A leading scientist is the latest person to warn that the bickering over whether conventional or organic farming is environmentally superior is getting no one anywhere in mitigating climate change. In an interview with Farmers Weekly Ian Crute, shortly to become chief scientist at the Agricultural and Horticultural development board, said it was vital to reduce greenhouse gas emissions from all types of agriculture. The former director of Rothamsted Research commented, 'The notion that this is a case of organic farming, conventional farming bad, doesn't get us anywhere.'
More investment in scientific research was needed to uncover beter ways that agriculture could help in the mitigation of climate change. 'There is no good data which would say that the emissions of nitrous oxide from organic systems compared to systems which are using synthetic fertiliser are necessary any worse or any better. I could argue very strongly that efficient pest, disease and weed control using pestcides was a far greener system in terms of the efficiency with which nitrogen us used than an inefficient system using far more land and inputs inefficiently.'
NFU policy director Martin Haworth endorsed Professor Crute's comments. More money needed to be spent on research and development to address 'market failure' issues. He commented, 'We need to reduce greenhouse gas emissions from all systems and science is key.'
The comments came after a study by the Institute of Grocery Distribution (IGD) found that four out of five shoppers are turning their backs on organic produce in favour of cheaper, conventionally-produced food. They found that 10 per cent of shoppers have found alternative products offering the same perceived benefits as organic food at a lower price.
A further 8 per cent are focusing their organic spend on fewer products where they think it really makes a difference, while another 8 per cent say they are not sure what organic stands for anymore. More than 40 per cent of shoppers say they have never been interested in organic.
The hard core of dedicated organic shoppers make up nearly one in five of the UK population. They tend to be younger and more affluent. However, some of them are looking for their ethical values in products that meet high animal welfare standards, local foods and Fairtrade. Nine per cent of shoppers will buy more organic food when they have more money.
Soil Association director Patrick Holden admitted that many people saw organic as a lifestyle choice rather than a sustainable farming system. 'We need to work at changing these perceptions,' he said.
Monday, August 31, 2009
Saturday, August 29, 2009
The iceing on the cake
With the approval by the Icelandic Parliament of arrangements to pay back money owed by failed Icelandic banks to depositors in the UK and the Netherlands, the way is now clear for Iceland's application to join the EU to proceed.
The opening of negotiations has already been approved by the Parliament, but membership would have to be approved by a national referendum and approval rates have been dropping sharply as the nation's population consider that they have been harshly treated by the international community for the failures of a few financiers.
Fish is normally seen as the main obstacle to Icelandic membership, but agriculture also poses many challenges. Iceland has a PSE of around 70 per cent, one of the highest in the OECD (along with Norway and Switzerland, although reforms have been introduced in the latter country) and twice the OECD average. The OECD has commented that since the last 1980s there has been limited progress in policy reform with only a slight drop in levels of producer support.
Sheep farming has been the main activity, but this has been in decline. Scarcely any crops are grown in the country. There are around five hundred dairy farms, presumably to ensure a liquid milk supply given the country's isolation. At least until recently, dairy prices were still administered.
The EU's net trade balance with Iceland is just over €150m for agricultural and food exports. The value of EU food exports has risen 25 per cent in the last four years. However, there is a trade deficit of more than €1bn in fish products.
In any negotiations account has to be taken of Iceland's special circumstances in terms of climate and location. There is no doubt that agriculture as well as fish is a sensitive subject in terms of the already wounded national pride of the Icelandic nation. The main potential gain for Iceland is membership of the euro and relief for their own battered currency.
We shall be paying special attention to negotiations as they proceed.
The opening of negotiations has already been approved by the Parliament, but membership would have to be approved by a national referendum and approval rates have been dropping sharply as the nation's population consider that they have been harshly treated by the international community for the failures of a few financiers.
Fish is normally seen as the main obstacle to Icelandic membership, but agriculture also poses many challenges. Iceland has a PSE of around 70 per cent, one of the highest in the OECD (along with Norway and Switzerland, although reforms have been introduced in the latter country) and twice the OECD average. The OECD has commented that since the last 1980s there has been limited progress in policy reform with only a slight drop in levels of producer support.
Sheep farming has been the main activity, but this has been in decline. Scarcely any crops are grown in the country. There are around five hundred dairy farms, presumably to ensure a liquid milk supply given the country's isolation. At least until recently, dairy prices were still administered.
The EU's net trade balance with Iceland is just over €150m for agricultural and food exports. The value of EU food exports has risen 25 per cent in the last four years. However, there is a trade deficit of more than €1bn in fish products.
In any negotiations account has to be taken of Iceland's special circumstances in terms of climate and location. There is no doubt that agriculture as well as fish is a sensitive subject in terms of the already wounded national pride of the Icelandic nation. The main potential gain for Iceland is membership of the euro and relief for their own battered currency.
We shall be paying special attention to negotiations as they proceed.
Friday, August 28, 2009
The impact on CAP on developing countries
This interesting report from the International Centre for Trade and Sustainable Development shows how the CAP can often undermine the development goals that member states are pursuing: Millennium Goals
Wednesday, August 26, 2009
New Ag committee line up
With co-decision on agricultural issues likely to come into force from next year, the European Parliament's Agriculture Committee has assumed a new importance and there was plenty of competition for places. However, one unasnwered question is whether the Budget Committee will have a stronger influence on plenary voting patterns than the Ag committee.
Many of the leading lights from the old committee have gone. Former chair UK Conservative Neil Parish is standing for the UK Parliament and may have a role in Dave Cameron's government at a junior level. I am grateful to Parish for getting me a glass of champange after German Green landowner Freidrich-Wilhelm Graefe zu Baringdorf had attacked me when I appeared before the committee as 'not a real scientist.' (It then all kicked off with a German CDU member heckiling the Green Junker).
The new committee chair is Paulo De Castro, the second Italian to chair the committee and just the second Social Democrat. The fact that he is chair owes much to the priority which the European People's Party gave to chairing other committees under the D'Hondt points system for allocating committee chairs.
De Castro is well qualified for the job, having been a Professor of Agricultural Economics at the University of Bolonga and Italy's farm minister from October 1998 to April 2000. He also served as a special adviser on agricultural issues to Commission President Romano Prodi from June to December 2000.
Agra Focus commented that De Castro 'is arguably as well-qualified as anyone in Europe to head one of the EU Institutions going into the debate on the post-2013 Common Agricultural Policy.' It remains to be seen whether the 1st reading vote on the reform proposals occurs while he is chair, or after the halfway point in the mandate (early 2012) by which time there could be a different chair.
De Castro used encouraging terminology in a short interview with Agra Focus. There have been concerns that co-decision (if the Irish get the vote right at the second time of asking) could slow down and dilute reform because of farm interests on the EP Committee. However, De Castro emphasised the importance of goals of concern to all EU citizens such as public goods, food safety and animal welfare.
Many of the leading lights from the old committee have gone. Former chair UK Conservative Neil Parish is standing for the UK Parliament and may have a role in Dave Cameron's government at a junior level. I am grateful to Parish for getting me a glass of champange after German Green landowner Freidrich-Wilhelm Graefe zu Baringdorf had attacked me when I appeared before the committee as 'not a real scientist.' (It then all kicked off with a German CDU member heckiling the Green Junker).
The new committee chair is Paulo De Castro, the second Italian to chair the committee and just the second Social Democrat. The fact that he is chair owes much to the priority which the European People's Party gave to chairing other committees under the D'Hondt points system for allocating committee chairs.
De Castro is well qualified for the job, having been a Professor of Agricultural Economics at the University of Bolonga and Italy's farm minister from October 1998 to April 2000. He also served as a special adviser on agricultural issues to Commission President Romano Prodi from June to December 2000.
Agra Focus commented that De Castro 'is arguably as well-qualified as anyone in Europe to head one of the EU Institutions going into the debate on the post-2013 Common Agricultural Policy.' It remains to be seen whether the 1st reading vote on the reform proposals occurs while he is chair, or after the halfway point in the mandate (early 2012) by which time there could be a different chair.
De Castro used encouraging terminology in a short interview with Agra Focus. There have been concerns that co-decision (if the Irish get the vote right at the second time of asking) could slow down and dilute reform because of farm interests on the EP Committee. However, De Castro emphasised the importance of goals of concern to all EU citizens such as public goods, food safety and animal welfare.
Monday, August 24, 2009
Organics: it all kicks off
We haven't yet looked at the Food Standards Agency (FSA) report earlier this month that stated that 50 years of evidence on nutrition and health effects found that there was little difference in the nutritional value of orgainic produce. The small nutritional differences which did occur were not large enough to be of any public health relevance.
This is not a message organic farmers and growers wanted to hear at a time when sales have been slumping in the recession. According to research by the Institute of Grocery Distribution earlier this year, the number of people buying organic produce dropped from almost a quarter to 19 per cent. Prince Charles' organic food range, Duchy Originals, has seen a dramatic slump in sales. Profits fell from £1.53m in 2007 to £57,400 last year.
Organic goods were coming to be seen as a luxury in the recession as consumers search for value. Admittedly, there have been some signs of a recent recovery. Last month Tesco said that the sector was seeing 'green shoots of recovery'. Organic milk buyer OMSCo reported earlier this month that sales of organic milk had increased by 10.5 per cent in four weeks.
In any case the FSA report misses the point about why consumers buy organic. It was evident from vox pops after the report came out that the main concern for many of them was pesticide residues rather than nutrition. There is little point in telling them that pesticide residues are minimal or that they are strictly monitored both by the regulator and by supermarkets who don't want any damage to their brands.
Unfortunately the debate has become pivoted around an artificial divide between organic and conventional methods of farming when more attention should be paid to how conventional farming can be made less intensive and environmentally damaging through integrated crop and pest management. It is evident, however, that the position of many organic proponents is deeply ideological in the sense that they hold entrenched positions that dismiss any contrary arguments or evidence.
There is a sense in which 'organic' has become a diluted brand that is confusing to customers. In many ways it is 'local' that is the acclerating brand, particularly through the farmers' market movement. In supermarkets 'local' is sometimes really 'regional'. The big boom in the last year, as many garden centres could attest, has been in the 'grow your own' movement in allotments and gardens.
As was pointed out at the ESRS conference in Vaasa last week the notion of locality is linked to a narrative of producers' pride but also links into the willingness of consumers to pay more as part of a search for excellence. Wealthy and concerned consumers provide a basis for the protection of European agriculture not through traditional market barriers but by reinventing old forms of quality and developing new ones.
For retailers there is an imperative to strengthen consumer loyalty through an appeal to ethical and moral values as well as competition on price. This, of course, brings us into the debate about 'choice editing' as a means of dealing with problems such as obesity. But that is another story.
This is not a message organic farmers and growers wanted to hear at a time when sales have been slumping in the recession. According to research by the Institute of Grocery Distribution earlier this year, the number of people buying organic produce dropped from almost a quarter to 19 per cent. Prince Charles' organic food range, Duchy Originals, has seen a dramatic slump in sales. Profits fell from £1.53m in 2007 to £57,400 last year.
Organic goods were coming to be seen as a luxury in the recession as consumers search for value. Admittedly, there have been some signs of a recent recovery. Last month Tesco said that the sector was seeing 'green shoots of recovery'. Organic milk buyer OMSCo reported earlier this month that sales of organic milk had increased by 10.5 per cent in four weeks.
In any case the FSA report misses the point about why consumers buy organic. It was evident from vox pops after the report came out that the main concern for many of them was pesticide residues rather than nutrition. There is little point in telling them that pesticide residues are minimal or that they are strictly monitored both by the regulator and by supermarkets who don't want any damage to their brands.
Unfortunately the debate has become pivoted around an artificial divide between organic and conventional methods of farming when more attention should be paid to how conventional farming can be made less intensive and environmentally damaging through integrated crop and pest management. It is evident, however, that the position of many organic proponents is deeply ideological in the sense that they hold entrenched positions that dismiss any contrary arguments or evidence.
There is a sense in which 'organic' has become a diluted brand that is confusing to customers. In many ways it is 'local' that is the acclerating brand, particularly through the farmers' market movement. In supermarkets 'local' is sometimes really 'regional'. The big boom in the last year, as many garden centres could attest, has been in the 'grow your own' movement in allotments and gardens.
As was pointed out at the ESRS conference in Vaasa last week the notion of locality is linked to a narrative of producers' pride but also links into the willingness of consumers to pay more as part of a search for excellence. Wealthy and concerned consumers provide a basis for the protection of European agriculture not through traditional market barriers but by reinventing old forms of quality and developing new ones.
For retailers there is an imperative to strengthen consumer loyalty through an appeal to ethical and moral values as well as competition on price. This, of course, brings us into the debate about 'choice editing' as a means of dealing with problems such as obesity. But that is another story.
Thursday, August 20, 2009
Productivism by any name
Vaasa, Finland: Geoff Lawrence told delegates at the ESRS conference today that one should be careful about terms like neo-productionism and post-productivism that had been used at the conference. Liked productivism, they amounted to a triumph of output over sustainability.
He emphasised the way in which the financialisation of the world food regime has encouraged speculative trading which in turn had resulted in more volatile prices. In 2003 $13bn have been spent on agricultural futures trading and it had soared to $260bn in 2006 as traders saw an opportunity as prices rose.
This theme was emphasised by Peter Feindt and Terry Marsden who argued that short-term and long-term resource shortfalls fuelled speculation. They also drew attention to the carbon dependant nature of the current world food regime.
Unfortunately, the articulation of sustainability concerns often di not got beyond reports, leading to an incoherent articulation which did not change policy. Cracks in the current regime offered up real opportunities for change, but more attention needed to be paid to the politics of transitions.
Mark Tilzey presented an analysis informed by Marxist categories, drawing attention to the attempts of fractions of capital to restore class hegemony. Delegates wondered if they had stumbled into a time warp, but Tilzey argued that the export of productivism through globalisation opened up spaces for the affluent at home. He questioned whether the production of staples could be undertaken by a sustainable rural paradigm, but did not call for machine tractor stations.
In discussion it was argued that supply chains were the dominant form of governance in the current agri-food system. These were potentially highly flexible strategic devices, but did they have the absorptive capacity to deal with challenges like the decreased availability of fossil fuels?
Later discussion emphasised the increasingly close links between food, the environment, energy and finance.
He emphasised the way in which the financialisation of the world food regime has encouraged speculative trading which in turn had resulted in more volatile prices. In 2003 $13bn have been spent on agricultural futures trading and it had soared to $260bn in 2006 as traders saw an opportunity as prices rose.
This theme was emphasised by Peter Feindt and Terry Marsden who argued that short-term and long-term resource shortfalls fuelled speculation. They also drew attention to the carbon dependant nature of the current world food regime.
Unfortunately, the articulation of sustainability concerns often di not got beyond reports, leading to an incoherent articulation which did not change policy. Cracks in the current regime offered up real opportunities for change, but more attention needed to be paid to the politics of transitions.
Mark Tilzey presented an analysis informed by Marxist categories, drawing attention to the attempts of fractions of capital to restore class hegemony. Delegates wondered if they had stumbled into a time warp, but Tilzey argued that the export of productivism through globalisation opened up spaces for the affluent at home. He questioned whether the production of staples could be undertaken by a sustainable rural paradigm, but did not call for machine tractor stations.
In discussion it was argued that supply chains were the dominant form of governance in the current agri-food system. These were potentially highly flexible strategic devices, but did they have the absorptive capacity to deal with challenges like the decreased availability of fossil fuels?
Later discussion emphasised the increasingly close links between food, the environment, energy and finance.
Monday, August 17, 2009
Big Phil Lays It On The Line
Vaasa: Philip Lowe is a leading figure in the rural studies community in the UK and he issues a stark warning about the so-called 'new productivism' in an interview that was issued to delegates at the ESRS Congress where he gave the opening plenary.
Asked if we were moving towards a 'new productivism', the Duke of Northumberland professor at Newcastle University said: 'Much of what I hear sounds like the old productivism. The characteristic of the old productivism that prevailed until the 1990s was that it sought recklessly to boost primary production. Although it claimed to do this with attention to efficiency, this only embraced the so-called factors of production: land, labour and capital.'
The RELU boss continued, 'So we encouraged a form of agriculture that was wasteful in its use of water, energy, soils and caused pollution problems and diminished biodiversity. We must not return to the old-style productivism - of expansion of food production at any cost.'
'No,' Lowe declared, 'the new productivism msut be constructed on the basis of economic and ecological efficiency which thereby protects the capacities of individual ecosystems to deliver a range of valued a life-supporting services.'
Asked if we were moving towards a 'new productivism', the Duke of Northumberland professor at Newcastle University said: 'Much of what I hear sounds like the old productivism. The characteristic of the old productivism that prevailed until the 1990s was that it sought recklessly to boost primary production. Although it claimed to do this with attention to efficiency, this only embraced the so-called factors of production: land, labour and capital.'
The RELU boss continued, 'So we encouraged a form of agriculture that was wasteful in its use of water, energy, soils and caused pollution problems and diminished biodiversity. We must not return to the old-style productivism - of expansion of food production at any cost.'
'No,' Lowe declared, 'the new productivism msut be constructed on the basis of economic and ecological efficiency which thereby protects the capacities of individual ecosystems to deliver a range of valued a life-supporting services.'
Greetings from Finland
Vaasa, Finland: This week I am here at the European Rural Sociology Conference. There are many panles and papers that look relevant to this blog and I will reporting on them as time allows.
Thursday, August 13, 2009
So, farewell then, Fernand Boden
Don't know who he is? Well as Luxembourg's farm minister he was on the Agriculture Council for 14 years and hence its longest-serving member. This included two presidencies. Now, as he approaches the age of 66, he has stepped down and also shed his portfolios of the Middle Classes [sic], Tourism and Housing.
His replacement is Romaain Schneider, the former Secretary-General of the Socialist Workers' Party [sic] who comes from the city of Wiltz and also takes on the sports portfolio. This is not a surprise as he is the President of the 2nd Division ('Division of Honour') football club FC Wiltz 71.
At one time members of the Farm Council remained there for a long time and this had quite an effect on its culture and decision-making. Given that the members were generally male and had some kind of agricultual background, even if only as a bureaucrat, this created something of a 'club' atmosphere. Now only 6 of the 27 members were in office in two-and-half years ago.
Monday, August 10, 2009
Food security
The follow-up report one year after the publication of the Cabinet Office report on 'Food Matters' can be found here: Food Matters
You can see a short video by Hilary Benn in which he says 'Overall we're doing ok' here: Benn . For some baffling reason this has been recorded in a particularly noisy street location.
You can see a short video by Hilary Benn in which he says 'Overall we're doing ok' here: Benn . For some baffling reason this has been recorded in a particularly noisy street location.
Sunday, August 09, 2009
Threat to cross-border trade
The internal market is arguably the greatest achievement of the European Union and from time to time we are told that it is now almost complete. However, regulatory decisions can easily derail it and a threat has arisen to cross-border trade between England and Scotland.
The Scottish Government is planning to capitalise on its low incidence of Bovine TB by applying to the European Commission for TB-free status. They have held back from making an immediate application after auctioneers and meat wholesalers expressed reservations. They warned that the sustainability of abattoirs and markets could be threatened as cross-border trade dried up.
It might also be counter productive in terms of containing the disease. Scottish finishers typically buy cattle from the north of England where TB is less common. However, if they are not prepared to pay the cost of pre-movement testing, they might start buying from high-risk areas in Wales and the West of England.
Another complication is that some farmers have holdings on either side of the national border. It is also unclear whether livestock taken from Scotland and not sold at an English market can then be returned north of the border.
It's sometimes a bit of an Alice in Wonderland world in agricultural policy. No doubt the move is seen as a patriotic one in Scotland, but whether it is good policy is another matter.
The Scottish Government is planning to capitalise on its low incidence of Bovine TB by applying to the European Commission for TB-free status. They have held back from making an immediate application after auctioneers and meat wholesalers expressed reservations. They warned that the sustainability of abattoirs and markets could be threatened as cross-border trade dried up.
It might also be counter productive in terms of containing the disease. Scottish finishers typically buy cattle from the north of England where TB is less common. However, if they are not prepared to pay the cost of pre-movement testing, they might start buying from high-risk areas in Wales and the West of England.
Another complication is that some farmers have holdings on either side of the national border. It is also unclear whether livestock taken from Scotland and not sold at an English market can then be returned north of the border.
It's sometimes a bit of an Alice in Wonderland world in agricultural policy. No doubt the move is seen as a patriotic one in Scotland, but whether it is good policy is another matter.
Eurosceptic MPs deny they had snouts in trough
Eurosceptic Conservative MPs have argued that there is nothing inconsistent in receiving payments from the CAP whilst being critical of it - which is indeed the case. The three MPs were the subject of an investigation screened by More4.
Former Conservative Party chairman Michael Ancram was said to have received £11,451 for his farm in the Scottish borders (not an unusual figure for a large business). David Heathcoat-Amory received £114,000 for his Scottish farms while Philip Dunne received £201,000 for his farm in Herefordshire.
The three MPs were among 45 who last year supported Eurosceptic Bill Cash's amendment to the Lisbon Treaty. All three of them mounted a robust defence of the farm subsidies received by businesses in which they had an interest. Mr Ancram pointed out that as a non-active partner, he only received money if the farm made a profit, which it hadn't done in the 12 months to May 2009. The year before it had only made a small profit. He commented, 'I'd love to see the CAP reformed - as long as it exists I'm entitled to claim.'
Mr Heathcoat-Amory said his arrangements were part of a farming partnership and the money didn't go into his bank account. Mr Dunne, who is MP for Ludlow, said the farm support arrangements enabled him to employ 20 people and farm effectively to award-winning environmental standards. He agreed that the CAP was in need of reform, but said it should be done at a European-wide level so UK farmers were not disadvantaged (which is indeed the only level at which it could be done).
If a flawed system exists, it is difficult to blame individuals who are entitled to claim for doing so. Nevertheless, as the countdown to a general election begins, it is evident that there are some contradictions in Conservative policy on Europe. Part of this arises from a tension between the Eurosceptic views of Conservative activists and many MPs and the need to pursue a strategy at the European level which protects British interests. Antagonising the EU over a range of issues could reduce the political capital at Britain's disposal to pursue CAP reform, although it could be argued that Labour has not made as much progress in that direction as it originally hoped.
Former Conservative Party chairman Michael Ancram was said to have received £11,451 for his farm in the Scottish borders (not an unusual figure for a large business). David Heathcoat-Amory received £114,000 for his Scottish farms while Philip Dunne received £201,000 for his farm in Herefordshire.
The three MPs were among 45 who last year supported Eurosceptic Bill Cash's amendment to the Lisbon Treaty. All three of them mounted a robust defence of the farm subsidies received by businesses in which they had an interest. Mr Ancram pointed out that as a non-active partner, he only received money if the farm made a profit, which it hadn't done in the 12 months to May 2009. The year before it had only made a small profit. He commented, 'I'd love to see the CAP reformed - as long as it exists I'm entitled to claim.'
Mr Heathcoat-Amory said his arrangements were part of a farming partnership and the money didn't go into his bank account. Mr Dunne, who is MP for Ludlow, said the farm support arrangements enabled him to employ 20 people and farm effectively to award-winning environmental standards. He agreed that the CAP was in need of reform, but said it should be done at a European-wide level so UK farmers were not disadvantaged (which is indeed the only level at which it could be done).
If a flawed system exists, it is difficult to blame individuals who are entitled to claim for doing so. Nevertheless, as the countdown to a general election begins, it is evident that there are some contradictions in Conservative policy on Europe. Part of this arises from a tension between the Eurosceptic views of Conservative activists and many MPs and the need to pursue a strategy at the European level which protects British interests. Antagonising the EU over a range of issues could reduce the political capital at Britain's disposal to pursue CAP reform, although it could be argued that Labour has not made as much progress in that direction as it originally hoped.
Wednesday, August 05, 2009
'Can't pay, won't pay' say French farmers
French farmers have been told that they have to pay back hundreds of millions of euros after the Commission ruled that the subsidies were paid out illegally. Moreover, the Commission doesn't just want the €330m back, it is also charging interest of up to €150m.
With Sarko disporting himself in the Mediterranean as he recovers from his recent fainting fit, Francois Lafitte, president of the fruit and vegetable producers' union Fédécom has warned of a 'fiery' summer if the government pushes ahead with plans to claw the money back in September.
According to Mr Lafitte, recovering the money for taxpayers would bankrupt farmers. He also claims that Brussels has got its sums wrong (which is possible). But the French state has admitted that the subsidies, paid over a ten year period, were illegal under European law.
Mr Lafitte claims that the subsidies were needed to see off competition from Spain and Portugal. They were producing more cheaply at a time when French producers had a surplus. No mention of the consumer here.
France has launched an appeal at the European Court of Justice, but thinks that the process of repayment should start even before a decision is taken, otherwise they could end up paying even more. They don't sound very confident about their case.
The subsidies have to be paid back by January 2010, but new farm minister Bruno Le Maire has said that he would 'do nothing to compromise the future of the industry' which is being hit by current low prices.
He didn't explain how he would square this particular circle other than to say 'I will be very careful that the situation of each farmer will be analysed on a case-to-case basis in order not to penalise the most fragile.'
Translation:
1. Decisions will be subject to political pressures as I don't want to blot my copybook.
2. The most efficient will be hit hardest.
With Sarko disporting himself in the Mediterranean as he recovers from his recent fainting fit, Francois Lafitte, president of the fruit and vegetable producers' union Fédécom has warned of a 'fiery' summer if the government pushes ahead with plans to claw the money back in September.
According to Mr Lafitte, recovering the money for taxpayers would bankrupt farmers. He also claims that Brussels has got its sums wrong (which is possible). But the French state has admitted that the subsidies, paid over a ten year period, were illegal under European law.
Mr Lafitte claims that the subsidies were needed to see off competition from Spain and Portugal. They were producing more cheaply at a time when French producers had a surplus. No mention of the consumer here.
France has launched an appeal at the European Court of Justice, but thinks that the process of repayment should start even before a decision is taken, otherwise they could end up paying even more. They don't sound very confident about their case.
The subsidies have to be paid back by January 2010, but new farm minister Bruno Le Maire has said that he would 'do nothing to compromise the future of the industry' which is being hit by current low prices.
He didn't explain how he would square this particular circle other than to say 'I will be very careful that the situation of each farmer will be analysed on a case-to-case basis in order not to penalise the most fragile.'
Translation:
1. Decisions will be subject to political pressures as I don't want to blot my copybook.
2. The most efficient will be hit hardest.
Sunday, August 02, 2009
Have milk prices turned the corner?
Problems in the EU dairy sector have led the Commission to resort to the tired old policy instruments of intervention buying of skimmed milk powder and export subsidies. To be fair to the Commission, they have had to resist a lot of political pressure for even more intervention, including backing off the planned phasing out of quotas which have ossified the EU dairy sector and made it less internationally competitive.
However, there are a few signs of an improvement in prices. In the UK the NFU believes the corner has been turned for dairy farmers supplying the liquid market after Robert Wiseman Dairies announced that it was raising its price by 0.3p a litre. This increase follows a period of better returns from the cream market and will take the standard litre price for about 900 direct suppliers to 24.3p before seasonality deductions.
Prospects for milk used in manufacturing are less good. Skimmed milk powder continues to flow into intervention stores throughout Europe. While President Obama enjoyed one of the best publicised beers in history, the USA continues to distort the world market with subsidised exports.
Prices on global commodity markets are still under pressure. Butter is quoted at about £1160/t, while skimmed milk powder has slipped back recently to £1227-£1288/t. EU prices are somewhat better and the butter price has climbed above the intervention level. But significant volumes of skimmed milk powder are still being sold into intervention at about £1450/t. These stocks will eventually have to be sold into the market with an inevitable depressing effect.
What is evident is that supermarkets have been creaming off profits. According to a new market situation report from the Commission, 'the pronounced fall in the prices of milk and dairy commodities since the end of 2007 has only triggered a slight decline in consumer prices for dairy products.'
Since the end of 2007, Commission figures show that the wholesale butter price has dropped by 39 per cent, skimmed milk powder by 49 per cent, cheese by 18 per cent and milk by 31 per cent. Yet the price consumers pay in the shops for dairy products has dropped by just 2 per cent.
The Commission's conclusion is that 'the EU dairy supply chain does not function efficiently.' The market power of supermarkets, particularly in Britain, but increasingly in other member states, is considerable.
Competition policy authorities seem reluctant to act. Admittedly, it is sometimes difficult to get hard evidence of exploitation of market power as suppliers feel they are vulnerable, even with guarantees of confidentiality.
However, there is also a broader political context as supermarkets help the less well off by holding down food prices. Given the importance to New Labour of working people and their families, it is not surprising that they are unwilling to back strong action, but I would not expect Dave Cameron to take a very different line when he is in charge.
Meanwhile, the Commission has proposed extending intervention purchasing for 13 months. Even more worrying, it has suggested allowing state aids of up to €15,000 per dairy farmers. This will do nothing to solve the industry's structural challenges.
However, there are a few signs of an improvement in prices. In the UK the NFU believes the corner has been turned for dairy farmers supplying the liquid market after Robert Wiseman Dairies announced that it was raising its price by 0.3p a litre. This increase follows a period of better returns from the cream market and will take the standard litre price for about 900 direct suppliers to 24.3p before seasonality deductions.
Prospects for milk used in manufacturing are less good. Skimmed milk powder continues to flow into intervention stores throughout Europe. While President Obama enjoyed one of the best publicised beers in history, the USA continues to distort the world market with subsidised exports.
Prices on global commodity markets are still under pressure. Butter is quoted at about £1160/t, while skimmed milk powder has slipped back recently to £1227-£1288/t. EU prices are somewhat better and the butter price has climbed above the intervention level. But significant volumes of skimmed milk powder are still being sold into intervention at about £1450/t. These stocks will eventually have to be sold into the market with an inevitable depressing effect.
What is evident is that supermarkets have been creaming off profits. According to a new market situation report from the Commission, 'the pronounced fall in the prices of milk and dairy commodities since the end of 2007 has only triggered a slight decline in consumer prices for dairy products.'
Since the end of 2007, Commission figures show that the wholesale butter price has dropped by 39 per cent, skimmed milk powder by 49 per cent, cheese by 18 per cent and milk by 31 per cent. Yet the price consumers pay in the shops for dairy products has dropped by just 2 per cent.
The Commission's conclusion is that 'the EU dairy supply chain does not function efficiently.' The market power of supermarkets, particularly in Britain, but increasingly in other member states, is considerable.
Competition policy authorities seem reluctant to act. Admittedly, it is sometimes difficult to get hard evidence of exploitation of market power as suppliers feel they are vulnerable, even with guarantees of confidentiality.
However, there is also a broader political context as supermarkets help the less well off by holding down food prices. Given the importance to New Labour of working people and their families, it is not surprising that they are unwilling to back strong action, but I would not expect Dave Cameron to take a very different line when he is in charge.
Meanwhile, the Commission has proposed extending intervention purchasing for 13 months. Even more worrying, it has suggested allowing state aids of up to €15,000 per dairy farmers. This will do nothing to solve the industry's structural challenges.
Monday, July 27, 2009
Franco German alliance revived
France and Germany are seeking to revive the Franco-German alliance on CAP reform, seeking to agree a mutual deal which they can then impose on others. This may, however, not be so easy in a 27 member state EU. France and Germany may, however, be able to exploit the existence of a lame duck administration in Britain, the main champion of liberal solutions, combined with a likely change of government next year.
Paris and Berlin haveannounced the creation of a Franco-German working group to frame reform of the EU's Common Agricultural Policy (CAP) after 2013. The working group was established on 2 July, a day before newly-appointed French Farm Minister Bruno Le Maire met with European Commission President José Manuel Barroso to explain France's stance on the future reform.
Le Maire said Barroso had shared his views on the 'strategic importance' of agriculture to the EU and on guaranteeing European food security.' It is absolutely necessary to regulate production,' Le Maire told the press after the meeting, insisting that the agricultural sector is far too strategic to be left to market forces alone.
'More regulation' will be France's guiding line in negotiations on farm reform, he added. But regulation does not necessarily mean quotas, he added, a reference to ongoing protests over milk prices.
'Our main political objective must be to guarantee stable and decent revenue for farmers,' he went on, noting that French farmers had lost 20 pet cent of their income since 2008. Such price volatility and decreases are 'not economically viable' and 'farmers cannot live with such instability,' he stressed. In other words, they must be funded by European taxpayers.
Franco-German cooperation on CAP reform will be very tight, Le Maire said, indicating that he would add a German official to his cabinet to prepare the work. Similarly, a French official will be sent to Berlin, he said.
The working group is open for others to join, he added, announcing a charm offensive tour of EU capitals that will start in London before going to Madrid, Rome, Bucharest and Warsaw. Paris and Berlin expect to table their first guiding principles for CAP reform 'in the coming months,' he added.
The appointment of Marie, formerly junior minister for European affairs, as farm minister in the 23 June reshuffle was itself significant. An ENArque, he has no clear agricultural experience or background. He is, however, a fluent German speaker and made numerous visits to Berlin in the first half of the year.
Paris and Berlin haveannounced the creation of a Franco-German working group to frame reform of the EU's Common Agricultural Policy (CAP) after 2013. The working group was established on 2 July, a day before newly-appointed French Farm Minister Bruno Le Maire met with European Commission President José Manuel Barroso to explain France's stance on the future reform.
Le Maire said Barroso had shared his views on the 'strategic importance' of agriculture to the EU and on guaranteeing European food security.' It is absolutely necessary to regulate production,' Le Maire told the press after the meeting, insisting that the agricultural sector is far too strategic to be left to market forces alone.
'More regulation' will be France's guiding line in negotiations on farm reform, he added. But regulation does not necessarily mean quotas, he added, a reference to ongoing protests over milk prices.
'Our main political objective must be to guarantee stable and decent revenue for farmers,' he went on, noting that French farmers had lost 20 pet cent of their income since 2008. Such price volatility and decreases are 'not economically viable' and 'farmers cannot live with such instability,' he stressed. In other words, they must be funded by European taxpayers.
Franco-German cooperation on CAP reform will be very tight, Le Maire said, indicating that he would add a German official to his cabinet to prepare the work. Similarly, a French official will be sent to Berlin, he said.
The working group is open for others to join, he added, announcing a charm offensive tour of EU capitals that will start in London before going to Madrid, Rome, Bucharest and Warsaw. Paris and Berlin expect to table their first guiding principles for CAP reform 'in the coming months,' he added.
The appointment of Marie, formerly junior minister for European affairs, as farm minister in the 23 June reshuffle was itself significant. An ENArque, he has no clear agricultural experience or background. He is, however, a fluent German speaker and made numerous visits to Berlin in the first half of the year.
Tuesday, July 14, 2009
Superficial change
Santiago, Chile: it was argued in the panel on agricultural policy and trade at the IPSA conference yesterday that the so-called ´paradigm shift´ in discussion of the CAP had not occurred in 2003 as some had argued or, if it had, it had had few concrete results. Supposedly the state assisted paradigm was replaced by a new multifunctionality paradigm. However, it was argued by Carsten Daugbjerg from Aarhus University that the multifunctionality paradigm provided cover for the continuation of state assistance.
Another paper looked at ´rent seeking´ interpretations of agricultural subsidy. From the ensuing discussion a view emerged that whilst such models might not be able to explain the origins of subsidy policies, they might be useful in understanding their continuation.
Another paper looked at ´rent seeking´ interpretations of agricultural subsidy. From the ensuing discussion a view emerged that whilst such models might not be able to explain the origins of subsidy policies, they might be useful in understanding their continuation.
Sunday, June 28, 2009
UK can compete - so does it need subsidies?
Russia and Romania may be two of the cheapest places in the world to produce wheat, byt the UK is only a little way behind. Releasing the result of its Global Cost of Production Challenge, Bidwells Agriculture head of research Carl Atkin, said that despite the higher unit price of inputs in the UK, cost of production per tonne is only marginally higher than in eastern Europe. 'This is because of the considerable yield advantage the UK has, based on first-class soils and a maritime climate.'
Western Europe's temperate maritime climate produces one of the longest and most suitable growing seasons in the world for wheat, Mr Atkin explained. While the soils in eastern Europe and the former Soviet Union are often of equal or better quality, climatic and weather constraints temper output. In addition, there is considerable yield volatility in other parts of the world, where occasional crop failures need to be factored in. This is partly why UK what production costs per tonne are lower in Australia, Brazil and Canada.
Moreover, post-farmgate costs needed to be factored in. These can be substantial if infrastructure is poor and costs-to-market are high, as is generally the case in Russia. Costs are rsing in places such as Russia and Romania faster tham in, say Australia and Canada, as land and labour costs escalate.
If UK wheat can compete on world markets, do large-scale arable operations in East Anglia really need subsidies to be viable? Of course, re-directing CAP payments elsewhere could simply subsidise efficiency. Introducing a measure such as a cap on payments to large farmers would disadvantage the UK relative to other member states. But this analysis does raise questions about whether blanket subsidies are still required.
Western Europe's temperate maritime climate produces one of the longest and most suitable growing seasons in the world for wheat, Mr Atkin explained. While the soils in eastern Europe and the former Soviet Union are often of equal or better quality, climatic and weather constraints temper output. In addition, there is considerable yield volatility in other parts of the world, where occasional crop failures need to be factored in. This is partly why UK what production costs per tonne are lower in Australia, Brazil and Canada.
Moreover, post-farmgate costs needed to be factored in. These can be substantial if infrastructure is poor and costs-to-market are high, as is generally the case in Russia. Costs are rsing in places such as Russia and Romania faster tham in, say Australia and Canada, as land and labour costs escalate.
If UK wheat can compete on world markets, do large-scale arable operations in East Anglia really need subsidies to be viable? Of course, re-directing CAP payments elsewhere could simply subsidise efficiency. Introducing a measure such as a cap on payments to large farmers would disadvantage the UK relative to other member states. But this analysis does raise questions about whether blanket subsidies are still required.
Could Doha be back on?
India's new government is eager to resume the Doha round of world trade talks, according to the country's new minister for commerce and industry. Anand Sharma told the Financial Times that India was keen to break the impasse in negotiations. Mr Sharma's tone marks a significant shift from his predecessor, Kamal Nath, who was known for his uncomprising stance in the Doha talks.
Many countries blamed India for the breakdown of ministerial talks a year ago intended to forge a blueprint for concluding the Doha round. The meeting ended in disarray after India and the US failed to reach a compromise over the special safeguard mechanism, designed to protect farmers in poor countries from surges of agricultural imports. Washington said imports should have to increase 40 per cent to trigger safeguard tariffs, whereas India wanted a very low 10 per cent trigger.
World trade negotiations have been the most significant driver for CAP reform for nearly two decades and a resumption of them could counter balance strengthening protectionist forces in Europe.
Many countries blamed India for the breakdown of ministerial talks a year ago intended to forge a blueprint for concluding the Doha round. The meeting ended in disarray after India and the US failed to reach a compromise over the special safeguard mechanism, designed to protect farmers in poor countries from surges of agricultural imports. Washington said imports should have to increase 40 per cent to trigger safeguard tariffs, whereas India wanted a very low 10 per cent trigger.
World trade negotiations have been the most significant driver for CAP reform for nearly two decades and a resumption of them could counter balance strengthening protectionist forces in Europe.
Friday, June 26, 2009
The debate on the post-2013 CAP
The debate on the future of the CAP after 2013 has now started following the informal Farm Council in the Czech Republic earlier this month. Those who want to influence the debate have about twelve months before the Commission publishes a Communication (effectively a White Paper) on future policy in the summer/early autumn of next year. Formal legislative proposals will then be published in the middle of 2011 together with the proposals for the financial perspectives from 2014 to 2019 or 2020.
At the Farm Council there was a surprisingly strong consensus on maintaining a strong 1st Pillar after 2013, principally in the form of Single Farm Payments (SFP). Britain sent a junior minister, Jane Kennedy, who has since resigned and she made a ritual reptition of the UK Government's position of wanting to phase out direct payments altogether. However, it is clear that this argument is going nowhere and that the French subsidisation discourse is back in the driving seat.
Justifications advanced for subsidy
What are the justifucations for continuing SFP? Are they an income support or are they there to support the provision of public goods? If the former, they are remarkably inefficient as most of the money goes to larger farmers. Commissioner Fischer Boel, however, made the argument that dairy farmers would be in even worse trouble without direct payments.
The Commission has estimated that 40 per cent of farms would disappear in some sectors if the CAP budget was stopped tomorrow - and farmer incomes would drop by more than two-thirds, from levels already below the EU average. No serious analyst is recommending withdrawing the budget overnight. We would rather not be here, but we do not start with a blank sheet of paper. However, objectives need to be clearly stated and prioritised and there needs to be a measureable link between objectives and policy instruments. In other words, no blanket subsidies that do not lead to demonstrable outcomes.
It is argued that the ovearching objective is to maintain farming across the EU, i.e., to avoid rural exodus and abandonment of the land. Leaving the land unfarmed would certainly have negative biodiversity impacts and also impair landscapes, affecting rural tourism. However, there needs to be more emphasis on the overall vigour of the rural economy, reducing its dependence on farming and ensuring that infrastructure such as broadband is in place everywhere.
A widely used argument at the Council was that the higher environmental, food safety, food quality, traceability, animal health and welfare standards that EU producers face in relation to non-EU producers cannot be rewarded by the market and therefore justify subsidies. There is certainly a case here, but the monitoring and enforcement of cross-compliace needs to be substantially improved if these subsidies are to be justified.
The food security argument was also raised and the difficulty with this is that it can become a portmanteau argument for 'business as usual', rather than taking a careful look at what might be required, for example, in terms of climate change adaptation.
Abandoning old forms of calculation
There was broad agreement that the historical reference base must be abandoned to legitimise payments after 2013. The adoption of a regional flat rate payment for all member states seems likely, although Finland is pressing for a differentiation between different types of farms, e.g., arable and livestock. Decoupling is also important, but Finland has argued in favour of coupling in sensitive regions where farming might otherwise stop.
Some are nore equal than others
Retiring European Parliament Agriculture Committee chaurman Neil Parish paraphased Orwell by stating that while all Member States are equal, some are more equal than others. New member states receive less than €200 per hectare in SFP compared with an EU average figure of just over €300. Greece receives more than €500 per hectare and Latvia barely €100.
However, French Minister Michel Barnier made it clear that 'equity was not the same as equality', arguing that a wide range of other criteria should be considered. Commissioner Fischer Boel made it clear that she thought that a flat rate payment across the EU was unrealistic.
Commissioner Fischer Boel has reserved her position about serving a second term as Farm Commissioner, but acknowledged that she would have to come to a decision in the near future.
At the Farm Council there was a surprisingly strong consensus on maintaining a strong 1st Pillar after 2013, principally in the form of Single Farm Payments (SFP). Britain sent a junior minister, Jane Kennedy, who has since resigned and she made a ritual reptition of the UK Government's position of wanting to phase out direct payments altogether. However, it is clear that this argument is going nowhere and that the French subsidisation discourse is back in the driving seat.
Justifications advanced for subsidy
What are the justifucations for continuing SFP? Are they an income support or are they there to support the provision of public goods? If the former, they are remarkably inefficient as most of the money goes to larger farmers. Commissioner Fischer Boel, however, made the argument that dairy farmers would be in even worse trouble without direct payments.
The Commission has estimated that 40 per cent of farms would disappear in some sectors if the CAP budget was stopped tomorrow - and farmer incomes would drop by more than two-thirds, from levels already below the EU average. No serious analyst is recommending withdrawing the budget overnight. We would rather not be here, but we do not start with a blank sheet of paper. However, objectives need to be clearly stated and prioritised and there needs to be a measureable link between objectives and policy instruments. In other words, no blanket subsidies that do not lead to demonstrable outcomes.
It is argued that the ovearching objective is to maintain farming across the EU, i.e., to avoid rural exodus and abandonment of the land. Leaving the land unfarmed would certainly have negative biodiversity impacts and also impair landscapes, affecting rural tourism. However, there needs to be more emphasis on the overall vigour of the rural economy, reducing its dependence on farming and ensuring that infrastructure such as broadband is in place everywhere.
A widely used argument at the Council was that the higher environmental, food safety, food quality, traceability, animal health and welfare standards that EU producers face in relation to non-EU producers cannot be rewarded by the market and therefore justify subsidies. There is certainly a case here, but the monitoring and enforcement of cross-compliace needs to be substantially improved if these subsidies are to be justified.
The food security argument was also raised and the difficulty with this is that it can become a portmanteau argument for 'business as usual', rather than taking a careful look at what might be required, for example, in terms of climate change adaptation.
Abandoning old forms of calculation
There was broad agreement that the historical reference base must be abandoned to legitimise payments after 2013. The adoption of a regional flat rate payment for all member states seems likely, although Finland is pressing for a differentiation between different types of farms, e.g., arable and livestock. Decoupling is also important, but Finland has argued in favour of coupling in sensitive regions where farming might otherwise stop.
Some are nore equal than others
Retiring European Parliament Agriculture Committee chaurman Neil Parish paraphased Orwell by stating that while all Member States are equal, some are more equal than others. New member states receive less than €200 per hectare in SFP compared with an EU average figure of just over €300. Greece receives more than €500 per hectare and Latvia barely €100.
However, French Minister Michel Barnier made it clear that 'equity was not the same as equality', arguing that a wide range of other criteria should be considered. Commissioner Fischer Boel made it clear that she thought that a flat rate payment across the EU was unrealistic.
Commissioner Fischer Boel has reserved her position about serving a second term as Farm Commissioner, but acknowledged that she would have to come to a decision in the near future.
Saturday, June 06, 2009
SFP to stay - Fischer Boel
Farm commissioner Mariann Fischer Boel expects Single Farm Payment (SFP) to stay after 2013. 'I believe that some kind of basic income safety net will be needed,' she told an informal farm council meeting in the Czech Republic. Why that cannot be provided by the social security system was not explained.
However, SFPs should be linked to the delivery of public goods 'to avoid further intensification and industrialisation of farming which could entail serious environmental, economic and social consequences.'
She also made it clear that payments should no longer be made on an historic basis. Her view is that there is no sense in two neighbouring farmers getting widely different levels of payment on the basis of what they were doing ten years ago.
However, SFPs should be linked to the delivery of public goods 'to avoid further intensification and industrialisation of farming which could entail serious environmental, economic and social consequences.'
She also made it clear that payments should no longer be made on an historic basis. Her view is that there is no sense in two neighbouring farmers getting widely different levels of payment on the basis of what they were doing ten years ago.
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