Year: 2010

Posted on

How can direct payments be justified after 2013?

This is the question that former OECD trade and agriculture supremo Stefan Tangermann poses in a recent issue of Agra Europe. In effect the answer that the agricultural economist gives is that they can’t be, although he is too canny to say that in so many words. But he takes each argument for the SFP in turn and demolishes it.

He points out that direct payments make up nearly three-quarters of EU expenditure on the CAP, equivalent to about one third of the Union’s total budget. The argument that they are compensation for earlier reforms can no longer be used to justify their continuation.… Read the rest

Posted on

Crystal ball gazing: Scenar II study on the effects of CAP reform

A new economic modelling study commissioned by DG Agriculture shows that many of the core claims made for the CAP are highly misleading, or downright wrong. The Scenar 2020 II study shows that if the subsidies, tariffs, intervention prices and quotas of the CAP were abolished and replaced with a free market, European overall agri-food production would be almost unchanged. This finding directly contradicts the argument that the CAP is an essential policy for ensuring that Europe remains a global agricultural powerhouse and ensuring European citizens have access to a reliable supply of affordable food.

The big picture message is that farming is subject to a range of economic, technological and demographic pressures that far outweigh the effects of agriculture policy, athough there are some exceptions.… Read the rest

Posted on

22 March: Hey, big spender

Greece’s woe continues.

On Tuesday last week, the European Commission said 20 member states must pay back a total of €346.5 million in “unduly spent” farm subsidies. Member states failed to apply proper financial controls and permitted ineligible expenditures.

Greece and Poland account for more than half that sum.

Cash-strapped Athens must pay back €132.6 million – most of which went to cotton farmers who were “overshooting” quotas. Brussels also identified “severe and persistent weaknesses” in Greece’s rural development measures.

Meanwhile, the commission will seek to claw back €92 million from Poland for “acceptance of ineligible land for payments” and “insufficient” checks in regions with high error rates.… Read the rest

Posted on

DG Agri study: Don’t be afraid of liberalization

Farm interests routinely threaten that any reduction in support will provoke a slump in production, endangering EU food security, and threatening massive land abandonment to the detriment of rural life and biodiversity. The findings of the Scenar 2020-II – Update of scenario study on agriculture and the rural world, commissioned by DG Agri, strongly contradict such panicmongering about the looming end of EU agriculture.

The study looks at three scenarios. The reference case assumes a 20% (nominal) CAP budget reduction, reduced intervention stocks, full decoupling, a 30% direct payment reduction, a 105% increase for the second pillar, and a moderate Doha agreement (based on the Falconer paper, including the elimination of export subsidies).… Read the rest

Posted on

OECD research on the CAP

Agricultural ministers of the OECD met in late February 2010 – the first time since 1998 – and issued a communiqué that touches on everything and says close to nothing. For once, such an empty statement is perfectly fine. The OECD Secretariat doesn’t need its ministers in order to do an excellent job in providing intellectual guidance and hard data.

The flagship of OECD research is certainly the country-level analysis of agricultural policies, based on Producer and Consumer Support Estimates and enriched by a brief description of recent policy developments in the report on Agricultural Policies in OECD Countries: Monitoring and Evaluation 2009.… Read the rest

Posted on

12 March: Sarko steals the headlines

Quite a week for Nicolas Sarkozy, then.

After skipping the opening ceremony of the Salon d’Agriculture, the French president wrapped up the show by announcing that France is ready to accept farm budget cuts – but only if EU farmers are given more protection against imports.

Speaking at a debate on Saturday, Sarkozy said Paris would be “supple” about the budget but “rigid” in its demand that agricultural imports be subject to the same standards of production as those adhered to by EU farmers.

“I am ready to accept reducing the share of agricultural spending in the EU budget provided that we use community preference,” Sarkozy said, a reference to the high standard of environmental rules followed by EU producers

This, then, indicates a significant shift in thinking.… Read the rest

Posted on

The Socialist Revolution

1789: the people of Paris take the Bastille. 1848: republican upheaval all across Europe. 1917: the Communists take power in Russia. 2010: the European Socialists & Democrats declare that the CAP needs to be revolutionized. Admittedly, the S&D do not pretend to lay claim to quite such daring historical parallels – but there is no doubt that they make bold claims: the ‘one step at a time while maintaining the original philosophy’ approach of the 1992, 2000, 2003 and 2008/09 reforms has been ‘overly timid’. Explaining that progressives are those who anticipate and guide ambitious reform processes, whereas conservatives only tackle the issues when forced to do so by the emergence of crises or external constraints, they conclude that, ‘the reform of the CAP over the last 15 years has generally followed this second path.’… Read the rest

Posted on

Sarkozy offers a deal on CAP reform

President Sarkozy took farmers into his confidence in a recent speech at the Salon d’agriculture where he proposed a new direction in France’s position on CAP reform post 2013. Noting that there were farms in France where the share of subsidies equals the value of production, he declared that this does not make sense if the farmer is a producer. He criticised the policy approach of accepting compensation for reductions in prices because, some day, there is no longer sufficient funds to continue to pay for the subsidies.

Instead, he proposed to the other EU partners a deal whereby France would be flexible on the share of the next financial perspective going to agriculture provided that this was balanced by more rigorous Community preference which, implicitly would lead to a higher market return.… Read the rest

Posted on

5 March: The circus comes to town

The world’s largest food and farm show, France’s Salon d’Agriculture, is taking place in Paris this week.

Europe’s new agriculture commissioner Dacian Ciolos cut the ribbon — a first for an EU commissioner — after President Nicolas Sarkozy broke with tradition and skipped the opening ceremony. The French premier will wrap up proceedings on Sunday instead.

The event comes after a year in which French farming has suffered its worst crisis in decades. According to Reuters, it is a “chance for Europe’s top agricultural producer to convince the visiting public and foreign officials it is worth safeguarding a sector undermined by declining revenues.”… Read the rest

Posted on

New Danish farms minister in subsidy storm

Yesterday’s reshuffle of the Danish government included the appointment of a new minister for agriculture: Henrik Høegh. Less than a day into his new job, he is becoming embroiled in a political row over a perceived conflict of interest. The reason? Mr Høegh is a farmer who receives more than sixty thousand euro a year in EU farm subsidies.

Data on farm subsidies shows that since 2000, Mr Høegh has benefited from the CAP to the tune of 604,787 euros over the nine years from 2000 to 2008. Farm subsidies appear to be something of a Høegh family business: it seems his son and daughter are also significant recipients.… Read the rest