Global food prices remain very high

The Commission has published its latest international food price monitoring newsletter for September. This tracks price changes for five major food groups included in the FAO food price index. After hitting a record level of 237.7 in February 2011, the FAO Food Price index continues lingering above levels observed during the 2007/08 food crisis, settling at 231.0 in July 2011 and 231.1 in August 2011. Compared to June 2011 levels, meat and sugar indices strengthened, while other eased slightly. These high food prices continue to fuel concern about food price inflation in developing and emerging economies.

FAO food price index Sept 2011

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Commission’s impact assessment of direct payments changes

The Commission’s impact assessment of the range of changes to direct payments included in its draft legislative proposals provide useful additional detail on the economic impacts to be expected from these changes and thus their political feasibility. The impact analysis has yet to be released officially but the relevant annex of the draft assessment can be found here.

Annex 3 of the impact assessment (IA) addresses all of the proposed changes in Pillar 1: greater convergence between Member States; the move toward flat rate payments within Member States or regions; additional income support in less favoured areas; capping of payments; the small farmer scheme; specific support for young farmers; a better definition of ‘active farmers’; as well as coupled aids (the ‘green’ payment option is evaluated in Annex 2 of the IA).

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Draft market organisation regulation confirms market orientation with safeguards

The two previous posts covered the Commission’s draft proposals for the Direct Payments regulation and the Rural Development regulation. In this post, I cover its draft proposal for a revised single common market organisation regulation.

Summary

• There is the first formal acknowledgement that the Commission is not going to propose legislation to renew the sugar quota regime when it expires in 2014/15, although there will be a one year extension. Ending the sugar quota system is given as an example of simplification of the CAP under the proposal.
• A single animal disease/loss of consumer confidence provision is extended to plant products given the experience with the e.coli

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Leaked rural development regulation has few surprises

In a previous post I looked at the draft Direct Payment regulation, one of four key regulations which will shape the future CAP after 2013. In this post, I look at what is proposed in the Rural Development regulation. This comes with the health warning that the actual legislative proposals will not be released until October 12th, and some of these proposals may change in the meantime.

Summary of proposals

• Greater coordination of EAFRD spending to ensure complementarity of RD programming with the programming of the other shared-management funds, the Regional Fund, the Social Fund, the Cohesion Fund and the Fisheries Fund.

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Leaked legislative proposals anticipate Commission CAP reform proposals due October 12th

The International Centre for Trade and Sustainable Development has made copies of the draft Commission legislative proposals for CAP reform available here. These are the versions circulated within the Commission for comment, and they could change further before they are formally released to the European Parliament and the Member States on 12 October next.  Nonetheless, the draft regulations are worth analysing in detail because of the indications they give to the Commission’s thinking.

The proposals are contained in four main regulations which would replace the existing regulations governing the CAP, as follows:
–    A regulation governing direct payments under Pillar 1
–    A regulation governing rural development payments under Pillar 2
–    A regulation revising the single Common Market Organisation regulation
–    A horizontal regulation covering financing, management and monitoring of the CAP.

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Lamy: Trade is vital for food security

Pascal Lamy, WTO Director-General, used his keynote speech to a recent congress of European agricultural economists to address a perennial issue in agricultural trade policy, namely, whether agriculture should be treated like shirts, shoes and tyres and fall under the same trade regime?

“Now, while the international community broadly-speaking agrees on what the basic objectives of agricultural policy are, I believe that there continues to be a disagreement on what “global integration” can do for agriculture (in particular, international trade). Is greater global integration beneficial or harmful to agriculture? That is the question that underlies trade negotiations in this field at the World Trade Organization, but it is also a question for which a coherent response has yet to emerge.”

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