effects on CAP decision-making. The decision-making process is likely to become more complex and longer (as if it wasn't already) which is why there is a rush to get dossiers completed by the end of the year. The Farm Council will no longer be able to ignore what the Parliament says as they effectively can at the moment.
The Parliament has been hardly in the vanguard of progressive thinking about the CAP and has got itself into a real muddle over pesticides policy, taking decisions that work against its own intentions. However, rather than being a spokesperson for farm interests, the Agriculture and Rural Development Committee will have to move into the political mainstream while other committees such as Trade and Budget will have to keep a closer eye on what it is up to.
Admittedly, some progress has been made under the former chairmanship of Joseph Daul and now Neil Parrish (representing South-West England). The recent wine reform agreement reflected what MEPs had advocated on grubbing up.
The new Treaty does make a clearer distinction between 'delegated acts', i.e., real legislation and 'implementing rules'. The Commission is understood to have suggested that there may have to be revisions to the existing comitology rules in order to clarify when decisions can pass to the Management Committee and when they stay in Council.
Perhaps most interesting of all the Treaty will bring about a reduction in the number of Commissioners from 27 to 15 by 2014. Coincident with what is hoped to be a radical reform of the CAP, the Agriculture and Rural Development post could disappear. If it was merged with say, environment, this would embed a new approach to agricultural issues.
Friday, January 18, 2008
Getting decisions on the Health Check
With 27 member states the whole negotiating process in the Farm Council has become a lot more difficult, not that it was ever easy. Another complication is that fisheries matters are now dealt with in the Farm Council and this means that the December meeting is the scene for an inevitable battle between fisheries ministers over quotas.
The only effective way to proceed is to forge compromises outside the Council chamber through bilaterals between the Presidency/Commission and individual ministers. A lot then depends on the negotiating skill of the Presidency, but the Portuguese Presidency is judged to have been a success. Slovenia is the first transition state to be in the chair, but both its farm minister and its officials enjoy a good reputation.
The Health Check will have to be finalised at the end of this year under the French presidency. France will probably try to get a deal in November as it can then include some direct reference to the Health Check in its final Summit conclusions, presumably providing some form of wording that would support French ambitions in the 2009 review of the EU budget with the objective of maintaining high levels of CAP spending after 2009.
Another reason to get a deal before December is that this would leave little time for lawyers and linguists to check it before the end of the year. This could then open up the prospect of a challenge from MEPs on the grounds that they should have had co-decision powers on the Health Check. Life under co-decision will be interesting once the new Lisbon Treaty enters into force (as anticipated) in January 2009.
The only effective way to proceed is to forge compromises outside the Council chamber through bilaterals between the Presidency/Commission and individual ministers. A lot then depends on the negotiating skill of the Presidency, but the Portuguese Presidency is judged to have been a success. Slovenia is the first transition state to be in the chair, but both its farm minister and its officials enjoy a good reputation.
The Health Check will have to be finalised at the end of this year under the French presidency. France will probably try to get a deal in November as it can then include some direct reference to the Health Check in its final Summit conclusions, presumably providing some form of wording that would support French ambitions in the 2009 review of the EU budget with the objective of maintaining high levels of CAP spending after 2009.
Another reason to get a deal before December is that this would leave little time for lawyers and linguists to check it before the end of the year. This could then open up the prospect of a challenge from MEPs on the grounds that they should have had co-decision powers on the Health Check. Life under co-decision will be interesting once the new Lisbon Treaty enters into force (as anticipated) in January 2009.
Friday, January 04, 2008
The challenges of livestock production
At a recent meeting of its Business Forum, the Food Ethics Council reviewed livestock production in the context of climate change and the following key points emerged:
*Livestock contribute about eight percent of total greenhouse gas emissions from UK consumption. Meat accounts for more than two-thirds of that.
*UK consumption of poultry meat has doubled over the past 20 years, whereas red meat and pork has remained static. UK per capita consumption is well above the world average.
*Changes to production can increase efficiency and reduce emissions, but producers should be alert to potential trade-offs with other sustainability criteria and animal welfare.
*Policy makers are exploring the scope to reduce emissions by reducing meat demand. The economics of this are uncertain and, though potentially costly for UK meat producers, would not necessarily harm them.
*Initiatives to promote sustainable production and consumption must consider: (a) differences between livestock species, business models and production systems; (b) opportunity costs of sustainability strategies; (c) what foods we would eat instead if we ate less meat.
*Businesses should expect a range of public and private sector initiatives intended to improve the sustainability not only of specific products, but also of the diet that we produce, sell and eat.
The last two points should be relevant to the CAP, but there is little evidence that they are being considered in any systematic way.
*Livestock contribute about eight percent of total greenhouse gas emissions from UK consumption. Meat accounts for more than two-thirds of that.
*UK consumption of poultry meat has doubled over the past 20 years, whereas red meat and pork has remained static. UK per capita consumption is well above the world average.
*Changes to production can increase efficiency and reduce emissions, but producers should be alert to potential trade-offs with other sustainability criteria and animal welfare.
*Policy makers are exploring the scope to reduce emissions by reducing meat demand. The economics of this are uncertain and, though potentially costly for UK meat producers, would not necessarily harm them.
*Initiatives to promote sustainable production and consumption must consider: (a) differences between livestock species, business models and production systems; (b) opportunity costs of sustainability strategies; (c) what foods we would eat instead if we ate less meat.
*Businesses should expect a range of public and private sector initiatives intended to improve the sustainability not only of specific products, but also of the diet that we produce, sell and eat.
The last two points should be relevant to the CAP, but there is little evidence that they are being considered in any systematic way.
Sunday, December 23, 2007
Food prices face new surge
Global food prices face a new surge. In Chicago wheat and rice prices for delivery in March 2008 have jumped to an all-time high, soyabean prices are at a 34-year high and corn prices at a 11-year peak. The agricultural commodities price rises are the result of high demand, poor harvests and low stockpiles of food.
Food prices in the UK are more than 5 per cent higher than a year ago. Bread prices have jumped 11.6 per cent over the last year, double the increase for cake or biscuits. Butter and eggs are about a third more expensive than last November, milk prices are 16.6 per cent higher and cheese is up 8.8 per cent.
Eurozone food price inflation was up to 4.3 per cent in November. It was one of the main reasons for the jump in the zone's annual inflation rate from 2.6 per cent in October to 3.1 per cent, the highest level in six years. In the US, annual food price inflation of 4.8 per cent in November combined to a rise in the inflation rate to 4.3 per cent.
Deeper long-term economic influences are likely to have more influence on the future supply and demand of major food commodities and therefore on medium to lomg-term price levels, than the current boom in biofuel production. This is the main conclusion of a new report from the International Food Policy Institute: Food . One might add, however, that biofuel demand is more susceptible to the effects of policy initiatives, in particular over generous subsidies and tax reliefs.
The report points out that while overall world economic growth is likely to remain in the 4 per cent a year average range, growth in the developing countries with expanding food demand is expected to average 6 per cent a year well into the next decade. IFPRI points out that of the world's most food insecure countries, which have the greatest propensity to import food, twenty-two had average annual growth rates ranging from 5 per cent to 16 per cent between 2004 and 2006.
What IFPRI characterises as 'diet globalisation' is also a major long-term demand changing factor. More affluent city-dwelling Asian consumers are increasingly seeking non-traditional foods. This is leading to reduced rice consumption and increased consumption of wheat and wheat-based products, temperate-zone vegetables and dairy products - and increases in demand for animal feeds for the livestock producing many of these foods.
One by-product of rising food prices is that import tariffs for agricultural commodities, in paricular cereals, vegetable oils and rice, are being slashed in an effort by developed and developing countries to cushion their local markets against rising food inflation. On the other hand, export tariffs have been raised by several key exporting countries such as Argentina in an attempt to keep local markets well supplied.
Given that the rise in food prices is not likely to be a short-term phenomenon, one might question why the commercial aspects of farming continue to require subsidy.
Food prices in the UK are more than 5 per cent higher than a year ago. Bread prices have jumped 11.6 per cent over the last year, double the increase for cake or biscuits. Butter and eggs are about a third more expensive than last November, milk prices are 16.6 per cent higher and cheese is up 8.8 per cent.
Eurozone food price inflation was up to 4.3 per cent in November. It was one of the main reasons for the jump in the zone's annual inflation rate from 2.6 per cent in October to 3.1 per cent, the highest level in six years. In the US, annual food price inflation of 4.8 per cent in November combined to a rise in the inflation rate to 4.3 per cent.
Deeper long-term economic influences are likely to have more influence on the future supply and demand of major food commodities and therefore on medium to lomg-term price levels, than the current boom in biofuel production. This is the main conclusion of a new report from the International Food Policy Institute: Food . One might add, however, that biofuel demand is more susceptible to the effects of policy initiatives, in particular over generous subsidies and tax reliefs.
The report points out that while overall world economic growth is likely to remain in the 4 per cent a year average range, growth in the developing countries with expanding food demand is expected to average 6 per cent a year well into the next decade. IFPRI points out that of the world's most food insecure countries, which have the greatest propensity to import food, twenty-two had average annual growth rates ranging from 5 per cent to 16 per cent between 2004 and 2006.
What IFPRI characterises as 'diet globalisation' is also a major long-term demand changing factor. More affluent city-dwelling Asian consumers are increasingly seeking non-traditional foods. This is leading to reduced rice consumption and increased consumption of wheat and wheat-based products, temperate-zone vegetables and dairy products - and increases in demand for animal feeds for the livestock producing many of these foods.
One by-product of rising food prices is that import tariffs for agricultural commodities, in paricular cereals, vegetable oils and rice, are being slashed in an effort by developed and developing countries to cushion their local markets against rising food inflation. On the other hand, export tariffs have been raised by several key exporting countries such as Argentina in an attempt to keep local markets well supplied.
Given that the rise in food prices is not likely to be a short-term phenomenon, one might question why the commercial aspects of farming continue to require subsidy.
Thursday, December 20, 2007
Wine reform watered down
EU farm ministers have agreed a reform package for the wine sector that dilutes the package proposed by Commissioner Fischer Boel. Pressure from France and Italy means that fewer vineyards will be scrapped and the surplus of low quality wine will continue to be distilled for industrial use over a four year period.
The Commission's plan to outlaw chapitalisation (using sugar or must to add sweetness to alcohol) has been scrapped and it will still be allowed in those statements where it is already legal. This proposal was opposed by Austria, Germany and Hungary. One consequence is that subsidies will have to be prolonged to producers in the southern states which use must as the grape juice is more expensive.
Traditionalists will also be pleased that an overall harmonisation of labelling practices throughout the EU as planned by the Commission will not take place. However, winemakers not using geographical indications and designations of origin will in future be allowed to indicate their wines' grape variety and vintage on the label.
In this connection, UK Labour MEP Brian Simpson commented, 'This is the battle for the £6 bottle. There is too much snobbery about wine, which has caused the resistance.'
Much of the annual €1.3bn EU wine budget, about half of which buys up unwated wine, will be put into national envelopes for member state governments to use in promotion and restructuring.
Putting a brave face on the deal, Commissioner Fischer Boel admitted, 'We didn't get everything we wanted, but we have ended up with a well-balanced agreement.' In other words, the wine producing states have exerted effective pressure to defend their interests.
The underlying problem is that traditional growers like France and Italy have been consuming a third less of their own crop. Where consumption is growing in countries like Britain and Sweden, it is often being driven by 'New World' wines which are perceived to offer better value.
Whether the EU wine lake can be drained in five years as is hoped remains to be seen. Much will depend on effective implementation at member state level.
The Commission's plan to outlaw chapitalisation (using sugar or must to add sweetness to alcohol) has been scrapped and it will still be allowed in those statements where it is already legal. This proposal was opposed by Austria, Germany and Hungary. One consequence is that subsidies will have to be prolonged to producers in the southern states which use must as the grape juice is more expensive.
Traditionalists will also be pleased that an overall harmonisation of labelling practices throughout the EU as planned by the Commission will not take place. However, winemakers not using geographical indications and designations of origin will in future be allowed to indicate their wines' grape variety and vintage on the label.
In this connection, UK Labour MEP Brian Simpson commented, 'This is the battle for the £6 bottle. There is too much snobbery about wine, which has caused the resistance.'
Much of the annual €1.3bn EU wine budget, about half of which buys up unwated wine, will be put into national envelopes for member state governments to use in promotion and restructuring.
Putting a brave face on the deal, Commissioner Fischer Boel admitted, 'We didn't get everything we wanted, but we have ended up with a well-balanced agreement.' In other words, the wine producing states have exerted effective pressure to defend their interests.
The underlying problem is that traditional growers like France and Italy have been consuming a third less of their own crop. Where consumption is growing in countries like Britain and Sweden, it is often being driven by 'New World' wines which are perceived to offer better value.
Whether the EU wine lake can be drained in five years as is hoped remains to be seen. Much will depend on effective implementation at member state level.
Monday, December 17, 2007
Join the CAP health check debate
You can do so at: Debate . Jack Thurston of farmsubsidy.org starts off with a critique of the shortcomings of the Health Check, but gets slagged off later for 2nd rate left-wing journalism! Inevitably, those with axes to grind are there whether ideological (GM) or particular (suckler cows in N.Ireland). There is also a plaintive plea for more information in Bulgarian.
I suppose that my view of these exercises is that they give the semblance of participation while the real decisions are taken elsewhere. As a debate, it is very difficult to get people to move from their fixed positions.
Launching the debate, Fischer Boel once again showed her susceptibility to food security discourses. Referring to an 'atmopshere of anxiety' surrounding the markets, she said: 'Renewed awareness of the importance of food is a good thing. We should never be complacent about supplying life's basic necessities.'
Given that farmers (other than livestock farmers) are now getting a better return from the market, one might think that now was a good time to substantially reduce subsidies.
In her presentation to the European Parliament Agriculture Committee, Fischer Boel seemed to go further than the Communication itself, for example by clearly indicating her preference for a longer-term shift towards a flat rate Single Farm Payment or for ending the 45€/ha. energy crop premium.
I suppose that my view of these exercises is that they give the semblance of participation while the real decisions are taken elsewhere. As a debate, it is very difficult to get people to move from their fixed positions.
Launching the debate, Fischer Boel once again showed her susceptibility to food security discourses. Referring to an 'atmopshere of anxiety' surrounding the markets, she said: 'Renewed awareness of the importance of food is a good thing. We should never be complacent about supplying life's basic necessities.'
Given that farmers (other than livestock farmers) are now getting a better return from the market, one might think that now was a good time to substantially reduce subsidies.
In her presentation to the European Parliament Agriculture Committee, Fischer Boel seemed to go further than the Communication itself, for example by clearly indicating her preference for a longer-term shift towards a flat rate Single Farm Payment or for ending the 45€/ha. energy crop premium.
Tuesday, December 04, 2007
Meat: facing the dilemmas
The excellent Food Ethics published by the Food Ethics Council has devoted its latest issue to this theme. You can read excerpts online at: Meat
There are a lot of issues related to increasing meat consumption: climate change; health issues; water scarcity and biodiversity loss from clearing forests to make way for pasture and feed production; and animal welfare, which is certainly not a luxury we can no longer afford. The FAO calculates that livestock account for 18 per cent of total anthropogenic greenhouse gas emissions. Cows and sheep burp a lot releasing methane, which has a global warming potency 21 times greater than CO2.
In his introduction to the edition, Tom MacMillan suggests that 'the challenge is not only to eat less but also to eat better meat - produced in more humane and environmentally sound production systems yielding a better quality product.' Henry Buller reports in the issue from his innovative 'Eating Biodiversity' project on this theme.
I have not yet read all the articles, but what strikes me is that although there are plenty of references to the FAO and some to the OECD and WTO, the EU and the CAP are conspicuous by their absence. Surely the EU should be contributing to this debate and developing proactive policies that bring together a number of related objectives in different spheres of policy? Or is that too much to hope for?
There are a lot of issues related to increasing meat consumption: climate change; health issues; water scarcity and biodiversity loss from clearing forests to make way for pasture and feed production; and animal welfare, which is certainly not a luxury we can no longer afford. The FAO calculates that livestock account for 18 per cent of total anthropogenic greenhouse gas emissions. Cows and sheep burp a lot releasing methane, which has a global warming potency 21 times greater than CO2.
In his introduction to the edition, Tom MacMillan suggests that 'the challenge is not only to eat less but also to eat better meat - produced in more humane and environmentally sound production systems yielding a better quality product.' Henry Buller reports in the issue from his innovative 'Eating Biodiversity' project on this theme.
I have not yet read all the articles, but what strikes me is that although there are plenty of references to the FAO and some to the OECD and WTO, the EU and the CAP are conspicuous by their absence. Surely the EU should be contributing to this debate and developing proactive policies that bring together a number of related objectives in different spheres of policy? Or is that too much to hope for?
Thursday, November 22, 2007
Health Check Attacks Peripheral Ills
It is difficult to say anything new about the CAP Health Check proposals because they have been leaked so extensively. What they amount to is finding a patient who has a number of chronic long-term illnesses which require radical treatment, but then proposing to concentrate attention on the patient's toothache and Athlete's Foot.
The proposed capping of payments to large farms is intended to increase the popularity of the policy by reducing transfers from taxpayers to those who are already propserous. It thus would enable the Commission to portray the policy as one that primarily helps small, marginal or peripheral farmers, albeit in a very inefficient fashion. The issue of why there should be subsidies at all for commercial aspects of farming activity is thereby evaded.
The industry's protectionist subsidy seeking mindset has not actually helped it. It has diverted attention from the needs of the customer and the opportunities presented by higher value added products. A recent example is to be found in efforts to get more Government purchases of food sourced from Britain. Presumably more is not being so sourced because of price/quality problems. Why not identify and tackle those problems?
I never expected much from the Health Check. But there is a need to aim for a more radical reform of policy in the run up to 2013.
The proposed capping of payments to large farms is intended to increase the popularity of the policy by reducing transfers from taxpayers to those who are already propserous. It thus would enable the Commission to portray the policy as one that primarily helps small, marginal or peripheral farmers, albeit in a very inefficient fashion. The issue of why there should be subsidies at all for commercial aspects of farming activity is thereby evaded.
The industry's protectionist subsidy seeking mindset has not actually helped it. It has diverted attention from the needs of the customer and the opportunities presented by higher value added products. A recent example is to be found in efforts to get more Government purchases of food sourced from Britain. Presumably more is not being so sourced because of price/quality problems. Why not identify and tackle those problems?
I never expected much from the Health Check. But there is a need to aim for a more radical reform of policy in the run up to 2013.
Sunday, November 18, 2007
EU warns Romania on farm payments
Romania has been told to tighten controls in its farm payment systems or face a severe cut in it subsdies next year from the EU. The European Commission said that independent auditors Deloitte had found 'major deficiencies in the software module designed to ensure that payments are made correctly.'
The Commission said that Romania could lose about €180m in subsidies next yar if it failed to correct problems in its software systems. It delivered the warning amid persistent complaints from some of the EU's western European members that Romania was not fully prepared for the challenges of EU membership when it became a member last January.
The financial stakes are high because Romania is due to recive €443m in direct payments next year, part of a grand total of €4.3bn between now and the end of 2013. Agriculture accounts for about 40 per cent of employment.
The Commission said that Romania could lose about €180m in subsidies next yar if it failed to correct problems in its software systems. It delivered the warning amid persistent complaints from some of the EU's western European members that Romania was not fully prepared for the challenges of EU membership when it became a member last January.
The financial stakes are high because Romania is due to recive €443m in direct payments next year, part of a grand total of €4.3bn between now and the end of 2013. Agriculture accounts for about 40 per cent of employment.
Sunday, November 11, 2007
New Farm Bill 'offers no reform at all'
At one time in the 1990s it seemed as if the USA might lead the way in reducing farm subsidies. Not any more. A new version of the US Farm Bill, just approved by the Senate's Agriculture Committee, has been attacked by acting US farm secretary, Chuck Conner. The long-awaited Senate version of the Bill, which follows one from the House of Representatives in August, provides plenty of goodies for American farmers for the next five years. For example, there would be a permanent $5bn 'disaster' fund.
Mr Conner said bluntly that the draft Bill offered 'no reform at all'. The lack of a meaningful cap on payments would allow millionaires to continue to participate in farm programmes. Just how widespread this practice is has been illustrated by our friends at CAP Health Check by superimposing the number of beneficiaries on a Google map of New York City. Other wealthy areas in cities like Los Angeles also contain their fair share of sofa farmers.
It's a story all too familiar in Europe: take away money from taxpayers and consumers on average incomes or less and give to wealthy landowners.
Mr Conner said bluntly that the draft Bill offered 'no reform at all'. The lack of a meaningful cap on payments would allow millionaires to continue to participate in farm programmes. Just how widespread this practice is has been illustrated by our friends at CAP Health Check by superimposing the number of beneficiaries on a Google map of New York City. Other wealthy areas in cities like Los Angeles also contain their fair share of sofa farmers.
It's a story all too familiar in Europe: take away money from taxpayers and consumers on average incomes or less and give to wealthy landowners.
Thursday, November 01, 2007
CAP still takes up nearly 47 per cent of budget
The CAP still took 46.7 per cent of overall allocated EU expenditure in 2006, compared to 46.2 per cent in 2005, according to figures released by the European Commission. However, this represents a decrease on the 49 per cent figure in 2003. It also accounted for 0.44 per cent of GNI.
The ten accession states received 9 per cent of overall CAP funding including 27.4 per cent of the Rural Development Budget. France remains the individual member state with the largest share of spending but this was down from 20.7 per cent in 2005 and 21.6 per cent in 2004.
68.4 per cent of the money was spent on direct aids, roughly half of which went on the SPS in the EU-15. Spending on export refunds and intervention dropped to just 5 per cent and 1.5 per cent of the CAP budget respectively.
Five member states (Austria, France, Ireland, Portugal and Spain) are net beneficiaries of the CAP budget, as are virtually all new member states (Malta got only €9.4m in agricultural spending). Their share of spending will increase in the coming years with the phasing in of the SFP.
More details at: Finances
The ten accession states received 9 per cent of overall CAP funding including 27.4 per cent of the Rural Development Budget. France remains the individual member state with the largest share of spending but this was down from 20.7 per cent in 2005 and 21.6 per cent in 2004.
68.4 per cent of the money was spent on direct aids, roughly half of which went on the SPS in the EU-15. Spending on export refunds and intervention dropped to just 5 per cent and 1.5 per cent of the CAP budget respectively.
Five member states (Austria, France, Ireland, Portugal and Spain) are net beneficiaries of the CAP budget, as are virtually all new member states (Malta got only €9.4m in agricultural spending). Their share of spending will increase in the coming years with the phasing in of the SFP.
More details at: Finances
Sunday, October 28, 2007
Productionists bang the food security drum
It has been evident for some time that those who would want to see a switch away from a greater emphasis on environmental issues in relation to agriculture and a restoration of a productionist orientation have seen food security as one of their best cards.
In part this is because food supplies are getting tighter. Supply has been affected by growing demand for biofuels and other non-food crops. Demand is being stimulated by a growing and more prosperous world population.
So could 'the UK run short of food in the future' as is argued by regular Farmers Weekly contributor Hugh Brown (who combines farming with working full time for Capital Radio). This shows a not unsurprising lack of faith in the price mechanism for a farmer.
If the supply-demand balance alters, prices will go up and this will encourage more production. Of course, the land supply is not infinite, but there is plenty of land in the world, not least in the Global South, that is not being farmed as efficiently as it could be (without having an adverse environmental impact). Of course, climate change is a big uncertainty, but this shows why it should be a priority in decisions about farm policy.
Brown concentrates a lot on his fire at Defra, and it is certainly a department that has had its problems. From a farming perspective, of course, it no longer acts as the voice of the farmer in the way that MAFF did, but that was one of the reasons for setting up Defra with a new mission.
Brown argues, 'If we do start to go short of food and need to start planning seriously about how we feed the nation, it would be somewhat of a contradiction to have the same department both try to encourage the growing of food, while the other part of the department is trying to nail down environmental regulation, potentially curtailing food production.'
His solution is to give the food part of Defra its own department, presumably a Ministry of Food Security, so that 'it might be able to work more effectively in planning ahead.' The shadow of Stalinist five year plans dies hard in some areas of farming. That is not to say that we shouldn't continue to fund work that is concerned with diseases and pests that affect plants and livestock and hence undermine production.
However, given the challenge of climate change, not to mention various pollution issues, farming needs to be guided by an effective environmental policy, but also one that provides farmers with incentives for maximising environmental benefits.
In part this is because food supplies are getting tighter. Supply has been affected by growing demand for biofuels and other non-food crops. Demand is being stimulated by a growing and more prosperous world population.
So could 'the UK run short of food in the future' as is argued by regular Farmers Weekly contributor Hugh Brown (who combines farming with working full time for Capital Radio). This shows a not unsurprising lack of faith in the price mechanism for a farmer.
If the supply-demand balance alters, prices will go up and this will encourage more production. Of course, the land supply is not infinite, but there is plenty of land in the world, not least in the Global South, that is not being farmed as efficiently as it could be (without having an adverse environmental impact). Of course, climate change is a big uncertainty, but this shows why it should be a priority in decisions about farm policy.
Brown concentrates a lot on his fire at Defra, and it is certainly a department that has had its problems. From a farming perspective, of course, it no longer acts as the voice of the farmer in the way that MAFF did, but that was one of the reasons for setting up Defra with a new mission.
Brown argues, 'If we do start to go short of food and need to start planning seriously about how we feed the nation, it would be somewhat of a contradiction to have the same department both try to encourage the growing of food, while the other part of the department is trying to nail down environmental regulation, potentially curtailing food production.'
His solution is to give the food part of Defra its own department, presumably a Ministry of Food Security, so that 'it might be able to work more effectively in planning ahead.' The shadow of Stalinist five year plans dies hard in some areas of farming. That is not to say that we shouldn't continue to fund work that is concerned with diseases and pests that affect plants and livestock and hence undermine production.
However, given the challenge of climate change, not to mention various pollution issues, farming needs to be guided by an effective environmental policy, but also one that provides farmers with incentives for maximising environmental benefits.
Wednesday, October 17, 2007
Fischer Boel rebuffs twitchers
EU agriculture commissioner Mariann Fischer Boel has rebuffed claims by the Royal Society for the Protection of Birds (RSPB) that the time has come for a new CAP. The suggestion is made in a report launched by the RSPB and its associated global organisation Birdlife International: New challenges, new CAP
RSPB head of agriculture Gareth Morgan had the temerity to suggest that the CAP needs a far greater environmental element to retain its current budget: 'That means scrapping subsidies and, instead, rewarding farmers for measures to help tackle climate change, reverse widlife declines and improve water quality.'
But Fischer Boel was having none of it. She insisted that much of what the organisations were asking for was already being delivered by the CAP: 'You say you want a new CAP ... today's CAP has a huge number of "new" elements compared with a few years ago.' Of course there are significant new elements, but whether that amounts to a new policy is another matter altogether.
Fischer Boel went on to explain that the forthcoming 'health check' would provide scope for further refinement. But refinement is just what it is. As contributors to the CAP HealthCheck blog have pointed out, an opportunity is being missed to do some fundamental thinking about the objectives of the CAP and how they can be delivered. See: Health Check
RSPB head of agriculture Gareth Morgan had the temerity to suggest that the CAP needs a far greater environmental element to retain its current budget: 'That means scrapping subsidies and, instead, rewarding farmers for measures to help tackle climate change, reverse widlife declines and improve water quality.'
But Fischer Boel was having none of it. She insisted that much of what the organisations were asking for was already being delivered by the CAP: 'You say you want a new CAP ... today's CAP has a huge number of "new" elements compared with a few years ago.' Of course there are significant new elements, but whether that amounts to a new policy is another matter altogether.
Fischer Boel went on to explain that the forthcoming 'health check' would provide scope for further refinement. But refinement is just what it is. As contributors to the CAP HealthCheck blog have pointed out, an opportunity is being missed to do some fundamental thinking about the objectives of the CAP and how they can be delivered. See: Health Check
Sunday, October 14, 2007
Capital gains tax hit on farmers is not good news
Why should anyone who wants to see a more modern agriculture in Britain be concerned about the fact that the measures announced by the Chancellor in the pre-Budget report impose a greater tax burden on farmers?
Because it may discourage farmers from selling up. That is an important mechanism for restructuring farms to permit greater efficiency. It also allows new capital and younger managers with new ideas to come into the industry. Even if average age statistics can be misleading, there are still many farmers who started farming when maximising production with the help of subsidies was the favoured policy.
Farmers have been hit particularly hard by the Chancellor's scrapping of indexation allowances. This reduces taxable gains on assets held long term. It has had the effect of making tax free the first 105 per cent of gains on farmland held since at least 1982, leaving only gains above that amount subject to capital gains tax.
Farm prices have been buoyed by a number of factors. The availability of substantial subsidies has been one factor, but farms within easy reach of London have often been purchased for lifestyle and/or sporting reasons. The recent hike in crop prices also makes arable farms a more attractive investment.
Some farmers who have been thinking of selling up may now try and do so before April, but that may entail some discounting as purchasers will be well aware of the tax penalties attached to a delayed sale.
Because it may discourage farmers from selling up. That is an important mechanism for restructuring farms to permit greater efficiency. It also allows new capital and younger managers with new ideas to come into the industry. Even if average age statistics can be misleading, there are still many farmers who started farming when maximising production with the help of subsidies was the favoured policy.
Farmers have been hit particularly hard by the Chancellor's scrapping of indexation allowances. This reduces taxable gains on assets held long term. It has had the effect of making tax free the first 105 per cent of gains on farmland held since at least 1982, leaving only gains above that amount subject to capital gains tax.
Farm prices have been buoyed by a number of factors. The availability of substantial subsidies has been one factor, but farms within easy reach of London have often been purchased for lifestyle and/or sporting reasons. The recent hike in crop prices also makes arable farms a more attractive investment.
Some farmers who have been thinking of selling up may now try and do so before April, but that may entail some discounting as purchasers will be well aware of the tax penalties attached to a delayed sale.
Wednesday, October 10, 2007
The environmental impact of ending set aside
Idling land resources through set aside never made a lot of economic sense and was largely a way of dealing with over production encouraged by the old style CAP. However, many environmentalists felt that set aside encouraged biodiversity.
This was particularly the case for the Royal Society for the Protection of Birds (RSPB) which with over a million members, largely urban gardeners whose bird identification skills are sketchy, is a very influential conservationist group in the UK. Defra policy is strongly influenced by the RSPB which has framed the agenda in terms of, for example, using farmland bird populations as an indicator of environmental stress, although they may not the best measure.
The RSPB view, as expressed by head of conservation Sue Armstrong Brown, is that 'One of the strengths of set-aside was simply that there was lots of it. It made the whole countryside more varied and wildlife loves variety.' The NFU, in contrast, argues that it is a blunt policy instrument and that only a small part of set aside ever had great environmental value.
Defra secretary Hilary Benn has stepped in to warn farmers to look after habitats and bird numbers after set aside has gone, or face new regulations to compel them to do so. He announced an immediate programme of environmental monitoring of farmland.
In fact, as Don Curry has pointed out, this is an English policy manifestation of a mich wider debate. As commodity prices have risen, global tensions between the use of land for food, fuel and the creation of environmental benefits have increased. There are no easy answers, but a debate is needed.
This was particularly the case for the Royal Society for the Protection of Birds (RSPB) which with over a million members, largely urban gardeners whose bird identification skills are sketchy, is a very influential conservationist group in the UK. Defra policy is strongly influenced by the RSPB which has framed the agenda in terms of, for example, using farmland bird populations as an indicator of environmental stress, although they may not the best measure.
The RSPB view, as expressed by head of conservation Sue Armstrong Brown, is that 'One of the strengths of set-aside was simply that there was lots of it. It made the whole countryside more varied and wildlife loves variety.' The NFU, in contrast, argues that it is a blunt policy instrument and that only a small part of set aside ever had great environmental value.
Defra secretary Hilary Benn has stepped in to warn farmers to look after habitats and bird numbers after set aside has gone, or face new regulations to compel them to do so. He announced an immediate programme of environmental monitoring of farmland.
In fact, as Don Curry has pointed out, this is an English policy manifestation of a mich wider debate. As commodity prices have risen, global tensions between the use of land for food, fuel and the creation of environmental benefits have increased. There are no easy answers, but a debate is needed.
Monday, October 01, 2007
Capping SFPS is on the agenda again
Leaks from Brussels suggest that capping Single Farm Payments is on the agenda for the forthcoming Health Check. This was mooted at the time of the last reform and defeated by opposition from Britain and Germany who would have lost out the most.
The last set of proposals envisaged an overall ceiling, but this time reductions would be tapered to make them more palatable. There would be a 10 per cent reduction on payments about €100,000, 25 per cent off payments above €200,000 and 45 per cent off payments above €300,000. As an additional incentive, money saved by the 'capping' would stay in a member state and be added on to its national envelope for targeted receipts.
There would also be a lower limit on payments to save the transaction costs of payments to owners of horse paddocks or hobby farms. These tend to gum up the payments system and are not supporting anything that resembles a commercial farming activity.
Reducing payments to large-scale farmers, some of them members of Europe's royal and aristocratic families, would seem to be a no brainer. In a sense, however, it is penalising the more economically efficient farmers who are often better suited to compete in an international market. That being so, perhaps they should not have subsidies at all, but then no farmer should be receiving non-specific subsidies (other than a pay off in the form of a bond).
There is also a difficult technical problem. How does one define what constitutes a farm? Ownership of large estates could be subdivided among different companies. Lawyers have always been adept at spotting new loopholes in the CAP and they could be the real beneficiaries of these proposals. However, I doubt whether they would go through in the form suggested.
The last set of proposals envisaged an overall ceiling, but this time reductions would be tapered to make them more palatable. There would be a 10 per cent reduction on payments about €100,000, 25 per cent off payments above €200,000 and 45 per cent off payments above €300,000. As an additional incentive, money saved by the 'capping' would stay in a member state and be added on to its national envelope for targeted receipts.
There would also be a lower limit on payments to save the transaction costs of payments to owners of horse paddocks or hobby farms. These tend to gum up the payments system and are not supporting anything that resembles a commercial farming activity.
Reducing payments to large-scale farmers, some of them members of Europe's royal and aristocratic families, would seem to be a no brainer. In a sense, however, it is penalising the more economically efficient farmers who are often better suited to compete in an international market. That being so, perhaps they should not have subsidies at all, but then no farmer should be receiving non-specific subsidies (other than a pay off in the form of a bond).
There is also a difficult technical problem. How does one define what constitutes a farm? Ownership of large estates could be subdivided among different companies. Lawyers have always been adept at spotting new loopholes in the CAP and they could be the real beneficiaries of these proposals. However, I doubt whether they would go through in the form suggested.
Tuesday, September 25, 2007
EU fails to respond to booming global dairy market
The EU has largely failed to respond to a booming global dairy market. Milk deliveries actually fell by 1.5 per cent in 2006 despite an increase in quotas. All sorts of explanations are being trotted out such as the threat of high super-levy penalties and even the expiry of the transitional period in the A10 countries (this allowed for domestic marketing not to comply fully with EU criteria).
An alternative explanation is that the quota regime has ossified the structure of the dairy industry in the EU, holding back the more efficient and protecting more marginal farmers (which indeed is one of its intentions). Quota can be transferred in some countries (the rules differ), but despite the existence of an internal market, it cannot be transferred across national borders. The consequence is that the EU's dairy processing industry has been handicapped in responding to new opportunities on the world market.
What is driving these opportunities? The key factor is increased demand from the emerging economies. As people become more affluent, they consume more products that make use of milk. The increased demand for milk powders, for so long the sump of the industry, illustrates the fact that the major force underlying the price boom is increased demand for processed food ingredients.
Moreover, as demand expanded particularly in fast-growing Asian economies, exportable supplies were limited by drought in Australia and strong domestic consumption in the US and EU. The EU market is likely to be dominated by the expanding demand for cheese. Projections by the European Commission suggest that EU-27 cheese production is likely to increase by a total of 10 per cent during the 2005-13 period and will be likely to use nearly 85 per cent of the additional increase in milk expected to be delivered ober this period.
Can the price boom last? The OECD is relatively optimistic. Even though current exceptionally high prices are unlikely to be sustained, it is confident in its 2007 Agricultural Markets Report that milk powder and dairy product prices are likely to stay at relatively high levels at least until the middle of the next decade. Over the 2007-16 period it expects prices to remain at about US $50 to $100 per 100 kg (milk equivalent) higher as compared with the previous decade.
Compared to the level of average prices in nominal terms over the period 2001-5, world butter prices are preducted to increase the most, rising by 42 per cent. It wasn't so long ago that 'ageing' butter was being sold off from EU intervention stores to grateful Soviet consumers, a trade that made the intermediaries a lot of money. Skimmed milk powder prices are expected to rise by 33 per cent.
Much of the new output needed to meet demand will not come from the OECD area where production is expected to remain relatively stable, with the main production gains coming in Oceania and the United States. The OECD expects India, China and Pakistan to account for more than 50 per cent of the likely global milk production gains.
The one caveat is the quetion of economic growth. If economic growth continues at the rate predicted by the OECD, an average of 4 per cent for Asia, South America and Africa, then increased consumption and high prices will persist. Any faltering in growth would leave large quantities of milk from developing country producers looking for a market which would have a big knock on effect on the EU.
Why are British dairy farmers still in trouble? For historical reasons relating to imports from the British Commonwealth, the UK market is still dependent to a larger extent than elsewhere on the liquid market. This is still very price sensitive in the sense that supermarkets in practice treat milk as a 'loss leader' (whatever they might say to the contrary). However, they have been increasing prices to farmers recently, although input costs have also been going up.
Quotas are to be phased out, not before time, as they made it difficult for new entrants, despite special schemes in a number of countries. The UK in particular had insufficient quota to meet all its potential production needs. A freer market should benefit both producers and consumers.
An alternative explanation is that the quota regime has ossified the structure of the dairy industry in the EU, holding back the more efficient and protecting more marginal farmers (which indeed is one of its intentions). Quota can be transferred in some countries (the rules differ), but despite the existence of an internal market, it cannot be transferred across national borders. The consequence is that the EU's dairy processing industry has been handicapped in responding to new opportunities on the world market.
What is driving these opportunities? The key factor is increased demand from the emerging economies. As people become more affluent, they consume more products that make use of milk. The increased demand for milk powders, for so long the sump of the industry, illustrates the fact that the major force underlying the price boom is increased demand for processed food ingredients.
Moreover, as demand expanded particularly in fast-growing Asian economies, exportable supplies were limited by drought in Australia and strong domestic consumption in the US and EU. The EU market is likely to be dominated by the expanding demand for cheese. Projections by the European Commission suggest that EU-27 cheese production is likely to increase by a total of 10 per cent during the 2005-13 period and will be likely to use nearly 85 per cent of the additional increase in milk expected to be delivered ober this period.
Can the price boom last? The OECD is relatively optimistic. Even though current exceptionally high prices are unlikely to be sustained, it is confident in its 2007 Agricultural Markets Report that milk powder and dairy product prices are likely to stay at relatively high levels at least until the middle of the next decade. Over the 2007-16 period it expects prices to remain at about US $50 to $100 per 100 kg (milk equivalent) higher as compared with the previous decade.
Compared to the level of average prices in nominal terms over the period 2001-5, world butter prices are preducted to increase the most, rising by 42 per cent. It wasn't so long ago that 'ageing' butter was being sold off from EU intervention stores to grateful Soviet consumers, a trade that made the intermediaries a lot of money. Skimmed milk powder prices are expected to rise by 33 per cent.
Much of the new output needed to meet demand will not come from the OECD area where production is expected to remain relatively stable, with the main production gains coming in Oceania and the United States. The OECD expects India, China and Pakistan to account for more than 50 per cent of the likely global milk production gains.
The one caveat is the quetion of economic growth. If economic growth continues at the rate predicted by the OECD, an average of 4 per cent for Asia, South America and Africa, then increased consumption and high prices will persist. Any faltering in growth would leave large quantities of milk from developing country producers looking for a market which would have a big knock on effect on the EU.
Why are British dairy farmers still in trouble? For historical reasons relating to imports from the British Commonwealth, the UK market is still dependent to a larger extent than elsewhere on the liquid market. This is still very price sensitive in the sense that supermarkets in practice treat milk as a 'loss leader' (whatever they might say to the contrary). However, they have been increasing prices to farmers recently, although input costs have also been going up.
Quotas are to be phased out, not before time, as they made it difficult for new entrants, despite special schemes in a number of countries. The UK in particular had insufficient quota to meet all its potential production needs. A freer market should benefit both producers and consumers.
Sunday, September 23, 2007
Fischer Boel seduced by food security rhetoric
Experts on agricultural policy are often asked why the 'farm lobby' has been so successful although, of course, at EU level its influence has declined over time. In part this has been because it has been losing the debate and has often shown insufficient flexibility in responding to new framings of issues.
Nevertheless, one should never understimate the ability of producer interests to use new concerns to their advantage. In the past, for example, British farmers used concerns about the balance of payments to justify the subsidies they received. Food security concerns were significant during the formation of the CAP with recent experiences of food shortages in the minds of decision-makers. These concerns were reinforced by arguments about what might happen if the Cold War got a bit hotter.
With world supply and demand being tighter than it has been for some time, farming journalists and others have been trying to propel food security back on to the EU policy agenda. They appear to have scored at least a partial hit with farm commissioner Mariann Fischer Boel.
She said that Europe was producing enough to meet its own needs but had to keep one eye on growing demand around the world and discuss the question of 'food security'. 'It is obvious that the whole discussion on energy security started when suddenly the Russians cut off the pipelines. And it is obvious that we would want to think about food security. We can discuss buffer stocks just as you have for oil today.' EU rules require countries to keep three months' supply of oil in storage.
The analogy with energy security is an imperfect one as there is no one country with a pipeline of food on which Europe depends that it can turn off to great effect (although the moratorium on exports being operated by Russia and the Ukraine has had an impact on world prices).
Let's hope that just when we thought that intervention buying was fading away, it won't be rejuvenated as 'buffer stocks'. One of the greatest weaknesses of the CAP was always the creation of a risk free market through the purchase of surpluses by government agencies.
Nevertheless, one should never understimate the ability of producer interests to use new concerns to their advantage. In the past, for example, British farmers used concerns about the balance of payments to justify the subsidies they received. Food security concerns were significant during the formation of the CAP with recent experiences of food shortages in the minds of decision-makers. These concerns were reinforced by arguments about what might happen if the Cold War got a bit hotter.
With world supply and demand being tighter than it has been for some time, farming journalists and others have been trying to propel food security back on to the EU policy agenda. They appear to have scored at least a partial hit with farm commissioner Mariann Fischer Boel.
She said that Europe was producing enough to meet its own needs but had to keep one eye on growing demand around the world and discuss the question of 'food security'. 'It is obvious that the whole discussion on energy security started when suddenly the Russians cut off the pipelines. And it is obvious that we would want to think about food security. We can discuss buffer stocks just as you have for oil today.' EU rules require countries to keep three months' supply of oil in storage.
The analogy with energy security is an imperfect one as there is no one country with a pipeline of food on which Europe depends that it can turn off to great effect (although the moratorium on exports being operated by Russia and the Ukraine has had an impact on world prices).
Let's hope that just when we thought that intervention buying was fading away, it won't be rejuvenated as 'buffer stocks'. One of the greatest weaknesses of the CAP was always the creation of a risk free market through the purchase of surpluses by government agencies.
Saturday, September 15, 2007
Giant energy plants to transform UK countryside
The British countryside will be transformed through the planting of tall energy crops, the BA Festival of Science in York heard yesterday. Fields planted with miscanthus (or elephant) grass, 3-4 metres high, will look like Caribbean sugar-cane plantations.
The Rural and Economy Land Use programme (RELU) estimates that 15-20 per cent of Britain's agricultural land may have to be devoted to growing biofuels to meet international obligations to reduce carbon emissions and improve energy security. [The writer is a grant holder in the RELU programme].
The two main candidate crops are willow coppice, harvested every three years, and miscanthus, a fast-growing Asian grass harvested annually in late winter or spring. Farmers would grow those on poor quality arable land, said Anglea Karp of Rothamsted Research, RELU energy crops coordinator. 'The impact on agricultural land and food production is a big concern,' she said. 'Because the energy crops recycle their own nutrients and do not need fertilisers, they will not need to be planted on the best agricultural land.'
RELU has attempted to assess the public acceptability of a landscape dominated by giant energy crops. They conducted a survey using photographs of existing miscanthus and willow plantations. Surprisingly, two-thirds said they would not mind the triffids growing within sight of their home, although this figure fell when participants were told that more local power stations would be needed to produce energy from their crops.
Environmental surveys are particularly suspect because people feel a need to give the 'correct' green answer. When it comes to behaviour, NIMBY attitudes come to the surface.
Nevertheless, RELU supremo Philip Lowe seized the occasion to urge the government to 'take a more strategic approach to land use in rural areas.' The well connected Newcastle University professor said the government needed a strategic vision for balancing the growing pressures on home-grown food supplies with the need to grow energy crops.
The good professor turned words into action when he bought bananas as a healthy energy boost for the participants waiting for my panel at York.
The Rural and Economy Land Use programme (RELU) estimates that 15-20 per cent of Britain's agricultural land may have to be devoted to growing biofuels to meet international obligations to reduce carbon emissions and improve energy security. [The writer is a grant holder in the RELU programme].
The two main candidate crops are willow coppice, harvested every three years, and miscanthus, a fast-growing Asian grass harvested annually in late winter or spring. Farmers would grow those on poor quality arable land, said Anglea Karp of Rothamsted Research, RELU energy crops coordinator. 'The impact on agricultural land and food production is a big concern,' she said. 'Because the energy crops recycle their own nutrients and do not need fertilisers, they will not need to be planted on the best agricultural land.'
RELU has attempted to assess the public acceptability of a landscape dominated by giant energy crops. They conducted a survey using photographs of existing miscanthus and willow plantations. Surprisingly, two-thirds said they would not mind the triffids growing within sight of their home, although this figure fell when participants were told that more local power stations would be needed to produce energy from their crops.
Environmental surveys are particularly suspect because people feel a need to give the 'correct' green answer. When it comes to behaviour, NIMBY attitudes come to the surface.
Nevertheless, RELU supremo Philip Lowe seized the occasion to urge the government to 'take a more strategic approach to land use in rural areas.' The well connected Newcastle University professor said the government needed a strategic vision for balancing the growing pressures on home-grown food supplies with the need to grow energy crops.
The good professor turned words into action when he bought bananas as a healthy energy boost for the participants waiting for my panel at York.
Sarko changes French stance on CAP
Observers like Jack Thurston have picked up signs of a change in the French stance on the CAP for some time. But now President Nicholas Sarkozy has promised to initiate a fundamental debate about its purpose next year when France takes over the EU's rotating presidency. Using words never used by a French president before to a farming audience, he told farmers at a cattle fair near Rennes that they had to learn to make a living from market prices rather than subsidies.
It's a change from the days when Jacques Chirac was de facto farm minister, but before we get too excited a reading of his speech suggests that he envisages the continuation of subsidies by other but more legitimate and acceptable means.
He framed a partly free market message with a demand for more EU wide protection for a sector he described as 'an essential pillar' of the French economy. The EU should set a goal of 'stabilising markets' in agricultural goods, one that, of course, it has had since the Treaty of Rome. It would do this by re-establishing the principle of 'community preference', although he did not spell out what this would mean in practice.
He said that a reformed CAP would need to meet four objectives: ensure food security for Europe (groan); contribute to a growing global demand for food; preserve rural economies and landscapes; and help combat climate change.
It's a change from the days when Jacques Chirac was de facto farm minister, but before we get too excited a reading of his speech suggests that he envisages the continuation of subsidies by other but more legitimate and acceptable means.
He framed a partly free market message with a demand for more EU wide protection for a sector he described as 'an essential pillar' of the French economy. The EU should set a goal of 'stabilising markets' in agricultural goods, one that, of course, it has had since the Treaty of Rome. It would do this by re-establishing the principle of 'community preference', although he did not spell out what this would mean in practice.
He said that a reformed CAP would need to meet four objectives: ensure food security for Europe (groan); contribute to a growing global demand for food; preserve rural economies and landscapes; and help combat climate change.
OECD blasts biofuel subsidies
Governments need to scrap subsidies for biofuels as the current rush to support alternative energy sources will lead to surging food prices and the potential destruction of natural habitats, argues the OECD in a report leaked this week. The OECD argues that politicians are rigging the market in favour of an untried technology that will have only limited impact on climate change. [The writer is a member of the BBSRC Biofuels Panel but the views expressed here are entirely his own].
The survey says that biofuel would cut energy-related emissions by 3 per cent at most. The study estimates the US alone spends $7bn a year helping make ethanol, with each tonne of carbon dioxide avoided costing more than $500. In the EU it can be almost ten times as much.
There could also be negative environmental externalities. The report states, 'As long as environmental values are not adeuately priced in the market, there will be powerful incentives to replace natural eco-systems such as forests, wetlands and pasture with dedicated bio-energy crops.'
The survey puts a question mark over the EU's plan to derive 10 per cent of transport fuel from plants by 2020. It says money saved from subsidies phasing out should fund research into so-called second generation fuels, which are being developed to use waste products.
Not surprisingly, the NFU has sought to play down the impact on food prices. Their energy and climate change adviser Jonathan Scarlock said, 'The current high prices of commodities are more down to harvest problems in key exporting countries rather than the relatively small proportion going into biofuel production.' While the price of cereals may have doubled this year, the impact on the retail price of food is likely to be about 5 per cent. However, bread prices in the UK have already gone up more than that.
There is a certain amount of triumphalism among farmers' spokespersons at the moment about the fact that the era of cheap food is over. They point out that the proportion of income spent on food in advanced countries has fallen dramatically.
That's so, but many families with young children are on very tight budgets and with fuel prices going up and nursery fees high have little room to absorb food price increases. They may trade down in product quality. Also, supermarkets operating in a competitive environment will try to hold back prices.
The survey says that biofuel would cut energy-related emissions by 3 per cent at most. The study estimates the US alone spends $7bn a year helping make ethanol, with each tonne of carbon dioxide avoided costing more than $500. In the EU it can be almost ten times as much.
There could also be negative environmental externalities. The report states, 'As long as environmental values are not adeuately priced in the market, there will be powerful incentives to replace natural eco-systems such as forests, wetlands and pasture with dedicated bio-energy crops.'
The survey puts a question mark over the EU's plan to derive 10 per cent of transport fuel from plants by 2020. It says money saved from subsidies phasing out should fund research into so-called second generation fuels, which are being developed to use waste products.
Not surprisingly, the NFU has sought to play down the impact on food prices. Their energy and climate change adviser Jonathan Scarlock said, 'The current high prices of commodities are more down to harvest problems in key exporting countries rather than the relatively small proportion going into biofuel production.' While the price of cereals may have doubled this year, the impact on the retail price of food is likely to be about 5 per cent. However, bread prices in the UK have already gone up more than that.
There is a certain amount of triumphalism among farmers' spokespersons at the moment about the fact that the era of cheap food is over. They point out that the proportion of income spent on food in advanced countries has fallen dramatically.
That's so, but many families with young children are on very tight budgets and with fuel prices going up and nursery fees high have little room to absorb food price increases. They may trade down in product quality. Also, supermarkets operating in a competitive environment will try to hold back prices.
Tuesday, September 04, 2007
Special issue of Food Ethics
The autumn issue of Food Ethics focuses on EU farm policy. I wrote an introductory article and there are a number of interesting articles by academics and practitioners including Jack Thurston on where the subsidies go. You can read a sample of the material at Food Ethics
Monday, August 20, 2007
EU farmers need to save water
European agriculture should face the same 'user pays' principle as other EU consumers of water in the coming year in order to address the growing problem of water scarcity, according to a Commission Communication. The report by the Environment DG recognises that at least 20 per cent and maybe 40 per cent of water is wasted in the EU.
Climate change is likely to make drought a more frequent problem. Presenting the report Environment Commissioner Stavros Dinas pointed out that agriculture accounts for more water use than any other sector and as much as two-thirds in Southern Europe.
Supporting studies show that potential water savings resulting from improvements in the conveyance efficiency of irrigation systems range between 10 and 25 per cent of their withdrawals. Water savings resulting from improving application efficiency can range between 10 and 60 per cent of water use. Additional water savings can be expected from changes in irrigation practices (30 per cent), use of more drought-resistant crops (up to 50 per cent) or reuse of treated sewage effluent (10 per cent).
The potential water savings in the irrigation sector would amount to 43 per cent of the current agricultural volumes absorbed.
Climate change is likely to make drought a more frequent problem. Presenting the report Environment Commissioner Stavros Dinas pointed out that agriculture accounts for more water use than any other sector and as much as two-thirds in Southern Europe.
Supporting studies show that potential water savings resulting from improvements in the conveyance efficiency of irrigation systems range between 10 and 25 per cent of their withdrawals. Water savings resulting from improving application efficiency can range between 10 and 60 per cent of water use. Additional water savings can be expected from changes in irrigation practices (30 per cent), use of more drought-resistant crops (up to 50 per cent) or reuse of treated sewage effluent (10 per cent).
The potential water savings in the irrigation sector would amount to 43 per cent of the current agricultural volumes absorbed.
Sunday, August 19, 2007
End protectionist biofuel barriers urges FAO chief
UN Food and Agricultural Organisation chief Jacques Diouf has urged the EU and US to lower protectionist barriers against ethanol imports to promote the development of biofuels in developing countries. They are often better suited to their production. Many analysts think that the environmental equation does not add up in the developed world for biofuels, quite apart from their likely impact on food prices.
At present, the bioenergy industry is regulated by domestic policies rather than international agreement. Diouf would like opportunities created for developing countries to take advantage of their comparative advantages in terms of ecosystems and climates that are more suited to biomass production, as well as ample reserves of land and labour.
The US, Europe and Brazil last year accounted for almost 95 per cent of the world's biofuel production with Canada, China and India produced most of the rest. Biofuel production, mostly of corn-derived ethanol in the US and rapeseed-derived biodiesel in Europe, doubled between 2000 and 2005, but still accounted for just 1 per cent of global road transport fuel. This is projected to rise to 4 per cent ny 2030.
At present rich countries' traiffs make it uneconomic for poor countries to grow biofuel crops. The problem for developing countries is exacerbated by food prices being pushed up by the biofuel industry's rising consumption of crops. Corn prices this year reached an 11-year high of $4.30 a bushel while wheat prices rose recently to $6.96 a bushel, the highest sive 1996.
At present, the bioenergy industry is regulated by domestic policies rather than international agreement. Diouf would like opportunities created for developing countries to take advantage of their comparative advantages in terms of ecosystems and climates that are more suited to biomass production, as well as ample reserves of land and labour.
The US, Europe and Brazil last year accounted for almost 95 per cent of the world's biofuel production with Canada, China and India produced most of the rest. Biofuel production, mostly of corn-derived ethanol in the US and rapeseed-derived biodiesel in Europe, doubled between 2000 and 2005, but still accounted for just 1 per cent of global road transport fuel. This is projected to rise to 4 per cent ny 2030.
At present rich countries' traiffs make it uneconomic for poor countries to grow biofuel crops. The problem for developing countries is exacerbated by food prices being pushed up by the biofuel industry's rising consumption of crops. Corn prices this year reached an 11-year high of $4.30 a bushel while wheat prices rose recently to $6.96 a bushel, the highest sive 1996.
Tuesday, July 31, 2007
Puzzle over co-decision
It is far from clear how agricultural issues will be dealt with under co-decision once the reform treaty is enacted. Under current rules, most CAP dossiers are decided under the 'consultation' procedure, where the Council must wait for an EP opinion, but has no obligation to incorporate EP amendments into the final text.
The reform treaty retains the text of the consitutional treaty which made a distinction between 'bigger' political issues, but consultation would remain for so-called 'technical' dossiers such as those 'relating to prices, customs duties, quotas and direct aids.' In practice, some of these could be very political. In any case, the distinction is a very fuzzy one and requires clarification if the system is to work.
The EP, although very attuned to issues like the environmental costs of pesticide use, has often not been a strong advocate of reform with its agriculture committee dominated by farm interests.
The reform treaty retains the text of the consitutional treaty which made a distinction between 'bigger' political issues, but consultation would remain for so-called 'technical' dossiers such as those 'relating to prices, customs duties, quotas and direct aids.' In practice, some of these could be very political. In any case, the distinction is a very fuzzy one and requires clarification if the system is to work.
The EP, although very attuned to issues like the environmental costs of pesticide use, has often not been a strong advocate of reform with its agriculture committee dominated by farm interests.
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