Biofuels come to rescue of EU sugar market in medium-term

DG Agri published its annual Prospects for Agricultural Markets and Income in the EU for the period 2007 through 2014 at the end of July. In this post I discuss the Commission’s latest view on the outlook for the EU sugar market. The EU’s sugar market reform agreed in November 2005 has been less than a thundering success in making progress towards its objective of reducing domestic production by 6 mio tonnes of white sugar annually. White sugar stocks remain high, and success in maintaining market balance through 2014 will depend on the quantity of imports realised under the EBA (Everything But Arms) scheme and the future take up of restructuring aid.… Read the rest

Set-aside: ensuring the environmental benefits

Ariel Brunner in a recent post lamented the fact that the EU has proposed to set the rate of compulsory set-aside to 0% for the 2008 harvest without putting in place alternative measures to secure the environmental benefits which set-aside land provides. The reason why the decision only concerns autumn 2007 and spring 2008 sowings is that a decision to eliminate set-aside can only be done in the context of a global review of arable crops policy. This will be undertaken as part of the CAP Health Check, when the Commission has promised an analysis on how and by which means we can address the positive environmental side effects of set aside.… Read the rest

European Commission split over biofuels

The European Commission is experiencing a bitter three-way split over biofuels policy, with no real sign of who will prevail. Chief among the biofuels boosters is DG Energy & Transport, which sees a rapid expansion of biofuel production and consumption as a core part of meeting high-level commitments to green energy and reducing dependency on fossil fuel imports from unstable regions like the Middle East or unreliable countries like Russia. DG Energy is in a bitter disagreement with DG Environment on the question of whether biofuels are part of the solution to climate change or part of the problem.… Read the rest

Are biofuels to blame for agflation?

The UK’s consumer prices index showed annual food price inflation of 6 per cent in April, the highest level in almost six years and well ahead of overall inflation of 2.8 per cent. In the US, prices have risen by 6.7 per cent, seasonally adjusted, since the beginning of the year, compared to 2.1 per cent for all of 2006. There are some proximate factors driving food prices. Florida promises the smallest orange crop in 17 years. Swine fever in China has pushed up local pork prices. Coffee prices have been pushed up by adverse weather affecting production in Vietnam and Brazil, the two largest producers.… Read the rest

Biofuels may push up beer prices

I was giving a presentation on the CAP during this week and I was asked if ending it would threaten food security in Europe. My reply was that no one was advocating dismantling the CAP overnight, so any adjustments would be phased in, but that the real challenge to food security came from the rapid expansion of growing crops as biofuels. A structural shift is going on in farm markets. An illustration of this is what is happening to the price of barley which is used for beer, whisky and animal feed. … Read the rest

Biofuels- a cold look at a hot issue

Biofuels have been all the rage lately among EU decision makers and Council seems bound on setting an ambitious new binding target for their use. As climate change has finally made it to the top of the political agenda biofuels are being hailed as the silver bullet. Everybody seems to agree they are also a key to the future of the CAP, but consensus ends there. Some see energy production as the perfect excuse to maintain and even restore production subsidies, while others see the opportunity to junk the subsidies as farmers will be making a living from selling (subsidised) biofuels.… Read the rest