Author: Alan Matthews

This guest post is written by Professor Ulrich Koester, Professor Emeritus of Agricultural Market Analysis and Policy at the University of Kiel. It originally appeared in German as an opinion piece in the periodical Wirtschaftsdienst 8/2011.

Discussions on the EU medium-term financial framework 2014-2020 are currently taking place in Brussels. Of particular significance are the expenditures for agricultural and fisheries policies. These policies account until now for €58 billion of expenditure or 47.4% of the EU budget. According to the draft proposal this share should reduce to 39% by 2010. It is rather shocking that, at a time when budget resources are scarce, and in light of the poor experiences to date with the current instruments and the results of numerous scientific and internal EU analyses, that it appears that the volume and structure of EU expenditure will not be greatly changed.… Read the rest

As a follow up to my earlier post on the complexities that may hold up the signing of the extended EU-Moroccan Free Trade Agreement, Korski and Leonard from the European Council on Foreign Relations in an op-ed piece in the International Herald Tribune today outline conflicting issues at play in EU-Egypt agricultural trade relations. The issue here arises from the e.coli outbreaks due to bean sprouts in northern Germany and Bordeaux earlier this year that killed at least 48 people and hospitalised hundreds more.

Apparently, investigators from the European Food Safety Authority found a link between these outbreaks and imported Egyptian fenugreek seeds used to produce bean sprouts.… Read the rest

Yet another post on a trade topic, but this is justified by the news from Geneva last week where the WTO Doha Round’s attempts to hang on to life become fainter and weaker. Pascal Lamy was in sombre mood at the meeting:

What we are seeing today is the paralysis in the negotiating function of the WTO, whether it is on market access or on the rule- making.  What we are facing is the inability of the WTO to adapt and adjust to emerging global trade priorities, those you cannot solve through bilateral deals.

While no government has yet declared that the Doha Round is dead, it is clearly on life support.… Read the rest

In September 2010 the European Commission forwarded a draft agreement on further reciprocal liberalisation of agricultural trade with Morocco to the Council and the Parliament, and ultimately the member states, for approval. This draft agreement has nothing to do with responding to the Arab Spring, although its ratification now takes place in that context.

The agreement springs from the authorisation given by the EU Council in 2005 to open negotiations under the 2000 Euro-Mediterranean Agreement which provides that the Union and Morocco will gradually implement greater liberalisation of their reciprocal trade in agricultural products, processed agricultural products and fishery products.… Read the rest

One issue which was not specifically addressed as part of either the Commission’s November 2010 Communication on the CAP post 2013 nor its proposal for the Multiannual Financial Framework is the future of the financial discipline mechanism for CAP Pillar 1 spending. Financial discipline is the process by which EU Farm Ministers each year determine if percentage reductions are required to keep Pillar 1 spending within the budget (in practice, by making reductions in direct payments).

Financial discipline explained

Financial discipline was introduced in the Fischler 2003 CAP reform to take effect over the period 2007-2013. The aim is to anticipate budgetary problems before they occur.… Read the rest

In presenting its proposals for the 2014-2020 MFF on June 29th last, the Commission Services produced a helpful guide to the proposals in the form of a Q&A Questions and Answers memo. Intriguingly, there appear to be two versions in circulation.

For example, one version on the EUBusiness.com website (also picked up by NFU Online) contains the following paragraph on CAP Pillar 2.

The allocation of rural development funds will be revised on the basis of more objective criteria and better targeted to the objectives of the policy. This will ensure a fairer treatment of farmers performing the same activities.

… Read the rest

One of the revelations in the Commission’s proposed Multiannual Financial Framework was its proposal to move funding for the programme of food assistance to the most deprived persons out of the CAP Pillar 1 budget to the European Social Fund, thus saving an estimated €3.5 billion which could then be used for other agricultural spending.

Whether the EU should be funding social programmes of this kind remains controversial in the Council of Ministers, although there is unalloyed enthusiasm for the programme in the European Parliament given that the majority of parliamentarians there favour spending of all kinds.

Origins of the programme

The scheme had its origins as an emergency measure in the exceptionally cold winter of 1986/87, when surplus stocks of agricultural produce were given to Member State charities for distribution to people in need.… Read the rest

The publication of the Commission’s proposals for the next Multiannual Financial Framework (MFF) 2014-2020 brings a little more clarity to its thinking on the likely shape of CAP reform post 2013.

Overall, the proposal represents a slight increase in the total size of the EU budget in the next programming period, by between 3.5% and 5% depending on whether one looks at commitment or payment appropriations. While a number of member states have sought a total freeze in real terms, this still represents a much more modest increase than that proposed recently by the European Parliament (which was a 5 percentage point increase in the share of the EU budget in GNI).… Read the rest

A concern about increased price volatility facing EU farmers marks virtually every statement on the challenges facing the CAP post 2013, with the presumption that new instruments to address this challenge should be part of the CAP reform proposals. Income insurance and ‘contractualisation’ (greater use of written contracts and new collective bargaining powers for producer organisations) are the new tools most often mentioned in this context. A new report by Stefan Tangermann published by the International Centre for Trade and Sustainable Development punctures these claims and flatly concludes that intensified risk management instruments for EU agriculture are not warranted.

His argument is based around five points.… Read the rest

Much of the recent discourse around CAP reform emphasises that European agriculture has an important role to play in the future in contributing to global food security. This concern has been driven by the growing awareness of the challenge of increasing global food production in a sustainable way, which in turn was underlined by the impact of the two recent food price spikes (2007-08 and 2010-11) on global hunger.

Estimates by the U.N. Food and Agriculture Organization (FAO), the U.S. Department of Agriculture (USDA), and the World Bank concluded that between 75 million and 160 million people were thrown into hunger or poverty as a result of the 2007/08 global food crisis.… Read the rest