The scale of bids to permanently dig up vineyards under the first year of the grubbing-up scheme set up under the wine reform has surprised the Commission. They have been obliged to reduce each application by 54.1 per cent as a result. Bids across the EU for just under 160,000 hectares have been reduced to just over 73,000. The total budget for the first year of the grubbing up scheme was €464m.
The applications cover 4.2 per cent of the European Union wine area. but as mich as 12.7 per cent in Cyprus and 8.9 per cent in Spain. These countries perhaps have relatively high proportions of lower quality wines while Cyprus is a recent entrant to the EU and will have not been able to take advantage of earlier schemes. 91 per cent of the funds have been allocated to Spain, Italy and France.
Europe continues to face a challenge from the new wine producers of Australia, Chile, New Zealand and South Africa, particularly in relation to medium quality 'drinkable' wines.
Tuesday, December 02, 2008
Friday, November 21, 2008
CAP Health Check deal
An outline of the compromise deal brokered by the French presidency to complete the CAP health check can be found here: Euractiv . There is also extensive coverage on the CAP Health Check blog that we work with: see Health Check. Even if the name of the blog eventually changes, the need for its campaigning stance remains.
Further progress has been made in the direction of strengthening Pillar 2 payments which emphasise environmental protection. Indeed, this move has upset the NFU: NFU . However, this is not a fundamental reform of the CAP, but nor was it meant to be. For that we will have to wait at least until 2013.
In any case with economic crisis hitting Europe the attentions of its leaders is focused elsewhere. Industrial policy is making a comeback, particularly in France and Italy. In so far as payments to bail out firms in difficulty become fashionable once again, aid to farmers looks less exceptional and less open to criticism. A quote from Silvio Berlusconi about says it all: 'State aid, which until yesterday was considered a sin, is now absolutely essential.' So much for the internal market.
Industrial policy was, of course, as big a disaster as farm policy: it just didn't last as long. The least efficient firms went out of business eventually and those that were left were able to compete in normal economic conditions.
We will provide more analysis over the coming weeks.
Further progress has been made in the direction of strengthening Pillar 2 payments which emphasise environmental protection. Indeed, this move has upset the NFU: NFU . However, this is not a fundamental reform of the CAP, but nor was it meant to be. For that we will have to wait at least until 2013.
In any case with economic crisis hitting Europe the attentions of its leaders is focused elsewhere. Industrial policy is making a comeback, particularly in France and Italy. In so far as payments to bail out firms in difficulty become fashionable once again, aid to farmers looks less exceptional and less open to criticism. A quote from Silvio Berlusconi about says it all: 'State aid, which until yesterday was considered a sin, is now absolutely essential.' So much for the internal market.
Industrial policy was, of course, as big a disaster as farm policy: it just didn't last as long. The least efficient firms went out of business eventually and those that were left were able to compete in normal economic conditions.
We will provide more analysis over the coming weeks.
Monday, November 17, 2008
The methane menace and hamburgers
A paper on the contribution to climate change of livestock methane emissions has found that the problem is likely to get worse as global demand for meat and dairy products increases. Dr Andy Thorpe, an economist at Portsmouth University, found that a single herd of 200 cows can produce annual emissions of methane roughly equivalent in energy terms to driving a family car 180,000 km.
Whereas carbon dioxide emissions have increased 31 per cent over the past 250 years, methane, which has a higher warming potential and a longer atmosphere lifetime than carbon dioxide has increased by 149 per cent over that time. Dr Thorpe commented that 'Methane emission growth ... has been increasing exponentially in the developing world due to a rise in incomes leading to an increased demand for meat and the "hamburger connection" where developing countries make a lucrative profit supplying meat to developed countries.'
Attempts to curb animal methane emissions have included feeding grazing animals on cottonseed and alfalfa, using food additives, and vacinnating animals with drugs, but it is not clear if they will work on a large scale. A reduction in the amount of livestock kept for meat and milk would only put pressure on other food sources, such as cereals.
Animal methane emissions from developing countries have increased to 75 per cent of the global total, with India and Brazil in the lead. It is thought that atmospheric methane is responsible for one-fifth of the global warming since 1750.
Cows, sheep, goats and camels have an additional stomach and produce large amounts of methane as they digest their food. A dairy cow in New Zealand will typically produce around 80kg of methane a year, just through burping.
The policy pressures this produces is shown by complaints from the Irish Dairy Industries Association that the Republic's commitment to reduce greenhouse gas emissions is piling further economic pressure on the country's beleaguered dairy industry. It was argued that because Ireland's greenhouse gas emissions (GHG)were closely linked to methane from cattle, a 20 per cent cut in GHG emissions would result in a 20 per cent cut in Ireland's dairy herd.
The association complained that there is no international standard for measurement of emissions from enetric fermentation in cattle. The background to these concerns is a sharp drop in prices from 40 cents a litre in 2007 to around 24 now.
Vegetarians would no doubt argue that the GHG emissions of cattle reinforce the case for not eating meat. In practice, it is difficult to see how the problem can be tackled given that the livestock sector is under heavy economic pressure.
Whereas carbon dioxide emissions have increased 31 per cent over the past 250 years, methane, which has a higher warming potential and a longer atmosphere lifetime than carbon dioxide has increased by 149 per cent over that time. Dr Thorpe commented that 'Methane emission growth ... has been increasing exponentially in the developing world due to a rise in incomes leading to an increased demand for meat and the "hamburger connection" where developing countries make a lucrative profit supplying meat to developed countries.'
Attempts to curb animal methane emissions have included feeding grazing animals on cottonseed and alfalfa, using food additives, and vacinnating animals with drugs, but it is not clear if they will work on a large scale. A reduction in the amount of livestock kept for meat and milk would only put pressure on other food sources, such as cereals.
Animal methane emissions from developing countries have increased to 75 per cent of the global total, with India and Brazil in the lead. It is thought that atmospheric methane is responsible for one-fifth of the global warming since 1750.
Cows, sheep, goats and camels have an additional stomach and produce large amounts of methane as they digest their food. A dairy cow in New Zealand will typically produce around 80kg of methane a year, just through burping.
The policy pressures this produces is shown by complaints from the Irish Dairy Industries Association that the Republic's commitment to reduce greenhouse gas emissions is piling further economic pressure on the country's beleaguered dairy industry. It was argued that because Ireland's greenhouse gas emissions (GHG)were closely linked to methane from cattle, a 20 per cent cut in GHG emissions would result in a 20 per cent cut in Ireland's dairy herd.
The association complained that there is no international standard for measurement of emissions from enetric fermentation in cattle. The background to these concerns is a sharp drop in prices from 40 cents a litre in 2007 to around 24 now.
Vegetarians would no doubt argue that the GHG emissions of cattle reinforce the case for not eating meat. In practice, it is difficult to see how the problem can be tackled given that the livestock sector is under heavy economic pressure.
Wednesday, November 12, 2008
Auditors' report makes for sobering reading
The very complexity of the CAP opens it to scams of various kinds. These may not be fraudulent in the criminal sense of the term (although such instances have occurred) but they do represent a use of loopholes to divert public money to line the pockets of individuals.
In this respect the report from the EU Court of Auditors for 2007 makes for sobering reading. The EU spent 51 billion euros in 2007 on agriculture and natural resources of which all but 2 per cent was on agriculture and rural development. The Court's press release states, 'the estimated overall error rate is still material. [Translated out of bureaucratic code, a lot of public money is being wasted]. Rural development, with its often complex rules, accounts for a disproportionately large part of this error rate.'
Of 196 transactions examined, 61 were affected by error and some two-thirds of the errors (40) were classified as 'serious'. In its response, the Commission finds reassurance in the fact 'that the most likely overall error rate is not significantly different from last year's'. So that's all right then.
Once again olive oil in Southern Europe is a particular culprit. In its 2006 report, the Court pointed out that in Greece, Spain and Italy the olive cultivation data were neither complete not reliable. 'These weaknesses persist in Italy and Greece, where four out of five transactions audited contained errors, some of which led to significant overpayments.'
Significant overpayments were found in relation to nuts and dried grapes in Spain and Greece. In one case in Spain a farmer appeared to have far fewer sheep than the number that had been claimed for.
Northern European states were far from blameless. In relation to the Single Payments Scheme which now accounts for 55 per cent of all payments, 'in England the four entitlements audited were erroneously calculated mainly due to failure to take account of changes in land parcels; while these errors did not have a significant impact on the 2007 payments since England applies the "dynamic" model, these initial entitlements, unless corrected, will result in significant over/underpayments in future years.'
In England the same parcel of land can be claimed by two 'farmers' under different area related and EU schemes. In nine out of 12 on-the-spot visits to 'new beneficiaries' of EU direct aid, 'the area declared for SPS was not eligible in whole or in part either because it was not in good agricultural condition, its main use was not agricultural or the beneficiary was not eligible because he did not carry out any agricultural activity on the land.' [This is sometimes referred to as 'sofa farming']
More generally, the Court states that 'the administrative controls in England do not provide assurance that EU aid is paid out correctly. England [does] not avail of the option to use aerial or spatial orthoimagery'. As the Commission points out in its response, this is not legally required, but it is still good practice.
Portugal has paid out €3.5m on 'balido' land. This land is usually public land of very poor pasture and mainly covered by bushes and trees. In Greece quantities of rice were missing from public storage.
In nine out of 13 agri-environmental schemes audited in France and Ireland farmers had not met the eligibility conditions. Even the Commission admitted that many of these errors had 'an important financial impact' in relation to records about nitrate reduction. The Commission also conceded that it was following up with French authorities the lack of an adequate audit trail in relation to interest rate subsidies.
One is left with the impression that public funds will contunue to be misallocated or wasted.
In this respect the report from the EU Court of Auditors for 2007 makes for sobering reading. The EU spent 51 billion euros in 2007 on agriculture and natural resources of which all but 2 per cent was on agriculture and rural development. The Court's press release states, 'the estimated overall error rate is still material. [Translated out of bureaucratic code, a lot of public money is being wasted]. Rural development, with its often complex rules, accounts for a disproportionately large part of this error rate.'
Of 196 transactions examined, 61 were affected by error and some two-thirds of the errors (40) were classified as 'serious'. In its response, the Commission finds reassurance in the fact 'that the most likely overall error rate is not significantly different from last year's'. So that's all right then.
Once again olive oil in Southern Europe is a particular culprit. In its 2006 report, the Court pointed out that in Greece, Spain and Italy the olive cultivation data were neither complete not reliable. 'These weaknesses persist in Italy and Greece, where four out of five transactions audited contained errors, some of which led to significant overpayments.'
Significant overpayments were found in relation to nuts and dried grapes in Spain and Greece. In one case in Spain a farmer appeared to have far fewer sheep than the number that had been claimed for.
Northern European states were far from blameless. In relation to the Single Payments Scheme which now accounts for 55 per cent of all payments, 'in England the four entitlements audited were erroneously calculated mainly due to failure to take account of changes in land parcels; while these errors did not have a significant impact on the 2007 payments since England applies the "dynamic" model, these initial entitlements, unless corrected, will result in significant over/underpayments in future years.'
In England the same parcel of land can be claimed by two 'farmers' under different area related and EU schemes. In nine out of 12 on-the-spot visits to 'new beneficiaries' of EU direct aid, 'the area declared for SPS was not eligible in whole or in part either because it was not in good agricultural condition, its main use was not agricultural or the beneficiary was not eligible because he did not carry out any agricultural activity on the land.' [This is sometimes referred to as 'sofa farming']
More generally, the Court states that 'the administrative controls in England do not provide assurance that EU aid is paid out correctly. England [does] not avail of the option to use aerial or spatial orthoimagery'. As the Commission points out in its response, this is not legally required, but it is still good practice.
Portugal has paid out €3.5m on 'balido' land. This land is usually public land of very poor pasture and mainly covered by bushes and trees. In Greece quantities of rice were missing from public storage.
In nine out of 13 agri-environmental schemes audited in France and Ireland farmers had not met the eligibility conditions. Even the Commission admitted that many of these errors had 'an important financial impact' in relation to records about nitrate reduction. The Commission also conceded that it was following up with French authorities the lack of an adequate audit trail in relation to interest rate subsidies.
One is left with the impression that public funds will contunue to be misallocated or wasted.
Sunday, November 09, 2008
Farmers and the credit crunch
Over ten years ago I was involved in an international project on farm finance as part of which I interviewed the agricultural finance specialists in all the banks in Britain and Ireland. One thing that came across was that banks competed to lend to farmers because it was seen as a lucrative market with very secure assets.
Figures from the Bank of England show that agricultural borrowing in the UK is at an all time high, £11bn at the end of September, compared with £9.94bn at the end of 1997. The debt burden was, however, offset by an increase in farm incomes. According to Defra, the average income was about £48,000 in 2007-8, about 40 per cent higher than the previous year, owing largely to higher prices for cereals and milk.
The falling exchange rate may also benefit farmers, given that subsidies are denominated in euros (the notorious 'green pound' which was one of the most complex aspects of the CAP is no longer with us). The estimated €3.8bn (£3.1bn) in subsidies this year should be worth more. Sterling's weakness may make exports more attractive. In 2006, the last year for which figures are available, the UK exported £10.5bn of farm products.
Agricultural land is still fetching historically high prices, giving farmers an equity cushion. Borrowing is much lower than in other sectors. The total value of farming assets in the UK is estimated at around £150bn, giving a gearing ratio of less than 10 per cent, far less than the rates other industries have come to see as normal.
Figures from the Bank of England show that agricultural borrowing in the UK is at an all time high, £11bn at the end of September, compared with £9.94bn at the end of 1997. The debt burden was, however, offset by an increase in farm incomes. According to Defra, the average income was about £48,000 in 2007-8, about 40 per cent higher than the previous year, owing largely to higher prices for cereals and milk.
The falling exchange rate may also benefit farmers, given that subsidies are denominated in euros (the notorious 'green pound' which was one of the most complex aspects of the CAP is no longer with us). The estimated €3.8bn (£3.1bn) in subsidies this year should be worth more. Sterling's weakness may make exports more attractive. In 2006, the last year for which figures are available, the UK exported £10.5bn of farm products.
Agricultural land is still fetching historically high prices, giving farmers an equity cushion. Borrowing is much lower than in other sectors. The total value of farming assets in the UK is estimated at around £150bn, giving a gearing ratio of less than 10 per cent, far less than the rates other industries have come to see as normal.
Monday, October 27, 2008
Buckwell expresses doubts about SFP and pillars
Allan Buckwell expresses doubts about the efficacy of the Single Farm Payment in his interview with Agra Focus (see below). He comments, 'It is a very simplistic stablization measure and the distribution of the payments is a big odd.'
Later in the interview, he explains, 'I was never really a big fan of the Single Farm Payment. It was an absolutely necessary step to unhook support from prices ... When you look at the payments per head or per hectare or per annual work unit by Member State, there is a variation of about 3-50 fold from the highest to the lowest.'
He also expresses doubts about the two pillar distinction which has been regarded, perhaps too uncritically, as a central plank of the recent development of the CAP in order to increase spending on the 'multifunctional' or public goods aspects of agriculture. He notes, 'The distinction between the two pillars served a purpose. If it's creating an obstacle to the development of a better policy, then let's scrap it.'
He comments, 'There is little doubt that Pillar 2 is becoming unpopular. It is unpopular with farmers: many farmers in many countries say they cannot access the schemes that are available. They see it as bureaucratic, and also complain that money is leaking away to others. The bureaucrats and the administration say that it is a complex system with very high administrative costs and co-financing puts off Member States from doing more of it.'
He argues that co-financing is the key issue. If co-financing rules are stopping sensible reform, they should be changed. It might be better to co-finance everything with the member state contribution related to the national income per head. What is needed, he argues, is an explicit debate about the underlying principle rather than about 'funny little new programmes.'
Later in the interview, he explains, 'I was never really a big fan of the Single Farm Payment. It was an absolutely necessary step to unhook support from prices ... When you look at the payments per head or per hectare or per annual work unit by Member State, there is a variation of about 3-50 fold from the highest to the lowest.'
He also expresses doubts about the two pillar distinction which has been regarded, perhaps too uncritically, as a central plank of the recent development of the CAP in order to increase spending on the 'multifunctional' or public goods aspects of agriculture. He notes, 'The distinction between the two pillars served a purpose. If it's creating an obstacle to the development of a better policy, then let's scrap it.'
He comments, 'There is little doubt that Pillar 2 is becoming unpopular. It is unpopular with farmers: many farmers in many countries say they cannot access the schemes that are available. They see it as bureaucratic, and also complain that money is leaking away to others. The bureaucrats and the administration say that it is a complex system with very high administrative costs and co-financing puts off Member States from doing more of it.'
He argues that co-financing is the key issue. If co-financing rules are stopping sensible reform, they should be changed. It might be better to co-finance everything with the member state contribution related to the national income per head. What is needed, he argues, is an explicit debate about the underlying principle rather than about 'funny little new programmes.'
Wednesday, October 22, 2008
Interview with Allan Buckwell
Agra Focus has been conducting a series of interviews on EU farm policy and one of the longest and most interesting to date is with Allan Buckwell. He is currently policy director with the (England and Wales) Country and Land Business Association, but is also chair of the policy committee run by the European Landowners Association. He was for many years a respected agricultural economics and policy academic at the now sadly diminished Wye College. Perhaps his most interesting role in policy terms was when he spent a year in DG Agri in 1995-6 and chaired a group which wrote a report on a Common Agricultural and Rural Policy for Europe.
The whole interview is well worth reading as is Agra Focus for those who wish to keep up to date with developments in the CAP debate. Over the next few days we shall publish some highlights from the interview.
Allan Buckwell said that in the 1990s there was a consensus that policy had to change and the direction in which it had to move was liberalisation. That meant moving away from distorting commodity markets. Now there is not the consensus on what direction to take the CAP.
Moreover, the broader European debate, which in 2005-6 seemed to be moving away from the accumulated outcome of 40 years of incrementalism was now replaced by very little strategic thinking at all. There was retrenchment all over Europe and a shift to Euroscepticism rather than taking a clean sheet of paper and thinking about what a new Europe could look like.
Allan Buckwell suggested that policy faced two challenges, a food challenge and an environmental challenge. Recent events suggested that there might also be a risk management challenge as well.
He reiterated his belief that the CAP should evolve to become a Food and Environmental Security Policy. There was no difficult in convincing people that environmental security was a big issue. 'Unfortunately, coming from where I do, if you mention the words food security you are immediately accused of being a farmer protectionist and wanting higher prices.'
Buckwell insisted, 'I am arguing that food and the environment are inter-related and there are such big market failures surrounding the environmental impacts of agricultural production, that this justifies a policy.' What was needed was not the agricultural policy we have had for the last 40 years, but there was a clear job to be done.
Part of what he has in mind is stimulating agricultural development in the new member states and modernising infrastructure and marketing there. He also emphasises the need for research and development work on how one maintains the productivity of agriculture and yet reduce its environmental impact. These are worthwhile aims for public action.
The whole interview is well worth reading as is Agra Focus for those who wish to keep up to date with developments in the CAP debate. Over the next few days we shall publish some highlights from the interview.
Allan Buckwell said that in the 1990s there was a consensus that policy had to change and the direction in which it had to move was liberalisation. That meant moving away from distorting commodity markets. Now there is not the consensus on what direction to take the CAP.
Moreover, the broader European debate, which in 2005-6 seemed to be moving away from the accumulated outcome of 40 years of incrementalism was now replaced by very little strategic thinking at all. There was retrenchment all over Europe and a shift to Euroscepticism rather than taking a clean sheet of paper and thinking about what a new Europe could look like.
Allan Buckwell suggested that policy faced two challenges, a food challenge and an environmental challenge. Recent events suggested that there might also be a risk management challenge as well.
He reiterated his belief that the CAP should evolve to become a Food and Environmental Security Policy. There was no difficult in convincing people that environmental security was a big issue. 'Unfortunately, coming from where I do, if you mention the words food security you are immediately accused of being a farmer protectionist and wanting higher prices.'
Buckwell insisted, 'I am arguing that food and the environment are inter-related and there are such big market failures surrounding the environmental impacts of agricultural production, that this justifies a policy.' What was needed was not the agricultural policy we have had for the last 40 years, but there was a clear job to be done.
Part of what he has in mind is stimulating agricultural development in the new member states and modernising infrastructure and marketing there. He also emphasises the need for research and development work on how one maintains the productivity of agriculture and yet reduce its environmental impact. These are worthwhile aims for public action.
Tuesday, October 14, 2008
Farmers divided over DECC
Farm organisations in the UK have divergent opinions on the consequences of the formation of a Department of Energy and Climate Change (DECC) which takes over responsibility for the key environmental issue of climate change from DEFRA.
NFU vice-president Paul Temple said he hoped the separation of energy and climate change would leave DEFRA with a sharper focus on food and farming. That would echo the days of the Ministry of Agriculture, Fisheries and Food (MAFF)that was focused on food production.
To echo the language of the film The Graduate I have one word to say to that: BSE. MAFF was a hopelessly clientilistic ministry that was in a symbiotic relationship with the NFU and almost always put productionist values first.
Because the Country Land and Business Association represents a lot of large landed estates (ok, I know that it has farmers like my brother-in-law in membership as well - a 7th generation Welsh farmer) it tends to be more interested in conservation. Actually, I also think there is a bit of self-selection in who becomes a member.
A CLA spokesman said that unless the two departments retained cohesion, the role of landowners in environmental management could be marginalised. 'Ed Miliband [the new DECC minister] will need to appease many groups in his new post and many campaigners who had relationships with DEFRA will have to introduce themselves to him afresh,' said the CLA.
Farmers Weekly blogger David Richardson, an unreconstructed productionist who is a very effective spokesman for large-scale arable farmers, said that until Hilary Been was removed, food production would never regain prominence, whatever the reshuffle. He accused Mr Benn of thinking of himself as an 'overseas development minister', presumably because he has expressed concern about the impact of the CAB on the Global South.
You can read David Richardson's views here: Farmer . When I looked the Defra story was second, as he was on to badgers.
It will be interesting to know what the new DEFRA Council of Food Policy Advisers will do, or more particularly whether it will take a balanced stance:
Defra
At the moment, I do not know who is on it which would indicate whether it was a nest of productionists or a body that tried to take account of a range of viewpoints.
NFU vice-president Paul Temple said he hoped the separation of energy and climate change would leave DEFRA with a sharper focus on food and farming. That would echo the days of the Ministry of Agriculture, Fisheries and Food (MAFF)that was focused on food production.
To echo the language of the film The Graduate I have one word to say to that: BSE. MAFF was a hopelessly clientilistic ministry that was in a symbiotic relationship with the NFU and almost always put productionist values first.
Because the Country Land and Business Association represents a lot of large landed estates (ok, I know that it has farmers like my brother-in-law in membership as well - a 7th generation Welsh farmer) it tends to be more interested in conservation. Actually, I also think there is a bit of self-selection in who becomes a member.
A CLA spokesman said that unless the two departments retained cohesion, the role of landowners in environmental management could be marginalised. 'Ed Miliband [the new DECC minister] will need to appease many groups in his new post and many campaigners who had relationships with DEFRA will have to introduce themselves to him afresh,' said the CLA.
Farmers Weekly blogger David Richardson, an unreconstructed productionist who is a very effective spokesman for large-scale arable farmers, said that until Hilary Been was removed, food production would never regain prominence, whatever the reshuffle. He accused Mr Benn of thinking of himself as an 'overseas development minister', presumably because he has expressed concern about the impact of the CAB on the Global South.
You can read David Richardson's views here: Farmer . When I looked the Defra story was second, as he was on to badgers.
It will be interesting to know what the new DEFRA Council of Food Policy Advisers will do, or more particularly whether it will take a balanced stance:
Defra
At the moment, I do not know who is on it which would indicate whether it was a nest of productionists or a body that tried to take account of a range of viewpoints.
Friday, October 03, 2008
Is MAFF back in the UK?
Details are still sketchy and yet to be confirmed but it looks as if the Department of Environment, Food and Rural Affairs is to lose its climate change function as part of the Cabinet reshuffle. Defra would retain its agriculture, food and rural affairs roles, thus looking more like than a MAFF Mark II. Let's hope it isn't as clientilist and productionist as the old department.
Friday, September 26, 2008
Wait a minute
The Scottish farm minister Richard Lochead has firmly ruled out a demand from NFU Scotland for the early payment of £61m of less favoured area support. He pointed out that early payment would jeopardise the Single Farm Payment as EU rules state that SFP must be paid ahead of LFA support.
The Scottish NFU argued that early payment would provide some respite to farmers escalating feed, fertiliser and fuel payment. Many families are constrained by rising food, energy and petrol prices. Perhaps on the same logic child benefit should be paid out early?
In an editorial Farmers' Weekly calls for a 'coherent, joined-up plan ... from DEFRA, which encourages a scaling-up of UK food production'. It doesn't get much to get the farming community to fall back on a call for Stalinist five-year plans. Machine Tractor Stations anyone?
Those in farming tend to see the world rather differently from the rest of us. To be fair, there are progressive farmers who see the need to engage in a dialogue with consumers and respond to market opportunities. But all too often they are not the public voice of the industry.
The Scottish NFU argued that early payment would provide some respite to farmers escalating feed, fertiliser and fuel payment. Many families are constrained by rising food, energy and petrol prices. Perhaps on the same logic child benefit should be paid out early?
In an editorial Farmers' Weekly calls for a 'coherent, joined-up plan ... from DEFRA, which encourages a scaling-up of UK food production'. It doesn't get much to get the farming community to fall back on a call for Stalinist five-year plans. Machine Tractor Stations anyone?
Those in farming tend to see the world rather differently from the rest of us. To be fair, there are progressive farmers who see the need to engage in a dialogue with consumers and respond to market opportunities. But all too often they are not the public voice of the industry.
Monday, September 22, 2008
Food security and CAP reform
A short overview article I have written on this subject can be read here:
Reform
Reform
New book recommendation
Whilst I have some reservations about plugging a book in which I wrote the concluding chapter (on 'Implications for Future Reforms'), I do recommend Johan Swinnen (edited) The Perfect Storm: The Political Economy of the Fischler Reforms of the Common Agricultural Policy published by the Centre for European Policy Studies in Brussels. You can now download it for free here:
Book
It was based on an excellent workshop in Brussels which involved some of the Fischler insiders as well as academics. The result is, I think, one of the most informed and authoritative accounts of the Fischler reforms that we have available to us.
Book
It was based on an excellent workshop in Brussels which involved some of the Fischler insiders as well as academics. The result is, I think, one of the most informed and authoritative accounts of the Fischler reforms that we have available to us.
Tuesday, September 16, 2008
An exercise in decoding
France has produced a paper on the future of the CAP which is designed to stimulate discussion at the informal farm council to be held there in the Rhone-Alps region on 21-23 September. The paper is very vague, no doubt deliberately so, and interpreting has to be an exercise in decoding.
The paper argues that in the 'new context' of rising food and fuel prices, the future of the CAP should centre around four areas. The first of these is assuring food security in the EU. No suprises there, as France has been a vigorous adopter and champion of the revived food security discourse which provides a new underpinning for subsidy and protection.
New content can be placed in it, however, as is evident from a discussion on economic patriotism I participated at Science Po in Paris last week. The argument there was that even new market approaches could be brought under the economic patriotism umbrella.
The second objective is contributing to sustainable and balanced food supplies in the world. A laudable aim, but the EU has frustrated it by dumping surplus produce on the world market and undermining local suppliers, as well as frustrating the development of commercial agriculture in the Global South by placing barriers to entry around the European market. Hopefully, some of the worst of these practices are coming to an end.
The third aim is preserving the rural fabric and ensuring territorial cohesion, an objective close to French hearts with its emphasis on the cultural dimension of the CAP. The paper argues that the uniformity of Pillar 1 is in danger of stifling the diversity of the French agricultural landscape. Vulnerable areas, of which no doubt there are many in France, should get some sort of 'top up'.
The fourth objective is participating in the mitigation of climate change, which everyone is in favour of, but the challenge is how you actually do it, particularly in an economic downturn.
The most specific the paper gets is a call for less static support tools which a decoding suggests are favoured in part because they may be a way of getting around international trade rules. As well as providing support for integrated enviromental measures, these tools (whatever they might be) would be a means of dealing with increased market volatility.
This leads me to suppose that one might be talking about some modernised verision of deficiency payments, as used in Britain before it joined the common market. It may be, and this is just surmise, that the French think they cannot keep the SFP going beyond 2013, but they may be able to sell a subsidy that is linked to climate change and environmental benefits and also gives farmers some protection in hard times.
Whether such a vague document will lead to a structured or useful discussion at the informal Farm Council remains to be seen, but somehow I doubt it.
More information on the meeting is at Council
The paper argues that in the 'new context' of rising food and fuel prices, the future of the CAP should centre around four areas. The first of these is assuring food security in the EU. No suprises there, as France has been a vigorous adopter and champion of the revived food security discourse which provides a new underpinning for subsidy and protection.
New content can be placed in it, however, as is evident from a discussion on economic patriotism I participated at Science Po in Paris last week. The argument there was that even new market approaches could be brought under the economic patriotism umbrella.
The second objective is contributing to sustainable and balanced food supplies in the world. A laudable aim, but the EU has frustrated it by dumping surplus produce on the world market and undermining local suppliers, as well as frustrating the development of commercial agriculture in the Global South by placing barriers to entry around the European market. Hopefully, some of the worst of these practices are coming to an end.
The third aim is preserving the rural fabric and ensuring territorial cohesion, an objective close to French hearts with its emphasis on the cultural dimension of the CAP. The paper argues that the uniformity of Pillar 1 is in danger of stifling the diversity of the French agricultural landscape. Vulnerable areas, of which no doubt there are many in France, should get some sort of 'top up'.
The fourth objective is participating in the mitigation of climate change, which everyone is in favour of, but the challenge is how you actually do it, particularly in an economic downturn.
The most specific the paper gets is a call for less static support tools which a decoding suggests are favoured in part because they may be a way of getting around international trade rules. As well as providing support for integrated enviromental measures, these tools (whatever they might be) would be a means of dealing with increased market volatility.
This leads me to suppose that one might be talking about some modernised verision of deficiency payments, as used in Britain before it joined the common market. It may be, and this is just surmise, that the French think they cannot keep the SFP going beyond 2013, but they may be able to sell a subsidy that is linked to climate change and environmental benefits and also gives farmers some protection in hard times.
Whether such a vague document will lead to a structured or useful discussion at the informal Farm Council remains to be seen, but somehow I doubt it.
More information on the meeting is at Council
Saturday, September 06, 2008
Credit crunch hits organic food sales
Sales of organic foods to leading supermarkets in Britain are struggling, suggesting that when recessionary conditions hit shoppers are ready to sacrifice their green credentials in favour of cheaper food. According to TNS World-panel data, sales of organic produce at Sainsbury's fell by 3.8 per cent and at Tesco by 1.3 per cent in the three months to early August. Spending on organic produce in the whole market has fallen by 19 per cent from £100m to £81m this year.
Organic agriculture is inherently more expensive than intensive agriculture. However, the Soil Association insisted that what was happening was a plateau rather than a reversal. Year-on-year average growth over the last decade has been 25 per cent.
It is interesting that organic egg sales have taken a particular hit, falling by 18 per cent in the four weeks to end of August. Consumers think that they can still be ethical by buying free range eggs.
These market developments could offer an opening for Integrated Crop Management which offers a route to more environmentally friendly farming without going organic. It is, of course, remarkable how tolerant consumers are of the use of so-called 'traditional' compounds by organic farmers, but they may not be aware of their use. 'Organic' has certainly embedded itself in the public consciousness with a very favourable image.
Organic agriculture is inherently more expensive than intensive agriculture. However, the Soil Association insisted that what was happening was a plateau rather than a reversal. Year-on-year average growth over the last decade has been 25 per cent.
It is interesting that organic egg sales have taken a particular hit, falling by 18 per cent in the four weeks to end of August. Consumers think that they can still be ethical by buying free range eggs.
These market developments could offer an opening for Integrated Crop Management which offers a route to more environmentally friendly farming without going organic. It is, of course, remarkable how tolerant consumers are of the use of so-called 'traditional' compounds by organic farmers, but they may not be aware of their use. 'Organic' has certainly embedded itself in the public consciousness with a very favourable image.
Tuesday, August 26, 2008
Farm visit, USA
Gilmanton, NH: Stopping on a back road near here to buy some corn, Brad kindly gave me tour of the family farm. His is the eight generation on the farm which was established in 1780. Much of the land round here was abandoned later once the topsoil had been used up and the rocks presented problems. But here and there a few farms survive, often occupied by descendants of the original families.
The farm I visited was of a mixed type you rarely see in the UK today. They owned 160 acres with another 160 rented. The three boys were home from college but the wet weather had delayed the harvest. Once they specialised in chickens, some two thousand of them, but they abandoned that in grandad's day. Brad wasn't sure why.
They grow corn for their cattle and to sell in their roadside shop. Sometimes they sell sacks of corn for cook outs. They make and sell hay. In addition to their cattle, they have around 60 sheep, not usually a big item in the US but there is a niche market in local Bosnian American and Greek American communities. They sell for around $100 each. They still have a few chickens.
But their most lucrative line is probably their maple syrup which they sell in their store. But Brad admitted that cash flow was a problem at some times of the year which is where mom's job as a librarian came in handy.
Subsidies did not seem to feature much, but two other local people who were not farmers told me they were applying for federal grants for conservation work on their properties, opening up the woodlands to provide a better environment for the moose. One was planning to hold tented events on her land which counted as a form of agri tourism.
But with no Single Farm Payment, the viability of the farms that operate commercially must remain in doubt - not that one would want it introduced in the US.
The farm I visited was of a mixed type you rarely see in the UK today. They owned 160 acres with another 160 rented. The three boys were home from college but the wet weather had delayed the harvest. Once they specialised in chickens, some two thousand of them, but they abandoned that in grandad's day. Brad wasn't sure why.
They grow corn for their cattle and to sell in their roadside shop. Sometimes they sell sacks of corn for cook outs. They make and sell hay. In addition to their cattle, they have around 60 sheep, not usually a big item in the US but there is a niche market in local Bosnian American and Greek American communities. They sell for around $100 each. They still have a few chickens.
But their most lucrative line is probably their maple syrup which they sell in their store. But Brad admitted that cash flow was a problem at some times of the year which is where mom's job as a librarian came in handy.
Subsidies did not seem to feature much, but two other local people who were not farmers told me they were applying for federal grants for conservation work on their properties, opening up the woodlands to provide a better environment for the moose. One was planning to hold tented events on her land which counted as a form of agri tourism.
But with no Single Farm Payment, the viability of the farms that operate commercially must remain in doubt - not that one would want it introduced in the US.
Sunday, August 03, 2008
What does Doha round collapse mean for CAP reform?
The Doha Round has effectively collapsed and if it is revived at all, it will be when a new US president is in office. However, US policy could take a protectionist turn while India, which has been a stumbling block in the negotiations anyway, may have an even less liberal government in power.
Trade has been the main driver of reform of the CAP. It played a key role in the MacSharry reforms and again in the 2003 reforms. In both cases wily farm commissioners (MacSharry and Fischler) used the international trade negotiations to broker needed reforms.
Now, not only have we lost the pressure from trade negotiations, the food security argument is being used to justify a reversion to protection and subsidy. The economic downturn has weakened the momentum behind pressures for a greening of the CAP.
However, it's not all bleak news. The opportunity cost of the CAP in terms of the EU budget remains considerable at a time when there is an imperative to invest in research and development to compete with emerging countries.
Greater transparency about CAP subsidies may also foster greater public pressure for change. In this respect the work being done by Jack Thurston and others to ensure that as much as information as possible becomes readily available on the internet is of crucial importance.
Trade has been the main driver of reform of the CAP. It played a key role in the MacSharry reforms and again in the 2003 reforms. In both cases wily farm commissioners (MacSharry and Fischler) used the international trade negotiations to broker needed reforms.
Now, not only have we lost the pressure from trade negotiations, the food security argument is being used to justify a reversion to protection and subsidy. The economic downturn has weakened the momentum behind pressures for a greening of the CAP.
However, it's not all bleak news. The opportunity cost of the CAP in terms of the EU budget remains considerable at a time when there is an imperative to invest in research and development to compete with emerging countries.
Greater transparency about CAP subsidies may also foster greater public pressure for change. In this respect the work being done by Jack Thurston and others to ensure that as much as information as possible becomes readily available on the internet is of crucial importance.
Sunday, July 20, 2008
UK edges towards food security policy
The UK Government has taken its first steps towards a national food security policy and abandoning its long-held stance of leaving supply to be determined by the market. However, it does not look as if it is going to ditch its support for reform of the CAP.
A discussion paper issued by Defra found 'the current global food security situation is a cause for deep concern', listing high energy prices, poor harvests, rising demand, biofuels and export bans in some countries as the main factors.
The government said it wanted to keep British farmers' productivity high, but insisted that the UK should not aim to be self-sufficient in food as that would make food supply too vulnerable to shocks, such as a poor harvest, floods or disease.
A food security policy, according to the document, would have to ensure a reliable supply of food; an efficient transport system; and that food was available at prices people could afford - in particular 'whether low-income consumers can afford enough nutritious food.' However, the paper was short on specifics on how the latter would be achieved.
The paper does not signal a revival of subsidies. Peter Kendall, president of the National Farmers' Union, attacked the government for failing to commit to 'concrete proposals' to help farmers.
Britain now relies less on food imports than during most of the last century. The UK is about 60 per cent self-sufficient in food, up from about 40 - 50 per cent in the 1950s which was the heyday of productivism and national subsidies. The UK's self-sufficiency was at its highest at more than 70 per cent in the 1980s when generous CAP subsidies encouraged farmers to over produce.
A discussion paper issued by Defra found 'the current global food security situation is a cause for deep concern', listing high energy prices, poor harvests, rising demand, biofuels and export bans in some countries as the main factors.
The government said it wanted to keep British farmers' productivity high, but insisted that the UK should not aim to be self-sufficient in food as that would make food supply too vulnerable to shocks, such as a poor harvest, floods or disease.
A food security policy, according to the document, would have to ensure a reliable supply of food; an efficient transport system; and that food was available at prices people could afford - in particular 'whether low-income consumers can afford enough nutritious food.' However, the paper was short on specifics on how the latter would be achieved.
The paper does not signal a revival of subsidies. Peter Kendall, president of the National Farmers' Union, attacked the government for failing to commit to 'concrete proposals' to help farmers.
Britain now relies less on food imports than during most of the last century. The UK is about 60 per cent self-sufficient in food, up from about 40 - 50 per cent in the 1950s which was the heyday of productivism and national subsidies. The UK's self-sufficiency was at its highest at more than 70 per cent in the 1980s when generous CAP subsidies encouraged farmers to over produce.
Sunday, July 13, 2008
Biofuel targets in doubt
The pace at which biofuels are introduced into the UK transport sector should be slowed, according to the 'Gallagher review' from the Government's Renewable Fuels Agency.
In the review Professor Gallagher states that 'there is a future for a sustainable biofuels industry. But feedstock production must avoid agricultural land that would otherwise be used for food production ... and the introduction of biofuels should be significantly slowed until adequate controls to address displacement effects are implemented.'
The report suggests that the target for road transport fuels to include 5 per cent biofuels by 2010/11 should be extended to 2013/14 and only increased thereafter 'if biofuels are shown to be demonstrably sustainable.' It also says that the EU's separate target of a 10 per cent inclusion rate by 2020 is not justified, and should be cut to 5 to 8 per cent.
Only 1 per cent of the world's crop land is given over to biofuel production at preesnt, and the review found it was probable that there was enough agricultural land available in the world to grow food and fuels at least until 2020. The review found that biofuels would contribute about 15 per cent to rises in the price of grain in Europe by 2020, compared with 2006 prices, if current biofuels targets were followed through.
The review also found, however, that the price of vegetable oils and oilseed was vulnerable to competition from biofuels, and would rise as much as 70 per cent in the US by 2020. compared with 2006 prices, if biofuel targets were met.
In the review Professor Gallagher states that 'there is a future for a sustainable biofuels industry. But feedstock production must avoid agricultural land that would otherwise be used for food production ... and the introduction of biofuels should be significantly slowed until adequate controls to address displacement effects are implemented.'
The report suggests that the target for road transport fuels to include 5 per cent biofuels by 2010/11 should be extended to 2013/14 and only increased thereafter 'if biofuels are shown to be demonstrably sustainable.' It also says that the EU's separate target of a 10 per cent inclusion rate by 2020 is not justified, and should be cut to 5 to 8 per cent.
Only 1 per cent of the world's crop land is given over to biofuel production at preesnt, and the review found it was probable that there was enough agricultural land available in the world to grow food and fuels at least until 2020. The review found that biofuels would contribute about 15 per cent to rises in the price of grain in Europe by 2020, compared with 2006 prices, if current biofuels targets were followed through.
The review also found, however, that the price of vegetable oils and oilseed was vulnerable to competition from biofuels, and would rise as much as 70 per cent in the US by 2020. compared with 2006 prices, if biofuel targets were met.
Thursday, July 10, 2008
French press for EU summit on CAP
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.
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 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.'
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