It’s customary that on the eve of a reform of the Common Agricultural Policy, Chris Haskins (Baron Haskins of Skidby, an appointed member of the House of Lords) sets out his case for radical change.
In the 2011 edition, Haskins argues for a cut in the CAP budget and a redistribution from farmers in western Europe to farmers in the east. With an outlook of increasing commodity prices, the CAP should focus less on subsidising farmers and more on providing help declining rural areas, particularly in eastern Europe, following the model of EU structural and cohesion policy.
A former Chairman of Northern Foods, one of the UK’s biggest processed food companies, Haskins joins the growing chorus of those rejecting the notion that preserving the CAP is necessary for European food security:
“The main economic justification for an EU common agricultural policy is that, consistent with the rules of the single market, it offers all EU citizens secure and adequate supplies of affordable food. So, putting the case the other way round, would supplies of food be at risk if farmers did not receive financial support from the taxpayer? If such action was taken precipitously and unilaterally (i.e. without comparable action by other large food producing countries especially in North America) some areas of European agriculture would contract in the short term, especially dairy and beef farming. But imports would fill any gap in the market without much difficulty. If there were a problem of supply, prices would rise and it would entice European farmers back into production”
“There is no food security problem in the EU, and nor would there be if subsidies were phased out. Furthermore, if support for farmers was run down in an orderly way and in conjunction with the United States, it is arguable that the industry’s income would not be seriously damaged. Indeed, European agriculture might even benefit. Without the cushion of subsidies and protectionist barriers, farmers would have an incentive to tackle the extensive inefficiencies of their industry – too many small unproductive farms, inadequate investment because of a lack of collateral, and insufficient co-operation in reducing costs and strengthening market clout. The most inefficient farmers would probably go out of business (and should receive one-off compensation if need be). But the better farmers could further expand with all the benefits of scale – more capacity to invest, increased efficiency, more resilience when times are tough. Good small farmers would also survive by continuing to diversify and develop alternative sources of income.”
He admits, however, that abolition of subsidies is politically unfeasible. So an end date should be set for the single farm payment of 2023 and in the mean time, attention should be focussed on making the CAP less wasteful and better targeted at genuine policy objectives.
Himself the owner of a large farm in Yorkshire, Haskins proposes a novel kind of cap on subsidy entitlements for large farms. He says that farms should only be subsidised up to their first 1000 hectares.
He has little to say about the environment, or the ‘public money for public goods’ arguments made by the likes of the RSBP and the European Landowners Organisation. He does say more research is needed into the effect of agriculture on climate change, and vice versa. He also warns that “farmers must expect further regulation to curb excessive use of pesticides and fertilisers”.
The paper is published by the Centre for European Reform and can be read in full, here (PDF).