National state aids on the up but hard to track

National aids to agriculture have increased, but they are difficult to track and more transparency is needed: http://capreform.eu/greater-transparency-needed-in-national-aids-to-agriculture/

Alan Matthews estimates that national state aids led to additional transfers of €9 billion to farmers.   He forecasts: 'It is likely that relying on Member States to provide national aids will continue to be a feature of future crises.'

He notes: 'This is an extremely murky area as, despite the obligations on Member States to report State aid and other aid to farmers, there is no central registry which keeps track of these amounts.'

New food security report

The EU has brought out a second report on the state of food security in the EU: https://agriculture.ec.europa.eu/document/download/a91b3841-6021-489e-b877-7f0f5278c88c_en?filename=efscm-assessment-spring-2024_en.pdf

It highlights weather and cost concerns on supply side and high food prices on demand side.

Farmer protests and the EP elections

Alan Matthews writes here about farmer protests and the 2024 European Parliament elections: https://www.intereconomics.eu/contents/year/2024/number/2/article/farmer-protests-and-the-2024-european-parliament-elections.html

He states:'This article looks at the origins of this recent wave of farm protests and asks whether a crisis situation exists in European farming as the Commission has suggested. It examines the measures that have been adopted and proposed in response. These measures, while consistent with the previously existing trend to roll back elements of the Green Deal, are in themselves limited in scope.'

'While signalling a willingness to respond to farmers’ concerns, they are unlikely to significantly change their situation. More radical changes have been put on the table, and these elements will play a role in the European Parliament elections in June 2024.'

Look out for an article from him to appear soon online from Political Quarterly.

Ministers retreat in face of farmer protests

Ministers have urged the EU to increase funding for the €60bn-a-year Common Agricultural Policy subsidy scheme in a bid to quell protests as Belgian farmers blockaded roads and set fire to tyres in central Brussels.

The CAP, which consumes about a third of the EU’s joint budget and is the oldest of the bloc’s policies still in operation, is designed to provide a steady stream of income to farmers in order to ensure food production. But as farmers staged their latest protests on Monday over rising costs and environmental regulations, ministers gathering in Brussels to discuss emergency measures to placate farmers said more money was crucial.

Charlie McConalogue, Ireland’s agriculture minister, told the Financial Times that the CAP had “eroded” in real terms over the past years and “must be strengthened in terms of its funding”. “Food security and supporting food production [should be] put very much back at the centre of . . . European budgetary considerations,” he said, a call echoed by ministers from France, Poland and other eastern European countries, according to diplomats present at the talks.

The CAP accounts for €386.6bn of the bloc’s €1.21tn common budget, which runs from 2021 to 2027.  Is this really a good use of available funds? Some 80 per cent of the scheme’s money goes to just 20 per cent of farmers, it is claimed, although I think this is a lazy application of the Pareto rule.

The debate over its increase comes amid heated discussions over priorities for the EU’s joint budget, with governments reluctant to contribute more due to stretched national finances and a need to spend more on defence after Russia launched its full-scale invasion of Ukraine two years ago.

Renationalisation?

Piet Adema, the Dutch agricultural minister, told the Financial Times that instead of boosting the CAP, member states should be allowed more flexibility in how the funds could be used, i.e., renationalise the policy but said consumers should also accept the need to pay more for their food.   But consumers are struggling with a cost of living crisis.

Adema said: “There should be more transparency in the whole food supply chain: where are the earnings made, where are the losses made and how can we influence that?   Indeed, but there are powerful forces that would oppose that, both input multinationals and large scale food processors.“The amount of money you pay for your food compared to 20 or 30 years ago relatively has gone down so when we as a society want our farmers to produce honest sustainable goods, we have to pay for them.”

Farmers have not only called for more funds but also a relaxation in environmental regulations and a reconsideration of trade deals that they say are allowing cheap food imports to undercut prices for EU producers.

Brussels mayhem

In Brussels on Monday, hundreds of tractors blockaded streets close to where ministers were meeting. Some drove at riot police and destroyed barbed wire barricades set up around the main buildings. Several protesters threw manure and brandished placards with slogans such as “leave a future for our children, don’t kill our parents”.

Police used water cannon to douse burning tyres. The demonstrations follow weeks of protests across EU countries including France, Germany, Italy, Poland, Romania and Spain. Farmers blocked a major motorway in Poland on Monday and threatened to continue their blockades for more than 20 days unless their demands were met. French President Emmanuel Macron missed a G7 meeting at the weekend as he spent 13 hours meeting farmers at the country’s annual Salon de l’Agriculture trade show. He called for “calm” after facing protests at the event. “We’re not going to be able to fix the farming crisis in a few hours,” he said.

Ministers in retreat

Ministers agreed that proposals put forward by the European Commission last week aimed at cutting red tape for farmers trying to access CAP funds were “a step in the right direction”, said David Clarinval, Belgium’s deputy prime minister told the Pink ‘Un, but “more ambitious measures” were needed.

The commission has already withdrawn a flagship proposal to cut pesticide use and deleted emissions reductions targets for agriculture from a document outlining options for future EU climate policy. Agriculture will be on the agenda of the EU leaders’ summit in March, one EU diplomat said. In a letter to the commission on Friday, Copa Cogeca, the main farming lobby group, said the bloc’s environmental agenda had resulted in “a regulatory tsunami, with too many rushed consultations, top-down targets lacking assessment, and proposals pushed through without feasibility studies”.

But Via Campesina, one of the groups behind Monday’s protest, which represents small food producers and agricultural workers, said: “Putting a stop to various measures aimed at protecting the environment is an easy solution that meets the needs of agribusiness players. Administrative simplification measures are necessary, but obviously insufficient to guarantee an income for our farms.”

Why farmers are protesting

Some excellent in depth analysis of why farmers are protesting across Europe and how they relate to climate change: https://www.carbonbrief.org/analysis-how-do-the-eu-farmer-protests-relate-to-climate-change/

Look out for some further analysis that will appear soon in Political Quarterly.

Commission backs down on greening agriculture

The European Commission has thrown in the towel on plans to cut climate change emissions in agriculture: https://www.euractiv.com/section/agriculture-food/news/eu-commission-backtracks-on-agricultural-emissions-cuts/

The recent farmer protests across Europe have undoubtedly been a factor, but there has also been concern about far right gains in the upcoming European Parliament elections which could undermine the European project as a whole.  The desire of Urusla von Ley en to secure a second term as Commission president is also part of the context: https://neighbourhood-enlargement.ec.europa.eu/news/speech-president-von-der-leyen-european-parliament-plenary-conclusions-european-council-meetings-2024-02-06_en.

Reducing climate change emissions in agriculture are not an optional extra.   In France, for example, they account for 12 per cent of emissions, far exceeding the contribution of agriculture to GDP or employment. Unfortunately, governments in general have a tendency to back away from effective measures of climate change once they threaten current lifestyles or working patterns.   This is in spite of increasing evidence of  a climate emergency.

Apparently the intention is to have a policy that covers the food sector as a whole which is not without merit but undermined if other measures are dropped.   The Greens are calling for a windfall tax on the profits of agri-food companies.

The plan to halve pesticide use by 2030 is to be dropped.   This is, of course, not directly related to climate change.  It would have an impact on production.   Biological alternatives to synthetics are being developed and are increasing market share, but there are not enough of them and they are not suitable for all crops. This policy might also have been onerous for farmers in terms of form filling.'  According to von Leyen, the pesticides measure has become a symbol of polarization.   Shares in Bayer, the EU's biggest pesticides producer, rose by 2 per cent.

Animal welfare rules are set to be watered down and unpopular (and largely ineffective) set aside requirements abandoned.

Why farmers are in revolt

It's been no surprise to see French farmers blocking motorways.   Such demonstrations are part of the political culture of France and farmers are particularly likely to resort to them.

However, all over Europe farmers are in revolt.   In the Netherlands they have given support to an insurgent party while Polish farmers are threatening to block the border with Ukraine to halt grain shipments.

All this is happening when farmers receive quite generous subsidies with the CAP still accounting for around a third of the EU budget.    Admittedly, input prices went up sharply in recent inflation.

The grievances cited by the farmers are many but among them are imports which under cut them and are produced used pesticides no longer permitted in the EU.   The EU's whole green agenda is seen as a threat, not least because of the form filling burden it imposes.

Four per cent set aside is unpopular as the land still has to be maintained and it does little to boost biodiversity.

Farmers have attracted some support from the public, not least in France where gastronomy is so central to the national identity.

So what is the answer?   There isn't a simple one.  Blocking imports would harm developing countries and put up prices for consumers.  Up to now the CAP has not been modified to take account of climate change and the green agenda was intended to address this and other environmental issues such as biodiversity.   It cannot be abandoned.

Over ten years ago I wrote an article emphasizing the importance of policy instruments in the CAP and the need for them to be better designed - more closely related to policy objectives while imposing fewer transaction costs on farmers.

However, simplification has long been a call in the CAP and not much progress has been made.  Indeed, complexity is almost what defines the policy, deterring policy outsiders from probing too closely.

Alan Matthews has an interesting perspective.   He argues that the evidence shows that farmers have made steady gains in their income from agriculture over the last two decades (since 2005) and agricultural income levels have been at their highest in the past three years, despite higher input costs: http://capreform.eu/what-is-actually-happening-with-agricultural-incomes/

EU green thrust irks farmers

No surprise perhaps to seem them on the streets, but French farmers have begun blocking motorways and targeting government buildings to express anger over rising costs and what they call suffocating red tape at both a national and EU level.

 “To attain our objectives, violence is not the answer, but some farmers have simply had enough,” said Arnaud Rousseau, head of the country’s biggest farmers’ union, FNSEA, on France Inter radio on Monday. He promised further demonstrations until farmers’ concerns were addressed. 

The government has said for months it would introduce legislation to help farmers but on Sunday pushed back the proposal for a few weeks, saying it wanted to improve it.  The movement in France, the biggest agricultural producer in the EU and a main recipient of the bloc’s Common Agricultural Policy subsidies, comes as similar protests have occurred in recent weeks in Germany, the Netherlands, Poland and Romania.  In the Netherlands, farmer discontent over fertiliser curbs helped boost an insurgent party..

Although farmers’ rage has sometimes been touched off by national measures such as a fuel tax subsidy cut in Germany, there is also a broad consensus against the EU’s “farm to fork” strategy that aims to reduce pesticide use and impose new rules to take climate change into account in farming practices. 

Withdrawal of tax break angers German farmers

As Germany faces a budget crisis, German farmers are furious at the withdrawal of the tax exemption for agricultural diesel.   Farmers blockaded large parts of central Berlin with a convoy of tractors yesterday.

The measure is expected to save the state about €900m a year and was apparently agreed over the head of farm minister Cem Ozdemir who has publicly criticised it.  It is estimated that the average farm will have to pay an additional €6,000 a year in tax as a result.

'Red' diesel was retained in the UK after Brexit.

More on this hee: https://unherd.com/thepost/germanys-farmer-protests-spell-trouble-for-olaf-scholz/

Progress on greening CAP 'stalling

Progress on the greening of the CAP is stalling according to the OECD: https://www.euractiv.com/section/agriculture-food/news/tie-farming-subsidies-to-performance-oecd-tells-eu/

The OECD calls for a more results oriented CAP.

UK agricultural policy after Brexit

My article with Alan Greer on the impact of Brexit on agricultural policy in the four nations of the UK is available to view free online: https://www.tandfonline.com/doi/full/10.1080/13501763.2023.2204118

The CAP after 2027

The debate about the CAP post 2027 is starting and Alan Matthews looks in depth at an IEEP paper on the green transition: http://capreform.eu/how-to-advance-the-green-transition-in-the-next-cap-post-2027/

Pessimism about pesticides regulation not justified

With the European Parliament scheduled to vote on the Sustainable Use of Pesticides Regulation in November, this open access article by JRC scientists sets out why fears of negative impacts on production are overblown: https://www.nature.com/articles/s43016-023-00834-6

Recent studies have estimated the potential yield impacts of pesticide reductions in the European Union. While these estimates guide policy design, they are often based on worst-case assumptions and rarely account for positive ecological feedbacks that would contribute to sustainable crop yields in the long term.

'Protecting crop yields is critical to safeguarding food and feed security. Studies on the potential yield impacts of a reduction in pesticide use and risk in the EU estimated adverse effects. As shown here, the literature suggests that these estimates are upper bounds for several reasons that must be acknowledged in research on the impacts of a pesticide reduction: the full 50% reduction does not fall onto feed and food crops; the heterogeneity in pesticide use across farms, areas and crops can be exploited in reduction plans; risk-based indices allow for progress by substituting active substances; the expansion of the area under organic farming may deliver progress; the SUR facilitates agronomic and technological alternatives to pesticides; and ecosystem services supporting sustainable crop yields will benefit from lower pesticide use. Finally, the SUR improves the availability of data on pesticide use and, in doing so, addresses a bottleneck in research and policy-making concerning more sustainable food systems.'

EU in retreat over animal welfare?

The EU is considering scrapping plans to impose regulations designed to improve animal welfare in the farming industry over concerns about the impact it could have on food inflation, according to senior officials.

The European Commission had promised to act after public pressure to stop practices such as the use of cages for livestock, the killing of day-old chicks, and the sale and production of fur. But concerns that the proposed changes could add to food costs, which rose sharply after Russia invaded Ukraine last year, have led Brussels to reconsider the plans.

Three EU officials with knowledge of the matter told the Financial Times that the Commission had dropped the proposals completely — along with a sustainable food law designed to boost green food production across the bloc. But another official said it was reviewing the animal welfare plan and would propose a scaled-back version.   This sounds like a trial balloon to judge reactions.

“Some in the commission are worried about the cost,” said Joe Moran, director of European policy for Four Paws, an animal welfare campaign group. The legislation is among the few remaining parts of the EU’s Green Deal climate package, laid out in 2019 to pivot the bloc to a more sustainable economy. But ahead of EU-wide elections in 2024, conservative politicians have pushed back against the environmental regulations.

Typically, the reaction of farm organizations is to call for more subsidies.  Pekka Pesonen, secretary-general of Copa-Cogeca, the EU farmer’s group, told the FT it could support many of the changes as long as they received financial aid to implement them, and if imported meat was subject to the same standards. That would in effect ban many imports from trading partners such as Brazil, Ukraine and Thailand. Such a measure would also be opposed by trade commissioner Valdis Dombrovskis.

The UK was one of the strongest advocates of animal welfare measures and its voice is no longer heard in the EU.

British farmers think things were better when the EU made policy

The voting behaviour of UK farmers in the Brexit referendum mirrored that of the population as a whole, but quite a few are now regretting their choice according to a Farmers' Weekly survey of 950 farmers and those in ancillary industries. 

Two-thirds of those surveyed thought that the UK was better off when the EU devised policy, ironically a view strongest among those growing non-supported crops such as potatoes, sugar beet and fruit.

Three-quarters of respondents said that Brexit had been negative for the UK economy and 69 per cent said that it had been very or fairly negative for their own businesses.   If the vote could be held again, there would be an eight per cent swing from leave to remain.   65 per cent said that it made it less likely they would vote Conservative.

Both arable and livestock farmers seemed equally disappointed   Even more negative were those growing vegetables (81 per cent) or keeping pigs  (79 per cent).

A clear majority said that despite pre-Brexit promises of 'a bonfire of red tape' once Britain left the EU, the reverse had been true.   My talks to farmers around the north of England convinced me that some had a very surprising view of the regulations that could be discarded.

The phasing out of the Basic Payment Scheme in England attracted a lot of criticism, it being claimed that farming could not survive without support.    Arguably this shows an industry that had become too reliant on subsidies not tied to outcomes.

How has UK agricultural policy changed since Brexit?

Some thoughts here: https://blogs.lse.ac.uk/europpblog/2023/05/24/how-has-uk-agricultural-policy-changed-since-brexit/

Divergence and continuity after Brexit

My article with Alan Greer on 'Divergence and Continuity after Brexit in agriculture' in the Journal of European Public Policy is now available online: https://www.tandfonline.com/doi/full/10.1080/13501763.2023.2204118

Throughout British membership of the European Union (EU), agricultural policy was largely determined by the Common Agricultural Policy (CAP). This was viewed by the UK as a dysfunctional policy and while periodic reforms meant that the EU moved slowly in the direction advocated by the UK, many of the main policy elements remained in place. The devolved administrations in Scotland, Wales and Northern Ireland have always enjoyed a measure of policy freedom in agriculture and have diverged from England in some areas. This article explores the extent of de-Europeanisation in the agricultural sectors in the UK and the patterns of divergence between them, focusing primarily on the development of policies for agricultural support that will replace those in place under the CAP. Overall, there has been substantial divergence in policy, but also areas of continuity, which means that processes of de-Europeanisation in the UK agricultural sectors has been uneven.

Fallow land boosts biodiversity

Research suggests that fallow land can promote bird biodiversity: https://phys.org/news/2023-04-fallow-bird-biodiversity.html

It is suggested that getting rid of set aside in the CAP was a mistake, but there was a broader set of arguments about that policy.   The current emphasis on food security would make it difficult to reinstate.

Ag committee wants cattle kept out of emission plans

The EU Parliament's Agriculture Committee wants to exclude cattle and other livestock from plans to cut greenhouse gas emissions: https://www.euractiv.com/section/agriculture-food/news/agriculture-meps-ask-to-exclude-cows-from-emission-cutting-plans/

Cattle are responsible for 68-74 per cent of livestock emissions.  Methane from cattle is shorter lived than carbon dioxide but is estimated to be 28 times more potent in warming the atmosphere.

In 2018 methane emissions from enteric fermentation in digestive systems of ruminant livestock continued to be the largest single component of farm-gate emissions. Enteric fermentation is a natural part of the digestive process in ruminant animals such as cattle, sheep, goats, and buffalo.   This is a digestive process as enzymes in their gut break down grass, hay and other feed.  Microbes in the digestive tract, or rumen, decompose and ferment food, producing methane as a by-product.    The gas, which builds up in stomachs, is then emitted largely through their burps

Crackdown on livestock farm emissions

Alan Matthews explains why extending the Industrial Emissions Directive to the most polluting livestock farms is justified.   It will be extended to large dairy and cattle farms and more pig and poultry farms.  Ammonia and methane emissions have fallen by very little since 2005.  The livestock sector is responsible for the majority of them: http://capreform.eu/regulating-the-most-polluting-livestock-farms-is-justified/

The proposal has attracted strong opposition in the European Parliament.