Will the amount of flexibility allowed in the latest CAP reform package undermine the common policy approach and create an uneven playing field in the European Union in terms of competitiveness? This is the question posed in an informative House of Commons Library briefing paper: Flexibility
The UK and Ireland have made full use of the flexibility allowed around eighty decision points to create bespoke policies, the paper finds.
Phil Hogan has been approved as agriculture commissioner by a majority of over three to one in the European Parliament's Agriculture and Rural Development Committee. He was asked some awkward questions about his career in Irish politics, as well as some standard agricultural questions, but did not encounter the level of difficulty experienced by some candidates for commissioner roles: Phil Hogan
He said that he would review the CAP in 2016 after one year of the new policy mix with particular reference to direct payments and the arrangements on greening and ecological focus. However, he said that his immediate priority was responding to the Russian ban on the import of EU agricultural products.
Researchers have suggested that the 'greening' of the CAP has been a failure. The latest version of the CAP is no greener than its predecessor and would fail a basic Advertising Standards Authority test in terms of its claims: No greening
The researchers conclude that it fails to encourage greater wildlife abundance or adequate protection for vulnerable habitats such as grasslands.
I would not wish to dispute the specific conclusions made. Policy instruments have often not been well designed and policy effectiveness insufficiently monitored. The sums of money available do not match the scale of the challenge, but have often not been well used.
However, one must beware of reducing environmental policy to the protection of biodiversity or landscape effects. Reducing water pollution from agricultural activities has been a key policy objective and some progress has been made. Climate change mitigation is surely the key objective, but little progress has been made, despite the contribution of modern agriculture to greenhouse gases.
Over the past decade farmland prices have grown at twice the rate of prime London property with good agricultural land increasing 270 per cent in value compared with a 135 per cent rise in London house prices during that time according to Savills. This makes it three times the price of farmland in North America and 15 times the price of such land in Australia, reports The Economist.
The reasons cited include limited and diminishing supply and constraints on world food supply. However, it should be pointed out that a lot of land in reach in London is bought at least in part as sporting estates which offer the additional incentives of a safe haven for money and tax breaks, such as exemption from inheritance tax after seven years.
However, of course, a lot of the demand is driven by farmers themselves. Economies of scale demand bigger units and although land can be rented, this may not offer security of tenure and often results in a patchwork quilt of land which means that time and money is taken up moving equipment around, not to mention complaints about slow moving agricultural vehicles on the roads.
What this means is that it is now very difficult to get into farming on your account unless you inherit a farm or a large pot of money. This has been exacerbated by the decline of county council entry level smallholdings. This means that farming is deprived of people who might bring in a fresh perspective and innovative ideas.
With outgoing agriculture commissioner Dacian Ciolos not re-nominated by Romania, the role has gone to Ireland's Phil Hogan. As this report makes clear, it is a decision likely to be welcomed by farmers: Hogan
The Irish Farmers' Association have certainly welcomed the appointment, implying that it will offer new opportunities for them to exert influence and secure better deals for farmers: Irish welcome
This report suggests that he has been none too popular in his role as environment minister in Ireland, although it does describe Brussels rather colourfully as a 'dross magnet': Ministerial record
The farm commissioner role often goes to a small member state with strong agricultural interests and it has, of course, been occupied by Ireland before, most notably by Ray MacSharry who brought about a significant reform of the CAP with long-lasting effects.
This article makes the interesting point that Ciolos failed to make sufficient progress on the integration of agricultural and environmental policy which is a clear direction of travel. It also notes that a central flaw of the CAP is the fragmented nature of the management and control systems: Environmental policy
There has been relatively little discussion so far of what kind of agricultural policy the UK might have if it left the EU and hence the CAP. Agricultural economist and CAP expert Alan Swinbank has been trying to stimulate debate on this issue, but so far with little success. His latest effort is in the journal EuroChoices.
He notes, 'Successive British governments have repeatedly argued for more radical reform of the CAP than the EU has been willing to accept ... To what extent these aspirations would translate into a reduction of support for British farmers, and a greater emphasis on the provision of environmental public goods, should the UK exit the EU is open to question ... British farmers might bitterly complain that they faced an uneven playing field as their competitors were better able to remain in business as a result of more generous Pillar 1 payments subsidising their farming activities.'
Swinbank also poses the question: 'Could a WTO compatible agri-food trade agreements be negotiated with its former EU partners, or would Irish and Brazilian beef face the same tariff barriers on imports into the British market?'
My initial thinking has been that the single farm (soon to be basic) payment should continue during a transitional period if the UK left the EU, but at a somewhat reduced percentage of the current rate, e.g., 90 per cent, 85 per cent, 80 per cent over three years. However, there is danger that this could become set in stone and we would be left with an historically determined form of subsidy rather than debating and re-thinking the pattern of support.
As Swinbank argues, the alternatives do need to be spelt out so that voters can make an informed choice in any referendum.
I have written on this subject here: Food Import Ban
With the extension of co-decision to agricultural policy by the Lisbon Treaty, the European Parliament's Agriculture and Rural Development Committee has become a much more important player in the decision-making process. It has tended to contain MEPs from agricultural and rural constituencies, or with interests in the sector, and in that sense has sometimes been a brake on reform, with the chair in 2009-14 insisting that the CAP budget be maintained in real terms with more money for farmers and more flexibility on how they spent this publicly funded largesse: Handouts
The committee's composition in the new Parliament has changed substantially, creating more uncertainty about its stance, although it will be chaired by the centre-right EPP. ComAgri’s political breakdown is based on the election results. The European People’s Party (EPP) came first so gets 13 of the 45 seats, with the Socialist and Democrats (S&D) next with nine seats and the other groups getting between three and five each.
A number of old hands who played key ComAgri roles in 2009-2014 are back, including former chair Paolo De Castro (S&D), Albert Dess (EPP) and Jim Nicholson (ECR). Notable absentees include ALDE’s George Lyon and the S&D’s Luis Manuel Capoulas Santos.
Of the 45 new ComAgri members, 23 were re-elected to the Parliament, of whom 20 sat on ComAgri in 2009-2014. New to ComAgri but not to the Parliament are Portugal’s Nuno Melo (EPP), the UK’s Richard Ashworth (ECR) and Dane Jens Rohde (ALDE). The other 22 are newly-elected to the Parliament. This reflects dramatic changes to the Parliament’s political make-up brought by the elections, with eurosceptic, anti-EU parties significantly increasing their MEP numbers – as well as some left-wing anti-EU parties.
The expanded Europe of Freedom and Direct Democracy (EFDD) group has increased its ComAgri representation from two to three MEPs. Back is Stuart Agnew from the UK’s Independence Party (UKIP), which wants the UK out of the EU altogether, but has a poor record of voting and committee attendance in the Parliament. UKIP's position is that UK farmers would then receive a version of what has been the Single Farm (to become Basic) Payment, but that it would be capped to limit the amount going to larger farmers, something the UK has always fought within the EU. Agnew is joined this time by Giulia Moi and Marco Zullo from Italy’s Five Star Movement – a populist party born out of a protest movement led by a comedian.
One of the three non-attached members, Edouard Ferrand, is from France’s far-right Front National, which increased its Parliament MEPs from three to 24. The FN is a critic of the CAP, lamenting the loss of control on farming decisions and arguing that the CAP has not helped agricultural earnings or done enough to protect French farming.
As for the Greens/EFA group, outspoken French MEP José Bové and German Martin Häusling are joined by new MEPs Bronis Ropé from Lithuania and Jordi Sebastià Talavera from Spain’s Compromis party. Bové was once involved in physically dismantling a MacDonalds that had set up in a cheese producing region and is a staunch opponent of GM.
The left-wing alliance GUE-NGL has four brand new MEPs on ComAgri. Two from Ireland – Matt Carthy and Luke ‘Ming’ Flanagan – are joined by Antje Anna Helena Hazekamp from the Netherlands’ Party for the Animals (PvdD) and Spain’s María Lidia Senra Rodríguez. We might expect more attempts to pursue animal protection issues.
Dacian Ciolos looks like he is the front runner for re-appointment for a second term as farm and rural development commissioner. He has not offended any major players among the member states and has been careful not to upset the French, being perceived originally as a French-approved appointment. He is strongly backed by his own government with farming being a more important part of their economy than in most member states.
From a reform perspective, he has been a disappointment, but that is not surprising. It is difficult to get reform through in the face of the vested interests of member states. The farm share of the budget is dropping, but relatively little has been done to make the CAP responsive to climate change.
There is an argument for continuity for the CAP, as Cioloș would be able to oversee mid-term reviews of ‘greening’ and other 2014-2020 reforms that he proposed back in 2011. But 'continuity' can be another way of saying 'business as usual'. The inefficiencies of the CAP are bound to be an agenda item in any referendum debate in the UK.
Ireland is always keen to get the farm commissioner's post and has done well in the role in the past (think of the MacSharry reforms). The Republic's Phil Hogan, who has served as Irish environment, community and local government minister since March 2011, is being advanced as a candidate. Hogan, from the Fine Gael party that is in coalition government with the Irish Labour Party, also has experience in EU issues and is being backed by fellow Fine Gael politician and MEP Mairead McGuinness. McGuinness, from the EPP group and an active member of the European Parliament’s agriculture committee (ComAgri) throughout the CAP reform process, is now a vice-president of the Parliament.
There are a couple of dark horses and one former Spanish agriculture minister Miguel Arias Cañete, since elected to the new European Parliament. Yet the chances for Italian Socialist (S&D) MEP Paolo de Castro, who was ComAgri chair in 2009-2014, appear slimmer.
Although there is much horse trading to come, Ciolos must be the odds on favourite.
If you don't have a farm to inherit, getting a start in farming is difficult. The capital costs of setting up, equipping and stocking a viable farm are huge. For some the practical route is to become a farm manager, but then you are working for someone else.
Perhaps surprisingly, there are people from a non-farming background who want to become farmers. I say 'surprisingly' because it is hard physical work, requires a wide range of skills including dealing with a lot of paper work and the returns are often poor and uncertain. There are some jobs I could never do and farmer, actor and politician are top of the list. But I appreciate that there are those who have a real and genuine commitment.
One route in has been through county council farms. These are not usually large and may have to be combined with rented land to be viable. When I have interviewed such farmers, the off farm work of their partner (or even the farmer) has often been a key contribution to the household budget. They tend to be livestock farms, raising beef or sheep or a dairy enterprise. Smaller arable farms have been squeezed as yields have flat lined for some thirty years and economies of scale have becoming increasingly important in that sector.
However, cash strapped county councils have been selling off their estates. Since 1964 the council farms estate across England and Wales has shrunk by 37 per cent to 111,650 hectares in 2012. Total holdings have fallen by 79 per cent to just 3,442 as they have been combined to try and make them more viable.
Average size has gone up from 10.9 hectares to 32 hectares, but arguably that is little better than a large smallholding. In some cases, part of the holding has been sold off for housing, sometimes the most productive land. When councils sell holdings off, tenants can purchase at market value, but there is no way that a farm of, say, 125 acres with a book value of £1.2m could support a large mortgage.
I don't think county farms are the way forward for the future, but the measures taken under the CAP don't help much either.
Finally, can I give my nephew Deiniol Williams a plug. He has left the family farm where his brother will carry on as, I think, the eighth generation. But he has started a ceramics business and uses a kiln on the farm: Ceramics
The Co-operative Group has sold its farm business to the Wellcome Trust for £249m. This is indeed a welcome result as it ensures a benevolent owner for the business which takes a long-term view and shares many of the ethical standards of the Co-op. As Danny Truell, its chief investment officer, put it, the trust values 'responsible stewardship over quick profits'.
Dedicated to driving improvements in human and animal health, the trust is the world's second highest spending charitable foundation. In effect, they function as another research council for the UK. I have had some loose association with their veterinary work and I have been favourably impressed.
The trust already has significant agricultural holdings in Cambridgeshire, Hertfordshire and Cheshire. It rarely sells businesses once it has acquired them.
The Co-op estate is made up of nearly 40,000 acres of land, 15 farms, three pack houses, and almost 130 residential and commercial properties. Its apple orchards at Tillington in Herefordshire were purchased in 2008, thereby preserving more than 1,000 rare varieties of British apples that were threatened with extinction.
This is one of Britain's largest land sales in decades and one of the largest global deals of its kind. It ends an association between the troubled Co-op and agriculture that dates back more than 100 years.
A coalition of NGOs including the RSPB and the National Trust working with the Centre for Food Research have called for UK food and farming policy to be reoriented around ecosystems and the promotion of healthy food in a report entitled Square Meal.. You can read more about the report and download it here: Square Meal
They state in a press release, 'The organisations involved have joined forces to highlight the overwhelming evidence that demonstrates the need for major changes to national food and farming policy. Square Meal aims to start a collaborative discussion in the run up to next year’s general election and to influence future government policies on these issues. [One suspects that the report is really addressed at a possible Labour Government]. It calls for stronger government leadership in planning the future use of land, food policy, farming and conservation in England and for wider public engagement on issues that affect the whole of society.'
One interesting question is how far these issues are within the domain of national politics. The increasing demand for a sugar tax clearly is, but many practical farming decisions are influenced by the CAP. This has a substantial emphasis on protecting the environment, but does not tackle health related issues.
On the CAP, the report says, 'The Common Agricultural Policy spends €1 billion a week of taxpayers’ money across the EU31– a vast amount that could be doing so much more to support and incentivise those farmers doing the right thing for society and the environment and push up standards across the board. But only a tiny proportion of this expenditure represents good value for money by being targeted at sustainable farming. Much of the rest ends up in the coffers of big business or capitalised in agricultural land prices, delivering little more than private profit or too often is supporting unsustainable farming systems, stifling innovation and hampering competitiveness.'
It is open to question whether large farms do stifle innovation, particularly technological innovation. The tone of the report is very critical of the market economy and praises regulation. It may be, however, that some of its objectives could be achieved within a market economy, or at least by using market based policy instruments. The UK's track record at exercising leadership on the CAP, which is called for in the report, has not been impressive so far, despite valiant efforts to secure reform, in part because of the vested interests of member states.
Defra has published the 'balance of competences' report on the relationship between the EU and Britain in the area of agriculture. At first glance there is a lot of 'x stakeholder says this' and 'y' stakeholder says that, but it will certainly repay further study. The full report can be downloaded here: Balance of competences
The executive summary states: 'The debate on EU competence for agriculture as set out in the evidence submitted was strongly supportive of EU competence in relation to the Single Market for agricultural goods and to the EU’s role in negotiating global trade deals for agricultural goods. In relation to the Common Agricultural Policy (CAP), there was a recognition that it had changed significantly from its post-war origins, particularly over the past 30 years. The most damaging and trade-distorting elements had been removed and the UK had played a significant role in driving reform.' In short, things have been worse, they have got somewhat better, we deserve a pat at the back for that and anyway there is no alternative.
The summary continues, 'However, respondents put forward evidence that, notwithstanding the reforms, the CAP’s objectives remained unclear and that the criteria for allocation of funding were irrational and disconnected from what the policy should be aiming to achieve. The majority of respondents argued that the CAP remains misdirected, cumbersome, costly and bureaucratic. Environmental organisations advanced detailed evidence about how historically, market intervention and direct payments had led to negative impacts on biodiversity and the farmed environment. The advent of agri-environment schemes had been beneficial across Europe and provided a regime for conservation that might not otherwise exist.' In short, this is a badly designed and implemented policy.
Liz Truss is the second woman MP from South-West Norfolk to hold the post of farm minister. Her predecessor Gillian Shephard held the portfolio from 1993 to 1994. There has been a long line of agriculture ministers from East Anglia.
Farm leaders wanted to keep Owen Paterson in post, but a lack of wellies during the floods undermined his reputation. His tough line on the badger cull earned plaudits from farmers, but leaving aside opposition from wildlife campaigners and many scientists, the cull failed on its own terms, targets not being met. Paterson then rather unfortunately complained that the badgers had moved the goalposts.
Some commentators, such as the Spectator think that he was targeted by pressure groups. This view has been pursued by Paterson who argues that he was the victim of a powerful self-serving environmental lobby he termed the 'green blob': Green blob . The Economist suggested that he should never have been appointed in the fisrt place.
As far as Farmers Weekly is concerned, Truss does have one of the main qualifications for the post, her own pair of willies, white to judge from the accompanying photograph, thus appearing stylish while avoiding the green colour favoured by urbanites in the countryside. She also takes a hard line on badgers.
The real difficulty for any Defra minister, apart from the fact that most agriculture policy is decided in Brussels, is Defra itself. It is a real mish mash of a department, uncertain whether its main role is to reform the CAP, boost the rural economy (of which agriculture is an important but only one part) or protect the environment. No wonder it has already finished off two ministers, but Ms Truss may be made of sterner stuff.
Some farmers are passionate about Scottish independence out of personal conviction, but many are cool about the idea. They are uncertain whether it will bring the claimed benefits, particularly given the importance of English markets.
The Scottish National Party argues that Westminster has done a poor job of representing Scotland's farming interests in Brussels. As a result, they argue, Scotland has missed out on billion of pounds in EU subsidies. However, others argue that lower levels of per acre subsidy reflect the low farming value of much of the land in western Scotland.
Farmers account for just 65,000 people out of a total Scottish electorate of four million, but both sides in the referendum debate see them as opinion leaders in rural communities and exerting a influence in the key food and drink industry.
Meanwhile, both sides in the referendum debate are rushing to support EU 'protected geographical status' for Ayrshire early new potatoes. This status has already been secured for Arbroath smokies, Scottish salmon and Stornoway black pudding.
There is a broad income range in Scottish farms with the gap between the richest and the poorest farms amounting to £102,000. The bottom 25 per cent of farms saw a loss of £14,000 in 2013 while the top quartile averaged a farm business income (effectively net profit) of £88,000.
New CAP rules require that large arable farmers ensure that five per cent of their land is set aside as an ecological focus area (EFA). The Government has caused controversy by deciding that one of the five options available to farmers to meet the crops will be planting nitrogen fixing crops such as field beans and peas.
Environmental groups argued that this would bring no wildlife benefits, while the RSPB branded the policy 'a wasted opportunity for the environment'. However, Defra minister Owen Paterson defended it in terms of the imperative of food security. For the NFU Meurig Raymond said that it represented 'a pragmatic solution to a very difficult situation.' In other words, smart lobbying by the NFU.
Jens Beckert, Jorg Rossel and Patrick Schenk at Cologne's Max Planck Institute have been looking at variations in the price of wine. Or more specifically, as the title of their paper states 'Wine as a Cultural Product: Symbolic Capital and Price Formation in the Wine Field'. For their study they analysed data from 110 wineries and 1,071 wines (it's not clear if they sampled any of them) as well as data on wine consumers in four German cities.
There are some real oddities in the wine market. Even expensive wines don't cost more than €10 a bottle to produce but, although chemically the same, a bottle of wine can cost 1.99 euros or 300 euros. 'These price differentials are justified by alleged quality differences between the wines. However ... it turns out that the price differences are largely unrelated to different production costs and to the sensual experience wine connoisseurs report when tasting the wine in a bland tasting ... even experts are not able to differentiate between wines based on objective characteristics and cannot rank wines according to their price'. Moreover, each time a new vintage comes along, the taste changes.
There are some generalisations one can make about price. Wines made of high status grape varieties (Riesling, Pinot) are usually more expensive. Dry wine is more expensive than sweet and semi-dry wine. Red wine is more expensive than white and rosé. Older wine is usually more expensive than that of a younger age.
Wine producers can develop symbolic capital that can be turned into profit. Wine producers that produce wines that are 'difficult' to drink because the consumer must first learn to appreciate them and 'work' on developing taste can accumulate such capital. This sounds like a formula for the consumer to be conned and a passport for pretentiousness - which does bring to mind an advert currently shown on British television in which a wine buff is mocked for such pretension.
It's an interesting paper, but there is relatively little about supply and demand which is always a key factor in any market, even one as unusual as that for wine.
If it was April Fools Day one would think this was a joke, but a White House climate change initiative is searching for a 'cow of the future' whose greenhouse gas emissions would be cut by anti-methane pills, burp scanners and gas backpacks.
Methane is a particularly potent greenhouse gas with a global warming effect that is twenty times greater than carbon dioxide and cows emit a lot of it. A typical cow emits 250-300 litres of methane a day. The 88 million cattle in the US produce more of it than landfill sites, natural gas leaks or fracking. However, contrary to a common misconception, 97 per cent of the methane gas is released by the front end through burps, not through emissions from the back end.
Supplements such as basil can cut methane production in cows. In Argentina, scientists have created backpacks that collect gas via tubes plugged into cows' stomachs. That sounds as if it would raise animal welfare issues to me.
The latest UN report on climate change emphasises food supply effects: Climate change.
The report argues that climate change has negatively affected wheat and maize yields both regionally and on a global basis. The effects of climate change on two other important food crops, rice and soya beans, have been smaller in the most important producing countries. There may be some positive effects on crops in cooler climates in future. However, the overall outlook for wheat, rice and maize production in tropical and temperate regions is expected to be more negative than positive.
The last assessment by the UN's Intergovernmental Panel on Climate Change in 2007 was more sanguine about how climate change was impacting on food production. Unfortunately, the suggestion that the CAP might incorporate a climate change pillar was rapidly dropped in the last set of reform negotiations.
Few commodities are more politicised than grains. They were the first products to be covered by the Common Agricultural Policy. The US has run export subsidy schemes for them in the past. International trading houses like Cargill are involved.
Fear has gripped the wheat market with prices soaring as investors buy against the backdrop of the crisis in Ukraine. Concern about freezing weather in major growing areas in the US has also helped to push up prices by about 20 per cent since the end of February. Ultimately this could boost inflation by affecting prices of goods in the shops.
The so-called Black Sea grain region of Russia, the Ukraine and Kazakhstan accounts for a fifth of world exports. Exports from this area are particularly important in North Africa and the Middle East.
In the longer run, production in Ukraine could be affected by higher prices for inputs because of the weakness of the hryvania and difficulties for farmers in accessing finance. If Russian tanks actually came charging across the steppes of eastern Ukraine, even more disruption would occur. On the more positive side, exports of Ukranian wheat to Europe could increase.
In Britain, 'Nimbys' are using food security arguments to reinforce their case against building on 'green belt' farmland. However, it is important not to panic. Global production forecasts are of 700m tonnes, only slightly down from 709m in 2013/14.
