The French government has launched a new website as part of the run-up to a conference it will hold on 3 July, at the very beginning of France’s 6-month EU Presidency, to discuss the future of European and global agriculture. Entitled “Qui va nourrir le monde?” (Who will feed the world), the debate is being organised around six questions, divided into two groups. Find out more after the jump…
Group one: Agriculture as a driver of growth and development
1. What are the prospects for local production in a global marketplace?
2. Can family farms provide jobs for young people?
3. How can agriculture contribute to the protection of the environment?
Group two: Regional and global governance
4. What are the challenges in North-South relations, what new forms of agriculture partnerships?
5. What are the roles for producer organisations in managing markets?
6. What international regulation is needed to balance the interests of the world’s farmers?
The website is in French only at the moment, for non-French speakers, Google’s sometimes haphazard machine translated version might be useful.
As well as launching websites, Michel Barnier, the French agriculture Minister, has been leading a media offensive over the past few weeks in advance of the French EU Presidency, and has been offering some answers to his questions. His interview with the Financial Times makes interesting reading, as does the FT’s firm riposte on its leader page. We can safely ignore Barnier’s views about Africa needing its own CAP. Such madness ought to be considered an extreme outlier position, at the opposite end of the ideological spectrum from the UK Government’s tactically naive vision paper of December 2005.
More interesting is Barnier’s idea that EU food quality and safety standards will be “the new policy of European preference”. Remember, President Sarkozy has spoken in vague terms in favour of Community Preference, aka ‘Fortress Europe’. Maybe now we are beginning to see the details. This approach has long been suspected as a way of squaring the circle of making EU agriculture globally competitive while keeping standards high. Simply use high EU standards as a way of keeping out competition while continuing to export high value European wine, spirits, processed meats and cheeses. The concept is particularly relevant for the EU’s trading partners. More advanced developing countries like Thailand and Brazil generally have few problems meeting new EU standards. Indeed many of the livestock operations in these countries are actually run by European companies, or with significant EU investment. However, earlier this year we did see the Irish farm lobby successfully lobby for a ban on Brazilian beef on the grounds that Brazil doesn’t meet EU traceability rules (nothing to do with Brazil being Ireland’s main competitor in the bottom end of the beef market, naturally). Where this ‘new policy of European preference’ will really hurt is in the least developed countries, especially in Africa. These countries lack the infrastructure and systems to comply with every last letter of EU traceability and food production rules, although a substantial boost in investment might help them catch up. Everything But Arms has removed the tariffs, but have they been replaced by a new wall of non-tariff barriers?
The non-tariff barrier approach is not entirely new. Long-running disputes over poultry and beef with the US are motivated – at least in part – by a desire to protect domestic producers from competition. The EU has long sought to get its Geographic Indications accepted into the WTO as a form of intellectual property with worldwide legal protection. With tariffs set to tumble if the DDA is concluded, there are no doubt those who feel that ‘Community Preference 2.0’ is the way forward.
Meantime, a report in the FT last week hints that Germany and France are looking towards making a long-term deal to protect the CAP budget beyond 2013. At a meeting in Brussels last week, a senior official from the German agriculture ministry treated the audience to a spirited defense of the CAP. The official argued that the CAP was doing a great job and that it would be rash to tamper with it. The Schroder-Chirac deal on CAP spending killed off any hope of substantial reform of the CAP before 2013. That deal was ostensibly made to allow for EU enlargement (and in the process swindle the ten new member states by giving them very small shares of CAP direct payments). Now the suspicion is, as one seasoned Brussels hand aptly puts it,
“France will help Germany in killing higher EU emission standards for cars and Germany will help France kill CAP reform. Peace and harmony across the continent.”
These kinds of back-room deals are always murky, and this one appears especially unsavory. Franco-German stitch-ups might have been the way things worked in the EU of 10 or 15. Today’s EU of 27 should not stand for them.
There is no doubt that the ‘food crisis’ is putting wind into the sails of those who would like return the CAP to its productionist roots: paying farmers public money to produce more food. Environmentalists, arguably the single most powerful group within the very loose CAP reform coalition of the past few years, are suddenly on the back foot. An early example is the abandonment of compulsory set-aside without any real flanking policies to secure the environmental benefits that are a by-product of leaving land fallow. Development advocates, another important group within the CAP reform coalition, are in a pickle because their longstanding critique of EU export dumping no longer make so much sense when the problem is suddenly that world food prices are too high, not that they are too low.
The solution to what is best described as a ‘food affordability crisis’ is not more subsidy-driven intensification of European agriculture. With water supplies and ecosystems critical to agriculture (e.g. pollinating insects) already under strain, the CAP should prioritise the long-term conservation of European natural resources. As Ariel Brunner of BirdLife International argues, it’s not our ability to produce enough food now that’s the problem, it’s our ability to produce enough food in several decades time, with climate change and population growth putting ever greater strain on the land. In the context of the current crisis, the very short term the solution is a big increase in funding for the World Food Programme. The heart of the problem is that poorer developing countries have agricultural systems that have barely made it into the 19th century, let alone the 21st century. And farm protectionism practiced by the EU, the US and Japan shares a part of the responsibility for this. Raising farm productivity in sub-Saharan Africa must be the priority, but this takes time. What is needed is investment in irrigation, transportation and credit to allow the purchase of the basics: seeds, machines and fertilizers. Reducing barriers to trade between developing countries is also important, although many countries suffering the pinch of high food prices are dropping their tariffs like hot potatoes. If this is what Barnier means when he talks about a CAP for Africa, then all well and good, but I suspect he is really advocating a disastrous policy aim of regional self-sufficiency and new barriers to trade.
A sustained period of higher food prices will provide a market incentive for this investment. Public policy can help prime the pump, and ensure that the transition from a low price/low productivity/low output agriculture to a low price/high productivity/high output agriculture is made as rapidly as possible, with as little time spent in the transitional high price/low productivity/low output phase. In the meantime, any subsidies aimed at averting hunger should focus on increasing the buying power of the urban and landless poor and not suppressing prices by legislation or export controls.
To come back to the French government’s question, the world can feed itself, but we need to work together and keep trading together.
The French position, something close to “because world prices are higher we need to give more protection and subsidies” is certainly embarassing. However, I don’t agree with J. Thurston on non-tariff barriers. I don’t think that you can treat the EU regulations as simple protectionism as he does and dismiss the whole issue.
The present situation is such that there are many genuine distorsions of competition between the EU and the rest of the world. Of course, this not always other people’s fault. For example, we impose very costly standards that do not always make a lot of sense. Last fall, our pig and poultry producers had to import non GM maize at a price that was 30% higher than the regular market price just because of unsubstantiated fears from some consumers. More and more animal welfare regulations are also generating a serious cost handicap for EU producers (I seldom torture cats for fun, but eating raw oysters and flyfishing are now targeted by animal welfare groups, suggesting that the whole thing could really go out of control if it has not done so yet).
We also prevent our processors from washing chickens in a mixture of blood and manure and then dunk them into chlorine as do US processors. We prevent dairy farmers from using somatotropin and beef producers from using growth activators that US producers are using. Some of these regulations make sense (at least for those of us who do not like the combined taste of manure and chlorine and who are not particularly fond of hairy hormone-fed sex partners). But even if they don’t, the distortion of competition is there.
In many cases the EU regulations are not imposed to protect local producers. This is certainly the case of GMOs, and the case of somatotropin rBGH (by the way we allow imports of dairy products even though they are produced with this hormone that increases yields by 15%, not really an abusive NTB).
If we consider that, substantiated or not, these regulations are imposed by EU consumers and citizens, and that there is no reason to accept a race to the bottom on standards, something must be done to level the playing field. We have two solutions. Either we give compensation to farmers for imposing stricter rules on them. Or we make foreign products more expensive on our own territory (this does not solve the issue of competition on foreign markets by the way). I do believe that the first solution is preferable, and that EU direct payments should be taylored accordingly rather than being handed as they are now. But still, you should not consider that the issue is irrelevant and that border measures like those on hormone treated beef and poultry are only protectionism in disguise.
There are enough bad ideas floatting around in France, please try to target the stupidest ones first.
@ J. Christophe Bureau:
I take your point that many of the EU’s non-tariff barriers have their origins in consumer pressure and are not producer-led. The questions you ask re compensation/exclusion could also be asked of other sectors. Will we ban textile imports from countries that still allow child labour or do not recognise trade unions? Or do not pay the EU minimum wage? Will we exclude raw materials and chemicals from countries that do not observe EU standards on the environment. Or should we be compensating EU textile producers and chemicals companies because of the extra costs they face operating in the EU.
What about the extra benefits that companies operating in the EU get? Proximity to the world’s single largest market, a pool of highly educated workers, a state that pays for healthcare and social protections? Should these figure on the negative side of the ledger?
The mythical ‘level playing field’ is exactly that, a myth. Competition will always be ‘unfair’ depending on how you look at it.
The motivation for the recent (and now lifted) ban on Brazilian beef came entirely from the EU beef producers, especially those in Ireland. They saw an opportunity to extract some rents and grabbed it. I don’t really blame them. But it is wise to be aware of the potential for a rising tide of this kind of behaviour, especially when we see powerful member states like France talking about a new era of community preference.
The solution that you don’t mention is traceability, transparency and labeling – i.e. solving the market failure of differing standards by providing consumers with the information they need with a security that this information can be relied upon. This seems to me a good way to proceed, and would certainly be cheaper than handing out tax-funded compensation every time an EU producer feels the pinch of competition, or risking an escalation of trade conflicts by taking action outside the provisions that exist for consumer safety at the WTO.
Sorry for being cynical, but I know the trick of invoking labelling as a elegant way to shelve difficult questions and pretend they do not exist (I worked at the OECD Secretariat you know). Traceability and labelling is nice for small niche markets. But it is a fantasy in a general case, given the share of processed food, collective restauration, and the fact that it becomes rapidly meanigless to label everything on everything. Do you seriously think that when a schoolboy eats some chicken nuggets in a cafeteria he will pay attention to 5 or 10 different labels ? (“fed with feedstuffs not containing GMOs and therefore paid 30% more”, “Not sterilized with in chlorine”, “not irradiated” , “not raised in cages less than 1 square meter”, “not fed with meatmeal”, “not given antibiotics that are illegal in the EU”, “transported to the slaughterhouse in a nice truck with music” etc.). A lot of stickers….
By the way, not all your examples of meaningless measures are that ridiculous: it does make sense to tax imports from countries that do not implement carbon taxes, for example. Just because if you don’t do it, you encourage steel and cement industries to move there and emit CO2, which, in a case of a global pollution like CO2 that can be anywhere in the world in 48 hours, means that you simply ruin your own efforts for tackling the issue (and you make a fool of yourself). If it was proven that Brazilian beef production was detrimental to a common good such as biodiversity in rainforests, I would not fight a ban on behalf of trade theorems. Even if it helped some Irish farmers for whom I have no particular sympathy for, and whose land must be worth 100 times my annual salary.
This being said, I never meant that all regulations should yield compensating subsidies. But rather than handing out the vast sums of money that we give away, if we decided to keep giving some of them after 2013, it would make some sense to use them to compensate farmers for the regulations that EU citizens want. Especially the crazy ones.
I think the best example of a labelling/traceability scheme that really has some meaning at either end of the supply chain is the organic standard. In the UK we also have the RSPB’s Freedom Foods welfare standards, which is widely recognised. In France you have Label Rouge for poultry, which has some meaning in the marketplace. These things do start small but the can grow rather fast and the standards they introduce will often permeate into the rest of the sector.
I agree with your final point that ‘we are where we are’ and that there is a big budget for agricultural support in the EU and that this has its own inertia, so we ought to be thinking in terms of how to spend it better, rather than handing it out more or less at random, which is a reasonably accurate description of the current policy.
My point about labelling is not that the government should take the lead, but that when there are questions that are not issues of food safety per se, i.e. issues that are more to do with practices which we might find somehow disgusting or distasteful (e.g. feeding remains of pigs to chickens, as the EU is currently proposing) the best solution may well a market based solution of product differentiation. I believe that the right balance does need to be struck between freedom of choice and the ‘nanny state’ which legislates all the time about what people may and may not eat. In the UK most of the main supermarkets are proud to proclaim their own brand products as ‘GMO free’. They see this as something consumers want, and something that can help their company distinguish itself in the market. Consumer opposition mediated through supermarket supply chains is likely to be the strongest barrier to GM in Europe. Most European farmers would love to use GM if they could get away with it.