Alan Matthews

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Alan Matthews is Professor Emeritus of European Agricultural Policy in the Department of Economics at Trinity College, Dublin, Ireland. His major research interests are agricultural policy analysis, the impact of international trade on developing countries, and computable general equilibrium analysis of trade and agricultural policy reforms. He has worked as a consultant to the European Parliament, the OECD, the Food and Agricultural Organisation of the United Nations and the UN Industrial Development Organisation, and has been a panel member in a number of WTO Dispute Settlement procedures. He is a former President of the European Association of Agricultural Economists but writes here in a personal capacity.

Recent blog posts written by Alan Matthews

How decoupled is the Single Farm Payment?

Three of my Irish colleagues at the Teagasc Rural Economy Research Centre have conducted an interesting simulation to estimate the extent to which farmers treat the Single Farm Payment (SFP) as coupled or decoupled. Using the EU-wide partial equilibrium simulation model AGMEMOD, Peter Howley, Kevin Hanrahan and Trevor Donnellan project Irish production in the cattle [...]

First results from Brno Informal Agricultural Council

The Czech Minister for Agriculture has issued a press release summarising the discussion at the informal agricultural council in Brno today. The subject was the future shape of a simplified system of direct payments and a more even distribution that would result in a fairer competitive environment on the single market. Even allowing for translation [...]

The Commission Communication on agricultural product quality policy

The Commission this week produced a Communication on how it proposes to develop and advance agricultural product quality policy in the EU. The Communication is the product of an extensive consultation process which began in 2006 with a stakeholder hearing, followed by a conference in Brussels in February 2007. This in turn led to a [...]

Food safety – the Irish pork dioxin crisis revisited

An Irish Parliamentary Committee has just published the results of its investigation into the pork dioxin crisis in Ireland last December, which led to the slaughter of pigs on a number of farms which had been fed contaminated feed and the recall of all Irish pork products produced since 1 September from the home and [...]

Prospects for GMO products in the EU

After the forceful and successful management of the agricultural dossier by the French Presidency in the second half of 2008, it was inevitable that the agenda for the Czech Presidency would be a light one, and this is also reflected in the activity level for this blog since the beginning of this year. Nonetheless, even [...]

More on Irish pigmeat compensation

The European Council at its last meeting under the French Presidency on 11-12 December had a weighty agenda, discussing the EU energy and climate change package, the European economic recovery plan and agreeing with the Irish government an approach which might allow the Lisbon Treaty to enter into force before the end of 2009. The [...]

Food safety rules as protection or protectionism?

SPS (sanitary and phytosanitary standards) barriers figured prominently in the final Agricultural Council of 2008 under the French Presidency. Agricultural Ministers agreed Council Conclusions on the safety of imported agricultural and agri-food products and compliance with Community rules. At the same meeting, EU Farm Ministers rejected a Commission proposal to allow the use of antimicrobial [...]

Questions from Irish pigmeat contamination crisis

Europe’s lastest food safety incident stems from the confirmation of elevated levels of dioxins in Irish pigmeat last Saturday. As a result, all Irish pork and bacon products from pigs slaughtered in Ireland since 1st September 2008 have been recalled. Consumers have been advised, as a precautionary measure, not to consume Irish pork and bacon [...]

Implications of reforming the basis for SPS payments

A recent paper by Beatriz Velaquez from the European Commission throws light on the consequences of moving towards a flat-rate scheme for SPS payments. Drawing on the Impact Analysis for the CAP Health Check proposals and using the FADN database of farm accounts, she examines three options (a) a flat rate scheme with equal payments [...]

Useful primer on CAP reform

I only recently came across a paper by Franklin Dehousse and Peter Timmerman published by the Egmont Institute, the Royal Institute for International Relations in Belgium entitled The New Context of the Agricultural Debate in Europe. Although published in June of this year, and thus written prior to the recent political conclusion to the CAP [...]

World food prices and the CAP

Jorge Nùñez Ferrer of the Centre for European Policy Studies in Brussels has an interesting comment on the possible implications of current high food prices for future CAP reform in the debate on the post-2013 EU budget, in which he rather despairingly projects that “the French Presidency will seek to strike a deal in the [...]

Do-ha, So-wha’?

The internet silence following the collapse of the Doha Round on 30 July last has been striking. It appears not only the negotiators but also the commentators feel the need for a well-earned August break. In a piece for last Sunday’s Irish Sunday Business Post, I tried to summarise my own views on why the [...]

The CAP’s ambiguous face to the outside world

The description of a Fortress Europe has often been applied to the CAP. But just as the CAP has undergone significant internal reform since the first faltering steps under Commissioner MacSharry in 1992, there have also been substantial changes to the CAP’s external trade regime. The EU still maintains high tariffs on specific agricultural imports, [...]

EU wrong to get involved in provision of free fruit and vegetables

Yesterday, the Agriculture and Rural Development Commissioner announced an EU-wide scheme to provide free fruit and vegetables to school children between the ages of 6 and 10. The purpose of the scheme is to encourage more healthy eating habits among children as a contribution to the campaign to fight the obesity epidemic which is storing [...]

New Humboldt University report on global market trends

Another study forecasting higher real food prices for the next decade has recently been published by three authors associated with the Humboldt University in Berlin led by Professor Harald von Witzke. The working paper provides a useful qualitative survey of the reasons why agricultural supply will have difficulty in keeping up with the demand for [...]

What is happening to EU land prices?

The evolution of agricultural land prices and rents can be a good indicator of the effect of agricultural policy, because of the assumption that a significant proportion of the transfers to farmers as a result of such policy are capitalised into land values. Thus, changes in agricultural policy may have implications for land values, and [...]

Milk quota removal could cost EU farmers €4 billion

The elimination of milk quotas as currently foreseen in 2015 will result in a loss to producers of €4 billion, and a gain to consumers of €3.7 billion, according to research by economists at the Institut d’Economie Industrielle in Toulouse. The group were asked to evaluate the impacts of the expiry of the EU milk [...]

Irish farmers flex muscles in Lisbon Treaty referendum

The WTO negotiations have become a live issue in Irish politics because Ireland is the only EU country which will hold a referendum to ratify the Lisbon Treaty, and the campaign provides an opportunity for interest groups to maximise their bargaining strength. For example, farm groups who are traditionally pro-EU in referendum votes have threatened [...]

US Farm Bill goes to the wire

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 [...]

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 [...]

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 [...]

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 [...]

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 [...]

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 [...]

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 [...]

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 [...]

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 [...]

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 [...]

Limited administrative burden of the Single Farm Payment

Economists have long been interested in the costs associated with policies transferring income support to farmers. These costs include not only the resource costs associated with distorting production and consumption choices away from the market optimum (assuming that market prices fully reflect the social value placed on resources and outputs), but also the transactions costs [...]

Specious arguments against limiting payments to largest farms

Initial media reaction to the Commission’s Health Check proposals has been predictable, with most papers picking up as the lead story the Commission’s proposal to apply a tapering reduction to direct payments to larger farms. The Financial Times story was headlined “Communists and royalty fight farm subsidy cuts.” Much was made of the fact that [...]

Why agricultural policy reform is so difficult

Over on the excellent VoxEU site, Thomas Hertel, Roman Keeney and Alan Winters try to answer the question why agricultural policy is so difficult to reform, as illustrated by the way in which difficulties in getting agreement on reduced agricultural support and protection has been one of the factors preventing progress in the Doha Round. [...]

Options for milk quota reform

How to manage the transition to the phasing out of milk quotas is one of the items on the CAP Health Check agenda. A recent study from the FAPRI-Ireland team based in the Rural Economy Research Centre, Teagasc in Ireland has examined the impacts of two alternative transition paths to phasing out milk quotas by [...]

More on who benefits from farm subsidies

Jack Thurston reviews some recent academic studies, including a recent paper by Stefan Kilian and Klaus Salhofer from the Technische Universität Munich, which make the point that much of the benefit of agricultural support policies does not end up in the hands of farmers who are its intended beneficiaries, but rather benefits landowners. However, my [...]

More on capping direct payments

Much initial reaction to the Commission’s leaked Health Check proposals has focused on its renewed attempt to introduce a cap on the Single Farm Payment amount which an individual farmer can receive. In fact, the proposal does not amount to a cap in the sense of an absolute ceiling, but takes of the form of [...]

Commission’s CAP Health Check proposals leaked

The Commission’s draft proposals for the CAP Health Check due to be officially released in November have now been widely leaked in the agricultural press (see the UK Farmers Guardian for one summary). Much initial reaction has focused on the Commission’s renewed attempt to introduce a cap on the Single Farm Payment amount which an [...]

Council agrees reform of the sugar reform

The Council agreed yesterday the Commission’s proposals to improve the attractiveness of the sugar industry restructuring scheme in order to meet the Commission’s objective of a reduction in 6 million tonnes of sugar quota by the end of the four year transition period 2006-2010 for the current EU sugar reform. As noted in a previous [...]

Why farmers in the New Member States love the CAP

Jerzy Wilkin of Warsaw University in a recent paper has summarised the agricultural experience in the New Member States (NMS) under the CAP since they joined the EU in 2004. One of the points he highlights is the change in attitudes among farmers to the EU particularly in Poland, the largest of the New Member [...]

Danish parliament unanimously calls for elimination of CAP support

Some Danish colleagues told me recently that the Danish Parliament on 30 May last unanimously passed a resolution requiring the Danish government to propose a strategy for how it would actively work for the elimination of EU agricultural support. The strategy should include a timeframe and plan of activities which should take into account the [...]

Prospect for milk quota increases next year

The UK Farmers Guardian reports that Mrs Fischer Boel was forced to confirm that allowing an increase in milk production would be addressed as part of the Commission’s Health Check proposals expected in November after Germany raised concerns about rising retail prices. The Commission has a number of options, including an annual market-linked increase in [...]

Australian report raises queries on CAP reform

The Australian Bureau of Agricultural and Resource Economics (ABARE) has long been a consistent critic of the CAP. In its latest report The European Union’s Agricultural Policy: A Stocktake of Reforms it acknowledges the EU’s reform efforts to date, but highlights areas where more needs to be done. Its main conclusion is that, while the [...]

Biofuels come to rescue of EU sugar market in medium-term

DG Agri published its annual Prospects for Agricultural Markets and Income in the EU for the period 2007 through 2014 at the end of July. In this post I discuss the Commission’s latest view on the outlook for the EU sugar market. The EU’s sugar market reform agreed in November 2005 has been less than [...]

Growth rates for global food demand set to fall

In a previous post, I discussed the significance of the current buoyant markets for dairy products for the likely success in pursuing further reform of the EU dairy regime. The insight that world market conditions may influence the trajectory of CAP reform can also be extended to other CAP regimes. Producers have not been as [...]

Importance of direct payments in Irish farm income by farming system

Irish farmers now totally dependent on direct payments for their income

The dependence of Irish farm incomes on the Single Farm Payment and other direct payments was starkly revealed by the publication of the 2006 results of the annual National Farm Survey (NFS) this week. Fully 98% of Family Farm Income (FFI) on Irish farms in 2006 was derived from the Single Farm Payment and other [...]

Good prospects for dairy reform

A particular milestone in the CAP was passed last month when the European Commission set export refunds on dairy products to zero for the first time ever in the management of the EU dairy regime. This reflects the extraordinary jump in world market prices for milk products in the past twelve months, with prices for [...]

Set-aside: ensuring the environmental benefits

Ariel Brunner in a recent post lamented the fact that the EU has proposed to set the rate of compulsory set-aside to 0% for the 2008 harvest without putting in place alternative measures to secure the environmental benefits which set-aside land provides. The reason why the decision only concerns autumn 2007 and spring 2008 sowings [...]

Less likelihood of cuts in Single Farm Payment

The Irish Farmers’ Journal reports that the value of the Single Farm Payment (SFP) is not likely to be greatly eroded by “financial discipline” cuts in order to accommodate the payments to new Member States within the European Union. This is because more buoyant farm prices mean that there will be huge cuts in the [...]

UK data on distribution of farm payments

The UK Department for Environment, Food and Rural Affairs (DEFRA) Agricultural Change and Environment Observatory recently published a statistical analysis of the breakdown of the Single Farm Payment (SFP) in England, one of the four regions for the purposes of administering the SFP scheme in the UK. The report analyses 2005 payments, with some historical [...]

CAP policy instruments and policy goals: cause or effect?

Fellow blogger Wyn Grant presented a paper in Paris last month which presents a wide-ranging overview of the changes in CAP policy instruments since its inception to the present day. His basic thesis is that over time the instruments have changed much more than the objectives and that this does reflect a shift in the [...]