The US Congress has just 14 days in which to agree on a new farm bill able to secure the approval of the White House, and time is running out. If a farm bill is not passed by March 15th, then the so-called ‘permanent legislation’, the provisions of the Agricultural Adjustment Act of 1938 and the Agricultural Act of 1949, would again become legally effective. The implications of this happening have recently been analysed by the US Department of Agriculture and would have such a dramatic and perverse effect on US farm programmes that it is most unlikely that Congress would let it happen.… Read the rest
WTO Agricultural Chair presents new modalities paper
The Chair of the agricultural negotiations at the WTO, Crawford Falconer, released his latest version of the draft modalities for an agricultural agreement on Friday last 8 February. This is the culmination of a series of intensive meetings since early January among a representative group of some 37 WTO members. Although there are still many square brackets in the text, representing areas where final political agreement will only be reached in the context of an overall trade-off against concessions in the non-agricultural market access (NAMA) negotiations, the text provides greater clarity on many of the more contentious issues that were outstanding in the previous incarnation of these draft modalities last July.… Read the rest
Agriculture Ministers hold first discussions on Health Check
Agriculture Ministers had their first discussion of the Commission’s Health Check proposals at the first Council meeting under the Slovenian Presidency yesterday. It appears that the two issues causing the most fuss are the Commission’s suggestions to introduce a progressive reduction in single farm payments to larger farms (inaccurately referred to as capping) and to increase the rate of compulsory modulation (which again would only affect larger farms), in both cases with the additional funds going to Pillar 2 rural development measures. At the same time, Ministers were clearly taken by the emphasis on risk management and safety nets in the Commission Communication and called for more specific proposals in this area.… Read the rest
Is EU biofuels policy worth the candle?
The Commission will announce next Wednesday (January 23rd) its proposals on how it intends to allocate the burden of cuts in carbon dioxide (CO2) emissions and of increased use of renewables among Member States. Its draft Directive (so far without the crucial percentage shares) reiterates the mandatory target that biofuels should account for 10 per cent of transport fuels in the EU-27 by 2020. There has been intense lobbying by industries, environment groups and member states in the run-up to this announcement. However, there is increasing scepticism that its biofuel plans make much sense in the context of its climate change targets, and environmental groups have called for the target to be abandoned.… Read the rest
Agricultural commodity prices continue to climb
One thing which we can predict with great certainty that the New Year will bring is continued high commodity prices. Agricultural product prices continue to hit record levels. In the US, futures prices for the 2008 crops of corn, wheat and soybeans all hit new highs in recent trading sessions. We review some of the evidence in this post.… Read the rest
New Irish animal welfare payment sets interesting precedent
When is a direct payment not a coupled payment? When it is an animal welfare payment. No, this is not a riddle found in my Christmas party cracker, but a response to the news that the Irish Government has just been given the go-ahead to introduce an animal welfare payment for Ireland’s 65,000 suckler cow herds. The Animal Recording, Welfare and Breeding Scheme, to give the payment its full title, will commence on 1st January 2008 and run for five years up to 31st December 2012. In return for complying with seven basic requirements, including calf registration, de-budding, castration where appropriate, a minimum calving age, appropriate weaning procedures including the introduction of meal feeding, animal events recording and taking part in a training and education course, suckler producers will qualify for an annual grant of €80 per cow, up to a maximum of 100 cows per herd (more specific details can be found here).… Read the rest
Commission proposal for 2 per cent increase in milk quota
The Commission has proposed a 2% increase in milk quotas beginning on 1 April 2008 to apply on an equal basis to the 27 Member States. This proposal repeats the Commission’s proposal for a 2% increase in the 2003 Mid Term Review (additional to the 1.5% increase already agreed for 11 Member States as part of Agenda 2000). Member States at that time rejected the proposal but called on the Commission to report on the market situation, once the reform was fully implemented, before a final decision was taken. The Commission has also published this market outlook report which argues that the expected positive growth in demand for dairy products both on the EU and world markets offers ample opportunities to absorb a 2% quota increase.… Read the rest
Rising agflation attracts the attention of the European Central Bank
The contribution of rising food prices to the revival of inflation in the eurozone has attracted the attention of the European Central Bank (ECB) in its latest monthly bulletin for December 2007. Eurostat’s flash estimate of inflation for November 2007 on an annualised basis is 3%, compared to an average growth rate of 1.9% in the first three quarters of 2007. This increase has been driven by recent strong energy and food price increases.… Read the rest
Health Check proposal on flat-rate Single Payment Scheme misunderstood
Many people are under the impression that the Commission’s Health Check Communication proposes that all Member States should move towards a flat rate regional single payment system. There is a widespread view that the Health Check would require those Member States which opted for the historic basis to begin to move towards a regional system between 2009 and 2013.… Read the rest
CAP direct payments poor value for money
The major weakness of the Commission’s CAP Health Check Communication is its failure to spell out a rationale for maintaining the Single Farm Payment after 2013. Yet another report, this time commissioned by the European Parliament’s Committee on Budgetary Control, lambasts the lack of efficient targeting and ensuing excessive cost of the SFP system. Written by Jorge Nunez Ferrer and Eleni Kaditi of the Centre for European Policy Studies in Brussels, and not yet published, the report examines both CAP market and rural development expenditures from the perspective whether EU interventions add value, that is, whether the benefits of these policies outweigh their costs.… Read the rest