The study looks at three scenarios. The reference case assumes a 20% (nominal) CAP budget reduction, reduced intervention stocks, full decoupling, a 30% direct payment reduction, a 105% increase for the second pillar, and a moderate Doha agreement (based on the Falconer paper, including the elimination of export subsidies). The conservative scenario presumes that the Health Check results are largely maintained, direct payments reduced by only 15% and second pillar payments raised by 45%. The liberal scenario is very liberal indeed, with a 55% CAP budget reduction, no intervention stocks, no direct payments, a 100% increase for the second pillar and no tariffs.

Among the most interesting results is that the volume of crop production will grow slowly in all scenarios (around 0.25% per year). Even the vulnerable livestock sector loses only 4% in the liberal scenario over the entire 2007-2020 period. Agricultural land use remains roughly unchanged in the reference and conservative scenarios, and declines by a mere 6% in the liberal scenario (due to the decline in the EU-15, driven mostly by the abolition of the Single Farm Payment).

More significant differences arise when it comes to land prices. These remain largely unchanged in the reference and conservative cases, but decrease by 30% in the liberal scenario. This is nothing the public need worry about – but it explains the heavy lobbying of landowners for the preservation of a ‘strong’ CAP.

The study also analyzes the situation of rural regions. It concludes that strong rurality is not synonymous with negative economic or demographic trends. 422 regions have a negative and 435 regions a positive demographic trend (with negative developments in the eastern Member States and at the southern and northern borders of the EU). The study also finds that ‘There is no evidence that the EU-27 regions with an above average agricultural employment are generally showing negative reactions. Hence, it shall be emphasised that rurality and agricultural vocation are not a sign of weak development perspectives.’ This further undermines the rural development approach of the CAP that spreads money to all rural regions, often in positive correlation with their agricultural production.

A last point to consider: surveys of life satisfaction and happiness give very similar results for urban and rural areas. Since ‘happiness’ is in vogue (and heads of states from Bhutan to France argue for happiness accounting to complement GDP figures), why worry if rural regions have a lower GDP per capita, so long as people there are equally satisfied?

Farming should protect Europe’s environmental resources not use them up

In 2009, farm incomes fell across the whole of the EU, not least in France. Dairy farms have been hardest hit with average prices down twenty per cent. This is despite the EU spending 55 billion euro on the common agricultural policy, one of whose aims is to ensure farmers a fair standard of living.

Not long ago the lists of who gets what from farm subsidies were considered ‘state secrets’. No wonder. They reveal that far from supporting small family farms, as the public might suppose, the CAP is lining the pockets of Europe’s biggest landowners and agri-businesses. The data shows that across Europe, 85 per cent of aid goes to the top 17 per cent of recipients.

This is because under the twisted logic of the CAP, the biggest farms with the best land get the most public assistance. Besides helping the rich get richer and big farms to buy out their smaller neighbours, subsidies for land ownership and production rights creates a kind of closed shop. Young farmers must buy their way in and are saddled with heavy debts.

Modern agriculture has brought an abundance of food but it has come at a price that goes beyond the financial costs of the CAP. Over the past quarter century, 40 per cent Europe’s farmland birds have disappeared. Bee colonies, so necessary for pollination of arable crops, are experiencing sudden collapse. Rivers and seas are fouled with fertilizers, pesticides and animal effluent. Each year more ancient natural pasture is put to the plough and more wetlands are drained: once gone, forever lost. The CAP has done little to help. In France, for example, payments for farmland conservation amount to 380 million euro in 2008. They are dwarfed by old-style subsidies of 9.34 billion euro.

Things have improved a little in the past few years and Europe is no longer hurting farmers in developing countries by dumping big surpluses overseas. Farmers are mostly free to farm to market demand rather than to government diktat. Yet these reforms have been opposed at every turn by farm unions and the politicians and civil servants in ministries of agriculture, between whom there are often close ties.

And now, even this modest progress is at risk from a new wind of protectionism blowing across the continent. With a growing world population and a changing climate the question of how humanity will feed itself is back on the political agenda. And rightly so. During the winter of 2007/08, food prices leaped to record levels and the world’s poor faced hunger and even comparatively wealthy Europeans felt the pinch. The response in some quarters has been to adopt a siege mentality and aim for self-sufficiency in food. Why, it is argued, should we put ourselves at the mercy of global markets when there is more we can squeeze out of our own lands?

To base an entire agriculture policy on this logic would be a mistake. Seductive though it may be, the promise of European food self-sufficiency is an illusion as it would come through even greater dependency on on imports of natural gas from Russia for fertilizer and oil from the Middle East to run farm machinery.

Instead of a renewed push for unsustainable agricultural intensification, we should encourage more environmentally-friendly farming. Climate change will increase the risk of drought, flooding and poor harvests and the frightening reality is that any food shortages we may have experienced lately are nothing compared to what we might expect mid-century. We would be wise to safeguard the fertility of our own over-exploited soils, conserve our own precious water, protect the biodiversity we need for the pollination of fruits and vegetables and the ecological resources we will need in an uncertain future. In Europe there is little ‘spare land’ to cultivate and big increases in yields will be hard to find. Increasing global food production can best be achieved by helping farmers in poorer countries whose agricultural productivity lags far behind ours.

Following the election of a new European Parliament and the appointment of a new Commission, the EU will this year embark on a fundamental review of its agriculture policy, which still accounts for 40 per cent of the community’s entire budget. Aside from providing income support to a sector of society that is, more often than not, richer than the average citizen, taxpayers get little for our money. The future must be a common European policy to protect and preserve Europe’s lands, recognising the role played by sustainable farming.

It is certain that such a shift will be fought hard by those who have got used to receiving ‘money for nothing’ but at a time when government budgets are under such strain, we cannot go on like this. In 2009 we discovered where money goes and witnessed the sheer the waste and inequity of a system that in 2008 paid 1,583,120 euro to Prince Hans Adam II of Liechtenstein and 253,987 euro to Prince Albert of Monaco. This year we must start taking action to build a better policy.

Jack Thurston is co-founder of farmsubsidy.org, a network of journalists, researchers and activists pushing for greater transparency in the CAP.

Birdlife International is a global partnership of conservation organisations. The Royal Society for the Protection of Birds, its member in the UK, boasts well over a million members. The European Landowners Organization is a federation of farmer and landowner associations. Both Birdlife and ELO have members and affiliates in each of the EU’s 27 member states.

They have come together in support of new ‘joint position’ for the future of the CAP. It is based around seven core principals. At its heart is a recognition that agriculture policy should be reoriented towards supporting the active land management practices that are needed to protect the landscape, the environment, preserve biodiversity and ensure for the long term Europe’s capacity to continue as a major producer of food.

The joint position stresses the need for a common European policy backed by money raised at a European level on the grounds that many aspects of land management require a cross border approach, e.g. water basins that span national boundaries, wildlife species that migrate long distances and seas that lap on the shores of more than one country. Moreover, within a the European common market for food, policies that have a bearing on food production should not operate in a way that distorts free competition. Birdlife and ELO also argue that solidarity among European nations of widely different levels of affluence and a shared concern for the future of the unique European tapestry of landscape and rural heritage is justification for a common European policy financed from a common budget.

The joint position is frank in its admission that despite a measure of evolution since it was founded in the early 1960s and some changing rhetoric, when it comes to how the €55 billion a year of CAP money is actually spent, it is still “a policy tuned to supporting agricultural commodity production”. It goes on to argue that the CAP must leave behind its commodity production past and embrace to a future in which “public expenditure matches, as much as possible, the delivery of public benefits which are vital for achieving both food and environmental security”.

Birdlife has been a pioneer of the “public money for public goods” mantra that looks certain to dominate at least the semantics of the upcoming CAP reform debate, if not the actual policy content. (Public goods have a very clear definition in economic theory but the term is increasingly thrown around without much precision, even by those who should know better, such as three analysts from the IEEP, who in a recent report, define agricultural public goods so widely as to remove any analytical power from the concept.) That a big, mainstream farm union like the ELO should throw its weight behind the public goods argument, and nail its flag to the Birdlife mast, is a significant achievement for the conservation group. It also suggests that the ELO has made a strategic calculation that the public money for public goods will be the defining logic of the next CAP reform, and it is better to get ahead of the argument than be left behind.

Making the opposite strategic choice is the UK’s National Farmers Union which is perhaps not surprising since the NFU’s main competition for members comes from the ELO affiliate the Country Land and Business Association (CLA). With Birdlife and the CLA even putting in a cordial joint appearance on the influential BBC Radio 4 Today Programme, the NFU’s Tom Hind reacted angrily to their joint position, dismissing the public goods argument as ‘naive’ and ‘old school’. For the NFU, the recent volatility of food prices means the next CAP reform should see the policy sharpen its focus on boosting commodity production. Some might regard this as a ‘pre-school’ approach.

Today the NFU issued a further reaction in the form of a press release in which its President Peter Kendall denounces the Birdlife/ELO position and reaffirms the NFU commitment to a CAP aimed squarely at commodity production and cheap food. Over the past few years successive NFU leaders have made the case for remuneration for public goods provided by agriculture (even the NFU’s EU-level partner COPA/COGECA has begun talking in these terms). So this more traditional perspective brings the NFU much closer to the positions taken by continental farm unions like the FNSEA in France.

Putting the UK sideshow to one side, the joint position sets out some of the policy implications of the high level argument for a CAP aimed at long term environmental and food security. It argues that High Nature Value farming, for example extensive grazing livestock farms, is badly neglected by the current CAP and should get a much larger share of taxpayer support, at the expense of more modern, resource-intensive and commercially-viable production systems such as feedlot livestock-rearing and monoculture cereal farms. During the question and answer session of the launch of the joint position in the European Parliament, I put it to Allan Buckwell, policy director of the ELO, that the plan would involve a major redistribution of subsidies and this could be politically toxic. Buckwell was admirably frank in agreeing that the plan would involve significant redistribution of support and made it clear the ELO was not in the business of defending the current allocation of CAP funds.

For a statement from a leading European farm union, the ‘joint statement’ is remarkable in that its contains the weakest possible defense of the market mechanisms (support prices, intervention buying and export subsidies) and direct aids of the first pillar of the CAP:

“Pillar 1 has certain strength in its relatively administrative simplicity and in the strong element of certainty and revenue stability it gives farmers.”

The ‘joint position’ contains no reference to measures to ensure price stability nor does it argue for the continuation the current system of direct income support for farmers. However, it is implicit that paying farmers for the provision of public goods does provide them with a valuable new income stream to supplement what they get from the marketplace. Both Allan Buckwell and RSPB’s Gareth Morgan made this point during the question and answer session.

Nevertheless, it is striking that first pillar of the CAP, which still takes up well over three quarters of the current budget, is well and truly hung out to dry. The joint position states that the mechanisms and measures of a reformed CAP “are likely to show more characteristics of the current CAP rural development and agri-environment measures than current support measures”. These characteristics are listed as follows: (1) a contractual basis of payments that lists the public goods the recipient of public funds is expected to produce in return for the public money paid, (2) transparency of both the funding and the contractual commitments, (3) targeting of specific outcomes and results that are quantifiable and measurable, (4) monitoring of performance and adaptation of policies in the light of outcomes, (5) accountability of recipients of EU funds and the national and regional authorities responsible for implementing EU policies and spending EU funds.

It is a sign of changing times that the ELO and Birdlife International are able to see eye-to-eye on the fundamental principals of a new CAP. In my view, they are on the right side of most of the big issues and the ELO has clearly stolen a march on the more traditional farm unions who would prefer to line up in defense of the status quo. My colleague Valentin Zahrnt has argued that BirdLife is makinge a mistake geting into bed with the ELO. I disagree. It’s not possible to achieve radical reform of the CAP without buy-in from the more progressive of Europe’s farmers and land managers.

Either way, there is no doubt that this will be seen a very important intervention as this year’s debate on the next CAP reform gets going. Read the joint position here

At first sight, this cooperation has something going for it. It navigates between the extremes – stubborn farmer federations that resist change, on one side, and, on the other, non-farm interests that want to squeeze money out of the CAP budget with little regard to the societal values at stake. It is attractive to the ELO, who is afraid that the political rigidity of farmers, their traditional allies, will backfire and play into the hands of the CAP critics. The ELO has recognized that substantial concessions are necessary to re-legitimize the CAP. Maintaining the size of the CAP budget is more important to them than defending farm income support at the expense of public goods payments. Some of the public goods payments will still end up as profit for land owners, and these payments will improve the quality of rural life about which the ELO cares. Its cooperation with BirdLife will also give it more leverage over farmer federations who now cry foul (e.g. the NFU) but may gradually soften their positions to avoid isolation. This logic is sound.

However, it makes much less sense for BirdLife to team up with the ELO. First, the ELO states the intention to build on the experiences and successes of the CAP. Its ambition is a gradual improvement, not a bold switch to a sustainable land-use policy. Environmentalists who cooperate with the ELO thus lower expectations and soften pressure on the Commission to include ambitious reform options in its proposals. Second, lower expectations will dampen the general interest in CAP reform. The power of environmentalist arguments depends very much on raising the stakes of CAP reform and pushing it to the center of public debate. If CAP reform boils down to a tug-of-war between farmers and finance ministers, the outcome will be a smaller CAP centered on farm income support. Third, the ELO has not been very specific on what policy instruments and subsidy allocations they are aiming for. It is doubtful whether they would endorse a stringent greening of the CAP (especially when political pressures inside the organization grow as the CAP negotiations move forward). My expectation is that environmental objectives will receive more funds under a ‘green and lean’ than under a ‘big and a little better’ CAP.

Fourth, BirdLife had to subscribe to the idea of threatened EU food security as a justification of the CAP. Of course, food security as meant by BirdLife is nothing else but ‘environmental security’: we need to farm sustainably to protect our natural farming resources in the long run. But the ELO use of the term comes closer to what farmers mean by it. Environmentalists should be most careful not to strengthen a term that is the most powerful and misleading argument of old-style CAP defenders (I have summarized the case against the food security argument here).

While warning of the dangers of closer cooperation between environmentalists and land owners (or other stakeholders who benefit most from CAP subsidies that are not effectively targeted at public goods), I do not overrate this joint position paper. It is rather vague and contradictory, and it says very little on the most contentious issues, such as farm income support, the definition of European public goods, the choice of targeted policy instruments, and co-financing.

Let me repeat my general appreciation for BirdLife’s CAP reform advocacy. They have published excellent studies, such as ‘Could do better! Why EU Rural Development Policy is failing to reach its biodiversity potential’ and ‘Through the green smokescreen’. And they have recently developed a much more precise vision of the future CAP together with four other farming and environmental NGOs.

View the feature here

George Alagiah travels the world to reveal a growing global food crisis that could affect the planet in the years ahead. With food riots on three continents recently, and unprededented competition for food due to population growth and changing diets, the series alerts viewers to a looming problem and looks for solutions.

George joins a Masai chief among the skeletons of hundreds of cattle he has lost to climate change, and the English farmer who tells him why food production in the UK is also hit. He spends a day eating with a family in Cuba to find out how a future oil shock could lead to dramatic adjustments to diets. He visits the breadbasket of India to meet the farmer who now struggles to irrigate his land as water tables drop, and finds out why obesity is spiralling out of control in Mexico.

Back in Britain, George investigates what is wrong with people’s diets, and discovers that the UK imports an average of 3000 litres of water per capita every day. He talks to top nutritionist Susan Jebb, DEFRA minister Hilary Benn and Nobel laureate Rajendra Pachauri to uncover what the future holds for our food.

It’s a solid analysis, identifying climate change, oil-dependency and water depletion as the biggest challenges facing the world as it tries to feed a growing population. Perhaps too much is made of the virtues of self-sufficiency as compared to trade and comparative advantage.

If you’re in the UK you can watch it on demand on your computer anytime over the next three weeks, via the BBC iPlayer. The next epsisode will look more closely at fish.

Asked if we were moving towards a ‘new productivism’, the Duke of Northumberland professor at Newcastle University said: ‘Much of what I hear sounds like the old productivism. The characteristic of the old productivism that prevailed until the 1990s was that it sought recklessly to boost primary production. Although it claimed to do this with attention to efficiency, this only embraced the so-called factors of production: land, labour and capital.’

The RELU boss continued, ‘So we encouraged a form of agriculture that was wasteful in its use of water, energy, soils and caused pollution problems and diminished biodiversity. We must not return to the old-style productivism – of expansion of food production at any cost.’

‘No,’ Lowe declared, ‘the new productivism must be constructed on the basis of economic and ecological efficiency which thereby protects the capacities of individual ecosystems to deliver a range of valued a life-supporting services.’

The paper argues that in the ‘new context’ of rising food and fuel prices, the future of the CAP should centre around four areas. The first of these is assuring food security in the EU. No suprises there, as France has been a vigorous adopter and champion of the revived food security discourse which provides a new underpinning for subsidy and protection.

New content can be placed in it, however, as is evident from a discussion on economic patriotism I participated at Science Po in Paris last week. The argument there was that even new market approaches could be brought under the economic patriotism umbrella.

The second objective is contributing to sustainable and balanced food supplies in the world. A laudable aim, but the EU has frustrated it by dumping surplus produce on the world market and undermining local suppliers, as well as frustrating the development of commercial agriculture in the Global South by placing barriers to entry around the European market. Hopefully, some of the worst of these practices are coming to an end.

The third aim is preserving the rural fabric and ensuring territorial cohesion, an objective close to French hearts with its emphasis on the cultural dimension of the CAP. The paper argues that the uniformity of Pillar 1 is in danger of stifling the diversity of the French agricultural landscape. Vulnerable areas, of which no doubt there are many in France, should get some sort of ‘top up’.

The fourth objective is participating in the mitigation of climate change, which everyone is in favour of, but the challenge is how you actually do it, particularly in an economic downturn.

The most specific the paper gets is a call for less static support tools which a decoding suggests are favoured in part because they may be a way of getting around international trade rules. As well as providing support for integrated enviromental measures, these tools (whatever they might be) would be a means of dealing with increased market volatility.

This leads me to suppose that one might be talking about some modernised verision of deficiency payments, as used in Britain before it joined the common market. It may be, and this is just surmise, that the French think they cannot keep the SFP going beyond 2013, but they may be able to sell a subsidy that is linked to climate change and environmental benefits and also gives farmers some protection in hard times.

Whether such a vague document will lead to a structured or useful discussion at the informal Farm Council remains to be seen, but somehow I doubt it.

More information on the meeting is at the French EU Presidency website and the French discussion paper is available in the original French and an English version too.

For one thing, whether higher food commodity prices should be taken as a sign of food insecurity or not is itself a moot point, and one which is being debated between Homi Kharas (Brookings Institute) and Joachim von Braun (International Food Policy Research Institute) on the Economist.com website under the proposition “There is an upside for humanity in the rise of food prices” (you can cast your vote before the debate closes Friday 8 August; when I posted this blog 56% were in favour and 44% against the proposition).

One  of the issues in this debate is whether higher food prices are likely to alleviate or push  people into poverty. The issue is very topical because of the views of the World Bank and others that the recent spike in food prices has reversed much of the progress in reducing poverty which is one of the key Millennium Development Goals.

This is partly an issue of the speed at which prices change (a point which von Braun makes eloquently in the Economist debate) and partly an issue whether the poor are net food sellers or net food buyers. The view has got around that more poor households in developing countries are net food buyers than are net food sellers, and thus that higher food prices increase the likelihood of poverty.

This view is challenged in a recent Policy Outlook by Sandra Polaski of the Carnegie Endowment for International Peace. While careful to point out that generalisations in this area are unlikely to be valid, she quotes a number of important studies which conclude that higher food prices have been responsible for lifting more people out of poverty than pulling them into it. In India, for example, which is home to the largest number of poor people in the world, a decline in the world price of rice would result in real income losses for 78% of all households and the distributional impact would be regressive (i.e. the consequences of higher world rice prices would be the opposite of these results).

This issue clearly warrants further investigation before we rush  off and conclude that a production-oriented CAP is needed in the future to address problems of world food insecurity.

Today’s Commission press release states:

“The fund would be worth €1 billion and would operate for two years, 2008 and 2009. This money would be in addition to existing development funds and would be taken from unused money from the European Union’s agricultural budget. It would be provided to developing countries which are most in need, based on a set of objective criteria. The facility would give priority to supply-side measures, improving access to farm inputs such as fertilisers and seed, possibly through credit, and to safety net measures aimed at improving productive capacity in agriculture. The support would be paid via international organisations, including regional organisations.”

Last week European Voice reported that German Chancellor Angela Merkel and her farms minister Horst Seehofer were voicing concerns about the plan. Some have said that Merkel’s concerns relate to the the principle of spending EU money (much of which is contributed by German taxpayers) on purposes other than those originally budgeted.

Seehofer, whose ministry frequently appears to be a wholly-owned subsidiary of the German farm unions, would probably rather keep the money in the farm budget, as would a number of farm ministers from the CEEC member states who made a statement demanding that any underspend in the CAP budget be used to top-up farm subsidies in their countries. To her credit, Commission Fischer Boel has roundly rebuffed these demands.

Meanwhile, it seems that vanity is to be clouding the judgment of some MEPs. Jutta Haug, the German social democrat MEP, who is responsible for drafting the Parliament’s position on the 2009 Budget, said it was important that the EU claimed credit for any additional funding. “We’re the biggest aid donor but we don’t have the visibility”, she said, according to European Voice. The Commission proposal gives examples on how it would want to channel the money through the international agencies with the greatest expertise in the field:

“Assistance channelled through International Organisations could for instance apply to FAO (emergency input delivery programme), IFAD (e.g. rural finance), UNICEF (child nutrition, nutritional safety nets), WFP (humanitarian food assistance, transitional safety nets), the ICRC (food assistance) and the World Bank (market-based risk management, safety nets).”

Ms Haug’s notion that getting good PR is more important than feeding the world’s hungry shows just how out of touch some MEPs can be. Surely the most important consideration is how to get the job done, not who gets the credit.