The S&D give two reasons a ‘New Start’ (yes, in capital letters, just like the ‘New Deal’ they are calling for) is imperative. The first is the common environmental public goods rationality (climate change, water management, renewable energy, biodiversity, soil erosion). The second is a combination of social concerns: reducing regional disparities, redirecting subsidies from the most competitive to more needy farm holdings, and creating employment (‘the granting of aid must absolutely be linked to job creation in rural areas in order to maintain, bring to life and develop the agricultural area in all regions of Europe’).

Concerns about employment and vitality in rural regions seem to point towards the strengthening of the non-agricultural component in rural development (Axes 3 of Pillar 2). But the document takes a most interesting turn in the opposite direction: the ‘hotchpotch’ of Pillar 2 should be cleared up, all CAP subsidies should be merged into one pillar, and all current CAP instruments that no longer fit should be transferred to the regional and cohesion policy.

I have a number of problems with the document. I am concerned about the objective of stimulating agricultural employment through the CAP and do not see the need to have a generalized payment link to natural handicaps. Furthermore, I very much like the extension of national co-financing of CAP subsidies, which the document rejects without further explanation.

Nevertheless, my overall assessment is strongly positive. The level of change envisioned is outstanding, and the general tone is rational/progressive (‘instruments must be better focused on objectives; priority must be given to expenditure that is more socially useful, such as financing of public goods made available to society; and handouts (direct subsidies) must be replaced with measures encouraging those involved to take account of the new requirements (new contractual approaches). Public subsidies should be given to farmers in return for their provision of environmental services and landscape management.’)

Comparing this statement to the stubborn defense of vested interests that is endemic in the EP Committee on Agriculture, it is a great step forward. And this is all the more important since Paolo De Castro, the chairman of the EP Committee on Agriculture, is a Socialist.

Instead, he proposed to the other EU partners a deal whereby France would be flexible on the share of the next financial perspective going to agriculture provided that this was balanced by more rigorous Community preference which, implicitly would lead to a higher market return. His argument is that if third country producers had to respect the high environmental, traceability and animal welfare rules which must be respected by European producers, then European farmers would be able to compete on price alone.

There are two issues with this argument. The first is whether the argument itself holds up. We can observe that controlling imports is only effective as a way of raising the EU price where the EU is a deficit importer; for those products where the EU is a net exporter, the EU price (assuming the absence of export subsidies) is determined on world markets where the EU cannot enforce its own standards.

Even in the case of a product like beef, where the EU is now a deficit importer, it is questionable how significant the price effect of demanding higher standards of imports would be. Only twelve countries are allowed to export beef to the EU at present in any case under existing rules. Of course, some of these, such as Brazil, have major export capacity. Already in Brazil, individual farms are registered and can comply with EU internal standards in order to gain access to the lucrative EU market. While it would be costly to meet the additional EU standards, the additional cost would not be a major disadvantage

The second issue with the Sarkozy approach is that it would fall foul of WTO trade rules. These rules allow the EU to take steps to control imports for health and safety reasons, and the EU makes clear that its existing rules do this more than adequately. Requiring a particular approach to animal welfare, or requiring observance of environmental standards, might improve things in Brazil, but WTO rules do not give one country a right to dictate non-essential standards in another country. This is, of course, also a protection for EU exporters against arbitrary demands from other importing countries.

While France has long sought stricter standards on imports, this is the first time it has indicated that it might be willing to trade off expenditure on agricultural subsidies for such higher standards. Does this represent a sign of some new flexibility in French thinking? What do French farm organisations think of the proposal?

Europe’s new agriculture commissioner Dacian Ciolos cut the ribbon — a first for an EU commissioner — after President Nicolas Sarkozy broke with tradition and skipped the opening ceremony. The French premier will wrap up proceedings on Sunday instead.

The event comes after a year in which French farming has suffered its worst crisis in decades. According to Reuters, it is a “chance for Europe’s top agricultural producer to convince the visiting public and foreign officials it is worth safeguarding a sector undermined by declining revenues.”

Target number one is Commissioner Ciolos.

As the Financial Times put it, “the invitation comes as Europe begins a thorny debate over financing the CAP … France wants to lead the debate [and] believes it has an opportunity to push its view, and the invitation of Mr Ciolos is a sign of its confidence.”

Seizing his opportunity, French farming minister Bruno Le Maire reiterated his proposals — such as bolstering prices for farmers — at a joint press conference with Ciolos. “It is unacceptable that farmers have to sell their products below their cost price,” Le Maire said.

Ciolos was more equivocal. “I think it’s important to find the middle way. I don’t like extremes,” he said. Instead, he said he’d look to combine both market forces and support mechanisms for farmers.

Yet the commissioner fell short of making firm commitments, saying it’s too early to discuss specific measures. When can we expect to see any? By the end of the year, Ciolos said.

The FT also noted that “the proposals have quite sensibly shifted the early debate on the CAP away from the controversial issue of funding to the question of what its priorities should be.”

Ciolos echoed this sentiment. “What is important is not simply the budget … but how European agriculture as a whole can survive,” he told reporters.

Still, as the FT reminds us, if EU member states “agree to regulation à la francaise, they will have agreed implicitly to a big budget, as the measures would demand significant funding.”

Le Maire wasn’t the only farm minister getting face time with Ciolos this week. The commissioner pressed the flesh with Hilary Benn of the UK, his German counterpart Ilse Aigner, Spain’s farm minister Elena Espinosa, and Brendan Smith of Ireland.

According to the German food ministry, Ciolos and Aigner had “an open and intensive exchange of views” in Berlin. Ciolos said afterwards: “We need an open debate in the general public. We will listen very carefully in the weeks and months to come. It is no coincidence that I have chosen Berlin as the first stop in this consultation progress.”

This week also saw the publication of three papers.

First, agriculture ministers and policy-makers from the 30 OECD countries, as well as several observer countries (such as Brazil, Indonesia, and Russia), which together account for a huge proportion of the world’s production and consumption of food and agricultural products, met in Paris.

According to communique released after the meeting, the participants concluded that agriculture has an important role to play in the process of “green growth”.

They also discussed food security at length, called for frameworks to enable food and agricultural markets to function “efficiently, effectively, transparently, and fairly”, and proposed an analysis of the “functioning of markets and the extent to which the changing physical and market environment is generating new or increased risk and volatility affecting the agriculture and food system.”

Later in the week, the European Commission unveiled a long-awaited economic roadmap for Europe. The EU’s new strategy for sustainable growth and jobs — “Europe 2020″ — replaces the Lisbon Agenda and puts innovation and green growth at the heart of its blueprint for competitiveness.

Yet agriculture was conspicuous by its absence from the text. According to AGRA FACTS (sub. req’d), commission officials said later that “even though agriculture is not mentioned so clearly, it is clear that agricultural policy is central to these issues”.

But conservation group WWF isn’t so sure. They say the strategy shows “little ambition” and “fails to give any clear direction on some of the biggest policy overhauls coming up in the next few years, including agriculture, fisheries and rural development, which are barely mentioned in the document”.

Finally, the Centre of European Policy Studies, a think tank, this week published a paper arguing that the EU budget should shift funds from the CAP to energy and climate change to reflect the bloc’s changing priorities. The paper says “tying up 40 percent of funds in the CAP restricts the manoeuvre of the budget” and that increased CAP co-financing would give the EU budget more flexibility.

Data on farm subsidies shows that since 2000, Mr Høegh has benefited from the CAP to the tune of 604,787 euros over the nine years from 2000 to 2008. Farm subsidies appear to be something of a Høegh family business: it seems his son and daughter are also significant recipients. Mr Høegh is now responsible for signing his own subsidy cheques, but also, as a member of the EU’s Council of Agriculture Ministers, deciding on the future of the CAP.

Høegh’s appointment to such a high profile and sensitive post came as something of a surprise since he’s only been a member of parliament for less than three years, before which time he was a Vice President of Danish Agriculture, the farmers union in Denmark, just the most recent position in a career spent in agricultural and farmer associations (read his CV in English here – PDF).

Of course we’ve been here before. Former Danish farms minister and EU Agriculture Commissioner Mariann Fischer Boel is married to a farmer, with a major business interest at stake in the future of the EU’s farm subsidies and tariff policies. Former Dutch farms minister Cees Veerman was nearly forced to resign when it was revealed that in addition to his farms in the Netherlands, he owned four farms in France, which he had failed to mention in his ministerial declaration of interests, and for which he received nearly two hundred thousand euros in subsidy a year. And the European Parliament’s agriculture committee has long been stuffed with farmers and farmer representatives. It just shows the extent to which the 55 billion euro a year common agricultural policy has been captured by those with a personal financial interest.

This latest row has made it onto Danish national television this evening with journalists, political commentators and opposition politicians questioning whether he can stay in post. With the long-term future of the CAP currently under debate, can the Danish people be confident that Mr Høegh will be pursuing the public interest rather than his own private profits?

You will understand that – minor as it might seem – the point that got most of my attention in the paper presented today by the Presidency of the European Council on Agriculture was the one on olive oil. After all, as an olive-oil farmer I have a vested interest on the issue, and therefore I was taken by surprise by reading that the Presidency considers “the authorisation of the private storage of olive oil in 2009, which contributed to a recovery in prices and subsequent market stabilisation” as an example of the success of the existing market control mechanisms.

As I am being paid 50% of the price I received for my olives a couple of years ago – 30 cents a kilo instead of 60 – I have some difficulties getting the point of the Presidency. It is true that when I started harvesting back in November, the local buyer told me he could not guarantee more than 24 cents the kilo, which would probably not cover harvesting costs, and so he presented his 30 cents offer as a generous move.

In the Brussels world of free competition, I could sell my olives to somebody else, but in the real world of Vale do Vargo, the only competitor is a co-operative that is practically bankrupt and pays for your olives in kind (gives you olive-oil in return) which is not a very practical form of payment. In the neighbouring village the local co-operative closed long ago, and several practicalities make it difficult for me to deliver my olives to longer distances.

So, I could think of milling the olives myself, or I could think of asking my south-eastern neighbour to mill them for me. But, well, all the traditional olive mills have been closed, according to the national authority’s explanation, because of Brussels directives. In fact, Brussels directives only told member states that waste water resulting from the milling process of olives should be correctly disposed of, and this did not mean closing down hundreds if not thousands of olive mills across the country, but Portuguese national bureaucracy saw here another golden opportunity to “modernise” by decree this old-fashioned rural country and made a very restrictive interpretation of the directive.

My short farming history started exactly when I was nominated for a report on olive-oil in the Budgets Control Committee of the European Parliament and I got so fascinated with the various dimensions of the issue that I decided to see for myself how to deal with olive groves. I never thought of my olive trees as a business, but as a hobby. Nevertheless, I expected it would be much less expensive than it turned out to be. As I soon understood, many of the olive groves around my own are held as a hobby by people working in nearby towns or villages. They have a small plot of land, something like one or two “sortes” – over there it means from 2,5 to 7 hectares – they take care of them on weekends and they are very happy if the payment for olives will cover their costs, excluding their voluntary work.

Normally this is a population that likes to keep old ties with inherited land or inherited rural habits, and that is emotionally involved with the farming cause, as much as if their livelihood would significantly depend on these plots of land. Then you have those who still make a living out of these traditional olive groves, and they must explore at least some 30 hectares of land. They keep traditional olive trees, but they already use mechanical collection and a lot of chemicals with which they kill all existing vegetation between olive trees and combat major pests. Sometimes they irrigate their olives as well.

The past years have been dramatic for this group. After severe droughts that limited production they now face sharp drops in prices. In the last five to ten years most of the olive grove scenery of Southern Alentejo changed dramatically, with the implantation of huge intensive olive oil groves. Invariably using irrigation, they multiplied by a factor of five to ten the number of olive trees per hectare, although using young and small olive trees that will not be allowed to get old. These new farms use more efficient olive-picking machines and the same chemical approach as the traditional commercial farms.

Most of the new olive groves were planted by Spanish investors, and because of the overall economic crisis, investment dried up in 2008, and several of these olive groves are for sale. Up to 2007/2008 – that is before these new olive groves started producing – the Portuguese olive-oil production was steadily declining, as in the absence of major modernisations, traditional production was just uncompetitive. This situation had, however, a positive aspect: prices remained firm. As the Portuguese consumer gives a premium to Portuguese olive oil and the national production was far below national demand, there was a premium for the national olives.

As the European Commission has been subsidising private storage of olive oil and – unless there will be bad climatic conditions – everything points to a steady increase of olive production for the next few years, I believe the private storage that the Presidency’s paper presents as the symbol of success in the intervention of markets will certainly play a role in damping future prices. It is awkward that a Presidency that happens to coincide with the largest European olive oil producer member state does not even consider the possibility that what I am presenting here as my personal analysis may become a reality.

If we were to analyse carefully the effect of the use by the EU of massive storage measures – milk products, beef, and grains – when the problem was more structural than short-term, I think we would confirm my point of view. What my accidental farming experience together with my administrative, political and academic experience tell me is that we are facing a structural challenge that has to be considered in several angles: technical modernisation; environmental impact in water, erosion, biodiversity and landscape management; rural policy; budget and budget control issues and food quality.

In our Mediterranean conditions, a traditional olive grove – intermingled with fig and almond trees, cork and green oaks – with centenary olive trees where you can easily find bees-nests, lizards, all sorts of insects and birds, even refuge for rabbits, with a lot of other species of plants in between where you occasionally spot hares, pheasants or wild boars is a wonder of nature. In the past, it allowed the presence of the “gland pigs” – that strive better in oak forests, but that go as well on olive groves – that would eat grass and plants, the figs and the fallen olives – and thus preventing the reproduction of pests like the fruit fly – alternating with lambs that would eat the grass and occasionally would prune the unwanted lower branches of olive trees. The main problem is that you need to give a close eye on what these animals are doing to prevent them misbehaving, and this is time consuming and less competitive than the alternative of spraying chemicals around.

Hand-picking of olives has been out of the question for quite some time and the standard traditional method has been for many decades to hit the trees with a stick, and collect the olives with a net by the ground. This is quite a rude method that destroys the productive capacity of the tree and is still time-consuming. Lately, huge machines that help shaking the tree have been used, but this is much more cumbersome, expensive and time-consuming than to have small aligned olive trees that you can handle like a fruit tree orchard.

As decoupling of aids from production only very recently and still partially arrived at olive production, and decoupled payments are made on the basis of historic production, the Common Agricultural Policy actually became a further disadvantage to the traditional olive grove, as it gets a much smaller subvention than the intensive one.

So objective technical and market conditions – reinforced instead of balanced by the CAP – made impossible to the traditional olive groves to compete with the new intensive ones. The new, intensive olive groves were classified by a DG-Environment European Commission report as the number one cause for soil erosion in Spain, washing annually millions of tones of earth from the fragile Mediterranean soil to the sea. They also represent a drain on scarce water resources, they have a negative effect on biodiversity and, last but not least, they are not beautiful in the landscape as the old ones are.

But if these obvious failures of policy were not important enough, the budget control framework of the European legislation made things considerably worse. Either because the Commission once proposed to replace the payments per olive quantity by a payment per olive tree – proposal flatly refused by the industry – or for some other less transparent reason, the budget control mechanisms of the Commission rely solely on counting the number of olive trees.

As an explanation for this extraordinary practice, the Commission said that counting the number of trees was an indirect way of counting olives, assuming approximate fixed productivities per tree in each particular region. This is sheer nonsense for two reasons: the first is that the main variable on which productivity depends is the intensification degree, not the region where an olive grove is situated; the second is that with extensive methods variability is very high depending on climate variations.

However it goes beyond belief the enormous amounts of effort and public funds put behind this absurd task of counting olive trees. Brussels gossips – completely out of the blue – were that plastic trees were being planted in Italy to deceive the controllers. This would have been double foolishness, as a real olive tree is cheaper than a plastic one and no-one ever got a cent from the European Budget for having an olive tree, but only from producing olives, and plastic trees do not produce them as real olive trees do. The first thing I was told when I bought my olive grove was that I should be very careful in stating a number of trees considerably lower than reality. Otherwise, I would risk seeing the controllers coming, deciding several of my olives were not in good production capacity and condemn me as a fraudster. In the olive oil business fraud comes from making olive-oil without olives, not olives from plastic or almond trees, as it is apparently reasoned by the Commission.

Fraud in olive oil traditionally attains alarming levels, much higher than in milk products or wine, two of the other traditional victims. According to a press report I quoted in a Parliamentary question to the Commission, falsification of olive oil reach 50% levels in some European markets. The Commission was not impressed, and answered this was a detail for member states to be concerned with.

From all of this, I think we can understand what should be done on this sector, quite differently from what as been done lately.

1. Limit market intervention to exceptional circumstances. Do not make a system out of it. If the crisis situation lasts, think of structural measures;

2. Phase out existing subventions and replace them by a system that rewards olive production for (1) biodiversity enhancement; (2) soil conservation and (3) water saving;

3. Promote or subvention research in technologies that will increase human productivity with extensive use of natural elements;

4. Promote or subvention the personal or collective use of machinery that replace burning and pesticides.

5. Couple these measures with rural policy and social policy towards those who will not be able to keep the market competition pressure, as Sicco Mansholt thought necessary from the beginning.

6. Make war on those who make olive-oil without olives, stop harassing farmers for ludicrous reasons;

7. One of the last but very important decisions of former Commissioner Fisher Böel was to send her staff for visits in the countryside. Enlarge the measure to the other European institutions, everyone being invited to reflect all of these issues walking along old olive groves… Be my guest!

De Castro explains that he has always regarded himself as a CAP reformer and sets out his vision for a reshaping of the EU’s farm subsidy system. He advocates a shift to a basic flat rate aid payment to farmers, plus additional funds to be allocated at the discretion of member states. He argues for introducing minimum and maximum thresholds for payments (a minimum around 300 euro and a maximum in the range 400,000-500,000 euro). He speaks in favour of co-financing of the CAP, so long as it’s not optional for member states. He explains his vision for the European Parliament’s role under the new Lisbon Treaty rules, including his idea of a permanent seat for the Agriculture Committee on the Agriculture Council and how he’d like COMAGRI to take part in CAP comitology.

CAP Reform Conversations: Paolo De Castro MEP from farmsubsidy.org on Vimeo.

More from ICTSD.

The European Food Declaration diagnoses the problems of Europe’s food and farming system in the following way:

- dependence on under-priced fossil fuels
- failure to recognise the limitations of water and land resources
- promotion of unhealthy diets high in calories, fat and salt, and low in fruit, vegetables and
grains
- domination by transnational corporations and the World Trade Organisation (WTO)

The declaration argues that:

“All people should have access to healthy, safe, and nutritious food. The ways in which we grow, distribute, prepare and eat food should celebrate Europe’s cultural diversity, providing sustenance equitably and sustainably.”

The declaration sets out 12 principles, among them Principle 3 makes the curiously contradictory case for healthier eating and less consumption of meat and dairy products “while
respecting the regional cultural dietary habits and traditions”. So cassoulet, bratwurst and zampone are all safe. Principle 4 calls for an agriculture “that involves numerous farmers”, presumably a call for more support to keep smaller farms in business, or to cut support for larger farms. Principle 4 also calls for “fair and secure farm prices”, i.e. a return to production controls and price-setting of the CAP of the 1970s and 1980s. Principle 7 argues that Europe should be GMO-free and Principle 8 says biofuels should be discouraged and transport minimised. Most of the other principles are of the ‘motherhood and apple pie’ variety – very sound but lacking real substance on how they’ll be achieved.

The declaration is the work of a platform of NGOs includingVia Campesina (International Peasant Movement), whose colourful José Bové is a former French presidential candidate and currently vice-chairman of the European Parliament’s agriculture committee, Friends of the Earth and Attac Austria. The organisers will open the declaration to public signatories later this month.

You can read the declaration in full below:

You can read a summary of the report at European Voice, or download the report in full over at followthemoney.eu.