Milk policy in the EU – a case of policy incoherence

While milk producers in the EU struggle with low milk prices, the EU and its member states struggle to come up with a coherent policy to address the issue. Milk prices will not recover until there is a better balance between supply and demand. I have previously written a number of posts (here and here) in which I have described the policy responses introduced in response to the sharp fall in milk prices since their record high in early 2014.
These responses include measures designed to reduce supply. Specifically, the Commission has activated Article 222 of the CMO Regulation which suspends competition law in the case of producer organisations, co-operatives and inter-branch organisations and allows them to voluntarily limit supply with a view to raising the price of milk.

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The dependence of EU farm income on public support

In spite of the substantial reforms in the structure of the CAP over the past two decades, EU agriculture remains hugely dependent on public support. The importance of public transfers, including direct payments, to EU farmers can be shown in various ways. One indicator is the importance of direct payments relative to the value of total output in the total revenue of farms (used by DG AGRI in this report on EU farm income). We can also focus more directly on the role that public transfers play in sustaining farm income. Here, there are two possibilities depending on the definition used for farm income – whether this is taken as factor income or entrepreneurial income (using the definitions in the Eurostat Economic Accounts for Agriculture, EAA).

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Update on market crisis measures

There were two occasions last week which provided an opportunity for an update on the market crisis measures taken by the Commission and member states. On Monday 11 April, the AGRIFISH Council was briefed by the Commissioner for Agriculture and Rural Development Phil Hogan on progress in implementation of the market support measures for those sectors that were agreed at its meeting on 14 March. The following day, Tuesday 12 April, the Commissioner addressed the plenary session of the European Parliament on the measures to alleviate the crisis in the European agricultural sector.
The measures taken at the March 2016 AGRIFISH Council were intended to be market-oriented and budget-neutral.… Read the rest

Use of risk management tools in the CAP

It has long been recognised that greater price and income volatility would accompany the move to a more market-oriented Common Agricultural Policy (CAP). Already in the run-up to the Fischler Mid-Term Review (MTR) in 2003 which led to the decoupling of direct payments, the Commission published a working document on risk management tools for agriculture, with a special focus on insurance, in 2001. The Council MTR agreement mandated the Commission to study specific measures to address risks, crises and natural disasters that agriculture may face. This led to a Communication from the Commission in 2005 on risk and crisis management in agriculture which discussed different instruments that could be implemented in the CAP.… Read the rest

Preparing for the MFF Mid-Term Review

The EU budget is under increasing pressure in the face of both new and unexpected expenditure demands. Already, in the first two years of this Multiannual Financial Framework (MFF) period 2014-2020, virtually all of the flexibility instruments which were put in place have been fully utilised, in part to fund the incoming Commission’s flagship project for a European Fund for Strategic Investments, and in part in response to the large number of arrivals of asylum-seekers, refugees and migrants as well as the terrorist attacks in Europe. In total, around €12 billion has so far been mobilised under the various flexibility instruments, leading one commentator to observe that “the EU budget had been flexed to the maximum”.… Read the rest