Emphasis on international competition as a justification for income support

I don’t see how our agriculture can, at the same time, be competitive in the international market and have higher level of standards than farmers in other parts of the world.

But if we don’t have this minimum support for income and compensatory payments, the risk is that a lot of farmers who can be competitive without the crosscompliance rules that we have in Europe but not in other parts of the world-who in normal situations can be competitive-will not be competitive.

Active farmers

Ciolos showed strong commitment to the concept of ‘active farmers’. He stated one minimum requirement clearly. When asked whether he would “expect some agricultural goods to be produced for someone to be defined as an active farmer?”, Mr. Ciolos responded ‘Yes. If not, we cannot talk about agriculture or the farmer.’ But otherwise, he provided little substance on how a practical definition could look like, and he admitted:

We can’t expect to have a common definition at European level. This is why now the objective of the Commission is to come with, let’s say, a negative definition-who is not an active farmer-and then the Member States will define who is an active farmer, taking into account the specific situation at national level.

Cap on direct income support

Mr. Ciolos supported the idea of a cap. But when asked whether there is ‘a danger that the larger farm holdings will simpler reorganise themselves into smaller holdings to get around any cap’, he did not offer much clarification:

Especially with big farms, I don’t think their objective is only to have a big amount of payments from public money. I don’t think that we will have a very important phenomenon of the splitting or separation of farms only to have payments. I think a farmer uses other logic when he decides on the structure of production and farms, and is thinking not only about having a level of direct payments.

Small farms

The idea is not to increase direct payments for small farms, but to make them simpler, and then to propose a lot of instruments-like training, investment and organisation of production groups-in order to integrate the small farms more into the market than at present.

We propose to generalise decoupled payments in all Europe and to maintain coupled payments only in some specific regions, for some specific products.

Financial allocation within the first pillar

Q: ‘How do you envisage money being shared between the two main elements of the new direct payments-that is, basic income support and the greening component?’

We are analysing several scenarios, but I think we can go up to maybe one third of the direct payments being linked to the production and delivery of public goods of greening.

Q: ‘Are you considering basing the payment for greening activities in Pillar 1 on objective criteria, such as the additional cost of delivery or the environmental benefit?’

I can see that this part of the greening payments is exactly the level of the production costs for a farm that decides to integrate this measure. The objective, in fact, for us is to use this part of the payments to incentivise a farmer to do more, not only to have a payment in exchange.

Further remarks

The oral evidence shows nicely the broadly practiced art of claiming, at the same time, that the CAP creates no distortions in the international economy (‘I don’t think that we can now say that we influence the level of prices in countries in the south.’) and that similar levels of payment are needed within the EU to avoid distortions (‘Here we can have a distortion in the market if categories of farms have different treatment.’).

Mr. Ciolos denied again that there is any conflict between supporting the delivery of public goods and the standard of living of farmers.

Of course, I don’t think there’s a contradiction between these two objectives, but it will depend on the resources that we have for the Common Agricultural Policy.

I don’t think that there is a tension in the CAP between ensuring good standards of living of farmers and the delivery of public goods if the first Pillar of direct payment is reformed

He furthermore repeated the idea that agriculture is more affected by governmental regulation than other sectors:

It’s the only sector, I think, in Europe that has to play an economic role and plays a part in the market but, at the same time, has to integrate a lot of rules imposed by society. The automotive industry, the textile industry and other industries do not integrate a lot of expectations from people in the way that agriculture does.

I am sure that a list of the costs of regulatory compliance in the automotive industry with all its safety requirements and environmental standards would be quite long. Also, remember the compliance challenge for the chemical industry under REACH. And all the emission standards that affect industrial production in the EU (and which do not apply to imports). And all the legislation on work safety, healthy working conditions, employee rights and job security that affect large companies much more than small farms.

A last point:

I also remind you that the discussion in Doha was not blocked because of the resistance of the European Union, but because of the resistance of the other partners

It’s true: the recent stalemates have not been directly provoked by the CAP. But weak and conservative signals on agriculture from the EU at the beginning of the Doha-Round did quite a bit in bogging negotiations down. With a clear and early commitment from the EU that substantial agricultural liberalization is on the negotiating table, the Doha negotiations might have take a different path.

You can download the transcript here. Please note: The transcript is not yet an approved formal record of these proceedings. Any public use of, or reference to, the contents should make clear that neither members nor witnesses have had the opportunity to correct the record.

But how independent are the evaluators? How strong is their mandate? How useful are the findings? In a recent article in EuroChoices, Angela Bergschmidt, an evaluator from the Federal Research Institute in charge of agriculture in Germany, offers a bleak account:

[It is] a useless evaluation; costly, often low in scientific quality, unread and unnoticed by policymakers and the wider public.

Evaluation results have apparently not been used to implement changes in the new RDP either at EU level or with respect to adoption by the Commission of the RDPs of Member States.

my experience in Germany is that neither the Federal Ministry for Food, Agriculture and Consumer Protection nor the Ministries of the Federal States are convinced of the evaluation concept. The Administration is accustomed to implementing measures without performance review, adapting them mainly for fiscal or political reasons. As a consequence, the results of an evaluation are used as a line of reasoning if they fit into actual strategies.

the main concern of individual managing authorities is to fulfil formal evaluation requirements

the evaluation unit remains understaffed and is unable to carry out quality control procedures for the large number of RDP evaluations

A seminar on May 19 will take a closer look at ‘Rural Development Policy in the EU – Lessons from the Past and Options for the Future’. The seminar focuses on the evaluation process for rural development programs and how this can inform and improve rural development policy in the EU. One objective of the conference is to discuss how better evidence on the key questions of policy design can be gathered. This is a crucial challenge ahead of the fundamental post-2013 CAP reform. In addition, the researchers have summarized the evidence that is available from existing evaluation reports, drawing lessons for the future direction of policy.

A smarter CAP debate

The seminar is part of a new series of seminars on CAP reform.

The EU needs a smart CAP debate. The CAP is the EU’s most expensive policy, costing € 57 billion annually. The success of the EU 2020 strategy and the next long-term EU budget cycle depends on CAP reform. Furthermore, the CAP is a key lever for promoting biodiversity and fighting climate change. A policy debate of the highest standards is needed to prepare the ground for making the right decisions on CAP reform.

But the debate about the future of the CAP is often poorly informed and distorted. Emotions take centerstage: fears over food insecurity, compassion for small-scale farmers and attachment to the rural way of life can hinder evidence-based analysis. The debate is also driven by special interests, with farmers protesting in the streets and extensive lobbying behind closed doors. Narrowly-conceived national interests in maximizing the receipt of EU subsidies also bias perspectives and arguments.

ECIPE and reformthecap.eu are organizing a series of seminars to help non-experts determine the facts. More and more stakeholders are starting to take an interest in the CAP. They feel that something is wrong with the policy but find it hard to challenge the justifications provided by insiders who defend the status quo. The seminars will provide an overview of what research has to say on critical issues in reforming the CAP. The aim is to inform all stakeholders through easily accessible, high-quality presentations by recognized experts: providing the best science at your fingertips.

The draft report suggests 5 ‘key building blocks’: area-based direct income support, climate change mitigation payments, payments to areas with natural handicaps, payments for biodiversity and environmental protection, and green growth subsidies with a focus on renewable energy. The first two payments are to be fully financed by the EU, and the other three co-financed by the member states.

I will not go into the reports’ food-security and fair-income arguments (though they thoroughly deserve criticism) but will limit myself to commenting on some peculiar lines of reasoning that are considered to prop up the case for a strong CAP.

whereas the share of CAP expenditure in the EU budget has steadily decreased from nearly 75% in 1985 to a projected 39.3% in 2013; whereas this represents less than 0.45% of the EU’s GDP; whereas the decline in budgetary expenditure on market measures is even more significant – from 74% of all CAP expenditure in 1992 to less than 10% at present;

“Measured against the EU budget and GDP, we are wasting less money today than in the past.” This is correct as an empirical assertion about past policy changes. It is not an argument that could justify the expenditure of a single euro on the CAP. Maybe 0.0% is the right spending target. It could theoretically also be optimal to spend 1.0% of GDP on agriculture through the CAP. Whatever the right solution is, reference to past spending levels is not acceptable as an argument in the debate about desirable future policy choices.

whereas the EU continues to experience a widening trade deficit in agricultural products

and

insists that EU agriculture must remain competitive against fierce competition from well-subsidised trade partners; therefore believes that competitiveness should still be a fundamental objective of the CAP post-2013 to ensure that the EU has the raw materials to produce high-value European food products and they continue to win a greater share of the world market

Where is the problem with a trade deficit in agriculture? And why should the EU gain shares in world agricultural markets? The basic assumption of economists is that each country benefits if it specializes according to its comparative advantage. In those developing countries where the most competitive sector happens to be agriculture, governments are often skeptic about excessive specialization and prefer a more complex economic argument based on the dynamic gains of investing in manufacturing and service sectors that allow their country to climb up the value chain in the future. But the EU’s competitive advantage is much more concentrated in high-value-added sectors (high-tech, professional services, luxury goods, research and innovation). In other words: we are lucky. It makes no sense to work against this specialization and export more agricultural products. Since trade accounts roughly balance in the long-term, more agricultural exports would automatically imply fewer exports of these high-value-added products and services in which the EU enjoys a comparative advantage.

recalls, therefore, that unless farming activity is preserved across the EU, no provision of public goods will be possible;

and

insists that the cost of support through a strong CAP is nothing compared to the costs of no action and its negative unintended consequences;

The death of European agriculture is again at the doorstep. The day the CAP is abolished, there is no country to walk in, no food to eat, no water to drink, no air to breathe. These wild beliefs can be divided into two ‘analytical’ steps: first, that agriculture would actually collapse, and second, that this would create overwhelming problems. In reality, agricultural production will most likely continue to grow – with or without policy support (see DG Agri study: Don’t be afraid of liberalization and Crystal ball gazing: Scenar II study on the effects of CAP reform). If agricultural production were to decline dramatically, this would cause some problems – but it would also create great benefits, notably in terms of water quality and climate change (though this depends on second-order effects abroad). But CAP supporters rarely say “We believe that without the CAP, there would be a slight decrease in production, and this would have negative effects on balance.” They almost inevitably turn to the dramatic – “unless farming activity is preserved across the EU, no provision of public goods will be possible” – a situation that would be so horrible that the €55 billion we are paying every year must be deemed nothing short of “nothing”.

I have criticized three points: the reference to past spending as a justification for future spending; the blindly mercatintilist appetite for world market shares; and the all-or-nothing drama when it comes to the survival of European agriculture and the public goods that depend on it. Together, they are examples of a fundamental problem in EU agricultural policy-making: the CAP debate is taking place in a bubble. Agricultural ministries, DG Agri, the EP Committee on Agriculture, farmers, the landowners and rural interests reinforce each other in the CAP-insider community. Radically critical voices are sidelined. The CAP is made within a bubble by people who want to keep the CAP as it stands or to reform it as much as is necessary to preserve it. Lines of arguments such as those I have picked out above can prosper in such an environment. Strikingly unsound statements, which would, in other policy domains, be dismissed with laughter as intellectually deficient, are the respectable mainstream in agriculture.

The starting point of the draft already chills expectations: “The Common Agricultural Policy has been largely successful in fulfilling the objectives it was set out to accomplish so far.”

Three groups of objectives are identified. 1) Supporting economic needs – including an EU agriculture competitive on world markets, EU food security in an unstable world context, and the valuable contribution EU agriculture and the downstream agri-food sector make to EU growth and employment.

2) Responding to social concerns – to enhance farmers’ incomes that are lower than the EU average in most member States and that decreased in 2009; to support the sustainable, dynamic and balanced socio-economic development of European rural communities; to attract younger generations to rural areas and activities; and to tackle rural unemployment.

3) Delivering benefits in terms of public goods – with a focus on the positive externalities of agriculture, justifying ‘a strong and well-supported CAP’.

From these objectives, the draft moves to an outline of future CAP measures and structures. The basic tenet is: keep things roughly as they are. Maintain some market measures as a safety net, continue with the Single Farm and the Less-Favored Area Payments, and uphold flexible spending entitlements that are fully community-financed (roughly corresponding to Art. 68). The current budget should also be kept, and co-financing limited to the sort of measures that currently fall under co-financing.

At some point, the report asks for the “maximisation of the delivery of environmental goods”. But this is misleading rhetoric. You can spend any Euro only once. If you want to serve many objectives and finance many measures that have nothing to be with environmental goods, you are leaving little for the environment.

For this draft, any argument is good enough if it results in payments to farmers. In the category “Supporting economic needs”, one objective is “corrections to market failures such as exposure to natural disasters, high risk and price volatility, lack of demand elasticity, farmers’ position as ‘price takers’ in the food chain, etc.” Since when are natural disasters a market failure? Or high risks, or a lack of demand elasticity? These are market conditions that determine how profitable a given sector is and who should be in this sector (according to how successful individual economic actors are in coping with these conditions). They can, in particular circumstances, give rise to market failures, and these market failures can, again in particular circumstances, justify efficient state action (which is unlikely to take the form of round-about income support or market intervention to support prices). But considering all these phenomena enumerated above as ‘market failures’ that somehow warrant the Single Farm Payment or price intervention is untenable.

What is most upsetting is that this draft comes from George Lyon, who happens to be a Liberal Democrat from the UK. These are the best reform credentials one could wish for. Once MEPs from other party groups and member states have introduced their amendments, the outcome will likely be worse.

But why would a Liberal Democrat from the UK write such a draft? Have a look at his homepage. Mr. Lyon was brought up in a seventh-generation tenant-farming family, occupied different positions within the National Farmers’ Union (NFU) starting in 1989, and had a stint as President of NFU Scotland in 1998-1999. He is hardly a special case. ComAgri MEPs frequently have close farming ties, which helps to explain why they overwhelmingly support a CAP that serves farmers first. If the EP wants to be worthy of its new powers in agriculture, it must intervene early and forcefully in the work of ComAgri.

The hearing will be webcast live, between 9am and noon, Brussels time.

The basics

1. Should maximising food production in Europe be a central objective of the CAP?

2. How would you respond to those who say it is hard to make the case for the CAP as a policy to support farm incomes when there are six and seven figure subsidies being paid every year to the likes of the Queen of England and Prince Albert of Monaco?

3. What is your opinion on the variation in rates of direct payments between new member states and the EU-15? Is any action is required to to address the issue?

4. Do production controls have a role in the future of the CAP?

5. Are you in favour of strengthening or relaxing the cross compliance conditions for those receiving direct payments?

6. Has the CAP gone too far down the road of decoupling subsidies from production – or not far enough?

7. What is your opinion of the US’s programme of counter-cyclical farm subsidies? Could such a system of direct payments that vary according to market prices be appropriate for the EU?

Farm economy

8. In terms of farm structures and farm sizes, where is European farming headed? What farm structures should be encouraged in the New Member States?

9. Do you agree that direct payments increase the market price of land and therefore make it harder for young farmers to start new farm businesses? What should be done?

10. What lessons should be drawn from the crisis in the dairy industry in 2009?

International trade

11. What is needed to reach an agreement on the trade negotiations in the Doha Development Agenda?

12. The EU maintains high tariffs on certain key agricultural commodities and products even though this makes food more expensive for European shoppers. Will you seek to reduce tariff levels?

13. Do you pledge the end of all EU export subsidies by 2013?

Environment and rural development

14. There is currently a lot of talk about public goods. What, in your opinion, are the public good that are most relevant in the context of agricultural policy?

15. Is it your opinion that some types of farming are better for the environment than others that, in some cases, can be very damaging to the environment. How should the CAP take account of these differences?

16. Should agri-environment support be restricted to farmers or should anyone who manages land and can potentially provide environmental services be eligible for aid?

17. Do you consider that the proper place for European rural economic development policy is as part of European regional policy, not as part of the CAP?

18. Do you agree that agriculture should be included in any European plans for reducing greenhouse gas emissions and not given special exemptions?

19. Should the CAP have a new ‘third pillar’ to help Europe mitigate and adapt to climate change? If so, what kind of policy measures would it contain?

Reforming the CAP

20. What will be your main objectives and guiding principles for the CAP post 2013?

21. Are you in favour of retaining the two pillar structure of the CAP and if so, what advantages do you see?

22. Would you favour the further use of modulation to shift funds from Pillar 1 to Pillar 2 of the CAP?

23. Is there a linkage between the CAP and the issue of national budgetary imbalances and various corrections and rebates in the EU budget?

24. How do you regard the connection between decisions on the shape of the CAP post-2013 and decisions on the EU financial perspectives for 2013-2020?

25. In future, should the first pillar of CAP, like the second pillar, and much of the rest of the EU budget, be nationally co-financed?

I tend to feel that Barroso was left with no other option, as no one was willing to put forward a good candidate – and that he was the only suitable candidate from among the nominees.

40-year-old Ciolos has enjoyed a meteoric political ascent (just ten years ago was employed as an intern at DG Agriculture) but he still has to clear the hurdle of confirmation by the European Parliament. Roger says he’ll be an obvious target for a new Parliament looking to flex its muscles. He considers the arguments against Ciolos and the reasons why the EP Ag Committee (COMAGRI) may choose to support the appointment of a inexperienced Agriculture Commissioner who is far from a household name in European politics.

Arguments Against Ciolos
– Wrong nationality. Romania is too dependent on agriculture, and besides which Ciolos is too French – having lived & studied there, i.e. a Romanian with a French CV.
– lacks political experience. He was only Minister for 15 months, and has spent most of his relatively short career as a civil servant; When he was Minister EU payments to Romania (for pre-accession Rural Development schemes) were frozen because of maladministration;
- lacks political support within the EP. Although he previously insisted that he was “independent”, he has now been embraced by the right of centre European People’s Party, but it remains unclear how strong this support is.

Arguments for COMAGRI supporting Ciolos
– Lack of alternative – COMAGRI is pro-farmer, and the fear from blocking him is who might be offered as an alternative Commissioner. Certainly it would be no one as well-qualified & informed as Ciolos. Without any doubt, there is no other Romanian who would be acceptable for the post.
– Lack of political experience – With co-decision, it could be a massive advantage for the EP, and for the COMAGRI in particular, to have an inexperienced Commissioner. He is reasonably close to COMAGRI Chairman Paolo De Castro (former Italian Minister) from their time together as Ministers – and so De Castro may have a much stronger influence over him, than over a different Commissioner.

Read Roger’s analysis and profile in full.

Readers should be aware that we’re still figuring out how to get the website to correctly display the ‘s’ diacritic character in the Commissioner-delegate’s surname.

Expert knowledge of the CAP is seen as essential for a succesful Agriculture Commissioner. This is why the job has often gone to ex-Farms Ministers like Fischer Boel and her Austrian predecessor Franz Fischler. It is regarded as important that the Commissioner can out-gun the Council and the Parliament with his or her technical knowledge, particularly necessary to seal the deal in late-night summit negotiations. The battle for the future of the CAP is often fought in a guerilla warfare of jargon-laden detail and complexity.

The Parliament has already appointed Paolo De Castro as chair of its Agriculture Committee. He’s a former Italian Minister for Agriculture and was previously an agricultural economist. But with no member state putting forward a commission nominee with an agricultural background (with the possible exception of the fading French-backed candidacy of Mary Coughlan of the Republic of Ireland), it looks as if it will have to be a ‘fresh face’.

And the face that fits could well be that of the Latvian Andris Piebalgs. First of all, he’s from a small country (this is traditionally a requirement for the agriculture job). Second, he is from a ‘new member state’ – who justifiably consider they get a bad deal from the CAP – and this may be a conciliatory first move in the process of addressing their grievances. Latvia is the country that has the lowest average rates of direct payments per hectare, around 78 euros per hectare. Piebalgs is regarded as having done well in his current portfolio, despite having no background in the energy policy field. He was responsible for conducting Latvia’s EU accession negotiations and so is likely to retain a recollection of the basic outlines of the CAP.

In the absence of a nominee who comes with existing detailed knowledge of the CAP, Commission President José Manuel Barroso would be wise to go for someone who knows Brussels and who has a reputation as a quick study. As things stand, Piebalgs is the candidate that anyone else who wants the plum post of Agriculture Commissioner will have to beat.

The paper says that it is too early to see what the future reform of the CAP will look like, but argues that it should be driven by two objectives. ‘Firstly, it should resolutely pursue the modernisation of the CAP, concentrating spending where it most adds value. Second, it must stimulate a further significant reduction in the overall share of the EU budget devoted to agriculture, freeing up spending for new priorities.’

The paper argues that direct aids should be reduced and linked more strongly to the delivery of public goods. A Pillar 3 should be established dealing purely with climate change.

The full communication is expect to be published in November.

This does not mean that nothing happed in 2009. One of the most important CAP issues was certainly the enhanced transparency of subsidy recipients. This brought the CAP into the headlines and created plenty of bad press for export subsidies and the Single Farm Payment. However, the outrage did not translate into a search for alternative policies. Another issue that drew attention to the CAP was the situation on the milk market and the protests by milk farmers. To some extent, complaints by development NGOs and trading partners about the resumption of dairy subsidies also got into the media. From one point of view, all this has been god news for CAP reform, simply because almost anything that attracts attention is favorable for reform. Those who defend the status quo are aware of and ready to fight for their interests, much more than the majority of citizens that pay, in one way or another, the price for a wasteful CAP.

On the other hand, the developments may have lowered expectations for the CAP post-2013. That is, actually removing milk quotas (as decided in the Health Check), re-directing money from large to small farms (as attempted in the Health Check), and phasing out export subsidies (as announced in the Doha Round) could become benchmarks for success rather than self-evident minimum requirements of reform. Besides, the political pressure exercised by milk farmers may have discouraged politicians from advocating far-reaching CAP reform.

There were also some larger conferences in Brussels and the member states; inter-ministerial multi-stakeholder processes have begun to define national visions and positions; and cross-cutting reform coalitions are emerging. But I believe that the major significance of 2009 lies not in the debates we had this year but in the legacy of this year’s events for 2010 and beyond.

First, public debts have risen tremendously in most member states as governments saved failing businesses and stimulated the economy. These debt levels are incompatible with the Stability and Growth Pact, and they are unsustainable in the face of an aging population. Under these circumstances, it will become increasingly clear that the EU budget will not grow after 2013, so competition for funding will intensify. There is also a possible threat of cuts to the EU budget that may convince pro-Europeans to invest their political capital into more effective, and thus more legitimate and defensible EU spending. The stress on public finances will also make itself felt more indirectly. As governments will be forced to increase taxes and to curb spending on sensitive items, such as social security and health care, the political climate will be most hostile to wasteful subsidies. It will be awkward for governments to reduce unemployment benefits at home but to continue to lavish public money on landowners in the EU.

Second, I expect the climate debate to become more relevant for agriculture after a climate deal has hopefully been reached. At the moment, the debate focuses on the objectives that should be set (depending on the climate models) and the political feasibility of a deal (depending on the US, China, India …). Once we have an agreement with clear targets in our hands, the question will be: how can the EU live up to its commitments? And then we start thinking about the fact that agriculture is responsible for about 10% of EU greenhouse emissions; that this share is likely to increase as cars become more energy efficient, while ruminant digestion is hard to improve; and that the CAP does next to nothing to make agriculture more climate-friendly.

Third, the ratification of the Lisbon Treaty will give the European Parliament co-decision power in agriculture. In the past, the EP could give its opinion on the CAP but its consent was not needed to enact CAP legislation. Therefore, the Committee on Agriculture and Rural Development was unimportant and primarily attracted MEPs who were close to farm interests. In the future, other MEPs – notably members of the committees on the budget, the environment, development, and industry, research and energy – can be expected to push for CAP reform. More generally, the EP as a whole will have an interest to ensure that its new powers in agriculture are exercised responsibly and are not subjected to narrow national interests or dictated by farm lobbies.

Fourth, elections have been held in October 2009 in Germany, which is not only the biggest member state but also a swing state when it comes to CAP reform. In the Health Check negotiations, Germany strongly defended conservative positions, shielding milk farmers and blocking progressive modulation. This is everything but a natural position dictated by national interests. After all, Germany is the major net contributor to the EU budget, it is strongly dependent on a liberal world trading system that is constantly undermined by agricultural protectionism, and the deep-rooted ideals of a social market economy run counter to the current CAP. Now, the elections have replaced the uninspiring coalition between conservatives and social democrats with a clear conservative-liberal majority. This outcome is a mandate for bold reform. Angela Merkel had already propagated profound changes in the 2005 campaign. Prodded by her liberal coalition partners, she may finally fulfill the promises which got her the job. It is also noteworthy that the CSU, the independent Bavarian branch of the conservatives that traditionally caters to farm interests, has scored its worst outcome in its history. This weakens their ability to stymie CAP reform.

So in 2009 the long-term CAP debate was less forceful than I would have hoped, but this year’s developments bode well for 2010.

How do you interpret, from a CAP perspective, the year that has lapsed since the big budget conference, and its implications for CAP reform?