Millions of pounds of txapayers' money intended for environmental projects is instead being used to prop up damaging farmning practices across Europe, according to a report Could Do Better compiled for the Royal Society for the Protection of Birds by Birdlife International.
The report highlights some of the positive work being done in EU member states with CAP funding which is helping farmers create and protect habitants for wildlife. 'In principle this European funding is great news for wildlife because it supports agri-environment schemes which protect biodiversity - but the truth is that implementation of the policy by many member states is weak,' warned RSPB's head of agriculture policy Gareth Morgan.
'In compiling this report we found examples of agricultural schemes receiving large amounts of public subsidy from the EU which had no environmental benefit at all, in fact some were causing the degradation of the environment.'
Farmland bird species are in decline across Europe and this is often linked to changes in agricultual activities. Many of these threatened species are extremely senistive to changes in their habitat caused by intensification of farming. For example, the Spanish imperial eagle requires large areas of sparse wood picture rich in rabbit and the eastern European red-footed falcon requires traditional farmland with ponds rich in dragonflies.
'The findings of this report make it clear that the CAP is still not functioning properly and requires radical reform,' Gareth added. 'Agri-environmental schemes can and do deliver great results for farming and wildlife, but only if member states commit to them properly - otherwise it is simply an exercise in handing out money for nothing.'
'Some EU governments are clearly unprepared to stand up to the vigorous lobbying of their agricultural sector. If they continue to put forward dodgy agri-environmental schemes which have no positive impact on biodiversity then Brussels should have the backbone to kick them out.'
Examples of money down the drain included €790m in Portugal that has been invested in irrigation projects which will destroy wildlife habitats and increase water over-abstraction. In Cyprus conservation money is being spent on opening forestry roads and creating forest firebreaks which fragment bird habitats and disturb populations. Italy, France and Ireland also get the thumbs down for spending money on agri-environmental schemes that have no impact on normal farming practice and no benefit for the environment.
However, in England agri-environment schemes are judged to have been well designed and to be delivering benefits for biodiversity.
The full report can be downloaded here: Birdlife
Sunday, May 31, 2009
Saturday, May 09, 2009
Sterling fall gives farmers subsidy cash windfall
British farmers are set for a cash windfall worth hundreds of millions of pounds because of the fall of the pound against the eurp. Within the next fortnight farmers must tell Defra whether they want to receive their subsidies in pounds or euros ahead of the figure being fixed in September.
The last single farm payment was worth about £3bn to UK farmers when it was paid out at the end of last year based on an exchange rate of 79p to the euro. Since then, the euro has appreciated to about 90p.
Peter Kendall, chairman of the National Farmers' Union said that if the exchange rate stayed the same payments would be about 13 per cent higher than last year. This would add up to an extra payout of more than £300m to farmers.
Many farmers have used hedging strategies to fix their payments in advance at 92p per euro or higher. However, that is an option that is only really available to larger farmers. Less prosperous farmers with smaller farms have not been able to do so and are still exposed to market fluctuations.
Perhaps they should set some of the extra money aside to pay their tax bills. Tax liabilities will be higher after increased profits during the last two harvest. Accountants Grant Thornton warned that many farmers faced substantial tax bills next January and July.
The last single farm payment was worth about £3bn to UK farmers when it was paid out at the end of last year based on an exchange rate of 79p to the euro. Since then, the euro has appreciated to about 90p.
Peter Kendall, chairman of the National Farmers' Union said that if the exchange rate stayed the same payments would be about 13 per cent higher than last year. This would add up to an extra payout of more than £300m to farmers.
Many farmers have used hedging strategies to fix their payments in advance at 92p per euro or higher. However, that is an option that is only really available to larger farmers. Less prosperous farmers with smaller farms have not been able to do so and are still exposed to market fluctuations.
Perhaps they should set some of the extra money aside to pay their tax bills. Tax liabilities will be higher after increased profits during the last two harvest. Accountants Grant Thornton warned that many farmers faced substantial tax bills next January and July.
Monday, May 04, 2009
Grain supply deficit by 2009-10
Grain stocks are projected to rise by 39 per cent this year to 160m tonnes after Russian and the Ukraine planted large crops in response to rising global prices. But, according to Societé Generale, the global wheat crop could shrink to around 642 million tonnes in 2009-10.
This still a bumper harvest by historical standards but significantly lower than last year. With consumption expected to increase to 657m tonnes, the market could see a supply deficit by the end of 2009-10. This could contribute to what is expected to be an era of volatile prices.
An important factor in the situation is the disapperarance of Argentina as a reliable exporter. Farmers there are due to start planting the 2009-10 crop in less than a month and there could be a fall of some 30 per cent on the 2008-9 season and the lowest since 1902-03 when Argentina was starting to earn a reputation as the bread basket of the world.
The decline stems from three years of misguided government intervention in wheat trading in which farmers are periodically banned from selling overseas; a 23 per cent tariff on exports; and a serious drought that has slashed exports. A long-running conflict between the government and soyabean farmers will slash export income this year. Lower wheat planting levels will lead to a bigger shift to soya, though, which is Argentina's biggest cash crop.
El Tejar, one of Argentina's leading agricultural groups, has frozen investments at home and is looking elsewhere in the region, such as neighbouring Uruguay and Brazil, where the regulatory hurdles that plague Argentina are absent.
The whole history of Argentina over the last hundred years is an object lesson in how political meddling can undermine a country's propserity. As far as farm trade is concerned, export taxes are just as much a distorting mechanism as import barriers.
This still a bumper harvest by historical standards but significantly lower than last year. With consumption expected to increase to 657m tonnes, the market could see a supply deficit by the end of 2009-10. This could contribute to what is expected to be an era of volatile prices.
An important factor in the situation is the disapperarance of Argentina as a reliable exporter. Farmers there are due to start planting the 2009-10 crop in less than a month and there could be a fall of some 30 per cent on the 2008-9 season and the lowest since 1902-03 when Argentina was starting to earn a reputation as the bread basket of the world.
The decline stems from three years of misguided government intervention in wheat trading in which farmers are periodically banned from selling overseas; a 23 per cent tariff on exports; and a serious drought that has slashed exports. A long-running conflict between the government and soyabean farmers will slash export income this year. Lower wheat planting levels will lead to a bigger shift to soya, though, which is Argentina's biggest cash crop.
El Tejar, one of Argentina's leading agricultural groups, has frozen investments at home and is looking elsewhere in the region, such as neighbouring Uruguay and Brazil, where the regulatory hurdles that plague Argentina are absent.
The whole history of Argentina over the last hundred years is an object lesson in how political meddling can undermine a country's propserity. As far as farm trade is concerned, export taxes are just as much a distorting mechanism as import barriers.
Wednesday, April 29, 2009
Blanket subsidies to continue after 2020
Pillar 1 subsidies are likely to continue after 2020, forecast Professor Allan Buckwell, the Policy Director of the Country Land and Business Association, in an interesting talk at the President's Seminar of the Royal Agricultural Society of England (RASE) in London yesterday.
He emphasised that agriculture should be able to look after itself. What it needed was imagination and drive, having the ideas about what customers want and having the energy and determination to see it through.
There was a possibility of big change in the next CAP reforms comparable to what happened in 1992 and 2000. However, he was concerned that we might not take the opportunity.
Trade liberalisation was in suspense. There was a real debate about going on about the extent to which we believed in international trade. Countries in Asia might think that the solution to their food security was to buy up land and rights to farm in Africa.
The 20th century trend in agriculture was for prices to fall in real terms, despite the growth in world population and income. However, this downward trend had slowed in the last twenty prices. Now we were in an era of more volatile prices. But if scarcity did produce systematically higher prices, what did that mean for policy? More support for farmers or less? It was hardly likely to lead to more support.
In seven out of the last eleven years farm income without support payments in the UK would be negative and even when positive was miniscule. The rapid removal of farm support would require structural adjustments.
Farmers thought that Pillar 2 was too bureaucratic and inaccessible to many farmers. For governments the administrative costs were high, there was the requirement for co-funding and the issue of whether benefits were discernible.
The status quo position on the Single Farm Payment was to cut, but how far and how fast. There was a wide distribution of payments among member states - Greece with its cotton and tobacco subsidies at one end with high payments and new member states like Latvia at the other. The distribution per beneficiary was even broader, although here the Czech Republic, Slovakia and the UK came out on top.
Would there be more uniform payments? What is the purpose of the payments? France favoured a basic husbandry payment. Which features of Pillar 2 could be dropped?
Putting the case for a food and environmental security policy, Professor Buckwell asked who is against food and environmental security? Who disputes that these are threatened? Europe faced the task of feeding its own population and possibly others as well.
The key point in food security was long-run production capacity - not letting good land to be built on or go under salt water. Knowledge and skills and research and development were also of key importance. One had to achieve food security as the key goal but without avoidable environmental degradation.
€53 billion (the CLA's estimate of the total cost of the policy) was not an obscene amount to be spending. He was not saying that the current policy was right, but any policy would need a significant budget.
Agricultural economist Sir John Marsh intervened from the floor to point out that subsidies kept resources in use which were les than optimal. We needed to be specific about what it was were were trying to create. CAP was originally created because of what seemed to be a fairly straightforward relationship between food availability and consumption. It then became a social policy because there were farmers with low incomes. Environmental aspects was too broad a term. The measurement of value to the public as a whole was less well defined.
There was an interesting exchange between Professor Buckwell and Martin Haworth of the NFU revealing 'differences of emphasis' between the two organisations. Haworth quetsioned whether both food and environmental security were under threat. He didn't agree that there was environmental degradation as things were getting better.
He disagreed with Allan Buckwell's suggestion that one should work with green organisations. It was dangerous to form an alliance with environmental organisations as this involved accepting that agricultural production was part of the environmental problem. In the set aside debate, environmental oganisations had convinced themselves that the only solution was to de-intensify agriculture in the form of set aside.
Haworth told Buckwell, 'What you are proposing is quite a dangerous way forward and not one we would support. We support the current architecture of pillar 1 and 2.'
He emphasised that agriculture should be able to look after itself. What it needed was imagination and drive, having the ideas about what customers want and having the energy and determination to see it through.
There was a possibility of big change in the next CAP reforms comparable to what happened in 1992 and 2000. However, he was concerned that we might not take the opportunity.
Trade liberalisation was in suspense. There was a real debate about going on about the extent to which we believed in international trade. Countries in Asia might think that the solution to their food security was to buy up land and rights to farm in Africa.
The 20th century trend in agriculture was for prices to fall in real terms, despite the growth in world population and income. However, this downward trend had slowed in the last twenty prices. Now we were in an era of more volatile prices. But if scarcity did produce systematically higher prices, what did that mean for policy? More support for farmers or less? It was hardly likely to lead to more support.
In seven out of the last eleven years farm income without support payments in the UK would be negative and even when positive was miniscule. The rapid removal of farm support would require structural adjustments.
Farmers thought that Pillar 2 was too bureaucratic and inaccessible to many farmers. For governments the administrative costs were high, there was the requirement for co-funding and the issue of whether benefits were discernible.
The status quo position on the Single Farm Payment was to cut, but how far and how fast. There was a wide distribution of payments among member states - Greece with its cotton and tobacco subsidies at one end with high payments and new member states like Latvia at the other. The distribution per beneficiary was even broader, although here the Czech Republic, Slovakia and the UK came out on top.
Would there be more uniform payments? What is the purpose of the payments? France favoured a basic husbandry payment. Which features of Pillar 2 could be dropped?
Putting the case for a food and environmental security policy, Professor Buckwell asked who is against food and environmental security? Who disputes that these are threatened? Europe faced the task of feeding its own population and possibly others as well.
The key point in food security was long-run production capacity - not letting good land to be built on or go under salt water. Knowledge and skills and research and development were also of key importance. One had to achieve food security as the key goal but without avoidable environmental degradation.
€53 billion (the CLA's estimate of the total cost of the policy) was not an obscene amount to be spending. He was not saying that the current policy was right, but any policy would need a significant budget.
Agricultural economist Sir John Marsh intervened from the floor to point out that subsidies kept resources in use which were les than optimal. We needed to be specific about what it was were were trying to create. CAP was originally created because of what seemed to be a fairly straightforward relationship between food availability and consumption. It then became a social policy because there were farmers with low incomes. Environmental aspects was too broad a term. The measurement of value to the public as a whole was less well defined.
There was an interesting exchange between Professor Buckwell and Martin Haworth of the NFU revealing 'differences of emphasis' between the two organisations. Haworth quetsioned whether both food and environmental security were under threat. He didn't agree that there was environmental degradation as things were getting better.
He disagreed with Allan Buckwell's suggestion that one should work with green organisations. It was dangerous to form an alliance with environmental organisations as this involved accepting that agricultural production was part of the environmental problem. In the set aside debate, environmental oganisations had convinced themselves that the only solution was to de-intensify agriculture in the form of set aside.
Haworth told Buckwell, 'What you are proposing is quite a dangerous way forward and not one we would support. We support the current architecture of pillar 1 and 2.'
Sunday, April 26, 2009
Changes proposed for LFA payments
The European Commission has unveiled proposals to make changes in the way in which Less Favoured Area (LFA) payments are made. A policy review was set in train following criticism by the European Court of Auditors in 2003 (these things take time) that some countries were abusing the definition of 'less favoured'. This particularly applied to so-called 'intermediate' areas.
In its Communication the Commission suggests that payments should be made in future on the basis of 'biophysical' rather than socio-economic criteria. The Commission's view is that future payments should be based on soils, drainage, climate and terrain rather than socio-economic disadvantage to satisfy the public that the money is being well spent.
The proposals have caused alarm in Scotland where 83 per cent of the land area is deemed intermediate LFA and attracts funding of about £61m a year into livestock farming into this areas. Wales also has 80 per cent of its land area designated as LFA.
In its Communication the Commission suggests that payments should be made in future on the basis of 'biophysical' rather than socio-economic criteria. The Commission's view is that future payments should be based on soils, drainage, climate and terrain rather than socio-economic disadvantage to satisfy the public that the money is being well spent.
The proposals have caused alarm in Scotland where 83 per cent of the land area is deemed intermediate LFA and attracts funding of about £61m a year into livestock farming into this areas. Wales also has 80 per cent of its land area designated as LFA.
Wednesday, April 22, 2009
CAP bonanza for big Irish dairy companies
Figures obtained through a freedom of information request to the Irish Department of Agriculture show that the country's top dairy companies did well in securing CAP money in the form of export refunds and intervention aid.
It was actually Greencore, which owns Irish Sugar, that topped the recipient's list with restructuring funds that amounted to a cool €84m.
However, the Irish Dairy Board received €6.5m, followed by Kerry Ingredients with €5.1m. In third place was the company behind Baileys cream liqueur, R & A Bailey, owned by the drinks giant Diageo, which received €2.9m. It is believed that most of the payments were for export refunds, but that the IDB received money for limited butter intervention in 2008.
Given that dairy markets were relatively strong in 2008, these payments are well down on the levels of 2007 and earlier years. Given the widespread current use of export refunds, the 2009 figures are likely to be significantly higher.
In all cases the companies have defended the payments, claiming that they were a mechanism used to support the milk price to farmers. However, it is unlikely that all the money reached farmers.
It was actually Greencore, which owns Irish Sugar, that topped the recipient's list with restructuring funds that amounted to a cool €84m.
However, the Irish Dairy Board received €6.5m, followed by Kerry Ingredients with €5.1m. In third place was the company behind Baileys cream liqueur, R & A Bailey, owned by the drinks giant Diageo, which received €2.9m. It is believed that most of the payments were for export refunds, but that the IDB received money for limited butter intervention in 2008.
Given that dairy markets were relatively strong in 2008, these payments are well down on the levels of 2007 and earlier years. Given the widespread current use of export refunds, the 2009 figures are likely to be significantly higher.
In all cases the companies have defended the payments, claiming that they were a mechanism used to support the milk price to farmers. However, it is unlikely that all the money reached farmers.
Sunday, April 19, 2009
Australia re-thinks drought subsidy
Even in an irrigation district, conditions in Australia can be dry
Australia is re-thinking its subsidy to drought hit farmers. This has a wider relevance, both in terms of how one adapts agricultural policy to climate change and how a subsidy can grow almost unnoticed. Australia has pursued a policy of eliminating agricultural subsidies, other than in investment in knowledge and R and D which most commentators would support.
The drought income supplement was an exception and it is mainly that subsidy which has pushed Australia's PSE up to a (still low) 7 per cent. What was once a 1 in 20 experience is now more likely to be 1 in 5 calling in question the notion of 'exceptional circumstances'. This is no surprise as work by Linda Botterill at ANU showed that it was difficult to come up with an objective definition of drought and the definition used is largely a socially constructed one.
In an interview with Agra Focus top Australian agricultural civil servant Stephen Hunter discussed the challenges that his country is facing in relation to climate change. He noted that Australia has always tended to have a higher variability in climate than most countries. However, the available evidence on the impact of climate change suggests that the south of the continent will become much drier with a higher variability in climate and the north will face increased rainfall. He commented, 'We have always had droughts. It's just that Climate Change is making it more likely.'
Flood irrigation is a less common sight now
On a visit to the irrigation district around Griffith, NSW a few years ago I was surprised at the amount of rice, a water intensive crop, that was being grown. But Hunter reveals in the interview that this has fallen drastically in recent years to as little as 2 to 5 per cent of normal levels. On farm, there has been a marked move away from flood iririgation and towards drip irrigation rather than sprays. One major lesson for Southern Europe in particular is the desirability of having a system of water trading in place so that it can be used at its highest value.
Hunter admits that there are limits to the extent to which the commercial market can provide multi peril crop insurance. The approach being used is to equip farmers to understand their local climate better and to outline management changes they might make to respond better to those conditions, e.g., low tillage farming to deal with soil problems.
Another interesting arrangement which allows market smoothing without distorting interventions is the Farm Management Deposit Scheme. This allows farmers to even out their income by putting into deposit surplus funds in a good year that will help them in less good years. What is distinctive about the scheme is that it is attached to tax incentives.
Australia often has some interesting policy lessons. Anyone who is interested in what I learnt on my recent visit about the management of cattle diseases can E mail me for a Power Point presentation.
Tuesday, April 14, 2009
Fischer Boel defends export subsidies
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.
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.
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.
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