BirdLife takes aim at Lyon

On the letters pages of this week’s European Voice, Ariel Brunner, head of EU policy at Birdlife International, has launched a stinging attack on the European Parliament’s agriculture committee. It’s worth republishing in full.

Dear Sir,

The result of this week’s vote on George Lyon’s report, ‘The Future of the CAP after 2013’, is clear evidence that the European Parliament’s Agriculture Committee is more interested in protecting the privilege of vested interests than creating a policy fit for the 21st century.

The report robustly defends the direct payment system, yet provides no evidence for its claims that direct payments help ensure European food security, meaningfully stabilise farming incomes or secure environmental benefits.

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The worst case scenario examined

A new study from the University of Wageningen in the Netherlands has attempted to model the effects of the abolition of EU farm subsidies. The authors of the report state that their study is very much a ‘worst case assessment’ since,

“It does not take into account farmers’ behaviour, although the past has shown that farmers do adapt to changes in the Common Agricultural Policy. It also assumes a fixed cost structure and abstracts from changes in factor prices and structural change, all elements which would reduce the impact of reform on farm incomes.”

The report makes it clear that the effect of subsidies – and their removal – is not felt evenly across Europe.

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The future of direct payments

As Valentin’s blog post yesterday explains, the CAP is not only a European agriculture policy, it’s a European income redistribution policy. The centrepiece of the CAP is the €42 billion a year in ‘direct aids’ or income support to farmers, funded entirely from the pooled EU budget. Valentin points out that in an era of fiscal austerity, the idea of billions of euros moving from one country’s taxpayers to another country’s farmers is likely to be politically controversial. Particularly when the biggest payouts go to Europe’s wealthiest citizens and most profitable companies.

As national governments decide by how much they are going to pay of nurses and school teachers, how many university places they will cut and which taxes they are going to have to increase, the idea that aids to farmers are ringfenced from cuts will come as a surprise to many.

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Which member states pay for wasteful farm income support?

So, is examination of member states’ financial net contributions a shameful exercise: hiking up national egoism and ignoring the larger benefits of European integration? Not at all. If CAP funds were spent exclusively on European public goods, such as climate change mitigation or the protection of endangered species, national bottom lines would indeed not matter. The money should be allocated wherever greenhouse gas reductions can be achieved most cheaply or where the need for wildlife protection is the greatest.

But as things stand, CAP subsidies are mostly free handouts to member states and their farming communities – they do not create commensurate value for European citizens.

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The historic roots of agricultural protectionism in Europe

Great Britain went through a protectionist phase in agriculture after the defeat of Napoleon in 1815, lasting for three decades until the repeal of the Corn Law in 1846. In food-importing Great Britain, the interruption of trade through Napoleon’s Continental Blockade had driven up food prices and farmers resisted the subsequent resumption of trade in peacetime. But the historic roots of continental agricultural protectionism, I always thought, were somewhat more recent, namely the transport cost revolution of the second half of the 19th century. As it became economically efficient to transport grain by train from the US Midwest to the East Coast, and then by ship to Europe, agrarian interests defended the higher rents on scarcer European land against the international convergence of factor prices.

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A three pillar CAP?

Attila Jambor and David Harvey presented a new paper to the Annual Conference of the Agricultural Economics Society a few months ago in which they argue that “two pillars are not enough for a sustainable future for the CAP”. They note that:

“The CAP, post 2013, is supposed by many to be required to contribute to meeting the major and diverse challenges of: global food security and climate change; environmental and land conservation and management; rural development; agrarian transition; food quality and safety; bioenergy and biofuels; regional and sectoral competitive (dis)advantages; market volatility and business risk and, no doubt, other issues as well.”

They also suggest that all of this must be achieved with a smaller share of the EU budget.

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