Commission approves CAP strategic plans

The Commission has now approved twenty strategic CAP plans with eight still to go: https://agriculture.ec.europa.eu/cap-my-country/cap-strategic-plans/approved-csp-0_en

Pesticide pause?

The EU is considering delaying plans to halve the use of pesticides over fears that the move could cut production and raise food prices at a time when they are under pressure from the conflict in Ukraine.

The Sustainable Use of Pesticides regulation intends to halve chemicals use by 2030.  This was always an ambitious project, given the lack of progress in getting biological alternatives developed, registered and on the market - and training farmers in their use.

EU farm lobby Copa-Cogeca is pushing for a range of green initiatives to be delayed or abandoned.

The current Czech presidency does not expect to find a compromise by the end of the year and there is some unease in the European Parliament about the proposal. 

Energy costs hit food supplies across Europe

UK growers are scaling back production in greenhouses as energy costs increase, a pattern that is replicated across Europe.  Crops that require intensive heating in colder climates such as tomatoes, cucumbers and lettuce are the most directly affected.

However, the energy crisis is impacting the EU food supply chain more directly.  Bakers, dairy farmers and other producers, including growers of sugar beet and olives are struggling to pay bills.  The price of inputs such as fertiliser and animal feed has shot up, alongside rising refrigeration and transport costs.

The UK's support plan for small businesses lasts just six months and so far lacks detail.     It is claimed that 75 to 80 per cent of UK salad growers will not plant next year.

In the Netherlands, which accounts for a quarter of world tomato exports, many glasshouses are going dark.  The largest tomato supplier in Sweden and Denmark is also switching off this winter.  Growers in Spain and Morocco may not be able to fill the gap.

In Italy, where growers are already struggling with a drought, it is estimated that a third of farmers are operating at a loss.  Monthly energy bills have typically tripled and fertiliser costs are up fourfold.  Many farmers on fixed contracts are choosing to sell the energy on.

Farmers may increase output of less energy intensive crops such as peppers.

New thinking on agriculture and food policy

My new book on agricultural and food policy is now out.

This book takes stock of the urgent challenges facing food chains globally and provides a critical evaluation of radical new thinking and perspectives on agricultural and food policy. Wyn Grant investigates the principal drivers of change in food and agriculture, including globalization, climate change, the structure of the industry, changing patterns of consumer demand and new technologies.

Rethinking Agricultural and Food Policy provides a comprehensive account of the contemporary challenges impacting the food chain. Chapters explore the various barriers towards positive progress, exposing the deficiency of institutional architecture at a domestic and international level and examining how attempts to reform and revitalize it encounter inertia, embedded production structures, defenders of the status quo and vested interests. Proposing that a holistic, interdisciplinary approach is essential in making progress towards revitalizing policy and encouraging innovation in international governance, Wyn Grant calls for a new agenda to deliver real and necessary change and offer hope for the planet and its people.

Using critical insights from natural and social science to uphold its calls for a holistic, integrated approach to agricultural and food policy, this timely book will be an essential read for policy makers, as well as students taking undergraduate or postgraduate courses in agriculture, food and the environment.

More information here: https://www.e-elgar.com/shop/gbp/rethinking-agricultural-and-food-policy-9781800881204.html

Farm to Fork strategy under threat

The EU's commitment to tackle climate change in the food chain has arguably never been as strong as it should been, in part because of pressure from the agri-food industries, but the Farm to Fork strategy at least outlined a way forward and set some targets.   Now it is under jeopardy as climate change is once again relegated in importance as food security comes to the fore given the historic role of Ukraine as a European 'bread basket'.

Farm to Fork targets included cutting fertiliser use by a fifth (it may reduce anyway because of soaring prices), halving the use of antibiotics and increasing the amount of land farmed organically from 9 per cent to 23 per cent.   Pesticide use has already decreased with many substances banned.

French president Emmanuel Macron has said that the sustainable food strategy was 'based on a pre-Ukraine war world' and should be revised, claiming it would lead to a 13 per cent drop in food production: https://www.euractiv.com/section/agriculture-food/news/macron-wants-to-adapt-eu-farm-to-fork-to-the-post-ukraine-war-world/  

He would, wouldn't he?  He is facing a presidential election in which he needs the votes of farmers, but Italy and Spain have raised similar concerns.

The farm lobby in the form of Copa/Cogeca have seized the window of political opportunity and called for increased fertiliser imports, pesticide use and cultivation of crops for animal feed.  They have also called for opt outs from ecological schemes and climate-linked animal welfare standards.

The Food Policy Coalition insists that the war in Ukraine is a reminder of how important it is to implement the Green Deal and the Farm to Fork and Biodiversity strategies: https://foodpolicycoalition.eu/wp-content/uploads/2022/03/Joint-open-letter-EU-food-supply-and-solidarity-response-to-the-war-in-Ukraine.-March-2022.pdf

Farm ministers were meeting in Brussels on Monday March 21st.

Food security prioritised over ecology

The majority of European Parliament agricultural committee rapporteurs want a new emphasis on food security even if it means watering down ecological focus areas: https://www.politico.eu/wp-content/uploads/2022/03/10/STAMPED_D20227683_Lins-Wojciechowski_Ukraine.pdf?utm_source=POLITICO.EU&utm_campaign=96260bf5c9-EMAIL_CAMPAIGN_2022_03_10_06_09&utm_medium=email&utm_term=0_10959edeb5-96260bf5c9-188948165

The green transition is certainly in danger and there is a risk of taking panic measures in current circumstances.   Measures to tackle climate change had their limits in the CAP anyway. Production and environmental protection need not be an 'either or' choice.

Risks to the sustainability agenda

It could be 'back to the future' as farm organisations use the war in Ukraine to bang the food security drum.  There are, of course, real issues here, given the importance of Russia and Ukraine in wheat production, but there is a risk of reverting to old fashioned blunt instrument subsidies and downgrading the sustainability agenda.

In particular one could create a false dichotomy between food security and sustainability: https://www.foodnavigator.com/Article/2022/03/07/Ukraine-war-detonates-EU-food-security-debate-but-will-sustainability-be-collateral-damage#

I will write more about this issue in the coming days.

Why we need research across disciplines to change food systems

This call for transdisciplinary research in the transformation of food systems is one I very much endorse and is reflected in my forthcoming book Rethinking Agricultural and Food Policy just submitted to Edward Elgar: https://link.springer.com/article/10.1186/s40100-021-00207-2

Call for EU plant protein strategy

France and Austria have national plant protein strategies and have called for a EU level strategy as part of a drive towards a more sustainable food system: https://info.bmlrt.gv.at/dam/jcr:e056d439-b736-439d-a0a2-fe03a02a5e44/Deklaration%20EN.pdf

Green takes agriculture ministry in Germany

The new food and agriculture minister in Germany, Cem Ozdemir, is a Green and a vegetarian.   However, he is seen as a pragmatist and his appointment has been welcomed by German farm organisations: https://www.politico.eu/article/germany-cem-ozdemir-agriculture-minister-farmers-election-greens/

The new German coalition will not manage to overhaul the CAP national strategic plan before the deadline, but aims for mid-term review and possible revisions.

Green food plan under attack

The European Parliament is due to vote on the Commission's Farm to Fork strategy this week, but is facing a lobbying blitz from farmers, agribusiness and even the US Government.  It is being argued that the strategy will reduce crop yields and force up prices: https://www.politico.eu/article/meps-vote-eus-green-food-plan-farm-to-fork/

Italy fails to make progress on CAP plan

Italy isn't make much progress towards a strategic view of the CAP, even though it could contribute to a fairer and greener policy: https://www.arc2020.eu/italian-cap-plan-in-progress/

Kiwi view of new style CAP

New Zealand has produced a comprehensive and authoritative report on the latest developments in the Common Agricultural Policy: https://www.mfat.govt.nz/en/trade/mfat-market-reports/market-reports-europe/eu-common-agricultural-policy-aims-to-be-fairer-greener-more-animal-friendly-and-flexible/

France still tops CAP money league

Some useful data here about agriculture in each member state and the EU as a whole: https://ec.europa.eu/info/food-farming-fisheries/farming/facts-and-figures/performance-agricultural-policy/agriculture-country/eu-country-factsheets_en

France still receives the greatest share of CAP expenditure, €9,448m or 17 per cent of the total.  Spain receives €6,908m and Germany €6280m followed by Italy on €5,778m.  These four states account for 52 per cent of expenditure.

Poland is the leading East European state on €4615m.   Malta receives the smallest amount at €19m.

German commission calls for CAP reform

A broadly based German commission has called for the reorientation of agriculture and food policy: https://www.euractiv.com/section/agriculture-food/news/german-commission-urges-phase-out-of-cap-direct-payments/

The report calls for a phasing out of direct payments and a reorientation of the CAP in the direction of environmental, animal welfare and climate change goals. 

The timing is a little odd as the EU has recently agreed the next five year plan for the CAP and the challenge now will be to maintain momentum.

CAP deal looks like business as usual

After months of difficult negotiations, a compromise was agreed on the next phase of the Common Agricultural Policy, but inevitably not everyone is happy, not least in France: https://www.euractiv.com/section/agriculture-food/news/france-still-has-mixed-feelings-over-compromise-cap-deal/

The new five year framework starts on 1 January 2023.  Direct payments to active farmers will account for 70 per cent or €192bn of the budget which still amounts to over a third of the overall EU budget.  However, at least 25 per cent of this support should be spent on eco schemes such as organic farming or integrated pest management.   Worthy those these schemes may be, do they represent any kind of strategy for tackling agriculture's contribution to climate change?

There is also a €450m a year reserve to bail out farmers in times of market crisis.  This is a substantial sum and it will be interesting to see how it will be triggered.

For all the bells and whistles such as member states being able to impose caps and reductions on direct payments to larger farms, this does look very much like a 'business as usual' settlement despite claims of a fairer, greener and simpler CAP: https://ec.europa.eu/commission/presscorner/detail/en/IP_21_2711.  Farm organisations have given it a lukewarm reception which suggests that it is not all that bad for their members.

Farmers in Britain are concerned that their competitors will continue to receive direct payments just as they are phased out in the UK.  Their continental counterparts will not be exposed to trade deals that facilitate cheap imports.

Some early reflections on the impact of Brexit

This article appeared in the latest issue of South-East Farmer:

Many farmers breathed a sigh of relief when a last minute trade deal was agreed between the UK and the EU, avoiding the threat of tariffs and quotas on agricultural exports.   Of course, this would have affected some sectors more than others, notably those farming sheep.  Such enterprises exist within the south-east of England, but they are more characteristic of remote hill farming areas in all the four nations of the United Kingdom.

I must admit to having a personal interest as my brother-in-law and nephew are sheep farmers in a remote part of Wales.   They have merged three farms in order to run as lean and efficient an operation as possible.   However, the whole enterprise is reliant on selling sheep for meat and the price they receive is influenced by the 40 per cent or so of total output that goes to mainland Europe.   The price received for wool scarcely covers the cost of shearing, if that, and rental income from properties and telephone masts is very much secondary.   The suggestion made by one politician that sheep farmers could shift to beef ignores the realities of production.

Farmers are generally enterprising and keen to keep input costs under control.   One farmer I know in Yorkshire produces honey with a distinctive taste from the moors, but still principally relies on his contract with a leading supermarket.   The more general point here is that the basic payment received by farmers under the Common Agricultural Policy is being replaced by a smaller domestic payment that is being phased out more quickly than some had anticipated, particularly for larger scale farms.

Other new forms of payment will be available, principally the Environmental Land Management Scheme, although that is still being developed and tested.  Along with other payments, it will fall well short of compensating farmers for the loss of the basic payment which made the difference between profit and loss for many farm enterprises.    It will also involve form filling to obtain, along with monitoring of outcomes, and is likely to be more suitable for farmers in remoter areas.   This is not necessarily a bad thing from an overall policy point of view, but it may prove challenging for, for example, larger scale arable farmers in south-east England.

In areas like the south-east there are, of course, opportunities for diversification that may not exist in remoter areas, particularly those that are less suited to tourism.   In this area as well, farmers have been very innovative in the range of ideas they have put into practice.   There can, however, come a point where one is no longer running a farm business, but a farm that enhances other projects such as wedding venues, restaurants, shops and petting zoos.  [I have just read about a farmer who is made £50,000 by loaning out a goat for video calls].

It is, of course, a personal business decision how far to go down this route.   A note of caution is necessary for late adopters.  Much of the low hanging fruit has already been taken.   The capital costs can be considerable and the skills required can be very different from decisions about what to plant, when to spray and when to harvest.   That said, many farmers manage to both farm and run complementary businesses.

Agriculture was the dog that didn’t bark in the night time in the very long legal text arrived at between the UK and the EU.   Indeed, listening to the discussions during the negotiations, one was left with the impression that fisheries were the really vital sector despite the fact that it accounts for a smaller share of the economy than agriculture.   Fish did enjoy considerable symbolic value in terms of ‘taking back control’.

There was an annex on trade in wine.   This is not really my area of expertise, apart from enjoying it and investing in one well-known business in the South-East.  As with most such agreements, the devil is in detail, but I would have thought that at first glance it was broadly acceptable to those growing grapes and producing wine in England.  [A subsequent article in the Financial Times refers to certification costs which could add £1.50 to a £12 bottle of imported wine.  This, of course, could make domestically produced wine more price competitive, although factors other than price can play a big part in purchase decisions].

In simple terms what the annex says is that EU and the UK should import and consume each other’s wine, although the flow is clearly from the EU direction.   The documentation required is limited to a certificate which can be produced electronically.   The self-certification is limited to eleven relatively straightforward questions.  The agreement will be reviewed after three years, a shorter period than for fisheries.

The CAP in review

The CAP will continue after Brexit, albeit with somewhat less money, but will needed changes be made, particularly in terms of 'greening'?   I give an overview here: https://www.europenowjournal.org/2020/11/09/the-common-agricultural-policy-an-overview/

This has attracted some attention on Twitter and I am grateful for the feedback received.   One comment was that 'Seems to suggest that nitrates have been addressed by the ND....if only that were true. There is large scale non compliance with the ND standards never mind the more ambitious water framework ones.' This is a fair criticism, I simply didn't have the word budget to deal with the issue in more depth.

I should have remembered that 'many years ago the OECD “Producer Subsidy Equivalent” was renamed the “Producer Support Estimate” because not all policy transfers are subsidies but some are payments for public goods.'

'Another quibble, but not so minor: at over 30% of its budget, EU expenditure on agriculture is called "substantial", because agriculture is only 1.6% of EU GDP. Unfair comparison: the whole EU budget itself is less than 2% of EU public expenditure.' I can see where this comment is coming from and it is not without validity, but agriculture still secures a disproportionate share of the EU budget.

EU lays down the gauntlet on biodiversity

The EU has set out a new biodiversity strategy.   When I have studied it in detail I will provide some analysis, but for now the summary can be found here: https://ec.europa.eu/environment/nature/biodiversity/strategy/index_en.htm

The full Communication can be found here: https://ec.europa.eu/environment/nature/biodiversity/strategy/index_en.htm

It is clear that a particular vision of farming is inherent in the document which states: 'certain agricultural practices are a key driver of biodiversity decline. This is why it is important to work with farmers to support and incentivise the transition to fully sustainable practices. Improving the condition and diversity of agroecosystems will increase the sector’s resilience to climate change, environmental risks and socioeconomic shocks, while creating new jobs, for example in organic farming, rural tourism or recreation.'

In other words, intensive forms of farming may face challenges.

The Commission's new Green Deal also has implications for agriculture and it has been leaked ahead of publication: https://www.euractiv.com/section/agriculture-food/news/commission-hikes-caps-second-pillar-spending-to-deliver-green-deal/

The recovery plan from Covid-19 'aims to digitalise and modernise the farming sector to increase the EU's resilience and to lower EU's dependency on third countries.'

Something similar may find favour in the UK after Brexit.

How can the CAP reduce GHG emissions?

Climate change has been an absent element of the CAP. A proposal for a third pillar was put forward in the last round of reforms, but was quickly squashed - I suspect by agri-business interests. However, the pressures to do something are now substantial, but what policy instruments should be used?

In that respect an article in the latest Journal of Agricultural Economics is helpful: M Himics et al, 'Setting Climate Action as the Priority for the Common Agricultural Policy: a Simulation Experiment.'

They examine the possibilities of re-directing the direct income support provided to farmers to a direct greenhouse gas reduction subsidy. They find that such a reallocation of financial resources could reduce agricultural non-carbon dioxide emissions (nitrous oxide and methane) by 21 per cent by 2030, compared to a business-as-usual baseline. Two-thirds of the emission savings are due to changes in production levels and composition.

A table lists various technological mitigation options, e.g., feed additives for livestock and breeding programmes to increase ruminant feed efficiency. Crops could use measures such as precision farming and better timing of fertilisation.

The special needs of remote island farming communities like the Orkney Islands would be respected

The greening top up of Pillar 1 would be retained, as would coupled supports for sectors and regions in competitive disadvantage. There would also be support for farmers in areas with natural constraints. My example would be the Orkney Islands which receive coupled support via the Scottish Government.

However, the removal of the basic payment could be associated with accelerated structural change and variable income effects. This does raise questions of political feasibility.

In future member states will have more flexibility to choose from a menu of greening policy options. However, it is not clear how the new CAP design would enable agriculture to meet the EU's emission reduction targets.

One area of difficulty in terms of the article's proposal is the impact on the livestock sector, already under economic pressure. 'The ruminant meat sector is most affected (-10% decrease in herd size and -9% in production), but pig production is also negatively affected.' Prices for beef and sheep and goat meat would go up, but would be offset by increasing imports and decreasing exports.

There would also be a six per cent decrease in the total utilised agricultural area, particularly of fodder activities and a 34 per cent increase in set aside activities and fallow land.

Emission savings in the EU are partially offset globally due to increasing production in less emission efficient trading partners. (Not given as an example, but Brazil comes to mind).

The scheme might also penalise farmers who have already invested in emission-efficient technologies and might require above average financial incentives to achieve further GHG reductions.

The authors argue that 'taking the current status quo of the regional pattern of basic CAP payments as a benchmark for direct agricultural GHG emissions-reduction policy would be suboptimal'. In terms of political acceptability, that might be problematic.