The Irish Department of Agriculture, Food and the Marine’s consultation on how to implement the new Direct Payments Regulation in Ireland closed last Friday. Ireland is an interesting case study in moving from the historic payment model because of its predominantly grassland-based agriculture and the high dependence of Irish farm incomes on direct payments (the single farm payment alone contributes 50% of Irish farm income). There are significant differences across farms in both the value of payment entitlements per hectare as well as in stocking densities per hectare (the best measure of the intensity of land use in grassland farming), which has given rise to a lively debate on how direct payments should be distributed in future.… Read the rest
Today the OECD published its annual update of trends in producer and consumer support to farmers (measured as the Producer Support Estimate, PSE and the Consumer Support Estimate, CSE, respectively). It shows overall support levels rising in 2012, following the historical low recorded in 2011.
For the OECD countries the share of support in farm receipts is 19%, up from 18% the previous year. There are sharp divergences behind these figures with the highest support countries recording increases (Japan 56%, Korea 54%, Norway 63% and Switzerland 57%) while relatively low support countries fell further (Israel 11%, Mexico 12%, United States 7%).
Well, not quite. But with the publication of the final texts of the CAP political agreement last week we can now scrutinise the detail and fine print. Changes to the language on export subsidies in the single Common Market Organisation regulation go further than before in limiting the future use of export subsidies, without quite taking the final step of eliminating them altogether.
I previously discussed the EU’s use of export subsidies in this post last year. I highlighted both the sharp fall in the use of export subsidies by the EU, the high cost to taxpayers and citizens of using this instrument to support market prices and farm incomes and the growing political support for their abolition.
The value of SFP payment entitlements (and the SAPS payment in the new member states) that farmers will receive later this year will be based on current eligibility rules (as set out in Council Regulation (EC) 73/2009 agreed following the CAP Health Check) but on the budgetary amounts set aside for 2014 under the new Multiannual Financial Framework (MFF) regulation for the coming period 2014-2020. This is because the 2013 direct payments are paid out of the 2014 EU budget which runs from 1 October this year.
This means that, even without the new CAP regulations agreed in June 2013 coming into force (which are now delayed to 1 January 2015), what farmers will receive in direct payments in 2013 will differ from what they were paid in 2012 for two main reasons:
• The overall budget for direct payments agreed for 2014, taking into account the additional demands on this budget arising from the phasing in direct payments in the new member states plus the provision for the new crisis reserve, is lower than before.
In the previous post, I discussed the process leading up to the forthcoming Bali Ministerial Conference of the WTO and the prospects for progress on a Doha Round ‘mini-package’. This ‘mini-package’ is planned to consist of three components: trade facilitation, some development/LDC issues and some agricultural elements (with the possibility of including other elements such as the dispute settlement review and the Information Technology Agreement if progress allows). In this post I discuss the issues being negotiated as part of the agricultural strand of this package.
The agricultural consultations have focused around three proposals tabled so far:
• a G-20 non paper which proposes an understanding on tariff rate quota (TRQ) administration provisions.
With Brussels and national capitals closed for the month of August so little happening on the CAP front, it is timely for a stock-taking of the state of play in the multilateral trade negotiations.
In December later this year, the WTO at its 9th WTO Ministerial Conference in Bali, Indonesia will make yet another effort to salvage some concrete deliverables from the tortuous Doha Round negotiations. The negotiations have proceeded in fits and starts, but with more fits than starts, since the cancellation of what should have been the 7th Ministerial Conference (MC) in Geneva in December 2008 following the failure to agree on revised modalities documents.
Growing price volatility on agricultural markets has renewed focus on the role of market support instruments. In successive CAP reforms, the role of market instruments has changed from essentially determining the market price received by producers to providing a market safety net. Intervention prices are set at low levels which ensure that they are only used in times of real crisis.
The graph below illustrates the extent of support price reductions which have taken place for different sectors. These price cuts allowed the drastic decrease of public stocks in the EU between the early 1990s and recent years, which has in turn reduced the budget pressure stemming from overproduction.… Read the rest
This flexibility may be seen as a consequence of trying to manage a single CAP in an increasingly heterogeneous agricultural landscape in Europe following successive enlargements to an EU of 28 member countries.… Read the rest
The principle of subsidiarity is now part of the Lisbon Treaty but there are many observers who feel that this does not work very well. The optimal degree of policy centralisation is part of the debate on the response to the Eurozone crisis as well as a key element in David Cameron’s demand in his London speech in January 2013 for the repatriation of powers from the Union to member states.… Read the rest
The Trade Policy Review provides succinct summaries of the relevant EU farm legislation and policy instruments, even if some of its data (for example, on levels of domestic support) are a little outdated because of the time required to submit the relevant notifications.… Read the rest