Farm commissioner Mariann Fischer Boel has reiterated the EU's commitment to phase out all export subsidies by 2013, but in the meantime has insisted on their use to defend EU market share. Responding to concerns that the dairy export refunds, reintroduced in January, mean 'dumping' cheap produce on developing countries, Fischer Boel said that the EU cannot risk losing its market share to other major exporters.
The return of the subsidies has been widely criticised by agricultural exporting countries such as Australia. But concern has also been expressed within the EU itself. Germany is known to have been concerned that the subsidies are creating a damaging dumping effect in some developing countries.
Fischer Boel explained that in countries such as the Dominican Republic, the impact of subsidised EU exports is not to directly harm domestic produce. These markets are in fact a battleground between the EU and other developed world exporters, she argued.
Of course the EU is not directly competing on the liquid milk market in these countries. However, I recall reading studies by Oxfam and Cafod relating to the Dominican Republic and Jamaica. Small local dairy farmers found that their market in local processing factories was driven out by skimmed milk powder from the EU.
Tuesday, April 14, 2009
Friday, April 10, 2009
Overdoing the gloom
I regard climate change as a major challenge. As it is a global public bad, it requires action by governments, individually, at EU level and globally. However, these actions will be insufficient if there is not an adequate response by business and by citizens.
In my view excessively gloomy predictions about climate change actually have a disempowering effect on citizens. They start to think it is all hopeless and they might as well continue with their existing environmentally unfriendly lifestyles.
Some of those putting forward these views have a broader agenda which is well served by taking an excessively pessimistic view of the prospects for climate change mitigation. (Adaptation is only now really starting to get on the EU agenda in a serious way).
This was the case with one of the speakers at the recent meeting of the Franco-British Council that I attended. I have so much material from this meeting that it is going to take some time for me to blog it all.
I thought that this particular speaker made some good points, but he undermined them through overstatement. He started by stating that we were just nine meals from anarchy because of our over reliance on retailers for buffer stocks. We do sometimes rely too much on leading supermarkets as a private governance mechanism, a subject which I am personally interested in. Indeed, I believe that Cobra, the civil contingencies unit in the Cabinet Office, has taken an interest in the subject of potential threats to food stocks.
The speaker argued that national food self-sufficiency was in long-term decline. The UK was increasingly reliant on imports when the ability of the rest of the world to provide for us was weakening. The fabric of biodiversity, nature's insurance plan against disaster, was wearing thin.
The speaker went on to argue that intensive farming defied ecological gravity. I think that this depends on how it is done. In arable farming, one needs the use of methods of Integrated Crop Management and Integrated Pest Management, subjects I have written on with my biological science colleagues. Livestock farming needs to observe animal welfare standards. All these objectives can, and are, being pursued through appropriate EU policies and it this dimension of the CAP that needs to be developed and strengthened.
The speaker argued that obesity is a climate change issue and that we need to consume less. The food crisis had been coopted to promote asymmetric market liberalisation and particular commercial agencies.
Where I did agree with the speaker was his emphasis on the importance of the planet's hydrological cycle. The proportion of the earth's surface subject to extreme drought had already increased from one to three per cent and could increase to one third by the end of the century [this is a worst case scenario in my view].
A person associated with DG Agri asked whether there was really a problem about generating a sufficient food supply. Yields had improved in the past. This commentator also defended biofuels, arguing that higher energy prices in the longer run would mean that they would be used without public policy.
The speaker asserted that biology must become before economics and politics. Scientists, however, were prone to pander to politicians. This is not my experience of working with natural scientists. It is not a question of biology coming before politics, but the insights of economics, political science, law, biological science and many other disciplines being brought together as in the RELU programme: RELU
A person from a farmers' organisation argued that the model of a richer country outbidding everyone else on the world market was not sustainable in the future.
The speaker concluded by celebrating the return of dirigiste politics and said that we could fundamentally re-engineer the economy as we did in the run up to the Second World War. The state rules ok!
For some of my work on ICM and IPM go to: Biologicals
On animal welfare: Livestock
In my view excessively gloomy predictions about climate change actually have a disempowering effect on citizens. They start to think it is all hopeless and they might as well continue with their existing environmentally unfriendly lifestyles.
Some of those putting forward these views have a broader agenda which is well served by taking an excessively pessimistic view of the prospects for climate change mitigation. (Adaptation is only now really starting to get on the EU agenda in a serious way).
This was the case with one of the speakers at the recent meeting of the Franco-British Council that I attended. I have so much material from this meeting that it is going to take some time for me to blog it all.
I thought that this particular speaker made some good points, but he undermined them through overstatement. He started by stating that we were just nine meals from anarchy because of our over reliance on retailers for buffer stocks. We do sometimes rely too much on leading supermarkets as a private governance mechanism, a subject which I am personally interested in. Indeed, I believe that Cobra, the civil contingencies unit in the Cabinet Office, has taken an interest in the subject of potential threats to food stocks.
The speaker argued that national food self-sufficiency was in long-term decline. The UK was increasingly reliant on imports when the ability of the rest of the world to provide for us was weakening. The fabric of biodiversity, nature's insurance plan against disaster, was wearing thin.
The speaker went on to argue that intensive farming defied ecological gravity. I think that this depends on how it is done. In arable farming, one needs the use of methods of Integrated Crop Management and Integrated Pest Management, subjects I have written on with my biological science colleagues. Livestock farming needs to observe animal welfare standards. All these objectives can, and are, being pursued through appropriate EU policies and it this dimension of the CAP that needs to be developed and strengthened.
The speaker argued that obesity is a climate change issue and that we need to consume less. The food crisis had been coopted to promote asymmetric market liberalisation and particular commercial agencies.
Where I did agree with the speaker was his emphasis on the importance of the planet's hydrological cycle. The proportion of the earth's surface subject to extreme drought had already increased from one to three per cent and could increase to one third by the end of the century [this is a worst case scenario in my view].
A person associated with DG Agri asked whether there was really a problem about generating a sufficient food supply. Yields had improved in the past. This commentator also defended biofuels, arguing that higher energy prices in the longer run would mean that they would be used without public policy.
The speaker asserted that biology must become before economics and politics. Scientists, however, were prone to pander to politicians. This is not my experience of working with natural scientists. It is not a question of biology coming before politics, but the insights of economics, political science, law, biological science and many other disciplines being brought together as in the RELU programme: RELU
A person from a farmers' organisation argued that the model of a richer country outbidding everyone else on the world market was not sustainable in the future.
The speaker concluded by celebrating the return of dirigiste politics and said that we could fundamentally re-engineer the economy as we did in the run up to the Second World War. The state rules ok!
For some of my work on ICM and IPM go to: Biologicals
On animal welfare: Livestock
Sunday, April 05, 2009
Re-education for Commission officials
On a visit to China a few years ago I met an elderly professor who had been sent with his students to the countryside during the Maoist period for 're-education' by the peasants. He struck a deal with the local peasants that allowed them to work on their books two days a week.
Now farm commissioner Mariann Fischer Boel, a large-scale farmer with her husband in Denmark, has decided that Commission officials in DG Agri need re-education. She considers that they are too detached from farmers and don't understand their problems.
The so-called Harvest Experience programme means that all agriculture staff will be sent to stay on farms from 2010. One goal is to encourage Commission officials to use simpler language.
It will be interesting to see where the farmer hosts are found from. I suspect that many of them will be drawn from farmer organisations and will have an axe to grind.
Historically, DG VI as it once was had a reputation of being particularly close to farmers. Its head official was always drawn from France and was usually close to large-scale French grain interests. Many of the officials were French and those Brits who worked there were usually Francophiles. One compensation was that it was said to have the best canteen in the Commission.
The Kinnock reforms ended the French domination at top level. Mind you, a lot of nonsense still comes out of DG Agri. A British academic was telling me about a talk given to students by one of its officials. He claimed that the livelihood of one person in five in Europe depended on the CAP. He worked this out by adding up those working in farming, those in food processing and those in input industries.
It was pointed out to him that it would be possible to have a healthy and competitive food sector in Europe without subsidy and protection.
Now farm commissioner Mariann Fischer Boel, a large-scale farmer with her husband in Denmark, has decided that Commission officials in DG Agri need re-education. She considers that they are too detached from farmers and don't understand their problems.
The so-called Harvest Experience programme means that all agriculture staff will be sent to stay on farms from 2010. One goal is to encourage Commission officials to use simpler language.
It will be interesting to see where the farmer hosts are found from. I suspect that many of them will be drawn from farmer organisations and will have an axe to grind.
Historically, DG VI as it once was had a reputation of being particularly close to farmers. Its head official was always drawn from France and was usually close to large-scale French grain interests. Many of the officials were French and those Brits who worked there were usually Francophiles. One compensation was that it was said to have the best canteen in the Commission.
The Kinnock reforms ended the French domination at top level. Mind you, a lot of nonsense still comes out of DG Agri. A British academic was telling me about a talk given to students by one of its officials. He claimed that the livelihood of one person in five in Europe depended on the CAP. He worked this out by adding up those working in farming, those in food processing and those in input industries.
It was pointed out to him that it would be possible to have a healthy and competitive food sector in Europe without subsidy and protection.
Saturday, April 04, 2009
The French official view
At the meeting of the Franco-British Council I attended last Monday, it was interesting to hear the current French official view expressed by a senior French person.
A food security theme was heavily emphasised with the food riots being invoked, it being argued that the health and well being of one billion people was threatened. Reference was made to the challenge presented by volatile prices. It was argued that food was a strategic asset and that we had lost sight of this in recent decades.
European policy ensured the food security of half a billion Europeans. Far from being a fortress, the EU was the world's leading importer from the developing world.
It was claimed that we had now reformed the CAP. This may be true, but it has not been transformed and many of its undesirable features remain in place.
It was argued that we should move away from the old stereotypical arguments about productionism versus environmentalism or markets versus self-sufficiency. We must produce more in a more sustainable way.
A food security theme was heavily emphasised with the food riots being invoked, it being argued that the health and well being of one billion people was threatened. Reference was made to the challenge presented by volatile prices. It was argued that food was a strategic asset and that we had lost sight of this in recent decades.
European policy ensured the food security of half a billion Europeans. Far from being a fortress, the EU was the world's leading importer from the developing world.
It was claimed that we had now reformed the CAP. This may be true, but it has not been transformed and many of its undesirable features remain in place.
It was argued that we should move away from the old stereotypical arguments about productionism versus environmentalism or markets versus self-sufficiency. We must produce more in a more sustainable way.
Monday, March 30, 2009
Into the lion's den
The Franco-British Council invited me to a large seminar in London yesterday on the Common Agricultural Policy. It was a very interesting day, although it was somewhat disconcerting to be asked questions in French about the policy from its defenders. Those present were a mix of academic and practitioners.
The meeting was conducted on Chatham House terms, but it gave an interesting indication of both current French and British thinking on the future of the CAP. Over the next week or so, I will reflect on some of the arguments put forward. The overall atmosphere was one of constructive dialogue, although one French speaker had to get in a dig about Britain not having learnt anything from BSE.
Much of the discussion focused on Pillar 2 issues in terms of rural development and how the CAP could be developed to meet the challenge of climate change. Indeed, one argument put forward from the British side was that the distinction between the pillars had become unhelpful and what was needed was a blended rural and environmental policy.
I wouldn't claim that the French participants necessarily bought into this, but I think there was an acceptance that there had to be debate about the underlying principles and goals of the CAP and without this one would not be able to arrive at better policy.
The meeting was conducted on Chatham House terms, but it gave an interesting indication of both current French and British thinking on the future of the CAP. Over the next week or so, I will reflect on some of the arguments put forward. The overall atmosphere was one of constructive dialogue, although one French speaker had to get in a dig about Britain not having learnt anything from BSE.
Much of the discussion focused on Pillar 2 issues in terms of rural development and how the CAP could be developed to meet the challenge of climate change. Indeed, one argument put forward from the British side was that the distinction between the pillars had become unhelpful and what was needed was a blended rural and environmental policy.
I wouldn't claim that the French participants necessarily bought into this, but I think there was an acceptance that there had to be debate about the underlying principles and goals of the CAP and without this one would not be able to arrive at better policy.
Sunday, March 22, 2009
Why CAP reform happened
The latest Journal of Common Market Studies (vol.47, 2, March 2009) contains an important article exploring the determinants of CAP reform. It is written by Alan Swinbank, a distinguished agricultural economist and a leading proponent of reform and Arlindo Cunha who was chair of the Agriculture Council in 1992 at the time of the MacSharry reform.
They have used a particular method, the Delphi technique, to survey a range of key influentials including Ray MacSharry and Franz Fischler. It allows them to analyse how the drivers of reform have changed over time through the 1992, 1999 and 2003 reforms.
Among the key findings were:
1. The Agriculture Commissioner has a key entreprenurial role (as I argued in my 1997 book on the CAP, 'the Commissioner makes a difference'
2. International trade negotiations were a major driver of reform (in this case providing confirmation of a widely held view)
3. Pressures from environmental groups, and from the media and public opinion, were identified as of growing importance, from a low base in 1992 to real significance in 2003. By contrast, farmers' organisations, the food processing indsutries, consumers and academics were judged to have had little influence on the reform process.
The European Parliament was seen as being of little influence in the reform process. Pressures from the European Council and the finance ministers in ECOFIN were seen to be more important in promoting the reform agenda than the Farm Council. Views on the role of the Farm Council were more divergent than almost any other subject covered in the survey. Some thought it had been conservative for a long time, running behind events, others took the view that it softened the Commission position.
The need for a better relationship between agriculture and the environment was seen as of little importance in 1992 but became particularly important in 2003. The need to find more funds for rural development also became important in 1999 and 2003. Ensuring the international competitiveness of agriculture also showed an increasing importance over the three reforms. Consumer concerns about food safety also became more important over time, but the importance of the 'European Model of Agriculture' seems to have peaked in the Agenda 2000 discussions when it was first presented.
They have used a particular method, the Delphi technique, to survey a range of key influentials including Ray MacSharry and Franz Fischler. It allows them to analyse how the drivers of reform have changed over time through the 1992, 1999 and 2003 reforms.
Among the key findings were:
1. The Agriculture Commissioner has a key entreprenurial role (as I argued in my 1997 book on the CAP, 'the Commissioner makes a difference'
2. International trade negotiations were a major driver of reform (in this case providing confirmation of a widely held view)
3. Pressures from environmental groups, and from the media and public opinion, were identified as of growing importance, from a low base in 1992 to real significance in 2003. By contrast, farmers' organisations, the food processing indsutries, consumers and academics were judged to have had little influence on the reform process.
The European Parliament was seen as being of little influence in the reform process. Pressures from the European Council and the finance ministers in ECOFIN were seen to be more important in promoting the reform agenda than the Farm Council. Views on the role of the Farm Council were more divergent than almost any other subject covered in the survey. Some thought it had been conservative for a long time, running behind events, others took the view that it softened the Commission position.
The need for a better relationship between agriculture and the environment was seen as of little importance in 1992 but became particularly important in 2003. The need to find more funds for rural development also became important in 1999 and 2003. Ensuring the international competitiveness of agriculture also showed an increasing importance over the three reforms. Consumer concerns about food safety also became more important over time, but the importance of the 'European Model of Agriculture' seems to have peaked in the Agenda 2000 discussions when it was first presented.
Sunday, March 15, 2009
A disappointing interview
I realise that opposition politicians have to say all things to all persons and jump on any bandgwagon that's going on, but I must say that I found an interview with Nick Herbert, the shadow Defra secretary, in Farmers Weekly a bit disappointing.
It remains to be seen whether the MP for Arundel and South Downs will be Defra secretary in Dave Cameron's government, or even whether Defra will remain in his present form. However, if his thinking is typical of that in the shadow cabinet on agriculture and food matters, it's a bit worrying. It looks as if we could be lurching back towards productionism.
Perhaps that is not entirely surprising as there has always been quite a close informal relationship between large-scale farmers and the Conservative Party. Unlike smaller farmers (who often vote for the Lib Dems or the Nationalists or even Labour), they are overwhelmingly Conservative voters. Many of them hold office in local Conservative associations.
Herbert thus goes for a badger cull, even though the scientific evidence is contradictory and culling can actually spread Bovine TB by disturbing social groups of badgers. It is also unlikely to win the Conservatives friends among the well-organised badger lobby. I would not rule out culling in any circumstances, and it will be interesting to see whether the proposed policy experiment in Wales goes ahead and, if it does, what its effects are. Herbert is chair of the all-party group on badger TB and one would have hoped that he could have been a bit more cautious before trying to score a few partisan points over Hilary Benn, whatever the latter's shortcomings.
What really concerns me is the following set of statements: 'We need to re-address the balance of food production. Total self-sufficiency isn't the right objective, but we do need increased production on the foods we can grow and rear domestically. We are a trading nation with important export markets and, while I'm not a protectionist, it's madness to import food we could be producing ... We should be maximising food production in a sustainable manner.'
Let's try and deconstruct these statements:
1. Addressing the balance of food production. This is part of the current fashion for re-balancing the economy, but I am far from sure that governments should set targets for the share of the economy undertaken by particular sectors.
2. Autarchy is impossible (good), but we should maximise domestic production. How? At a cost to the taxpayer or to the environment?
3. It's madness to import food we could be producing. Supposing that food is cheaper and of an equivalent quality or offers a better price/quality mix. The only way to keep that food out of the UK market is through protectionism which is what the CAP does at the moment.
4. How does one maximise food production in a sustainable manner? Of course, there are policies like Integrated Pest Management that need to be pursued, but there is something of a contradiction in this statement.
On the CAP, Herbert says, 'I would rather make decisions here. There's too much nonsense coming out of Europe and we need to minimise here.' Of course, the Conservatives are Eurosceptic, but I have never heard them advocating withdrawal from the CAP (unlike the CFP).
To be fair, there is a possibility of greater co-responsibility in the post-2013 CAP. Member states might be able to vary the level of subsidy provided. The problem with that approach is that it undermines the internal market which is one of the major achievements of the EU. Herbert's own answer is to have greater scrutiny of regulations in the Commons. There's nothing wrong in that, but I don't think it's the answer.
More thinking needs to be done between now and the election.
It remains to be seen whether the MP for Arundel and South Downs will be Defra secretary in Dave Cameron's government, or even whether Defra will remain in his present form. However, if his thinking is typical of that in the shadow cabinet on agriculture and food matters, it's a bit worrying. It looks as if we could be lurching back towards productionism.
Perhaps that is not entirely surprising as there has always been quite a close informal relationship between large-scale farmers and the Conservative Party. Unlike smaller farmers (who often vote for the Lib Dems or the Nationalists or even Labour), they are overwhelmingly Conservative voters. Many of them hold office in local Conservative associations.
Herbert thus goes for a badger cull, even though the scientific evidence is contradictory and culling can actually spread Bovine TB by disturbing social groups of badgers. It is also unlikely to win the Conservatives friends among the well-organised badger lobby. I would not rule out culling in any circumstances, and it will be interesting to see whether the proposed policy experiment in Wales goes ahead and, if it does, what its effects are. Herbert is chair of the all-party group on badger TB and one would have hoped that he could have been a bit more cautious before trying to score a few partisan points over Hilary Benn, whatever the latter's shortcomings.
What really concerns me is the following set of statements: 'We need to re-address the balance of food production. Total self-sufficiency isn't the right objective, but we do need increased production on the foods we can grow and rear domestically. We are a trading nation with important export markets and, while I'm not a protectionist, it's madness to import food we could be producing ... We should be maximising food production in a sustainable manner.'
Let's try and deconstruct these statements:
1. Addressing the balance of food production. This is part of the current fashion for re-balancing the economy, but I am far from sure that governments should set targets for the share of the economy undertaken by particular sectors.
2. Autarchy is impossible (good), but we should maximise domestic production. How? At a cost to the taxpayer or to the environment?
3. It's madness to import food we could be producing. Supposing that food is cheaper and of an equivalent quality or offers a better price/quality mix. The only way to keep that food out of the UK market is through protectionism which is what the CAP does at the moment.
4. How does one maximise food production in a sustainable manner? Of course, there are policies like Integrated Pest Management that need to be pursued, but there is something of a contradiction in this statement.
On the CAP, Herbert says, 'I would rather make decisions here. There's too much nonsense coming out of Europe and we need to minimise here.' Of course, the Conservatives are Eurosceptic, but I have never heard them advocating withdrawal from the CAP (unlike the CFP).
To be fair, there is a possibility of greater co-responsibility in the post-2013 CAP. Member states might be able to vary the level of subsidy provided. The problem with that approach is that it undermines the internal market which is one of the major achievements of the EU. Herbert's own answer is to have greater scrutiny of regulations in the Commons. There's nothing wrong in that, but I don't think it's the answer.
More thinking needs to be done between now and the election.
Spending money to pay it out
One of the many drawbacks of the CAP is that it costs a lot of money to run which reduces the sums that reach the supposed beneficiaries.
It has now emerged in response to a parliamentary question that each claim for the Single Farm Payment (SFP), irrespective of its value costs £742 to process. Junior Defra minister Jane Kennedy said that the figure was obtained by considering the direct processing costs and the total number of claims received.
A significabt number of SFP claims are worth around half of what it costs to process them, although this should change after the implementation of the Health Check reforms which are intended to cut very small payments to, for example, 'hobby farmers'. There were 14,465 payments under £400 in 2007 and 636 under £50. There were five payments made under £5.
It's a classic example of deadweight loss at the expense of the taxpayer. And it isn't helping farmers.
It has now emerged in response to a parliamentary question that each claim for the Single Farm Payment (SFP), irrespective of its value costs £742 to process. Junior Defra minister Jane Kennedy said that the figure was obtained by considering the direct processing costs and the total number of claims received.
A significabt number of SFP claims are worth around half of what it costs to process them, although this should change after the implementation of the Health Check reforms which are intended to cut very small payments to, for example, 'hobby farmers'. There were 14,465 payments under £400 in 2007 and 636 under £50. There were five payments made under £5.
It's a classic example of deadweight loss at the expense of the taxpayer. And it isn't helping farmers.
Thursday, March 12, 2009
Vision for the future of the CAP
The influential Land Use Policy Group will be launching their vision for the future of the CAP after 2013 in Brussels on March 30th. This will be an important event in the long-term effort to clarify thinking about future policy so that it delivers benefits to the environment and rural communities.
The Group wants to progressively transform the CAP so that it is focused more clearly on rewarding the environmental services arising from land management where the market fails to do so. These rewards should reflect the services provided and the costs incurred. The new policy should in the Group's view:
• Have a clear role in mitigating and adapting to climate change, addressing water and biodiversity management and ensuring that farming and forestry have the capacity to deliver environmental security and sustainable production in the long term.
• Promote the sustainable use of the natural resources on which all production depends through the use of good practice guidance together with agreed environmental standards, enforced by risk-based regulation which is binding on all land managers.
• Reward the positive management of existing biodiversity, cultural landscapes, carbon and water resources whilst securing improvements in the environmental quality of all rural land.
• Help reduce the environmental footprint of agriculture and forestry, by targeting capital investment on environmentally beneficial technology and infrastructure.
• Integrate sustainable land management with economic and social policy in order to encourage integrated land use that enables rural communities to benefit from the economic potential of their environment.
• Ensure that progress towards environmental, social and economic objectives is monitored, evaluated and regularly reported on.
The group admits that, 'Transforming the CAP in this way will take time. Any income support retained in the short term should be targeted, with conditions, on those farming systems making the greatest contribution to the management of environmental services for the benefit of society. Research and development should be focused on the challenge of enhancing long-term productivity in ways that reduce environmental impacts and help adapt to climate change.'
The Group states, 'We see our proposals as providing a sustainable justification for a “new contract” between predominantly urban taxpayers and those who manage rural land.' It will be interesting to learn more about the proposals when they become available. The principles are good ones, but to an extent the devil is in detail.
There is also the political problem of overcoming the resurgence of support for productionist solutions, the argument being advanced that protecting the environment is a luxury good that can be set aside in a recession. As evidence accumulates about the effects of climate change and their possible acceleration, future agriculture and rural policy must embed measures to mitigate climate change as a key priority.
The Group wants to progressively transform the CAP so that it is focused more clearly on rewarding the environmental services arising from land management where the market fails to do so. These rewards should reflect the services provided and the costs incurred. The new policy should in the Group's view:
• Have a clear role in mitigating and adapting to climate change, addressing water and biodiversity management and ensuring that farming and forestry have the capacity to deliver environmental security and sustainable production in the long term.
• Promote the sustainable use of the natural resources on which all production depends through the use of good practice guidance together with agreed environmental standards, enforced by risk-based regulation which is binding on all land managers.
• Reward the positive management of existing biodiversity, cultural landscapes, carbon and water resources whilst securing improvements in the environmental quality of all rural land.
• Help reduce the environmental footprint of agriculture and forestry, by targeting capital investment on environmentally beneficial technology and infrastructure.
• Integrate sustainable land management with economic and social policy in order to encourage integrated land use that enables rural communities to benefit from the economic potential of their environment.
• Ensure that progress towards environmental, social and economic objectives is monitored, evaluated and regularly reported on.
The group admits that, 'Transforming the CAP in this way will take time. Any income support retained in the short term should be targeted, with conditions, on those farming systems making the greatest contribution to the management of environmental services for the benefit of society. Research and development should be focused on the challenge of enhancing long-term productivity in ways that reduce environmental impacts and help adapt to climate change.'
The Group states, 'We see our proposals as providing a sustainable justification for a “new contract” between predominantly urban taxpayers and those who manage rural land.' It will be interesting to learn more about the proposals when they become available. The principles are good ones, but to an extent the devil is in detail.
There is also the political problem of overcoming the resurgence of support for productionist solutions, the argument being advanced that protecting the environment is a luxury good that can be set aside in a recession. As evidence accumulates about the effects of climate change and their possible acceleration, future agriculture and rural policy must embed measures to mitigate climate change as a key priority.
Tuesday, March 10, 2009
The future of the CAP
An excellent new site on the future of the CAP is now available organised around the theme of '2020: debating the future of the CAP': CAP 2020 . It has a particular emphasis on environmental issues, but has a broader focus than that.
Backed by the knowledge and expertise of the Institute for European Environmental Policy, this is going to be a key resource for analysts of the CAP. Indeed, it is going to eclipse anything that can be offerd on this blog or even what Jack Thurston has been able to achieve on CAP HealthCheck. He has been reorienting his interests in any case: Health Check
This blog will be kept going as from time to time I may be able to draw on my experience and contribute something to the debate. However, the debate is clearly moving on.
A document I saw recently suggested that the UK Government now has the ambition of phasing out the CAP as a protectionist and subsidy providing policy package by the year 2020. Even before the recession, I would have been sceptical about that ambition, given the strength of the political constellation that defends the CAP.
However, we now face a long and deep recession that it is going to have profound implications for the future role of government. Although the 'regulatory state' will probably be strengthened as a result, whatever government is in power in a particular country, it is going to have to cut public expenditure and raise taxes to pay off debt.
This might seem a golden opportunity to reduce the large sums that are spent on subsidising agriculture. However, even though the debate on the CAP has become more transparent, and significant changes have been achieved in the way in which it is delivered, the politics of bringing about change in the CAP remain challenging and complex. The policy will probably outlive me.
Backed by the knowledge and expertise of the Institute for European Environmental Policy, this is going to be a key resource for analysts of the CAP. Indeed, it is going to eclipse anything that can be offerd on this blog or even what Jack Thurston has been able to achieve on CAP HealthCheck. He has been reorienting his interests in any case: Health Check
This blog will be kept going as from time to time I may be able to draw on my experience and contribute something to the debate. However, the debate is clearly moving on.
A document I saw recently suggested that the UK Government now has the ambition of phasing out the CAP as a protectionist and subsidy providing policy package by the year 2020. Even before the recession, I would have been sceptical about that ambition, given the strength of the political constellation that defends the CAP.
However, we now face a long and deep recession that it is going to have profound implications for the future role of government. Although the 'regulatory state' will probably be strengthened as a result, whatever government is in power in a particular country, it is going to have to cut public expenditure and raise taxes to pay off debt.
This might seem a golden opportunity to reduce the large sums that are spent on subsidising agriculture. However, even though the debate on the CAP has become more transparent, and significant changes have been achieved in the way in which it is delivered, the politics of bringing about change in the CAP remain challenging and complex. The policy will probably outlive me.
Wednesday, February 25, 2009
Do subsidies keep the cost of food down?
Canberra, ACT: Jack Thurston over at the CAP Health Check blog recently set me a challenge. An argument that is increasingly heard is that farm subsidies are a good thing because they keep the cost of food down at a time of economic recession.
First, it's an inefficient way of delivering the subsidy to those most in need. In so far as the cost is reduced, the benefit reaches the rich as well as the poor. It would be better to ensure that the least well off members of the population had enough money for a balanced and nutritious diet.
Second, the protectionist aspects of the CAP mean that consumers in the EU do not have unhindered access to agricultural goods at world market prices. The EU price is generally above the world price.
What about the single farm payment? Much of the money spent on the CAP does not reach the farmer, but is absorbed by administrative costs (pushed up by the complexity of the system), traders and food processors (just look at how much Tate & Lyle has received) and by criminal organisations.
As a rational decision-maker, the farmer is not going to use the subsidy to lower prices. He may invest in the farm, thereby benefiting suppliers of agricultural equipment which is why they favour the CAP so much. Or he may decide to use the money for personal consumption - or more likely some mixture of both.
Some of my colleagues at Warwick HRI think that food is too cheap. By that they mean that it costs so little that people do not value it enough and the emphasis is on low cost production, regardless of some of the negative externalities. There is something in this, but one has to consider the impact of higher food prices on the constrained budget of the typical family.
First, it's an inefficient way of delivering the subsidy to those most in need. In so far as the cost is reduced, the benefit reaches the rich as well as the poor. It would be better to ensure that the least well off members of the population had enough money for a balanced and nutritious diet.
Second, the protectionist aspects of the CAP mean that consumers in the EU do not have unhindered access to agricultural goods at world market prices. The EU price is generally above the world price.
What about the single farm payment? Much of the money spent on the CAP does not reach the farmer, but is absorbed by administrative costs (pushed up by the complexity of the system), traders and food processors (just look at how much Tate & Lyle has received) and by criminal organisations.
As a rational decision-maker, the farmer is not going to use the subsidy to lower prices. He may invest in the farm, thereby benefiting suppliers of agricultural equipment which is why they favour the CAP so much. Or he may decide to use the money for personal consumption - or more likely some mixture of both.
Some of my colleagues at Warwick HRI think that food is too cheap. By that they mean that it costs so little that people do not value it enough and the emphasis is on low cost production, regardless of some of the negative externalities. There is something in this, but one has to consider the impact of higher food prices on the constrained budget of the typical family.
Monday, February 16, 2009
You can go to hell
Perth, WA: Coming to Australia always gives you a fresh perspective on matter agricultural. This is the prominent headline in The Countryman weekly which refers to a 66-year old Danish woman who is going to knock the guts out of the Australian dairy industry.
Quite what her age, nationality or gender has got to do with it is another matter, but the message about the restoration of export refunds and the actions of farm commissioner Mariann Fischer Boel is crystal clear. It is backed up by an interview with an indignant Australian farmer.
One good point that the articles does make is that the EU cares little about the health of the global dairy industry and perhaps in time of food security concerns it should.
Quite what her age, nationality or gender has got to do with it is another matter, but the message about the restoration of export refunds and the actions of farm commissioner Mariann Fischer Boel is crystal clear. It is backed up by an interview with an indignant Australian farmer.
One good point that the articles does make is that the EU cares little about the health of the global dairy industry and perhaps in time of food security concerns it should.
Tuesday, February 10, 2009
Can the old policy instruments have any effect?
The resort to intervention buying and export refunds in the dairy sector has been predictably bad PR for the EU, especially in the southern hemisphere. But a more fundamental question is, can these tired old policy instruments work any magic in a deep economic crisis?
What is likely to happen, judging by past experience, is that exporting countries like New Zealand will lower their prices in response in order to retain global market share. The net effect is that world prices are depressed even further and this does not help EU producers or certainly not the more efficient ones who are seeking to compete on the world market.
Wheeling out the old policy instruments may give partial satisfaction to farm lobbyists, but it is not really going to help prices or farm incomes. The unpalatable fact is that an internationally competitive EU dairy industry might have a better chance of bringing prosperity to EU dairy farmers. But that would mean marginal farmers in politically sensitive areas like Bavaria and Britanny going out of production. And that is too high a price to pay for a net efficiency gain.
What is likely to happen, judging by past experience, is that exporting countries like New Zealand will lower their prices in response in order to retain global market share. The net effect is that world prices are depressed even further and this does not help EU producers or certainly not the more efficient ones who are seeking to compete on the world market.
Wheeling out the old policy instruments may give partial satisfaction to farm lobbyists, but it is not really going to help prices or farm incomes. The unpalatable fact is that an internationally competitive EU dairy industry might have a better chance of bringing prosperity to EU dairy farmers. But that would mean marginal farmers in politically sensitive areas like Bavaria and Britanny going out of production. And that is too high a price to pay for a net efficiency gain.
Friday, January 23, 2009
Return of the butter mountain
It was the recession of the 1930s that ushered in agricultural protectionism and subsidies, not least in the United States. Now the European Union has reverted to two of its old favourite policy instruments: intervention buying and export subsidies in the dairy sector just when we thought we had seen the last of them. Stocks of butter disappeared completely in 2007.
Faced with a drastic drop in dairy prices, the EU is to buy 30,000 tons of butter at a guaranteed price. Over three times as much skimmed milk powder is to be purchased - 109,000 tons. In addition, export subsidies will be given to skimmed milk powder, butter, butter oil and cheese. These subsidies are, of course, particularly damaging to developing countries where they undermine the viability of local farmers. As Oxfam has pointed out, once the EU starts using them, other countries may follow suit.
Officials argue that, by historical standards, the amount being bought is more of a butter molehill than a mountain. In 1986, the EU bought 1.23 million tons of unwanted butter. However, farm organisations have argued that more intervention may be required. The fall of the rouble has dented one important export market. The price of a ton of skimmed milk powder has roughly halved since the summer of 2007.
As far as other intervention stocks are concerned, the EU has 717,810 tons of cereals in the grain mountain and 41,422 tons of sugar, while the wine lake has 2.3m hectolitres of wine in it.
Let's hope it's not back to the future.
Faced with a drastic drop in dairy prices, the EU is to buy 30,000 tons of butter at a guaranteed price. Over three times as much skimmed milk powder is to be purchased - 109,000 tons. In addition, export subsidies will be given to skimmed milk powder, butter, butter oil and cheese. These subsidies are, of course, particularly damaging to developing countries where they undermine the viability of local farmers. As Oxfam has pointed out, once the EU starts using them, other countries may follow suit.
Officials argue that, by historical standards, the amount being bought is more of a butter molehill than a mountain. In 1986, the EU bought 1.23 million tons of unwanted butter. However, farm organisations have argued that more intervention may be required. The fall of the rouble has dented one important export market. The price of a ton of skimmed milk powder has roughly halved since the summer of 2007.
As far as other intervention stocks are concerned, the EU has 717,810 tons of cereals in the grain mountain and 41,422 tons of sugar, while the wine lake has 2.3m hectolitres of wine in it.
Let's hope it's not back to the future.
Thursday, January 08, 2009
Defra wants set aside back
The UK rural affairs ministry, Defra, is to press for the reintroduction of compulsory set aside, most likely at a range of 2 to 4 per cent. The motivation is that the department failed to reach all its biodiversity targets in 2008 and Royal Society for the Protection of Birds (RSPB) figures showed that farmland bird numbers were in decline.
A link could be made between set-aside and the Entry Level Stewardship Scheme (ELS). One proposal under consideration is to allow farmers to include set aside in the ELS area of a farm. Farmers who are in the scheme would then effectively receive payments for their set aside.
The NFU has argued for set aside to remain at zero per cent, predictably citing food security grounds. A more subtle argument is that it is a very blunt policy instrument, not just for restraining production, but also for achieving biodiversity targets.
The key point here is the reliance on farmland bird populations as a measure of environmental stress. That certainly reflects the agenda setting power of the RSPB, but it is not necessarily the best measure. Moreover, even if one targets farmland bird population, set aside is a crude way of maintaining their numbers.
A link could be made between set-aside and the Entry Level Stewardship Scheme (ELS). One proposal under consideration is to allow farmers to include set aside in the ELS area of a farm. Farmers who are in the scheme would then effectively receive payments for their set aside.
The NFU has argued for set aside to remain at zero per cent, predictably citing food security grounds. A more subtle argument is that it is a very blunt policy instrument, not just for restraining production, but also for achieving biodiversity targets.
The key point here is the reliance on farmland bird populations as a measure of environmental stress. That certainly reflects the agenda setting power of the RSPB, but it is not necessarily the best measure. Moreover, even if one targets farmland bird population, set aside is a crude way of maintaining their numbers.
Budget pressure on CAP
With the Health Check out of the way, it looks as if the medium-term future of the CAP is going to be strongly influenced by discussions of how the EU budget should be spent. This always raises the awkward question of the opportunity cost of spending large sums of money on subsidising farmers.
One external study has concluded that the CAP could just as well be paid from national budgets as the EU budget in terms of its European added-value. (For the study go here: Budget This study seems to have influenced the viewpoint of EU Budget Commissioner Dalia Grybauskaité. She told Agra Focus that there will be massive poltical pressure for the EU to concentrate its policy spending after 2013 on areas where there is a genuine added-value at EU level, e.g., a common policy on energy or climate change.
The Commissioner described 1st pillar CAP funding as 'generally the largest and most costly EU policy which, under each reform has got more and more expensive and less and less efficient'. She also questioned whether agriculture policy is still a 'common policy'. When the EU was created there were questions of hunger. But that has changed and 'we are now fighting with over production and with price crises for food and agricultural products'.
Another argument for co-funding - which already happens in the new member states - is the casual attitude she has witnessed from some member states to various EU-funded projects - as demonstrated by poor controls and the likely increase in sums received under the 'clearance of accounts' procedure. As soon as national/regional funds are involved, the relevant authorities are more focussed and responsible for an efficient use of public money, she argued.
One external study has concluded that the CAP could just as well be paid from national budgets as the EU budget in terms of its European added-value. (For the study go here: Budget This study seems to have influenced the viewpoint of EU Budget Commissioner Dalia Grybauskaité. She told Agra Focus that there will be massive poltical pressure for the EU to concentrate its policy spending after 2013 on areas where there is a genuine added-value at EU level, e.g., a common policy on energy or climate change.
The Commissioner described 1st pillar CAP funding as 'generally the largest and most costly EU policy which, under each reform has got more and more expensive and less and less efficient'. She also questioned whether agriculture policy is still a 'common policy'. When the EU was created there were questions of hunger. But that has changed and 'we are now fighting with over production and with price crises for food and agricultural products'.
Another argument for co-funding - which already happens in the new member states - is the casual attitude she has witnessed from some member states to various EU-funded projects - as demonstrated by poor controls and the likely increase in sums received under the 'clearance of accounts' procedure. As soon as national/regional funds are involved, the relevant authorities are more focussed and responsible for an efficient use of public money, she argued.
Monday, December 15, 2008
Dairy quota row highlights industry divisions
Commissioner Mariann Fischer Boel's proposal for five annual dairy quota increases of 1 per cent each, adopted unchanged by farm ministers, is under attack from two sides. The Commission believes that this is a sure sign that it has negotiated a fair middle path through a morass of conflicting objectives. A less charitable interpretation would be that the needs of an internationally competitive industry have been partially sacrificed to those of marginal farmers with political clout.
What is at stake here is a deeoply divided industry. Parts of the European milk sector, largely found in Northern Europe (although also in Italy's Po Valley) is an efficient, hi tech branch of the food industry that is well capable of competing on the international market and has a strong export orientation. But there are also a lot of marginal dairy farmers who are conservative in outlook and manage to 'get by' economically with the help of political protection. This is given to them by groupings like the CSU in Bavaria.
Member states in the north and west of Europe, especially the UK and Denmark, have criticised the Health Check accord as a missed opportunity to set the EU dairy industry on the road to a prosperous and expansionist future. Member states to the south and east have lamented the prospect of more milk coming on to the market at a time when dairy farmers' incomes are coming under sustained pressure.
Kirsten Holm Svendsen, policy director of the Danish Dairy Board, commented, 'Restricting milk production in Europe will only generate higher support volumes from non-European dairy nations. Thus, by refusing to liberalise dairy production, the EU gives up the expanding European dairy market to the Brazilians.'
The Danes are also concerned that the new support mechanisms available to dairy producers under 'Article 68' of the Single Farm Payment regulation will allow member states to effectively re-introduce coupled support of the dairy sector, with a consequent distorting impact on competition.
The possibility of creating a new coupled dairy cow premium from 2010 is regarded as a negotiating victory for Austria. Outgoing Austrian farm minister Josef Proll said that the biennial reviews of the milk market would allow the Commission to put the planned quota increases in hold if there were to be any risk of exceptional market disturbances - or even to cut quotas. Thus, even modest steps in the direction of market liberalisation could be threatened.
What is at stake here is a deeoply divided industry. Parts of the European milk sector, largely found in Northern Europe (although also in Italy's Po Valley) is an efficient, hi tech branch of the food industry that is well capable of competing on the international market and has a strong export orientation. But there are also a lot of marginal dairy farmers who are conservative in outlook and manage to 'get by' economically with the help of political protection. This is given to them by groupings like the CSU in Bavaria.
Member states in the north and west of Europe, especially the UK and Denmark, have criticised the Health Check accord as a missed opportunity to set the EU dairy industry on the road to a prosperous and expansionist future. Member states to the south and east have lamented the prospect of more milk coming on to the market at a time when dairy farmers' incomes are coming under sustained pressure.
Kirsten Holm Svendsen, policy director of the Danish Dairy Board, commented, 'Restricting milk production in Europe will only generate higher support volumes from non-European dairy nations. Thus, by refusing to liberalise dairy production, the EU gives up the expanding European dairy market to the Brazilians.'
The Danes are also concerned that the new support mechanisms available to dairy producers under 'Article 68' of the Single Farm Payment regulation will allow member states to effectively re-introduce coupled support of the dairy sector, with a consequent distorting impact on competition.
The possibility of creating a new coupled dairy cow premium from 2010 is regarded as a negotiating victory for Austria. Outgoing Austrian farm minister Josef Proll said that the biennial reviews of the milk market would allow the Commission to put the planned quota increases in hold if there were to be any risk of exceptional market disturbances - or even to cut quotas. Thus, even modest steps in the direction of market liberalisation could be threatened.
Wednesday, December 10, 2008
Auditors roast cross-compliance policy
The European Court of Auditors has published a strong critique of the way that cross-compliance policy, a key element in the reformed CAP, is executed by the Commission and the member states.
The Court carried out an audit in 2008 of the cross-compliance policy at the Commission and in seven Member States representing the diversity of agriculture across Europe. In the report which it recently adopted, the Court concludes that the objectives of this policy have not been defined in a specific, measurable, relevant, and realistic way, and that at farm level many obligations are still only for form’s sake and therefore have little chance of leading to the expected changes, whether reducing the size of payments or modifying farming practices.
More precisely, the Court finds that:
􀂃 the Member States have not translated all the cross-compliance standards into obligations applicable at farm level.
􀂃 monitoring whether these obligations are being respected is weak and in some cases non-existent. One of the reasons for this is that the checks are largely carried out during the summer months and a significant number of obligations relating to agricultural practices which occur during other seasons and cannot therefore be properly checked.
􀂃 the minimal reduction in direct payments seen to date stems both from monitoring weaknesses and an inadequate system of sanctions. For example, the audit found no breach of cross-compliance after carrying out 11 633 checks of the Birds Directive and 14 896 checks of the Habitats Directive over two years in four Member States.
􀂃 the introduction of cross-compliance has weakened key elements of the control and sanction system for rural development. In addition, the separation between cross-compliance and agri-environmental measures is not always clear.
ô€‚ƒ the data sent by the Member States to the Commission are unreliable and overestimate both the rate of monitoring of farmers and the farmers’ compliance rates. The Commission’s system for monitoring these data is incomplete and suffers in particular from the absence of performance indicators and baseline levels.
Overall, the Court considers that cross-compliance is a vital element of the CAP but concludes that it is not effective as currently managed by the Commission and implemented by the Member States. It states, 'If the public authorities wish cross-compliance to achieve its full effect, they must define specific and measurable objectives which can be translated into obligations that are controllable at farm level. The Court therefore recommends that the applicable rules should be simplified, clarified and prioritised.'
The Court carried out an audit in 2008 of the cross-compliance policy at the Commission and in seven Member States representing the diversity of agriculture across Europe. In the report which it recently adopted, the Court concludes that the objectives of this policy have not been defined in a specific, measurable, relevant, and realistic way, and that at farm level many obligations are still only for form’s sake and therefore have little chance of leading to the expected changes, whether reducing the size of payments or modifying farming practices.
More precisely, the Court finds that:
􀂃 the Member States have not translated all the cross-compliance standards into obligations applicable at farm level.
􀂃 monitoring whether these obligations are being respected is weak and in some cases non-existent. One of the reasons for this is that the checks are largely carried out during the summer months and a significant number of obligations relating to agricultural practices which occur during other seasons and cannot therefore be properly checked.
􀂃 the minimal reduction in direct payments seen to date stems both from monitoring weaknesses and an inadequate system of sanctions. For example, the audit found no breach of cross-compliance after carrying out 11 633 checks of the Birds Directive and 14 896 checks of the Habitats Directive over two years in four Member States.
􀂃 the introduction of cross-compliance has weakened key elements of the control and sanction system for rural development. In addition, the separation between cross-compliance and agri-environmental measures is not always clear.
ô€‚ƒ the data sent by the Member States to the Commission are unreliable and overestimate both the rate of monitoring of farmers and the farmers’ compliance rates. The Commission’s system for monitoring these data is incomplete and suffers in particular from the absence of performance indicators and baseline levels.
Overall, the Court considers that cross-compliance is a vital element of the CAP but concludes that it is not effective as currently managed by the Commission and implemented by the Member States. It states, 'If the public authorities wish cross-compliance to achieve its full effect, they must define specific and measurable objectives which can be translated into obligations that are controllable at farm level. The Court therefore recommends that the applicable rules should be simplified, clarified and prioritised.'
Tuesday, December 09, 2008
The Estonian vision
A charming young Estonian woman greeted me at the European Parliament yesterday when I went to give evidence to the Agriculture and Rural Development Committee (of which more in due course). Of broader significance Estonia is orobably the only new member state with a clear concept of how the CAP should evolve. This is outlined in an Agra Focus interview with farm minister Helir-Valdor Seeder.
Estonia's view is that reform has not gone far enough and believes that we need a significantly reformed CAP. Seeder's view is that 'the system of direct aid today is innovative in its form ... but in practice it is the factual continuation of the 1992 MacSharry reform where farmers were compensated for the internal market price drop.' He argues there should be a continuing base payment to farmers to compensate for the EU standards they are obliged to follow.
However, more payments should be targeted. He sees the future in terms of a Common Rural Policy which should be open to entrepreneurs in rural areas, but 'should not be a cartel for the farmers club.'
He argues that price volatility requires a single intervention mechanism that would enable the EU to offset the negative effects of extreme temporary price drops. However, why not deal with this through some kind of insurance mechanism that had EU backing? It would be less market distoring.
Estonia's view is that reform has not gone far enough and believes that we need a significantly reformed CAP. Seeder's view is that 'the system of direct aid today is innovative in its form ... but in practice it is the factual continuation of the 1992 MacSharry reform where farmers were compensated for the internal market price drop.' He argues there should be a continuing base payment to farmers to compensate for the EU standards they are obliged to follow.
However, more payments should be targeted. He sees the future in terms of a Common Rural Policy which should be open to entrepreneurs in rural areas, but 'should not be a cartel for the farmers club.'
He argues that price volatility requires a single intervention mechanism that would enable the EU to offset the negative effects of extreme temporary price drops. However, why not deal with this through some kind of insurance mechanism that had EU backing? It would be less market distoring.
Tuesday, December 02, 2008
More bids to grub up vineyards than expected
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.
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.
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