Boom in Borage?

Walking the fields near my home, I noticed a new blue starflower crop that I was not familiar with. Indeed, the crop has suddenly become one of choice throughout this part of Warwickshire.

A little research established that it was Borage, a high value, speciality oil crop. Similar to Evening Primrose, Borage is recognised as a key source of gamme-linoclenic acid (GLA) and is used, when marketed as Starflower Oil, as a health food supplement or in skin care creams. GLA is known to have anti-inflammatory properties, without causing side-effevts often encountered by other inflammatory drugs.

Borage was first grown as a field crop in the UK in 1983, mainly in East Anglia. During the 1990s the crop area increased significantly. It has agronomy advantages as it is a good break crop in arable rotations. It's a low input crop with minimal environmental impact, not normally needing pesticides and requiring low inputs of nitrogen.

Under the single farm payment regime, farmers can be more ambitious about growing different crops as they do not need to sell into intervention to obtain subsidy payments. The contract price for borage is currently around £2,000 per tonne and ex farm gross margins of £630 per hectare are achievable. A number of companies in the UK offer 'buy back' contracts and agronomy support.

If grown specifically for the pharmaceutical industry, Borage can be grown on set aside land, but as the majority is grown as a food supplement this is not generally possible. However, set aside looks like it is on its way out with the increasing amount of land devoted to biofuels.

The spread of Borage into Warwickshire suggests that to an extent the policy instruments of the new look CAP are working. Of course, it also means less land devoted to conventional food crops, pushing up their price. But, in principle, it should mean that farmers get better returns from the market and have less need of subsidy.

Are biofuels to blame for agflation?

The UK's consumer prices index showed annual food price inflation of 6 per cent in April, the highest level in almost six years and well ahead of overall inflation of 2.8 per cent. In the US, prices have risen by 6.7 per cent, seasonally adjusted, since the beginning of the year, compared to 2.1 per cent for all of 2006.

There are some proximate factors driving food prices. Florida promises the smallest orange crop in 17 years. Swine fever in China has pushed up local pork prices. Coffee prices have been pushed up by adverse weather affecting production in Vietnam and Brazil, the two largest producers.

Of course, the relationship between food prices and inflation in general has been weakening. In the late 1940s food accounted for 43 per cent of the US consumer price index. By 1975 it was down to a quarter and its weight in the basket is now just 14 per cent.

Biofuels are gradually taking over as the main growth driver of agricultiral demand, Goldman Sachs says that if government policies are adopted in full, global demand for biofuels could increase from 10bn gallons a year to 25bn gallons by 2010. In the US ethanol production accounted last year for 16 per cent of the corn (maize) crop. If farmers are to fill cars as well as stomachs, then there is an argument for structurally higher prices of some agricultural commodities.

Of course, one response in a market system is to increase production, although this is ultimately limited by the availability of suitable land. Indeed, global grain production will rise by 6.2 per cent to a record 1.666bn tonnes in 2007-08, according to the International Grains Council. However, this will not match global consumption forecast at 1.680bn tonnes.

China's Communist rulers are worried and have announced a moratorium on the production of ethanol from corn and other food crops. In China grain security has been at the top of the party's political priority list and a 43 per cent increase in the price of China's staple meat - pork - triggered concern at the highest levels of the party.

The European Commission argues that its 10 per cent 2010 target for biofuels will not put a great strain on food markets. Their analysis suggests that prices for agricultural raw materials in the EU would rise by 3-6 per cent for cerals and 5-18 per cent for the major oilseeds as a result. As the cost of cereals makes up only 1 to 5 per cent of the consumer price of bread, which means that bread prices would increase by less than 1 per cent.

Although concerns have been expressed that planting biofuel crops may contribute to deforestation, biofuels do have clear environmental benefits. Corn-based ethanol gives 35 per cent more energy than it takes to produce. Greenhouse gas emissions per gallon of fuel used are 18 to 29 per cent lower with ethanol than with fossil fuels.

Biofuels are politically popular in the States because they give an income boost for farmers in the electorally marginal Mid West and also seek to address the country's security concerns about energy dependence on the Middle East. President Bush wants the country to produce 35 billion gallons of corn-based ethanol, a goal that will require an additional 129,000 square miles of farmland, an area the size of Kansas and Iowa combined.

What are implications for the CAP? In an ideal world, the promise of improved market returns should mean that farmers, particularly big grain farmers, would have less need of subsidy. Farmers would no doubt argue that they are recovering from a long period of low incomes and that indeed their real incomes has been falling for a century (although in practice this is offset by much larger scale operations that secure economies of scale).

A real concern is that the rush to biofuels will boost food security discourses. These are seen as the best bet by those who want to return to discredited productionist orthodoxies and to make the claim that farming cannot function as a normal commercial activity but should be subsidised.

New French farm minister is not good news

French farm minister Christine Lagarade only lasted a month in the job before being promoted to finance minister and her successor, Michel Barnier, is not good news if you are a reformist.

He said on Tuesday that his experience as a European Commissioner could help him defend the interests of French farmers within the EU and on a global level. The 56-year old is familiar with the workings of the European Union from his time as commissioner for regional policy and institutional reform from 1999-2004, when he managed the second largest EU budget after agriculture. He was also French foreign minister from 2004 to 2005, but was replaced after French votes rejected the EU constitution in a referendum.

'I will say now what I have always said when I was foreign minister: the common agricultural policy is not an archaic policy. It's modern,' he told RTL radio. So French farmers have nothing to fear, but the rest of us do.

Sarkozy is basically a conservative (he is certainly not a liberal) and he has more important agenda items than agriculture where basically his strategy seems to be not to offend the powerful French farmers lobby.

When I was in Paris, one questioner when I gave my paper suggested that the SFP was deliberately introduced to give a more transparent instrument that would draw public attention to the payments made to big farmers. I do not think the reformist camp was that smart.

In any case, actually getting hold of this information and publishing it is quite difficult as is evident from Jack Thurston's blog at Farm Subsidies Four countries have declined to supply the information and for most member states, including the UK, only partial information is available.

COPA to smarten up its act

Casual explanations of the persistence of the CAP put it down to the strength of the 'farm lobby'. At a national level, there is some truth in this and the positions of member states in the Farm Council often reflect pressure from their domestic farmers' organisations. After all, upsetting them is likely to lead to a lot of trouble and very few plaudits.

However, the European farm level organisation, COPA, has been a shadow of its former self for some time. It was originally set up at the instigation of the Commission and had a close relationship with them through to the 1970s. But since then its influence has faded. This partly reflects a failure to grasp the extent to which the agenda on the CAP, and the acceptable justifications for subsidies, has been changing.

There have been a number of internal reviews of COPA, but the latest one opens up the prospect of change. According to new Secretary-General Pekka Psonen with the EU now having 27 member states, COPA cannot afford to be hostage to any single organisation. Hence, it looks likely that the current unanimity rule will be scrapped and replaced by a system of qualified majority voting.

Will COPA's thinking also be dragged into the 21st century? We shall have to wait and see.

Sarko's hard line could have a paradoxical end

The hard line being taken by France's new president, Nicolas Sarkozy, on the future of the CAP could have a paradoxical outcome: further re-nationalisation of the policy once seen as the cornerstone of the European Union.

Sarkozy has revived the notion of 'communiy preference', a term dating back to the 1950s which referred to favouring domestically produced goods over imports. The Commission's off the record reaction was 'That would be going back to the CAP of 20 years ago.'

The upcoming health check of the CAP will present some challenges for French policy. Farm Commissioner Mariann Fischer Boel wants aid to farmers to be fully decoupled from production, but France has been one of the most enthusiastic users of options for 'recoupling'. She is also thought to think that intervention purchasing should only be an emergency option.

In the longer run, Budget Commissioner Dalia Grybauskaite is said to favour a radical overhaul of the EU budget after 2013 with a major shift in spending away from farm support towards growth and competitiveness-related spending.

France will become a net contributor to the CAP after 2013. French centre-right MEP Alain Lamassoure, who has been advising Sarkozy on EU affairs, has published proposals which would see greater co-financing of support by national governments. This is not favoured in the Commission as a potential distortion of competition which would undermine the common character of the CAP.

Yet if the EU decides on cuts that are too radical for Sarkozy, or at any rate for domestic French opinion, the solution could be to pay subsidies to French farmers from national funds. Thus, the final outcome could be even more re-nationalisation of the CAP than that which arose from the compromises of the 2003 reform.

I shall be presenting a paper on the CAP in Paris on Thursday and it will be interesting to see what the state of French opinion is.

Water is not just an issue for Australia

Dry irrigation channel near Griffith, New South Wales

The long drought in Australia has now given way to serious floods in New South Wales. Apart from the fact that Australia is a competitor with the EU, what is the relevance for the CAP? With increasing evidence of global warming, the effective use of water is an issue that concerns everyone in the world. Adequate supplies of water for intensive agriculture are an increasing problem in many parts of Southern Europe and water abstraction for water intensive crops is an issue in many parts of southern and eastern England.

A few years ago I visited the town of Griffth, NSW. which is at the heart of an irrigation district in the Murray-Darling basin in an area known as the 'Riverina'. It is sometimes referred to as Australia's version of California's Sacramento Valley. The basin as a whole accounts for some 40 per cent of Australia's agriculture and 85 per cent of its irrigation.

My notes at the time stated, 'We visited an irrigated farm producing rice as well as wheat and canola. In the last year farms have only been permitted 38 per cent of their normal water extraction. The amount of water needed to produce rice has been reduced from around 16 mega litres a hectare to around 11, but this still leaves it as a very water intensive crop.'

Australian rice farmers lead the world in water conservation. Their water use per tonne of output is half the global average. But in the last growing season there was no water for the rice farmers around Griffith.


How it should look: irrigation channels at work

Droughts are nothing new in the Murray Darling because of the periodic El Nino weather pattern. However, irrigators were allowing too much water to be taken out of the Murray-Darling. By 1994 human activity was consuming 77 per cent of the river's average annual flow, even though the actual flow falls far below the average in dry years. The mouth of the river was beginning to silt up. Thanks to a combination of reduced flow and increased run-off from saline soils churned up by agriculture, the water was becoming increasingly salty.

Australia has a fragile ecology that supports a bewildering and amazing biodiversity. It is also the world's biggest exporter of 'virtual water' embedded in farm produce. Just 0.5 per cent of Australian farming is artificially watered, but it produces 23 per cent of agricultural output.

Economists argue that it would make sense for farmers to sell water from their allocations to cities, given that the average price of urban water is $A1000 per megalitre whereas farmers trade water between themselves at $A100 a megalitre in drought years. Politics also comes into it as the farmers generally support the National Party, Prime Minister Howard's junior coalition partner.

The reduction in the availability of Australian produce is one factor producing higher food bills across the world. This year's wine grape harvest has fallen by 30 per cent, the equivalent of 400 million litres. This has eased the wine glut that was hitting Australian producers, but means the end of the cut-throat discounting of the last two years.

And if a country as economically strong and politically robust as Australia has difficulties sorting out its farm water problems, what does that imply for the rest of the world?

Is there hope in France?

Christine Lagarde

After Nicholas Sarkozy appeared to indicate that it was 'business as usual' in French agricultural policy, the appointment of Christine Lagarde as farm minister gives a ray of hope. Named as the 30th most powerful woman in the world by Forbes in 2006, she was formerly trade minister.

She was formerly chief of a big American law firm. Although she has been careful to say that agriculture would continue to have a 'strategic' role, Ms Lagarde also said that France could continue its position of 'intransigence' for ever.

Perhaps she can use her skills as a synchronised swimming champion to move the debate on CAP forward.

Wine reform will lead to job losses

The competition: a vineyard in Chile

An impact assessment of the European Commission's proposed reforms to the CAP wine regime warns that job losses are inevitable in parts of Europe most responsible for the distillation of wine. The report quotes Italian organisations, not an entirely disinterested source, that the sector could lose 75 per centr of its jobs in Italy.

Reform is also expected to bring down the price of cheaper table wines as wine that would, under the old regime, have been distilled is instead bottled for sale (with binge drinkers in Britain being one possible market). However, specialised table wine producers in Sicily and Languedoc-Roussillion in France could see their income fall by up to a third. Enraged wine makers in Languedoc-Roussillion started fires in several French supermarkets to protest against the reform.

However, CEEV, the European wine producers' federation said that changes in the industry were inevitable in the face of growing globalisation. 'This may be the last chance we have to update the sector', warned José-Ramón Fernandez. 'We welcome the Commission's efforts as long as they are accompanied by measures to move into alternative agricultural sectors that are socially acceptable to producers.'

A Commission spokesman said that the changes were likely to mean less but better wine on the market in the short term, but in the long-term a more competitive market, together with simplified labelling and classification rules, could see production soar. 'In the long-term people around the world could be drinking French and Spanish and Italian wine, instead of New World varieties.'

Perhaps. But New World producers know that the market has changed, with a mass market less interested in provenance and more in having drinkable wines available at an affordable price. In the short run, Australian production could be hit by the country's chronic drought, a topic we hope to cover soon

Plus ça change, plus c'est la même chose

France's new president Nicolas Sarkozy has aligned himself firmly with traditional French thinking on the CAP. He warned that he expected the EU to take a much tougher stance in global trade talks and said that he would not allow his country's farmers to be sold 'at the lowest possible price.'

He said that he would not allow cuts in support for European farmers while their US counterparts benefited from the same policies. Trade offs did not interest him: 'I'm not going to sell agriculture to get a better opening for services.' Mr Sarkozy said he as not going to be 'boxed in' if others failed to make reciprocal offers.

With the Doha Round talks seemingly making little real progress, Mr Sarkozy has dashed hopes that he might to talk a more flexible approach to cutting EU farm tariffs than his predecessor.

Scrap CAP says Commons committee

The Common Agricultural Policy should be scrapped and replaced with a new rural policy for the European Union says the House of Commons Select Committee on Environment, Food and Rural Affairs. The report is a response to the Government's 'Vision for the Common Agricultural Policy' published in December 2005. I appeared before the committee: further details of the report can be found at: CAP

The report states, 'The objectives of the CAP have remained unchanged for the last 50 years and now an anachronism. For all its revolutionary rhetoric, the UK Government's "Vision for the Common Agricultural Policy" was ultimately a disappointing lost opportunity as it merely described an evolution of the existing policy, primarily motivated by budget savings, rather than presenting a truly revolutionary vision.'

I was critical of the Government's strategy and tactics in launching the Vision document. The report comments, 'The Government showed a naivety in believing that its Vision document could be its catalyst to a reform agenda when it was introduced so near to the end of its Presidency and without any programme in place to gain support for the British position. For British ideas to succeed, it is important that the UK adopts a more sophisticated approach to its agenda than when it launched its Vision document on an unsuspecting audience and without prior effort to prepare other farm ministers for its arrival.'

It further notes, 'Not only did this approach subsequently damage its prospects for Pillar 2 development, it may well have undermined the UK Government's ability to infuence the reform agenda in the future by antagonising the European Commission and the other EU member states.'

The report talks favourably of the idea of a bond scheme, but notes Commissioner Fischer Boel's argument that it would lead to the demise of cross-compliance. However, the bond is intended to replace and phase out SFP payments. Separate payments could still be made for public good provision by farmers linked to cross compliance.

The report is perhaps too optimistic about the forthcoming CAP 'health check' offering a means of moving the debate forward given the narrow way in which its purpose has been defined by Commissioner Fischer Boel.

Wine lake threatens to overflow

Chilean 'reserve' wine in oak barrels - see story below

A tabloid newspaper once asked me if I could help them with a stunt whereby a journalist in a boat would row on the wine lake. Needless to say, the wine lake does not exist in a form that lends itself to such an enterprise. Nevertheless, the crisis of surplus wine stocks in Europe is such that the lake metaphorically threatens to overflow.

The Commission's proposed reform measures would not have eliminated the problem, but now their effectiveness is going to be further diminished by dilution at the insistence of wine producing states like France, Italy and Spain, aided and abetted by wine producers among accession states such as Bulgaria and Romania.

The fundamental facts are these: Europeans are drinking less wine (consumption is declining by 0.65 per cent a year) and they are drinking more 'New World' wines from Australia, California, Chile etc. Exports are also declining, so that ten years ago the EU held mpre than 80 per cent of the world wine market and its current share is 65 per cent. Moreover, the accession of Bulgaria and Romania has pushed up production by some 7 million hectolitres.

The structural surplus in the wine market in a 'normal' year is around 12.8 million hectolitres and this does not include the amount distilled for industrial use. The EU is currently spending €1.269m a year on the wine regime, about forty per cent of that being spent on distillation.

Policy instruments have not worked well. The ban on new plantings has not controlled production because yields have increased in some member states and there have also been illegal plantings. The grubbing up scheme has virtually ceased to operate.

Wine is a very conservative industry in Europe and the rigid rules on labelling and wine-making practices hinder innovation. When I visited a Chilean winery last year, they told me that they had two types of wine, standard and reserve, the latter being matured in oak barrels.

Attempts to promote the idea of Geograohic Indications are making little headway anyway, but are not helped in the case if wine by the dichotomy between table wines and 'quality' wines produced in specified regions.

The Commission's original proposal envisgaed getting rid of about 12 per cent of the current area of vineyards. This would not have eliminated the surplus in a declining market, but it now looks likely that the grubbing up programme will be halved.

It is disappointing that the European Parliament has taken a hostile approach to the Commission's proposals. Particular interests have prevailed over more general ones. However, the wine sector itself needs to become more competitive otherwise it will suffer more in the long run.

Sugar reform hits trouble

Last year's sugar reform has hit trouble and it's a familiar story: too much sugar is still being produced in the EU. 2007 production plans show that quotas have only fallen by 2.2 million tonnes over the first two years, well below the 5-6 million tonne target.

Moreover, the new rules also allow most sugar producers to purchase limited quantities of extra quota at €730 per tonne, and many companies who believe that their long-term future is promising have taken up this option, with nearly 900,000 tonnes of extra quota having been bought. In all, therefore quotas have only fallen by a net total of just over 1 million tonnes. Only three countries have ceased production altogether: Ireland, Latvia and Slovenia.

The quota system, together with high support prices, has not only built in large surplus production, but has left no room for imports. The commitment to import sugar from the ACP countries is being replaced over a transition period by quota free imports from the least developed countries and eventually from the ACP countries. The prices set in the EU will still be well above current world market levels even at the end of the reform process and the EU market is likely to be attractive to many producers in the developing world where the option for growing alternative crops is limited.

The reform cut sugar sale prices by 36 per cent over four years and set up a restructuring fund to pay uncompetitive processors and farmers to close down. Factories could choose between competing for sales at the new price, or being paid to cut their production quotas. According to the Commission, sugar facories were reluctant to reduce quotas because it was unclear how much of the restructuring aid they would have to pass on to sugar farmers. The reform gave farmers the right to at least ten per cent of the aid but member states could decide to hand out more.

The Commission is concerned that processors have been discouraged from taking up restructruring as they have been offered too small a proportion of the payment, particularly in the new member states where take up of restructuring money has been much lower than expected. The Commission plans to allow producers to keep 90 per cent of the restructuring money, with the remainder passed on to farmers. In any event, the world sugar market is very volatile and likely to become more so now that the EU has virtually disappeared from world trade.

Commission waters down wine reform

The Commission has backed away from radical plans to reform Europe's perenially troubled wine sector in the face of opposition from member states. The proposals put forward last June offered EU winemakers €2.4 billion over five years as an incentive to dig up their vines and concentrate on producing quality wines.

In particular the vineyard removal scheme will be much less extensive than originally proposed. The target for grubbing up vines, originally set at 400,000 of the current 3.4 million hectares, looks set to be cut in half. In any case, the scheme would continue to be voluntary for producers with no one forced to tear up vines.

All vine-covered land is planned to become eligible for Single Farm Payment to secure the 'Green Box' status of these aids in any future WTO dispue.

The Commission's plans have encountered opposition from some member states, not least Germany who are upset by a plan to ban the use of sugar. German farm minister Horst Seehofer claimed that Germany would lose part of its competitiveness 'if we did without sugar unnecessarily.' A ban on adding sugar would increase the cost of producing wine in Germany by up to 25 per cent. However, Commission officials argue that half of quality German wines are already produced without using sugar.

Accession states face surplus stocks fines

The Commission has announced that all of the 2004 accession states except Hungary will have to pay for failing to stop speculators building up stocks and benefitting from selling them at EU prices. The issue has caused alarm in the new member states who claim that in many cases the build up of stocks was due to hoarding by citizens rather than any profiteering by commercial traders. This was the excuse used by Estonia to explain what would have been huge sugar stocks per household, the argument being that Estonians were preparing for an orgy of jam making which was claimed to be an historic national pasttime.

Poland will have to pay €12.5m for surplus meat stocks, the Czech Republic €12.3m for excess meat and fruit stocks and Estonia €7.6m for milk. However, the relatively poor accession states will be given time to pay with instalments spread out over four years.

Butter mountain finally melts

The satisfied look of this cow in the Azores is no great surprise as it receives one of the biggest cattle subsidies in the EU, although still not enough for Portugal who voted against the last CAP reform on the issue of the fate of dairy cows in the Atlantic islands.

After 39 years of a butter mountain under the CAP, it has finally melted away. When the Soviet Union still existed, stocks of 'ageing' butter used to be sold off to its consumers who were glad to get any butter at all.

The last remaining stocks (in the Czech Republic, Finland and Spain) have been sold off. High market prices have led the Commission to close intervention in Spain, so it only remains open in Portugal.

Stocks reached a peak in 1986 when stocks totalled no less than 1.283 million tonnes, but the imposition of milk quotas helped to curb the build up. The other form of intervention buying in the dairy market, that of skimmed milk powder, ended in 2006.

Dairy intervention arrangements could be abolished as part of the forthcoming Health Check review. Dairy farmers still receive support, however, even though they might like to pretend otherwise. The virtual cow that was launched at the end of the 1990s never made its way into legislation, but dairy farmers receive their payments in another form.

Oxfam has estimated that a dairy cow in the EU can receive a subsidy of as much as $2 a day. Even if this figure is exaggerated, it is more than many people live on in least developed countries.

'We're all doomed'

Norfolk farmer David Richardson writes a weekly column in Farmers Weekly. The magazine has recently undergone a revamp under a woman editor, but David Richardson's column has survived, no doubt because he is seen as an articulate spokesperson for the 'big' farmer.

I met David Richardson once and he is undoubtedly a pleasant and sincere guy who defends his corner as best he can. But it's a pretty unreconstructed corner. Any argument will do to defend protection and subsidies for British farmers. Food security has always been a favourite theme of his in recent years. Defra is, of course, either hostile or ignorant to farmers, unlike good old MAFF. Anyone who fails to buy British food (unless it is a tropical crop) is close to being a traitor, while Global South farmers shouldn't be allowed to export to Britain because their animal welfare standards don't match those in one of the richest countries in the world.

In one of his most recent columns, Richardson claims 'subsidies - particularly the SFP element- are going to be phased out over the next few years.' I've heard a distinguished official at a farming organisation taking a similar line. And I've even heard a similar line taken by experienced BBC journalists who should know better.

Now it's more than likely that the 'financial discipline' will reduce SFP between now and 2013 because of the accession of Bulgaria and Romania but only by probably about seven per cent. Given that Mr Richardson, by his own admission, derives some twenty per cent of his farm income from SFP (and more from other payments), he should still be safe for nineteen per cent.

It's likely that SFP will be reduced further after 2013 but it is unlikely to disappear altogether.

So why are the likes of Mr Richardson making such claims which are remnsicent of the famous line favoured by one character in the old British sitcom Dad's Army, 'we're all doomed'? I would suggest because if such claims are made long enough and loud enough, the public will believe that subsidies are not being paid any more.

It has been claimed that the public is becoming more sympathetic to 'supporting' British farmers, although why a commercial activity should need supporting (other than for the public goods it provides) is not clear. But a mixture of ignorance (about the true cost), sentiment (about the countryside) and nationalism (about food security) can provide a heady mix in support of the status quo.

Fruit and veg reform could bring health benefits

Seeing through the Commission's proposal for reform of the fruit and vegetable regime could bring health benefits. With the exception of Greece and Italy no EU member state is currently meeting the World Health Organisation's recommended consumption rate of 400kg per day per capita. From the viewpoint of Commission officials, getting consumption up to the WHO minimum level would also provide a commercial answer to the sector's marketing problems.

Fruit and vegetable markets are very susceptible to short-term supply and demand crises. These result from both the perishable nature of the product and the susceptibility of both production and consumption to weather conditions. It is hard to underestimate how weather sensitive demand for these product is.

The Commission favours 'Producer Organisations' operating their own 'crisis management' schemes. This is a rather old style 'corporatist' solution which is handicapped by the fact that such organisations do not exist in all member states. In the Netherlands with its extensive glasshouse production sector, 79 per cent of growers are in such organisations. Membership in some accession states is particularly low: 1 per cent in Poland, 3 per cent in Cyprus and 4 per cent in Hungary.

However, some member states have still been upset by the Commission's far from radical proposals. They are particularly opposed to the idea that 20 per cent of an organisation's budget should go on environmental measures and that no more than 30 per cent should be spent on crisis management.

The UK uses a retailer led system of category management with a limited number of suppliers to each retailer, although a supplier may organise several growers. I am currently engaged in two research projects related to the horticulture sector and it has to be admitted that this system does produce greater concentration of ownership and production with retailers able to delist suppliers with little warning. However, the solution to those problems might lie in a more robust application of competition policy, something to be discussed in a future post on the dairy sector.

One Vision, Two Steps

It sounds like a Maoist slogan, but farm commissioner Mariann Fische Boel set out a 'one vision, two steps' plan for the reform of the CAP at the recent Agra Europe conference in London. As she has made clear before, the forthcoming Health Check which will address the period up until 2013 is seen largely as a tidying up exercise rather than an opportunity for further fundamental reform. The Commission is currenly preparing a Green Paper on the Health Check but this is not expected to be ready until after the summer.

However, a substantial shift in the structure of EU financing for agriculture and the rural economy remains a distinct possibility for the period after 2013. In the meantime, Single Farm Payment payments could be cut by 7 per cent a year by 2013 under the Financial Discipline Mechanism. This would result from the continuing phasing in of direct aids to accession states, aggravated by the addition of Bulgaria and Romania which took the SPS payment budget beyond the Pillar 1 budget ceiling. However, Fischer Boel confirmed that the SPS 'will be with us for a long time to come.'

The Danish farm supremo had little time for the two main drivers of CAP reform. She said that 'Thinking about policy must drive the European budget. If we put things the other way round ... we won't have a CAP that can meet the very real challenges of the futuree.' She also declared that she would not allow the Doha Round of international trade talks be 'the main driver of our domestic policy for farms and rural areas in the years ahead.'

In short, Fischer Boel wants to continue the reform process, but she wants to retain a CAP a long time into the future. And, of course, doing the first task makes it easier to achieve the second.

Sea of ignorance

A new Eurobarometer survey has found that 72 per cent of respondents considered themselves to be uninformed on agricultural issues and over half (54 per cent) had never heard or read about the CAP. The 43 per cent who claim to have at least some degree of awareness comprises of 34 per cent who say 'they don't really know exactly what it is' and just 9 per cent who say they know 'exactly what it is'.

Not surprisingly, the highest level of awareness is found in France, where almost two-thirds (64 per cent) have heard of the CAP and nearly one in five (19 per cent) are exactly aware. There is also high awareness in two other beneficiary member states, Ireland (61 per cent, 16 per cent exactly aware) and Poland (60 per cent, 10 per cent exactly aware).

Having been told that 40 per cent of the overall EU budget is spent on agriculture, only 16 per cent thought this was too high and almost 6 in 10 thought that this share should stay the same or increase in coming years. But then presumably if one told some respondents that 40 per cent of the EU budget went on supporting small shopkeepers, one might get a similar pattern of answers.

Those questioned (41 per cent) thought that ensuring the health and safety of food products should be the main priority of the CAP and one might question how far that forms part of the policy.

In between public ignorance and concentrated interests seeking to defend the CAP, it's difficult to find a space in which reformists can insert themselves.

It's nice to have it confirmed

Maurice Faure is the last surviving signatory of the Treaty of Rome. So it's nice to have his confirmation that the Treaty, whose agricultural clauses have never been modernised, was a great deal for farmers.

Faure told the Financial Times, 'The Treaty of Rome was very favourable to farmers.' The new arrangements offering subsidies and markets for France's grain and sugar beet surpluses were 'a big concession by Germany.'