I am currently in Brazil attending the 28th International Conference of Agricultural Economists. Yesterday, there was a well-attended session on “The European Union’s Common Agricultural Policy after 2013: what is happening, what is likely to happen, and why?” which was designed to provide an opportunity to explain and interpret the CAP reform debate to those attending the conference from other parts of the world. There were three presentations in the session which I link to in this post.
Giovanni Anania (University of Calabria)’s presentation first summarises the Commission’s original Oct 2011 proposals, explains the decision-making process and describes what has happened so far in the negotiations. He then makes an informed speculation on the likely outcome, emphasising the forces pushing for more flexibility in implementing the Commission proposals. He hypothesises that there may be an inverse relationship between the ultimate financial envelope allocated to the CAP and the extent of flexibilities that are ultimately agreed. He concludes that the new CAP is likely to be less innovative than the proposal by the Commission with questionable environmental impact and it could end up being more distorting than the current one.
Jean-Christophe Bureau (AgroParisTech)’s presentation highlighted many points where it is possible to be critical of the Commission’s proposals, but he argued that, taking account of the political economy surrounding the CAP at this point in time, it is actually quite a good set of recommendations. Comparing the Commission’s proposals with what is being proposed in the US farm policy debate, he argued that the overlooked positive aspect of the Commission’s proposal is that it could have been much worse. His conclusion is that economists should try to help clarify and improve the proposal rather than dismiss it.
In my own presentation, I examine the trade and food security impacts of the Commission’s proposals for countries outside the EU. My conclusion is that the overall impacts on the EU’s net trade position and thus on world prices will be very limited. This is because the proposals mainly involve reshuffling and some very limited targeting of the direct payments, and no strong production effects are expected from this. For different reasons, the market management measures proposed (mainly elimination of milk and sugar quotas) are also expected to have very limited impacts (although lower sugar prices will further erode the preferential rents of ACP sugar exporters, which explains why they have signed up with the EU sugar industry to advocate delaying quota elimination until 2020).
Overall, this set of presentations, while differing in their emphases and even assessment of the proposals, provide a useful summary of where we are in the CAP debate at this point in time.
This post was written by Alan Matthews.
Photo credit: European Commission