A new study from the University of Wageningen in the Netherlands has attempted to model the effects of the abolition of EU farm subsidies. The authors of the report state that their study is very much a ‘worst case assessment’ since,

“It does not take into account farmers’ behaviour, although the past has shown that farmers do adapt to changes in the Common Agricultural Policy. It also assumes a fixed cost structure and abstracts from changes in factor prices and structural change, all elements which would reduce the impact of reform on farm incomes.”

The report makes it clear that the effect of subsidies – and their removal – is not felt evenly across Europe. In countries such as the Netherlands, Italy and Belgium the share of farm subsidies in total agricultural output is below or around 10%, in Austria and Slovenia above 30%, in Ireland around 50% and in Finland even above 60%.

The level of subsidies in the grazing livestock sector is the highest, followed by the arable sector. The horticultural sector, and to a lesser extend the wine and intensive livestock sector receive the lowest amount of subsidies related to total output. As the report puts it, “the ‘non-CAP types of farms’ (e.g. horticulture, permanent crops and intensive livestock) have, in general, better prospects than the ‘CAP types of farms’.” Unfortunately, the ‘CAP types of farm’ account for some 95 per cent of EU land devoted to agriculture and so “the deterioration of the viability of these farms as a result of the abolition of the subsidies may have a serious impact on the structure of the farm sector as well as on the vitality of rural areas.”

The report concludes:

“The viability of farms in Spain, Poland, Lithuania, Latvia, Belgium and Austria is hardly affected [by the removal of subsidies], whilst farms in Denmark, Ireland, Sweden and the UK, as well as farms of some types in France, Germany, Hungary and Slovakia are heavily affected. In these countries, abolition of decoupled payments results in a large share of farms with negative farm incomes.”

The analysis looks only at first-order impacts and makes no attempt to predict how farmer behaviour might change were subsidies to be abolished. Even so, the authors point to evidence suggesting the adaptability of agriculture to policy change. For instance, arable Netherlands reacted to decoupling of arable payments and reduction of EU sugar subsidies by growing more intensive crops such as potatoes, vegetables and flower bulbs and less cereals and sugar beet. The authors point out that European farms have long been consolidating into larger units, in response to technological change and market competition. Abolishing subsidies would speed up the existing process of ’structural change’, says the report.

Finally, the report attempts to reach some conclusions about which kinds of farms are best-placed to weather the economic storm that would come with the abolition of subsidies. The report finds that farm size has a bearing on viability but it can work in different ways.

“The direction of this relationship differs between countries. In countries such as Germany, Latvia and Hungary larger farms tend to be less vital. In these countries the cooperative farms are an important reason for this. In other countries such as Belgium, Italy, Ireland, the Netherlands and the UK larger farms tend to be more vital.”

The authors point out that the two main potential problems that would be caused by the abolition of current subsidy system – land abandonment and farm insolvency – could be addressed at less cost than at present with a more targeted approach. This is perhaps the most policy-relevant conclusion of the entire report.

Read: Farm viability in the European Union: Assessment of the impact of changes in farm payments

Agricultural ministers of the OECD met in late February 2010 – the first time since 1998 – and issued a communiqué that touches on everything and says close to nothing. For once, such an empty statement is perfectly fine. The OECD Secretariat doesn’t need its ministers in order to do an excellent job in providing intellectual guidance and hard data.

The flagship of OECD research is certainly the country-level analysis of agricultural policies, based on Producer and Consumer Support Estimates and enriched by a brief description of recent policy developments in the report on Agricultural Policies in OECD Countries: Monitoring and Evaluation 2009.

New research on the CAP has been presented at an OECD Workshop on the Disaggregated Impacts of CAP Reform in March 2010.

The OECD also prepares a regular report on the Environmental Performance of Agriculture.

Equally important are the thematic research pieces. A 2009 piece on the ‘Adjustment Options and Strategies in the Context of Agricultural Policy Reform and Trade Liberalisation’ compares the liberalization experience in various OECD countries. It concludes that the agricultural sector frequently adapts better to liberalization than expected (greater efficiency, higher quality, different products), so that the need for adjustment policies is often overestimated. Policies to encourage exit from the agricultural sector are beset with the problem of windfall profits (payments for actors that would have left the sector anyway). Adjustment policies should rely, wherever possible, on generally available adjustment measures, including through the social security and tax system.

Especially interesting is the case of sectoral adjustment policies in Australia. The Farm Family Restart Scheme (FFRS) – now renamed into “AAA Farm Help – Supporting Families Through Change” – assists “low-income farmers who cannot borrow against their assets by giving them access to improved welfare support, as well as adjustment assistance for those who wish to leave the industry. It included income support for a maximum period of one year, grant of up to AUD 45 000 for those wishing to leave farming, access to professional advice on the future viability of the farm business, and other forms of counselling. The FFRS operates as a decision support system for farmers considering exiting the industry by giving them access to professional advice on the future viability of their business and on employment opportunities if they choose to exit the industry.“ Quite different from EU round-about handouts!

Another OECD work published in 2009, ‘Managing Risk in Agriculture: A Holistic Approach’, assesses the sources of risks, discusses private and public risk management tools and offers an overview of the implementation of risk management tools in OECD countries. It reveals the complexity of risk management and calls for prudence in designing governmental schemes (so as not to encourage risk-taking and replace private risk management mechanisms).

‘The Implementation Costs of Agricultural Policies’, published in 2007, finds that the advantages of targeting policies at desired outcomes outweigh the increased transaction costs of implementation for a very broad range of parameters. Furthermore, transaction costs can be much reduced through best practices (especially by the use of information technologies). This undermines the standard argument that the need to avoid excessive transaction costs makes a blunt policy like the Single Farm Payment inevitable.

The budget monitoring website FollowTheMoney.eu is serialising a three part survey of the long history of fraud in the Common Agricultural Policy. Things are better than they once were but to invert the old Yorkshire saying, where there’s brass, there’s muck.

Five leading European farming and environmental NGOs, who between them boast several million members, have jointly published a blueprint for a new Common Agricultural Policy. In an unusual and very modern step, they have published a draft proposal and opened it for consultation. They will produce a final version in 2010. The proposal, which runs to 28 pages, is for a radical reorientation of the CAP away from a productivist and income support model towards a ‘public money for public goods’ ethos. [...]

Scotland is far more in tune with current thinking on farm subsidies in mainland Europe than England and Wales, claims Scotland’s rural affairs minister Richard Lochhead. Addressing farmers at a Christmas Carcass competition in Inverurie, Mr Lochhead brought them glad tidings about the deep divide in agriculture policies on the two sides of the border. ‘My opinion on CAP reform is very different from DEFRA’s view that all direct subsidies should be removed and we should rely on a free market. Scotland should not go down that route and our thinking is much closer to the mainstream of Europe which is that the pendulum is swinging back towards support for active agriculture.’ [...]

When the negotiators in the Uruguay Round of the GATT introduced the concept of the ‘green box’ – farm support measures that are minimally or non-trade distorting and therefore exempt from any limits – few would have foreseen that within 15 years, the bulk of farm support in the developed world would be in the green box. A new book “Agricultural Subsidies in the WTO Green Box: Ensuring Coherence with Sustainable Development Goals”, published by Cambridge University Press, shows the extent to which farm support has been shifted out of more traditional, trade distorting measures and into the green box. It addresses the vexed question of whether green box supports are really as trade-neutral and environmentally beneficial as they are claimed to be. [...]

4000 dairy farmers with 900 tractors demonstrated outside an EU agricultural ministers meeting in Luxembourg yesterday calling for more aid for the sector. Inside, ministers faced a Franco-German memorandum backed by 20 member states with a series of demands for market distorting measures. In the event the concessions the Commission made are probably the least they could have got away with in the circumstances. Farmers’ organisation COPA immediately condemned them as insufficient. [...]

In one of its most critical ever reports, the National Audit Office has slammed the way in which the Rural Payments Agency has administered Single Farm Payments to farmers. It accused the agency of showing ’scant regard to protecting public money’. The agency has wasted around £700m, the capital equivalent of building thirty secondary schools. [...]

Earlier in the month I wrote that Agriculture Commissioner Mariann Fischer Boel was holding the line against protesting dairy farmers and a clutch of national agriculture ministers looking for more aid for their troubled farmers. It looks as though I spoke too soon. At this month’s farm council, Commissioner Fischer Boel found a further 280 million euro from the 2010 budget to give to dairy farmers, in addition to measures announced last month. [...]

This afternoon I did a pre-recorded interview with BBC Radio 4’s Farming Today programme. The subject was the House of Lords report on the 2010 EU budget, which says too much money is being spent on agriculture. The first question I was asked by the presenter shows how deeply the new (old) productivism has taken root over the past year. I was asked something along the lines of “Given the fears about food security, don’t we need a well-funded agriculture sector?”. [...]

Euractiv reports on the creation of a new Franco-German working group to frame reform of the EU’s Common Agricultural Policy (CAP) after 2013. France has a new Agriculture Minister in Bruno Le Maire, who wasted no time in setting out his stall in meetings with Commission President Jose Manuel Barroso. [...]

Russia and Romania may be two of the cheapest places in the world to produce wheat, but the UK is only a little way behind. Releasing the result of its Global Cost of Production Challenge, Bidwells Agriculture head of research Carl Atkin, said that despite the higher unit price of inputs in the UK, cost of production per tonne is only marginally higher than in eastern Europe. ‘This is because of the considerable yield advantage the UK has, based on first-class soils and a maritime climate.’ [...]

The debate on the future of the CAP after 2013 has now started following the informal Farm Council in the Czech Republic earlier this month. Those who want to influence the debate have about twelve months before the Commission publishes a Communication (effectively a White Paper) on future policy in the summer/early autumn of next year. Formal legislative proposals will then be published in the middle of 2011 together with the proposals for the financial perspectives from 2014 to 2019 or 2020. [...]

Millions of pounds of taxpayers’ money intended for environmental projects is instead being used to prop up damaging farmning practices across Europe, according to a report Could Do Better compiled for the Royal Society for the Protection of Birds by Birdlife International. The report highlights some of the positive work being done in EU member states with CAP funding which is helping farmers create and protect habitats for wildlife. [...]

The anti-EU agitprop outfit Open Europe has been huffing and puffing over the golden goodbyes that await those European Commissioners who will be put out to pasture when the current Commission’s five year mandate comes to an end later this year. Among their number is thought to be our own Agriculture Commissioner, Mariann Fischer Boel who, after five years of service in Brussels stands to receive approximately 270,000 euros of ‘transition money’ before her 43,000 euro a year pension kicks in.

The 66-year old Dane, who sports a trademark shock of snow white hair, has invoked the spirit of Hollywood actress Jennifer Aniston in the L’Oréal commercials, insisting the payout is entirely justifiable “because I’m worth it”. It’s just as well that the Commission scheme is so generous since Fischer Boel, who together with her husband owns several large livestock farms, is too old to qualify for the EU-funded early retirement scheme for farmers, which pays out a maximum of €18,000 a year to farmers who quit before turning 55. The typical ruse is for farmers approaching 55 to “retire” and apply for the early retirement money while passing the legal title of the farm on to a son or daughter who, in all likelihood, will qualify for an EU-funded young farmers startup grant worth up to €40,000. Both continue to work on the farm as before.

I realise that opposition politicians have to say all things to all persons and jump on any bandgwagon that’s going on, but I must say that I found an interview with Nick Herbert, the shadow Defra secretary, in Farmers Weekly a bit disappointing. It remains to be seen whether the MP for Arundel and South Downs will be Defra secretary in David Cameron’s Conservative government, or even whether Defra will remain in his present form. However, if his thinking is typical of that in the shadow cabinet on agriculture and food matters, it’s a bit worrying. It looks as if we could be lurching back towards productionism. [...]

You will be forgiven for wondering why things have been a little on the quiet side here at CAPHealthCheck.eu over the past couple of months. For my part, besides some intensive behind-the-scenes work at farmsubsidy.org and and exciting new EU budget transparency project that’s still under wraps, I’ve been blogging more on the EU budget than on the CAP, mostly over at FollowTheMoney.eu. Among the other leading contributors to this website, Wyn Grant has been on a fact-finding visit to Australia and Alan Matthews has been attending to his teaching responsibilities as well as working away on his forthcoming magnum opus on the CAP and global development. Fear not, we will be back in the saddle soon enough, but while things are running at a little below full capacity, you might want to take a look over at an excellent new website/blog called CAP2020: Debating the future of the Common Agricultural Policy. [...]

Last week I posted five reasons why it is hard to justify spending 30 billion euros each year on the Single Payment Scheme. Here are five more reasons. [...]

The EU spends around 30 billion euros each year on the single payment scheme, by far the largest of the myriad schemes and programmes that together comprise the 54 billion euro budget of the Common Agriculture Policy. The scheme was first introduced in 2005 but it is hard to see it surviving in its current form beyond the end of the EU’s 2007-13 financial perspective. Here are five reasons why the single payment scheme is not politically sustainable. Five more will follow tomorrow. [...]

It’s not uncommon to see reports of people queueing up all night for the latest iPhone, the next Star Wars movie or tickets to watch tennis at Wimbledon. But as I write, farmers in Northern Ireland are queueing outside for farm subsidies. The government in Northern Ireland has decided to hand out farm subsidies ‘on a first come first served’ basis. The decision was taken because this particular funding package is worth just £6 million and is capped at £5,000 per application so only 1,200 farmers stand to benefit. Farmers are to be sleeping out in the cold to ensure they get a good place in the line. [...]

It was the recession of the 1930s that ushered in agricultural protectionism and subsidies, not least in the United States. Now the European Union has reverted to two of its old favourite policy instruments: intervention buying and export subsidies in the dairy sector just when we thought we had seen the last of them. Stocks of butter disappeared completely in 2007.

Faced with a drastic drop in dairy prices, the EU is to buy 30,000 tons of butter at a guaranteed price. Over three times as much skimmed milk powder is to be purchased – 109,000 tons. In addition, export subsidies will be given to skimmed milk powder, butter, butter oil and cheese. These subsidies are, of course, particularly damaging to developing countries where they undermine the viability of local farmers. As Oxfam has pointed out, once the EU starts using them, other countries may follow suit.
[...]

It’s no wonder that the Commission suppressed the Court of Auditors report on cross compliance for as long as it could – the report is damning and undermines the Commission’s case for the legitimacy of EU farm subsidies.

Speaking in 2005, Agriculture Commissioner Mariann Fischer Boel explained how she sees cross compliance in relation nearly 40 billion euros of public expenditure on payments to farmers:

“I would emphasise that decoupled payments are not “money for nothing”. To get the cheque in the post, a farmer has to respect a demanding range of standards related to the environment and animal welfare. We call this system “cross-compliance”.”

Today’s report by the Court shows that such a view is at best wishful thinking and at worst deliberately deceitful. Cross compliance does not represent a ‘demanding range of standards’ at all.

It should be stressed that this study is the biggest and most comprehensive to date. The Court says that it “carried out an audit in 2008 of the cross-compliance policy at the Commission and in seven Member States representing the diversity of agriculture across Europe”.

The top line conclusion pulls no punches:

“the objectives of this policy have not been defined in a specific, measurable, relevant, and realistic way, and that at farm level many obligations are still only for form’s sake and therefore have little chance of leading to the expected changes, whether reducing the size of payments or modifying farming practices.”

Senior officials at the Court are reported to be fuming at the suppression of the report until after the CAP health check was concluded. They should rest assured that their work has not been in vain: this report will play a big part in the discussions of the future of the CAP as part of the EU budget review.

Read the press release and the full report (60+ pages).

Unanimity, like pregnancy, has a binary quality. A decision can’t be ‘virtually unanimous’. But this is just how French farms minister Michel Barnier described this morning’s final compromise agreement on the health check package. So which of the EU 27 member states were unable to acquiesce in the deal? My sources tell Roger Waite tells me it was the UK plus three others (I assume Denmark, Sweden and perhaps the Netherlands or Estonia) Lithuania, Latvia, the Czech Republic, Slovakia [update: and Estonia]. Can well-informed readers offer some further illumination? [...]

If Europe’s wealthiest landowners, from the Duke of Westminster in the UK to Prince Albert of Monaco to the fabulously-named Johannes Adam Ferdinand Alois Josef Maria Marko d’Aviano Pius von und zu Liechtenstein (aka Hans Adam II, Prince of Liechtenstein) were having sleepless nights over the future of their six and seven figure annual handouts from the Common Agricultural Policy, they can rest assured that they have friends in high places. Or at least, they have friends in the European Parliament. [...]

As Wyn Grant has observed, the Court of Auditors annual report on the 2007 EU budget published on Monday identified a clutch of weaknesses associated with the controls on spending on EU farm policies. The Court observes that “Some 20 percent of payments audited at final beneficiary level and revealed incorrect payments, a limited number of which had a high financial impact.” It concludes that farm subsidies remained “affected by a material level of error of legality and/or regularity”.

Strangely absent from the Court’s report was an evaluation of cross compliance – the environmental and animal health and welfare conditions that are required of all recipients of CAP direct payments: public expenditure which totals some 36 billion euros a year (28 billion euros of which is spent under the Single Payment Scheme). Could this be because the Court has just adopted a separate special report on this very subject? But that the report is being held back until the health check is concluded? [...]

Agra Focus has been conducting a series of interviews on EU farm policy and one of the longest and most interesting to date is with Allan Buckwell. He is currently policy director with the (England and Wales) Country and Land Business Association, but is also chair of the policy committee run by the European Landowners Association. He was for many years a respected agricultural economics and policy academic at the now sadly diminished Wye College. Perhaps his most interesting role in policy terms was when he spent a year in DG Agri in 1995-6 and chaired a group which wrote a report on a Common Agricultural and Rural Policy for Europe. [...]

In yesterday’s Irish Times I went ‘head to head’ with Michael Ring, a Fine Gael member of the Irish Dáil (legislature). I was putting the case for transparency in public expenditure on farm subsidies and Michael was arguing against. He made the claim that transparency in the CAP will “will give a clear indication of income of each farming household”. To be fair, nobody is arguing for the disclosure of farm incomes, just for the disclosure of the amount of government handouts to each farm. But could it be that the two figures are rather similar? And what does that mean for the economic viability of farming in Ireland? [...]

In December 2006 European Union heads of government agreed a new Financial Regulation, the legal text that sets out the rules for the EU budget. The new Financial Regulation contains new requirements on the public disclosure of end beneficiaries of EU funds. The first significant fruits of the new budget transparency law are due by 30 September 2008, the deadline set out in the implementing regulations relating to expenditure under the Common Agricultural Policy. By this date each member state is obliged to provide a web-based search tool detailing all end beneficiaries of EU funds spent under rural development programmes between 1 January 2007 and 14 October 2007 (sometimes referred to as the second pillar of the CAP). [...]

Czech agriculture minister Petr Gandalovic made an curious statement at the informal Agriculture Council meeting held earlier this week in the French Alps. Mr Gandalovic, who will assume the chairmanship of the Council under the Czech EU Presidency in the first half of 2009, told his colleagues:

“The more specific you make the policy, the more room you give to bureaucrats who make the decisions. Non-targeted payments give more power to farmers.”

In case it’s not clear, Mr Gandalovic was making the case against targeted payments. In doing so, perhaps inadvertently, he touched on a question that goes to the very heart of the debate about the future of the CAP: the extent to which the CAP’s 54 billion euros of annual public expenditure should be targeted on clearly defined objectives and measurable outcomes. It is a debate raging right now within DG Agriculture, a power struggle that is pitting CAP ‘modernisers’ who seek a greater role for the current rural development pillar against CAP ‘consolidators’ who defend the “Fischler settlement” and the current Commission Health Check agenda. What it boils down to is a debate over the fundamental role of public policy in agriculture. [...]

France has produced a paper on the future of the CAP which is designed to stimulate discussion at the informal farm council to be held there in the Rhone-Alps region on 21-23 September. The paper is very vague, no doubt deliberately so, and interpreting has to be an exercise in decoding. [...]

We’re used to the arguments that the CAP’s subsidies and tariffs are very bad for many desperately poor farmers in the developing world, with some going as far as to say that the EU has blood on its hands but now comes a piece of medical research which suggests that EU farm subsidies are responsible for more than ten thousand diet-related deaths among European citizens. [...]

In order to animate a transparent debate on the purpose, intensity and spatial distribution of CAP expenditure, a number of maps overlaying CAP expenditure data and high nature value farmland have been produced as part of a study recently completed by IEEP for the UK Royal Society for the Protection of Birds (RSPB). [...]

The vast majority of expenditure under the CAP continues to be directed to income support and is not explicitly targeted at responding to biodiversity, or other pressing environmental objectives. According to a new IEEP study for the UK Royal Society for the Protection of Birds (RSPB) the distribution and allocation of CAP funding, and the uses to which it is put to, should be adjusted in order to help meet the EU’s international commitment to halt the loss of biodiversity.

[...]

With the release yesterday of new figures on EU expenditure in 2007, the Commission has been busy spinning the line that farm subsidies no longer account for the biggest item of Brussels spending. Most news outlets have been swallowing this line without taking a closer look at the figures which show that a full 50 billion euros of EU money was spent on farm-based programmes. [...]

Over at farmsubsidy.org you can see the first fruits of a mapping project which aims to place every EU farm subsidy payment on a fully interactive web-based map, powered by the excellent Google Maps. The first country to get the mapping treatment is Sweden, chosen because its government has been by far the most transparent in terms of farm subsidy payments. The map displays some € 7 billion in CAP expenditure in 2 million payments to 114,700 recipients since 2000. We think the map-based interface is a fascinating new platform for bringing the CAP closer to the citizens that pay for it. Now that Sweden is done, other countries will follow.

[...]

While many are disappointed by the lack of ambition in the Commission’s health check proposals, there’s no doubt that Commissioner Fischer Boel has been on form when it comes to the pithy soundbites. [...]

The evolution of agricultural land prices and rents can be a good indicator of the effect of agricultural policy, because of the assumption that a significant proportion of the transfers to farmers as a result of such policy are capitalised into land values. Thus, changes in agricultural policy may have implications for land values, and the prospect of capital losses due to a fall in land values can be one source of opposition to such changes.

The issue is relevant in the context of the Commission’s proposals to introduce a ‘regret clause’ with respect to the implementation of the Single Payment Scheme as part of the Health Check. This would allow countries which have implemented the historic model of Single Farm Payments (SFP) to convert to a regional or flat-rate model if they desired.

The impact of such a proposal on land values is clearly one consideration which member state governments would need to consider in contemplating such a move. But the relationship between the SFP and land values is controversial, as I discussed in an earlier post. [...]

Earlier in the year a collaboration between German TV station Bayerischer Rundfunk’s Report München, Greenpeace and farmsubsidy.org uncovered farm subsidies going to some unusual recipients: airlines and cruise ships. Recall that similar revelations about farm subsidies to golf courses, pony clubs and railway companies made headlines in the autumn of last year. Watch the report with English subtitles, after the jump. [...]

We all know that the legislators who write US farm policy are not the brightest bulbs in the box. Even so, Senator Chuck Grassley treated us to an unusual insight into his own very special, mixed-up world during a telephone press briefing last week, reported in the Des Moines Register. Asked about the contribution of the US Government’s massive food-to-fuel subsidies to rising world food prices and the resulting hunger, poverty and social unrest, Grassley denied there was any connection and suggested the responsibility lay with people in China eating too much meat. [...]

With growing consensus that US and EU biofuel subsidies are among the principal contributors to recent global food price rises, termed a ’silent tsunami’ by The Economist, EU Trade Commissioner today signaled that Europe needs to reconsider its target of achieving a 10 per cent biofuels mix in transport fuel by 2020. Speaking on BBC Radio 4’s Today Programme this morning, Mandelson said:

“We’ve got to develop our biofuels policy intelligently… I think we need to carefully reflect on the approach that we’re taking.”

[...]

One proposal in the Commission’s health check communication of 20 November 2007 is that the member states which still allocate farm subsidies on the basis of historic entitlements should move to the area average system in which allocations are the same across all hectares in a given geographical region. But it looks as though this change will be optional, according to a speech made by Commissioner Fischer Boel in Ireland on 29 January. Moreover, the flat rate system does nothing to address the striking inequalities between member states, which shows that on average, Dutch farmers get €1299 per hectare, while Portuguese farmers get just €88. [...]

Top Commission officials have confirmed that in the face of opposition from four member states (Czech Republic, Germany, Slovakia and the UK) as well as many farm unions, Mariann Fischer Boel has dropped plans to cut the very largest farm subsidy payments by 45 per cent. The plan, which would have affected an estimated 23,000 farms that receive in excess of €300,000 a year, a list which is dominated by Europe’s wealthiest landowners such as the Duke of Westminster, Prince Albert of Monaco and the Crown Prince of Liechtenstein. [...]

A new report commissioned by the Budget Committee of the European Parliament makes interesting reading. The report, written by Jorge Núñez Ferrer (a former Commission fonctionnaire) and Eleni A. Kaditi, both of the Centre for European Policy Studies in Brussels, aims to asses whether the CAP provides ‘added value’. Núñez Ferrer and Kaditi define this as whether “the benefits outweigh the costs, not only of implementing the policy, but also the costs created in other areas.” The authors don’t pull their punches, particularly when it comes to direct payments which, costing some €30 billion a year, are by far the biggest ticket item in the CAP. [...]

Earlier this week, BBC Radio 4 broadcast Churchill Confidential, a dramatisation of British cabinet meetings chaired by Prime Minister Winston Churchill, records of which have only recently been released into the public domain. In this week’s episode, looking at Churchill’s second term of office (1951-55), we get an overview of the pressing issues of state at that time: the impending conflict with Egypt over the Suez Canal, the development of the British atom bomb, balancing Britain’s relationships with its European neighbours and the United States of America, immigration and race relations, the coronation of Queen Elizabeth II, the devaluation of the pound and, somewhat incongruously… a decision on whether to reduce the meat ration. Why is this relevant to the CAP? Find out after the jump… [...]

It should come as no surprise that the EU level farm union COPA-COGECA’s response to the Commission’s communication on the CAP health check is reminiscent of King Canute, trying to hold back the tide. What is very interesting, however, is that in important areas the response contains dissenting voices (or ‘reserves’) expressed by a handful of COPA-COGECA’s member groups. [...]

The European Parliament’s agriculture committee published a working paper on the CAP health check at the end of last year. Tamsin Cooper and Martin Farmer at IEEP have already argued that from an environmental perspective it lacks ambition and is internally inconsistent. I have looked in detail at the working paper’s proposals for ‘progressive modulation’ which is put forward as an alternative to both the Commission’s proposals on payment limits and increased compulsory modulation. [...]

When is a direct payment not a coupled payment? When it is an animal welfare payment. No, this is not a riddle found in my Christmas party cracker, but a response to the news that the Irish Government has just been given the go-ahead to introduce an animal welfare payment for Ireland’s 65,000 suckler cow herds. The Animal Recording, Welfare and Breeding Scheme, to give the payment its full title, will commence on 1st January 2008 and run for five years up to 31st December 2012. In return for complying with seven basic requirements, including calf registration, de-budding, castration where appropriate, a minimum calving age, appropriate weaning procedures including the introduction of meal feeding, animal events recording and taking part in a training and education course, suckler producers will qualify for an annual grant of €80 per cow, up to a maximum of 100 cows per herd (more specific details can be found here). [...]

The recently leaked Commission Green paper sets the scene for the upcoming health check. What emerges at the moment is a very cautious and minimalist approach, in line with what the Commissioner has been promising for a while. Two things seem striking. The first is the choice to ignore the budget review debate. The second is the lack of courage in confronting the CAP’s failings. [...]

The dependence of Irish farm incomes on the Single Farm Payment and other direct payments was starkly revealed by the publication of the 2006 results of the annual National Farm Survey (NFS) this week. Fully 98% of Family Farm Income (FFI) on Irish farms in 2006 was derived from the Single Farm Payment and other direct payments; only 2% represented the return from the market, the lowest recorded since the Survey commenced. Market FFI per farm in 2006 was only €334. In 2004, 86% of Family Farm Income came from direct payments and subsidies, and 14% from the market place. [...]

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. [...]