Conservative shadow minister Lord Taylor has said that there has been strong a focus on environmental considerations in agricultural policy. He said, 'If we want a very productive agriculture we want to re-focus the attention that's been diverted away from farming itself.'
It has been apparent for some time that a Conservative government would adopt a more productionist approach to farm policy, but that has always been foreshadowed by the recent Defra strategy paper which was substantially influenced by the growing influence of the food security discourse.
This comes at a time when a new study by WWF-UK and the Food Climate Research Network estimates the food we eat accounts for 30 per cent of the UK's carbon footprint. Previous official estimates had been below 20 per cent. However, these figures take into account emissions generated overseas. It is estimated that more than half of greenhouse gas emissions are accounted for by livestock farming.
What we do not want are ill thought out responses of the 'Meat Free Monday' type which have been criticised by careful analysts like Tom MacMillan of the Food Ethics Research Council. Too hasty a lurch in that direction could have implications for animal welfare.
Sunday, January 31, 2010
New ideas from Scotland
The interim report of the Scottish Government's Pack Inquiry has called for direct support to Scottish farmers to continue beyond 2013. You can find out more here:
Pack
No surprises there, but the report also proposes a new top-up find which would be financed by money taken out of the direct payment budget. This could be used to support measures such as fuel efficiency, renewable energy and animal health schemes (an area where Scotland has often been ahead of the curve).
Former auctioneer Brian Pack commented, 'Much more consultation and research is needed, but the idea is that a top-up fund would be used to back outcome and transformational change. It could be the new contract between producers and Scottish society and give the Scottish public the sort of efficient and sustainable agriculture they want to see.'
This is an interesting and innovative idea which deserves further consideration.
Pack
No surprises there, but the report also proposes a new top-up find which would be financed by money taken out of the direct payment budget. This could be used to support measures such as fuel efficiency, renewable energy and animal health schemes (an area where Scotland has often been ahead of the curve).
Former auctioneer Brian Pack commented, 'Much more consultation and research is needed, but the idea is that a top-up fund would be used to back outcome and transformational change. It could be the new contract between producers and Scottish society and give the Scottish public the sort of efficient and sustainable agriculture they want to see.'
This is an interesting and innovative idea which deserves further consideration.
Wednesday, January 27, 2010
It all kicks off in Greece
Greece's financial troubles may be hitting the euro, but this has not deterred Greek farmers who have been in a ten day confrontation with their government as it desperately seeks to stabilise the budget. The farmers have marched through central Athens demanding an extra €1 billion in subsidies.
This is cloud cuckoo land politics but, quite frankly, anything is possible in Greece which has shamelessly misled the EU about the scale of its budget deficit. Greece is the worst kind of party state reminiscent of Italy in the past where politics is about granting favours and can verge very closely to behaviour that is corrupt.
One of the populist slogans is 'Give money to farmers not bankers', referring to the government's attempts to raise funds abroad to pay down its debt. The realities of the situation have been well summarised by Yannos Papantoniou, the former finance minister who took Greece into the euro: 'Deep structural refoms are needed to engineer first growth, then productivity increases. Since the state sector is inadequate and inefficient, the country needs to embrace privatisation and market liberalisation to get growth going again.'
They could start with the agricultural sector which, if it was smaller, might be able to cause less disruption. Farmers have been blocking 20 highway junctions across the country, including a blockade of the country's border with Bulgaria which has upset the fellow EU member state. One might think that, in an internal market, this came within the remit of the EU itself.
But I'm afraid it's old style farm politics in Greece and we shall see a lot of that as the EU and its member states include agriculture in the round of budget cuts.
This is cloud cuckoo land politics but, quite frankly, anything is possible in Greece which has shamelessly misled the EU about the scale of its budget deficit. Greece is the worst kind of party state reminiscent of Italy in the past where politics is about granting favours and can verge very closely to behaviour that is corrupt.
One of the populist slogans is 'Give money to farmers not bankers', referring to the government's attempts to raise funds abroad to pay down its debt. The realities of the situation have been well summarised by Yannos Papantoniou, the former finance minister who took Greece into the euro: 'Deep structural refoms are needed to engineer first growth, then productivity increases. Since the state sector is inadequate and inefficient, the country needs to embrace privatisation and market liberalisation to get growth going again.'
They could start with the agricultural sector which, if it was smaller, might be able to cause less disruption. Farmers have been blocking 20 highway junctions across the country, including a blockade of the country's border with Bulgaria which has upset the fellow EU member state. One might think that, in an internal market, this came within the remit of the EU itself.
But I'm afraid it's old style farm politics in Greece and we shall see a lot of that as the EU and its member states include agriculture in the round of budget cuts.
Monday, January 11, 2010
The health check is over
The health check is now well and truly over so the CAP Health Check blog has been replaced by a new and more attractively designed site at Subsidies
They also have a film on You Tube about the work of their site: You Tube . This is interesting and well-made.
I suppose my view would be that if you are going to have subsidies, one has to be careful about cutting them off from large farmers who are arguably more efficient and certainly more internationally competitive. Of course, 'efficiency' is a contested concept and does not take account of negative environmental externalities, but what that implies is a proper Pillar 2 in the CAP and a new Pillar 3 to deal with climate change (or at least a substantial climate change dimension to Pillar 2).
They also have a film on You Tube about the work of their site: You Tube . This is interesting and well-made.
I suppose my view would be that if you are going to have subsidies, one has to be careful about cutting them off from large farmers who are arguably more efficient and certainly more internationally competitive. Of course, 'efficiency' is a contested concept and does not take account of negative environmental externalities, but what that implies is a proper Pillar 2 in the CAP and a new Pillar 3 to deal with climate change (or at least a substantial climate change dimension to Pillar 2).
Wednesday, January 06, 2010
The NFU perspective on the future of the CAP
Britain's National Farmers' Union is noted for its strategic, long-term view of agricultural issues. Its officials have a sophsiticated, well informed view of developments and it was therefore interesting to read an interview in the latest edition of Farmers Weekly with the NFU's head of economics and international affairs, Tom Hind. He was at one time acting head of the NFU's office in Brussels.
Not surprisingly, he takes the NFU line that farmers need to continue to receive the single farm payment (SFP) to give them a degree of income stability, especially faced with volatile markets. A basic tenet of agricultural economics is that markets for farm commodities are relatively unstable: to put it at its simplest, even with modern agronomy, the weather remains a factor which can disrupt such markets. If one accepts the view that farmers as a category require market stabilisation measures (which is not quite the same thing as income stabilisation), there is still room for a debate about whether the SFP is a particularly efficient or fair policy instrument, but it could be argued that we have to work with what we have.
In any event, he is confident that the long-term legitimacy of direct payments will be strengthened during the upcoming debate about the future of the CAP. He is emphatic that decision-makers in the UK 'must move away from ideologically entrenched positions, especially on phasing-out direct payments.' Not surprisingly, he is heartened by the declaration made by 22 EU governments in Paris in favour of a strong CAP. It's a document short on specifics, but it really represents a political commitment, rather than a set of policy recommendations.
It is interesting that he does fear some further renationalisation of the CAP which many member states pushed during the health check. He notes that in recent weeks several governments have resorted to state aids to give support to their farmers. He is correct to point out that such activities can lead to competitive distortions between member states and hence undermine the single market. What particularly concerns him is the possibility of national co-financing of direct aids. With justification, he fears that UK farmers would lost out as the Treasury would not be keen to top up direct support.
He does oppose direct payment schemes that used farm size or turnover for determining levels of support. He says that such criteria are 'woolly' and they are certainly difficult to interpret and apply in practice given the legal and other issues surrounding what constitutes 'a farm'. However, the real objection is that Britain is one of the countries that would lose out. If one is going to have farm subsidies, and one wants European agriculture to be competitive, should they be denied to the farmers best placed to compete on international markets?
Where I have particular sympathy with him is when he says that what is wanted is a policy focused on the market. This does not mean just decoupling, but also correcting market failures such as excessive retail power. Whether the EU can do much about this is another question. In large part it falls within the competition policy remit of member state governments, but they are often reluctant to rein in retailers who keep down inflation by delivering cheap food to voters, albeit by using contractual and other tactics that are arguably unfair and not in the long-run interests of an efficient and effective food chain.
Clearly someone like Tom Hind is looking at these issues with the needs of his members in mind: that is what he is paid to do. Most of us wouldn't start from where we are and a sudden withdrawal of subsidies could have substantial negative impacts on the agricultural economy.
Nevertheless, modern farmers are much more market oriented and are aware that they have to deliver products that the consumers want: hence the proliferation of farm shops and small-scale processing businesses serving niche markets with value added products. Hopefully, they can eventually be weaned off subsidies, particularly if competition policy is used to remove unfair practices.
Not surprisingly, he takes the NFU line that farmers need to continue to receive the single farm payment (SFP) to give them a degree of income stability, especially faced with volatile markets. A basic tenet of agricultural economics is that markets for farm commodities are relatively unstable: to put it at its simplest, even with modern agronomy, the weather remains a factor which can disrupt such markets. If one accepts the view that farmers as a category require market stabilisation measures (which is not quite the same thing as income stabilisation), there is still room for a debate about whether the SFP is a particularly efficient or fair policy instrument, but it could be argued that we have to work with what we have.
In any event, he is confident that the long-term legitimacy of direct payments will be strengthened during the upcoming debate about the future of the CAP. He is emphatic that decision-makers in the UK 'must move away from ideologically entrenched positions, especially on phasing-out direct payments.' Not surprisingly, he is heartened by the declaration made by 22 EU governments in Paris in favour of a strong CAP. It's a document short on specifics, but it really represents a political commitment, rather than a set of policy recommendations.
It is interesting that he does fear some further renationalisation of the CAP which many member states pushed during the health check. He notes that in recent weeks several governments have resorted to state aids to give support to their farmers. He is correct to point out that such activities can lead to competitive distortions between member states and hence undermine the single market. What particularly concerns him is the possibility of national co-financing of direct aids. With justification, he fears that UK farmers would lost out as the Treasury would not be keen to top up direct support.
He does oppose direct payment schemes that used farm size or turnover for determining levels of support. He says that such criteria are 'woolly' and they are certainly difficult to interpret and apply in practice given the legal and other issues surrounding what constitutes 'a farm'. However, the real objection is that Britain is one of the countries that would lose out. If one is going to have farm subsidies, and one wants European agriculture to be competitive, should they be denied to the farmers best placed to compete on international markets?
Where I have particular sympathy with him is when he says that what is wanted is a policy focused on the market. This does not mean just decoupling, but also correcting market failures such as excessive retail power. Whether the EU can do much about this is another question. In large part it falls within the competition policy remit of member state governments, but they are often reluctant to rein in retailers who keep down inflation by delivering cheap food to voters, albeit by using contractual and other tactics that are arguably unfair and not in the long-run interests of an efficient and effective food chain.
Clearly someone like Tom Hind is looking at these issues with the needs of his members in mind: that is what he is paid to do. Most of us wouldn't start from where we are and a sudden withdrawal of subsidies could have substantial negative impacts on the agricultural economy.
Nevertheless, modern farmers are much more market oriented and are aware that they have to deliver products that the consumers want: hence the proliferation of farm shops and small-scale processing businesses serving niche markets with value added products. Hopefully, they can eventually be weaned off subsidies, particularly if competition policy is used to remove unfair practices.
Sunday, January 03, 2010
Hedge fund moves into agriculture
A leading New York-based hedge fund is moving into agriculture through a vehicle called the American Farmland Company. Optima has $6 billion funds under management. It plans to start its swoop by investing in arable land in Arizona and vineyards in California.
It has no European plans at present and the predominantly smaller nature of most farms in Europe may make it a less attractive location. Even though the US subsidises its farms, especially its larger ones, making farm investment even more attractive, the sheer complexity and the CAP and the uncertainties surrounding its future may be an off putting factor. In the States the initial plan envisages up to 15 farms with an average size of 500 acres, so the involvement is modest.
It is the longer-term strategy that is interesting. Dixon Boardman, Optima's chief executive, believes that economic recovery, continued population growth and increased incomes, especially in emerging markets, will create increasing demand for food. The diminishing availability of arable land, especially in China, is also seen as a key factor. In other words, a food security crisis leading to increasing prices is seen as being on the agenda.
Boardman argues that farmland is an asset class that has been overlooked by many investors. I am not so sure that is so true in the UK where interest has waxed and waned over the years with companies like Sentry Farming eventually pulling out of farm management. Boardman argues that in the US farmland has generated revenues exceeding 15 per cent per annum in the past five years, but part of that has been fed by the biofuels boom which is of questionable net environmental value. He also points out that the farming sector has low debt which is an attraction in the current crisis.
The sector produced a return of 31.7 per cent in America between June 2007 and June 2009, according to the National Farming Index. Over the same period the S&P 500 index declined 35.9 per cent.
Only a small proportion of American farmland, estimated to have a value of around $2 trillion, is owned by institutional investors. Boardman is confident that farmers will sell up: 'Farming is much more than a commercial choice than a lifestyle choice in America. A lot of these farmers are getting old and the next generation is not always interested in taking over these farms.'
In the UK farmland values in southern England have long been boosted by interest from the City. Sporting assets such as shooting and fishing are a key attraction, along with opportunities to stable and exercise horses. However, these activities may be undertaken alongside a commercially managed farming operation. There may be inheritance tax advantages in investing in farmland.
It has no European plans at present and the predominantly smaller nature of most farms in Europe may make it a less attractive location. Even though the US subsidises its farms, especially its larger ones, making farm investment even more attractive, the sheer complexity and the CAP and the uncertainties surrounding its future may be an off putting factor. In the States the initial plan envisages up to 15 farms with an average size of 500 acres, so the involvement is modest.
It is the longer-term strategy that is interesting. Dixon Boardman, Optima's chief executive, believes that economic recovery, continued population growth and increased incomes, especially in emerging markets, will create increasing demand for food. The diminishing availability of arable land, especially in China, is also seen as a key factor. In other words, a food security crisis leading to increasing prices is seen as being on the agenda.
Boardman argues that farmland is an asset class that has been overlooked by many investors. I am not so sure that is so true in the UK where interest has waxed and waned over the years with companies like Sentry Farming eventually pulling out of farm management. Boardman argues that in the US farmland has generated revenues exceeding 15 per cent per annum in the past five years, but part of that has been fed by the biofuels boom which is of questionable net environmental value. He also points out that the farming sector has low debt which is an attraction in the current crisis.
The sector produced a return of 31.7 per cent in America between June 2007 and June 2009, according to the National Farming Index. Over the same period the S&P 500 index declined 35.9 per cent.
Only a small proportion of American farmland, estimated to have a value of around $2 trillion, is owned by institutional investors. Boardman is confident that farmers will sell up: 'Farming is much more than a commercial choice than a lifestyle choice in America. A lot of these farmers are getting old and the next generation is not always interested in taking over these farms.'
In the UK farmland values in southern England have long been boosted by interest from the City. Sporting assets such as shooting and fishing are a key attraction, along with opportunities to stable and exercise horses. However, these activities may be undertaken alongside a commercially managed farming operation. There may be inheritance tax advantages in investing in farmland.
Friday, January 01, 2010
New Year Greetings
I had an interesting visit to Australia in February and March and met many people connected with agricultural policy. This llama on a property in Queensland did not seem too pleased to see me, probably having been told that there was about to be a CAP regime for camelids.
May I wish all readers a happy, prosperous and healthy new year. I would like to be also able to forecast that the momentum of CAP reform will be maintained, and that agricultural policy will increasingly be adapted to the needs of climate change mitigation and adaptation, but I am not optimistic on either point.
Wednesday, December 23, 2009
Friday, December 11, 2009
New farm boss faces confirmation battle
The European Parliament always likes to assert itself by refusing to confirm one or two nominated commissioners in its confirmation hearings and the designate new farm commissioner Dacian Ciolos could be in their sights as the youngest and least experienced of the nominations. Although nominally an independent, he has been embraced by the centre right European People's Party, but they could easily drop him if the heat is turned up.
He got the nomination despite a late push by 'old' member states to nominate Ireland's Marie Geoghegan Quinn who was acceptable to France. However, they had left it too late to get the nomination for their candidate. Finland's Olli Rehn and Slovenia's Janez Potocnik were also in the frame at one time, while the favourite for a while was Latvia's Andris Pieblags who had shadowed Franz Fischler in 2004. To many it was a surprise that Ciolos got the nomination.
There have been complaints that Ciolos is 'too French' in the sense that his postgraduate education was undertaken in France and that his family and France's Michel Barnier's family are personal friends. He also has a French wife whom he met when both of them were trainees in DG AGRI. Ciolos was in fact appointed a director in DG AGRI earlier in the year, but was not able to take up the post.
His defenders argue that he is committed to a 'modern concept' of European agricultural and rural development policy in line with Commission thinking.
The appointment of John Dalli as the new Health Commissioner is also significant for farm policy. His appointment was perhaps even more surprising than that of Ciolos. Although the 61-year old is a big name in Malta where he was the longest serving Minister of Finance, he is less well known at a EU level.
DG SANCO will now take over responsibility for GMO cultivation and pesticides which currently resides with unit D.4 in DG ENVI. It is thought that this is because Commission president Barroso is looking for a more scientific, depoliticised approach to the GM debate.
Dalli has no prior experience of the food safety and animal health issues for which he will now take responsibility.
He got the nomination despite a late push by 'old' member states to nominate Ireland's Marie Geoghegan Quinn who was acceptable to France. However, they had left it too late to get the nomination for their candidate. Finland's Olli Rehn and Slovenia's Janez Potocnik were also in the frame at one time, while the favourite for a while was Latvia's Andris Pieblags who had shadowed Franz Fischler in 2004. To many it was a surprise that Ciolos got the nomination.
There have been complaints that Ciolos is 'too French' in the sense that his postgraduate education was undertaken in France and that his family and France's Michel Barnier's family are personal friends. He also has a French wife whom he met when both of them were trainees in DG AGRI. Ciolos was in fact appointed a director in DG AGRI earlier in the year, but was not able to take up the post.
His defenders argue that he is committed to a 'modern concept' of European agricultural and rural development policy in line with Commission thinking.
The appointment of John Dalli as the new Health Commissioner is also significant for farm policy. His appointment was perhaps even more surprising than that of Ciolos. Although the 61-year old is a big name in Malta where he was the longest serving Minister of Finance, he is less well known at a EU level.
DG SANCO will now take over responsibility for GMO cultivation and pesticides which currently resides with unit D.4 in DG ENVI. It is thought that this is because Commission president Barroso is looking for a more scientific, depoliticised approach to the GM debate.
Dalli has no prior experience of the food safety and animal health issues for which he will now take responsibility.
Cross-compliance is not delivering
Cross-compliance has no clear objectives, does not reflect the 'polluter pays' principle and is not being properly enforced, and is therefore not providing concrete diversity promotion, according to a new report. Published by Birdlife International it is entitled 'Through the green smokescreen. How is CAP cross compliance delivering for biodiversity.' It can be found here: Birdlife
Birdlife highlights that some of the biggest burdens imposed by cross-compliance are perversely felt by extensive livestock producers, i.e. the production systems which are most important for biodiversity and for which subsidy levels are usually lower than more intensive farms. It advocates a complete and urgent overhaul of the whole system and the need to realign the whole CAP to the principles of Rural Development.
Birdlife highlights that some of the biggest burdens imposed by cross-compliance are perversely felt by extensive livestock producers, i.e. the production systems which are most important for biodiversity and for which subsidy levels are usually lower than more intensive farms. It advocates a complete and urgent overhaul of the whole system and the need to realign the whole CAP to the principles of Rural Development.
Monday, December 07, 2009
Scotland 'on message' on farm subsidies
Scotland is far more in tune with current thinking on farm subsidies in mainland Europe than England and Wales, claims Scotland's rural affairs minister Richard Lochhead.
Addressing farmers at a Christmas Carcass competition in Inverurie, Mr Lochhead brought them glad tidings about the deep divide in agriculture policies on the two sides of the border. 'My opinion on CAP reform is very different from DEFRA's view that all direct subsidies should be removed and we should rely on a free market. Scotland should not go down that route and our thinking is much closer to the mainstream of Europe which is that the pendulum is swinging back towards support for active agriculture.'
The minister felt that outgoing farm commissioner Mariann Fischer Boel didn't envisage that pendulum swinging too far, ruling out headage payments, but new commissioner Dacian Ciolos could bring in a new era.
There are certainly those in Brussels who think that Ciolos will favour more market support and help to smaller farms. However, others take the view that he is on message with the Commission view on reform and has been playing down his linkages with France to reassure pro-reform countries.
However, Christmas has come early for some English farmers, with over 80 per cent of farmers receiving £1.3bn in Single Farm Payments to date. That's approximately £15,116 per recipient. Not quite a banker's bonus, but welcome all the same. Organicduck tweeted from Devon, 'Hurrah and thank you RPA. Maybe off Christmas shopping or maybe pay off some overdraft.' Payments are also well advanced in Wales and Scotland.
Addressing farmers at a Christmas Carcass competition in Inverurie, Mr Lochhead brought them glad tidings about the deep divide in agriculture policies on the two sides of the border. 'My opinion on CAP reform is very different from DEFRA's view that all direct subsidies should be removed and we should rely on a free market. Scotland should not go down that route and our thinking is much closer to the mainstream of Europe which is that the pendulum is swinging back towards support for active agriculture.'
The minister felt that outgoing farm commissioner Mariann Fischer Boel didn't envisage that pendulum swinging too far, ruling out headage payments, but new commissioner Dacian Ciolos could bring in a new era.
There are certainly those in Brussels who think that Ciolos will favour more market support and help to smaller farms. However, others take the view that he is on message with the Commission view on reform and has been playing down his linkages with France to reassure pro-reform countries.
However, Christmas has come early for some English farmers, with over 80 per cent of farmers receiving £1.3bn in Single Farm Payments to date. That's approximately £15,116 per recipient. Not quite a banker's bonus, but welcome all the same. Organicduck tweeted from Devon, 'Hurrah and thank you RPA. Maybe off Christmas shopping or maybe pay off some overdraft.' Payments are also well advanced in Wales and Scotland.
Sunday, November 29, 2009
New farm commissioner a setback for reform
The appointment of Romania's Dacian Ciolos as farm commissioner looks like a setback for reform. Romania has a bloated farm sector and has been in trouble for its management of EU funds.
The smart money recently was on the appointment of Andreas Pilebags from Latvia. France was hoping for an Irish appointment, but then swung behind Ciolos who undertook his postgraduate study in France.
The smart money recently was on the appointment of Andreas Pilebags from Latvia. France was hoping for an Irish appointment, but then swung behind Ciolos who undertook his postgraduate study in France.
Wednesday, November 25, 2009
CAP budget report has been 'binned' - or has it?
A controversial draft report which advocated cutbacks in CAP spending after 2014 has now been ditched according to Farm Commissioner Mariann Fischer Boel. She denied having backed the report which called for agriculture to account for a lesser share of the EU budget that it does at present. Fischer Boel claimed that the paper was now a 'non paper' and was 'in the bin'.
However, the position may be a little less straightforward than it appears. It was a small group of Commission President Barosso's advisers that drafted the review with his explicit approval. With Barosso back for a second term it is quite likely that the final version of the budget review document, to the tabled in the New Year, will contain views not dissimilar to those in the draft, including linking Single Farm Payments more closely to the provision of public goods.
Budget Division sources indicated that just how much the CAP's budget will be reduced is still up for grabs, but considerable cuts are considered to be necessary to focus spending on other higher priority investment areas. These include climate change and the promotion of growth and jobs.
However, the position may be a little less straightforward than it appears. It was a small group of Commission President Barosso's advisers that drafted the review with his explicit approval. With Barosso back for a second term it is quite likely that the final version of the budget review document, to the tabled in the New Year, will contain views not dissimilar to those in the draft, including linking Single Farm Payments more closely to the provision of public goods.
Budget Division sources indicated that just how much the CAP's budget will be reduced is still up for grabs, but considerable cuts are considered to be necessary to focus spending on other higher priority investment areas. These include climate change and the promotion of growth and jobs.
Friday, November 13, 2009
A new style CAP
A group of agricultural economists has launched a new attempt to reform the CAP with an emphasis on public goods provision: CAP
Thursday, November 12, 2009
G-21 an anti-reform bloc?
At various times in the history of the CAP, member states have formed informal groupings to address particular issues, e.g., 'the Aachen Five' and the agri-monetary system. The G-21, in effect led by France, is a much larger grouping which constitutes a qualified majority in the Council.
It become the G-21 rather than the G-20 at a meeting in Vienna when Greece joined. This left only the four leading reform countries (UK, Denmark, Netherlands, Sweden) outside the grouping, plus Cyprus and Malta - countries that have small farm sectors and may not have thought it worth the time and effort.
It's evident that this grouping forced the Commission to climb down on the Milk Fund issue and allocate an extra €280m to dairy farmers. This decision was apparently taken by Commission President Barrosso rather than by farm commissioner Mariann Fischer Boel.
A real concern is that this grouping could constitute a basis for mobilisation against further reform of the CAP.
It become the G-21 rather than the G-20 at a meeting in Vienna when Greece joined. This left only the four leading reform countries (UK, Denmark, Netherlands, Sweden) outside the grouping, plus Cyprus and Malta - countries that have small farm sectors and may not have thought it worth the time and effort.
It's evident that this grouping forced the Commission to climb down on the Milk Fund issue and allocate an extra €280m to dairy farmers. This decision was apparently taken by Commission President Barrosso rather than by farm commissioner Mariann Fischer Boel.
A real concern is that this grouping could constitute a basis for mobilisation against further reform of the CAP.
Sunday, November 01, 2009
Budget directorate wants to cut CAP
Leaked copies of a document from the European Commission's budget directorate reveal an aspiration to substantially cut agriculture's share of the EU budget from 2013 onwards.
The paper says that it is too early to see what the future reform of the CAP will look like, but argues that it should be driven by two objectives. 'Firstly, it should resolutely pursue the modernisation of the CAP, concentrating spending where it most adds value. Second, it must stimulate a further significant reduction in the overall share of the EU budget devoted to agriculture, freeing up spending for new priorities.'
The paper argues that direct aids should be reduced and linked more strongly to the delivery of public goods. A Pillar 3 should be established dealing purely with climate change.
The full communication is expect to be published in November.
The paper says that it is too early to see what the future reform of the CAP will look like, but argues that it should be driven by two objectives. 'Firstly, it should resolutely pursue the modernisation of the CAP, concentrating spending where it most adds value. Second, it must stimulate a further significant reduction in the overall share of the EU budget devoted to agriculture, freeing up spending for new priorities.'
The paper argues that direct aids should be reduced and linked more strongly to the delivery of public goods. A Pillar 3 should be established dealing purely with climate change.
The full communication is expect to be published in November.
Thursday, October 29, 2009
Sweet tooth
The International Centre for Trade and Sustainable Development has produced a paper on how a trade deal on sugar would affect importing and exporting countries. You can read it here: Sugar
The paper finds that a significant amount of sugar trade is conducted under preferential trade agreements which encourages sugar production where it is not competitive at the expense of low-cost sugar producing countries.
The EU sugar reforms had an adverse effect on higher cost producers in the Global South such as Fiji, Guyana and Mauritius. Full access by LDCs to the EU sugar market once the Everything But Arms Initiative is in operation should help countries like Sudan to boost their EU market share.
The paper finds that a significant amount of sugar trade is conducted under preferential trade agreements which encourages sugar production where it is not competitive at the expense of low-cost sugar producing countries.
The EU sugar reforms had an adverse effect on higher cost producers in the Global South such as Fiji, Guyana and Mauritius. Full access by LDCs to the EU sugar market once the Everything But Arms Initiative is in operation should help countries like Sudan to boost their EU market share.
Wednesday, October 28, 2009
Sarko: the answer lies in the soil
French president Nicholas Sarkozy has unveiled a €1.65bn rescue package to help French farmers cope with lower commodity prices and shore up his support among rural voters. It forms part of a broader thrust to reaffirm French 'national identity' and also to deflect criticisms over local tax reforms and allegations of nepotism in relation to the promotion of his son's career. Mr Sarkozy is facing difficult regional elections next year and needs the support of rural voters.
In a speech in the Jura, the president claimed that 'The word "soil" has a special meaning in French and I was elected to defend French national identity'. The package of subsidies is made of €1bn in subsidised loans and €650 in cuts to land and energy taxes and social charges (which have particularly hit fruit and vegetable producers weighed down by high social charges on seasonal labour).
Mr Sarkozy insisted that the plan, with its focus on tax cuts, would not contravene EU rules on state aid. He attacked the Commission for dragging its feet on proposals to help dairy farmers. French dairy farms are on average smaller than their competitors in other large member states.
The package signals a tougher stance by Paris as the EU prepares for the debate on scaling back CAP subsidies. Mr Sarkozy said that he wanted tighter regulation of the milk market from next year.
Mr Sarkozy has described a complete U turn from the first speech he made to farmers as president in 2007 when he told his audience they had to learn to make a living from market prices rather than subsidies. But now he needs to consolidate his traditional centre-right base and he has reverted to a more typical French stance.
In a speech in the Jura, the president claimed that 'The word "soil" has a special meaning in French and I was elected to defend French national identity'. The package of subsidies is made of €1bn in subsidised loans and €650 in cuts to land and energy taxes and social charges (which have particularly hit fruit and vegetable producers weighed down by high social charges on seasonal labour).
Mr Sarkozy insisted that the plan, with its focus on tax cuts, would not contravene EU rules on state aid. He attacked the Commission for dragging its feet on proposals to help dairy farmers. French dairy farms are on average smaller than their competitors in other large member states.
The package signals a tougher stance by Paris as the EU prepares for the debate on scaling back CAP subsidies. Mr Sarkozy said that he wanted tighter regulation of the milk market from next year.
Mr Sarkozy has described a complete U turn from the first speech he made to farmers as president in 2007 when he told his audience they had to learn to make a living from market prices rather than subsidies. But now he needs to consolidate his traditional centre-right base and he has reverted to a more typical French stance.
Tuesday, October 20, 2009
Dairy sector measures do not set pulses racing
4000 dairy farmers with 900 tractors demonstrated outside an EU agricultural ministers meeting in Luxembourg yesterday calling for more aid for the sector. Inside, ministers faced a Franco-German memorandum backed by 20 member states with a series of demands for market distorting measures. In the event the concessions the Commission made are probably the least they could have got away with in the circumstances. Farmers' organisation COPA immediately condemned them as insufficient.
The main move was to make an additional €280m of public money available under the Article 186 'disturbance clause' which allows the Commission to step in at short notice when the market collapses. The milk market has hardly collapsed and this is something EU finance ministers may wish to consider when they meet to consider the approval of the move on 19 November.
What the money is to be spent on is yet to be decided, although private storage for cheese has been mentioned. No, this doesn't mean that members of the public can get a subsidy for filling their fridges with cheese, although anything is possible in the Alice Through the Looking Glass world of the CAP.
What is significant is what was in the Franco-German document that has not been acted upon: official intervention buying of chesse, additional funding for school milk schemes (funding for fruit yoghurt had already been agreed) and more targeted export assistance and subsidies for skimmed milk powder to be used in animal feed.
It was this last measure which had the greatest potential for damage. Commissioner Fischer Boel dismissed it by saying that she had not received any convincing evidence that it would increase demand. What it has done in the past is seriously distort other markets, e.g., for pigmeat.
The notion of freezing quotas had already been knocked off the agenda in September, a singularly ill thought out proposal which would have done nothing in the short run and delayed adjustment in the longer run.
It is worth noting that milk prices have been increasing, by 2 per cent in August while butter has gone up by 4 per cent in France, 8 per cent in Germany and even more in the UL. Intervention buying of skimmed milk powder has virtually come to a halt because the market price is higher that the intervention price.
The main move was to make an additional €280m of public money available under the Article 186 'disturbance clause' which allows the Commission to step in at short notice when the market collapses. The milk market has hardly collapsed and this is something EU finance ministers may wish to consider when they meet to consider the approval of the move on 19 November.
What the money is to be spent on is yet to be decided, although private storage for cheese has been mentioned. No, this doesn't mean that members of the public can get a subsidy for filling their fridges with cheese, although anything is possible in the Alice Through the Looking Glass world of the CAP.
What is significant is what was in the Franco-German document that has not been acted upon: official intervention buying of chesse, additional funding for school milk schemes (funding for fruit yoghurt had already been agreed) and more targeted export assistance and subsidies for skimmed milk powder to be used in animal feed.
It was this last measure which had the greatest potential for damage. Commissioner Fischer Boel dismissed it by saying that she had not received any convincing evidence that it would increase demand. What it has done in the past is seriously distort other markets, e.g., for pigmeat.
The notion of freezing quotas had already been knocked off the agenda in September, a singularly ill thought out proposal which would have done nothing in the short run and delayed adjustment in the longer run.
It is worth noting that milk prices have been increasing, by 2 per cent in August while butter has gone up by 4 per cent in France, 8 per cent in Germany and even more in the UL. Intervention buying of skimmed milk powder has virtually come to a halt because the market price is higher that the intervention price.
Sunday, October 18, 2009
Watchdog slams farm payments mess
In one of its most critical ever reports, the National Audit Office has slammed the way in which the Rural Payments Agency has administered Single Farm Payments to farmers. It accused the agency of showing 'scant regard to protecting public money'.
The agency has wasted around £700m, the capital equivalent of building thirty secondary schools.
The average amount paid to about 107,000 English farmers is about £15,300 a year. However, the watchdog found there were substantial overpayments totalling between £55m and £90m but the data was so unreliable the auditors were unable to find out the precise sum. £280m has been set aside to pay Brussels penalties for administrative errors and late payments to farmers, but a further £43m of overpayments are likely to be irrecoverable.
What the report brings out is the high transaction costs incurred even in a supposedly simplified system of subsidies. It is estimated to cost £1,743 to process each farmer's claim for cash, a rise of 20 per cent in four years.
It is argued that some of the problems arise from the payment system chose by Margaret Beckett, at one time in charge of Defra. The devolved regions opted for a simpler system based on historic payments made to farmers. In Scotland the cost of administering payments is £285 per farmer. However, one reason for choosing an area farmed system was to try to break away from the 'to him that hath shall be given' aspect of the subsidies system.
Of course, some might think that we would better off by phasing out subsidies altogether.
The agency has wasted around £700m, the capital equivalent of building thirty secondary schools.
The average amount paid to about 107,000 English farmers is about £15,300 a year. However, the watchdog found there were substantial overpayments totalling between £55m and £90m but the data was so unreliable the auditors were unable to find out the precise sum. £280m has been set aside to pay Brussels penalties for administrative errors and late payments to farmers, but a further £43m of overpayments are likely to be irrecoverable.
What the report brings out is the high transaction costs incurred even in a supposedly simplified system of subsidies. It is estimated to cost £1,743 to process each farmer's claim for cash, a rise of 20 per cent in four years.
It is argued that some of the problems arise from the payment system chose by Margaret Beckett, at one time in charge of Defra. The devolved regions opted for a simpler system based on historic payments made to farmers. In Scotland the cost of administering payments is £285 per farmer. However, one reason for choosing an area farmed system was to try to break away from the 'to him that hath shall be given' aspect of the subsidies system.
Of course, some might think that we would better off by phasing out subsidies altogether.
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