“Waste at home and damage abroad”. That is how one Member of the European Parliament described the common agricultural policy. Gabrielle Zimmer, a German MEP who sits on the parliament’s development committee, was speaking at a conference convened last month by the United Nations Millenium Campaign to look at the impact of Europe’s farm tariffs and subsidies on developing countries.

According to Eckhard Deutscher, Chair of the OECD Development Assistance Committee (DAC) and another participant in the same meeting,

“The biggest challenge the EU’s development aspirations are facing is the lack of policy coherence. The trade, development, agriculture and environmental policies are simply out of sync with regard to developing countries.”

Eveline Herfkens, Founder of the UN Millennium Campaign, pulled no punches,

“An unreformed European agriculture policy will continue to hamper the EU’s and other donors’ efforts to eradicate poverty and will perpetuate human suffering.”

European countries lead the world as donors of development aid, but for decades the EU has pursued agriculture policies which have had the reverse effect – whether it’s trade barriers that make it harder for developing countries to export farm produce to Europe or subsidies that encourage European farmers to overproduce, driving prices down and undercutting unsubsidised farmers in poorer countries.

In the first few years of the last decade, the Make Trade Fair campaign made the weather in the debate over reform of the CAP, perhaps supplanting the environmental critique as the most politically salient attack on the policy. The decoupling of support in the Fischler reforms theoretically broke the link between farm subsidies and over-production although there are those who say that any farm subsidy has an impact on production. At the Hong Kong WTO ministerial in December 2005 the EU offered to end all export subsidies by 2013 if other countries reduced their supports to exporters.

It’s possible that United Nations Development Programme’s annual report for 2005  represents the high-water mark of the influence of the development advocates on thinking about agriculture policy:

“When it comes to world agricultural trade, market success is determined not by comparative advantage, but by comparative access to subsidies—an area in which producers in poor countries are unable to compete. High levels of agricultural support translate into higher output, fewer imports and more exports than would otherwise be the case. That support helps to explain why industrial countries continue to dominate world agricultural trade.”

The global food price spike of 2007-08 presented a problem for the development critique of farm subsidies. Suddenly, the problem for developing countries was not low commodity prices but high commodity prices. Backers of a production-boosting farm policies in rich countries were quick to jump on this turnaround, arguing that European and American farmers had a moral duty to ‘feed the world’ and that the CAP should underpin this aim.

A more subtle analysis would argue that developing country farmers have suffered as a consequence of the CAP for decades, and that it is precisely because of the chronically retarded state of agricultural development in many developing countries that food prices spiked and the effects were so damaging. A rapid supply response was just not possible because developing countries lack capital for agricultural investment, skills, market structures and so on. These are not things that can be built overnight. It could be added that biofuel subsidies and mandates contributed to the food price spikes by increasing demand for food crops like corn and oilseeds that are used to make biofuels.

The extent to which the CAP continues to cause harm to developing countries is the subject of an ongoing research by Alan Matthews, a contributor to this blog, and I’m told his findings will be published in a book in September 2010. As for the future of the CAP, there seems to be no guarantee that we are safe from a return to the production-boosting paradigm of the past. Momagri, a shadowy French farm lobbying organisation, is just one influential voice pushing for just such a change of direction. The United Nations Millenium Campaign has stepped into the debate on the future of the CAP at a critical time. It remains to be seen whether other development advocates and influential NGOs like Oxfam will rejoin the fray.

Photo credit: Quarsan – Flickr Creative Commons

Farm interests routinely threaten that any reduction in support will provoke a slump in production, endangering EU food security, and threatening massive land abandonment to the detriment of rural life and biodiversity. The findings of the Scenar 2020-II – Update of scenario study on agriculture and the rural world, commissioned by DG Agri, strongly contradict such panicmongering about the looming end of EU agriculture.

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?

CAP subsidies as reported to the WTO reached a ten-year high of over €90 billion in the 2006/07 marketing year, but conveniently most of them have been parked in the allegedly non trade distorting green box, something that has provoked disquiet in Geneva. The EU notified €90.7 billion of support to the global trade body for 2006/2007 – up from €75.6 billion in 2002, when support was at its lowest in the last fifteen years.

More from ICTSD.

Hot on the heels of the joint declaration by Birdlife International and the European Landowners Association and the declaration of 23 European agricultural economists comes the European Food Declaration (PDF).

The European Food Declaration diagnoses the problems of Europe’s food and farming system in the following way:

- dependence on under-priced fossil fuels
- failure to recognise the limitations of water and land resources
- promotion of unhealthy diets high in calories, fat and salt, and low in fruit, vegetables and
grains
- domination by transnational corporations and the World Trade Organisation (WTO)

The declaration argues that:

“All people should have access to healthy, safe, and nutritious food. The ways in which we grow, distribute, prepare and eat food should celebrate Europe’s cultural diversity, providing sustenance equitably and sustainably.”

The declaration sets out 12 principles, among them Principle 3 makes the curiously contradictory case for healthier eating and less consumption of meat and dairy products “while
respecting the regional cultural dietary habits and traditions”. So cassoulet, bratwurst and zampone are all safe. Principle 4 calls for an agriculture “that involves numerous farmers”, presumably a call for more support to keep smaller farms in business, or to cut support for larger farms. Principle 4 also calls for “fair and secure farm prices”, i.e. a return to production controls and price-setting of the CAP of the 1970s and 1980s. Principle 7 argues that Europe should be GMO-free and Principle 8 says biofuels should be discouraged and transport minimised. Most of the other principles are of the ‘motherhood and apple pie’ variety – very sound but lacking real substance on how they’ll be achieved.

The declaration is the work of a platform of NGOs includingVia Campesina (International Peasant Movement), whose colourful José Bové is a former French presidential candidate and currently vice-chairman of the European Parliament’s agriculture committee, Friends of the Earth and Attac Austria. The organisers will open the declaration to public signatories later this month.

You can read the declaration in full below:

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. [...]

Pascal Lamy, the WTO Director-General, provided an end-of-term report on the status of the Doha Round trade negotiations at the July meeting of the Trade Negotiations Committee before delegates left for their August break. This is what he had to say about the agricultural negotiations.

As you know, work in agriculture is continuing, particularly in light of the renewed political mandate from the G20 and G8. The Revision 4 bracketed and annotated areas needing further work have been identified. These include SSM [Special Safeguard Mechanism] (especially the architecture), cotton, issues related to sensitive products, preference erosion and tropical products, TRQ [Tariff Rate Quota] expansion as well as tariff simplification. The Chair has indicated that consultations are underway to determine how best to broach these issues, with a view to a steady programme of technical work in late-summer through to the autumn. The aim is to complete as much as possible of the outstanding technical work so as to set the stage for decisions on more political issues.

Discussions are on-going on the templates for scheduling and on the required format of support tables and data needs — both for completion of the templates and for the establishment of modalities and of the time-lines and process for scheduling and verification. It will be important for members to take ownership of this matter so that you can be fully ready, with agreed time lines and formats, to complete the scheduling process in agriculture once modalities are established. This is a very necessary, non-political work that should continue with greater focus through the autumn.

Full details at the WTO’s website. WTO Director General Pascal Lamy said:

“These revised texts set the stage for a decisive moment in the Doha round. Ministers and other senior officials will soon arrive for intensive negotiations the week of 21 July. They need negotiating documents which are clear and precise as they consider the complex issues of agriculture and industrial goods trade. These texts go a very long way in that direction. These negotiations have been long and tough but the prize awaiting us should we reach agreement is worth the effort. A deal to open trade in agriculture and goods means more growth, better prospects for development and a more stable and predictable trading system. We must not let this opportunity slip through our fingers.”

The main issues currently under negotiation that impact the CAP are in the market access pillar and relate to tariff issues, particularly the scale and handling of ’sensitive products’ that get partial exemption from the across-the-board tariff cuts. In relation to domestic support, the text appears to be close to being finalised. The main decision still to be taken by Ministers is the size of the cut in Overall Trade Distorting Support (OTDS). The options are a cut of between 75% and 85% for the EU, a cut of 66-73% for the US and Japan, and a cut of 50-60% for other countries. Even an 85% cut for the EU would not have any impact on current domestic support payments, which are notified as ‘non- or minimally trade distorting’ and therefore exempt from constraints.

One of the advances made when Franz Fischler was farm commissioner was to recognise farm animals as sentient beings rather than agricultural products. This provided a basis for treating animal welfare as one of the planks of multifunctionality. However, a vet who is an animal welfare expert suggested in a talk (under Chatham House rules) that I attended that this could face a challenge under WTO rules at some point in the future. [...]

Having previously run a highly visible campaign threatening to derail the imminent referendum on the EU’s Lisbon Treaty on account of the EU’s negotiating position in the WTO, the Irish Farmers Association has fallen back into line with it’s longstanding position of support for Irish membership of the EU. As previously noted, Ireland does spectacularly well out of the CAP, and it looks as though the IFA has extracted a promise from the new Irish prime minister Brian Cowen that he was prepared to veto any WTO deal that was bad for Ireland. [...]

The Republic of Ireland will hold a referendum on ratification of the EU’s Lisbon Treaty on 12 June 2008. The Irish Farmers Association is urging a No vote, on the grounds that the EU’s push towards more open world markets in agriculture could expose them to competition from overseas, notably from Latin America.

Ireland gets way more than it’s fair share of EU farm handouts. And this fact will not be lost to other member states if Ireland votes to derail the Lisbon Treaty. The EU is currently engaged in a fundamental, ‘once in generation’ review of its budget. The main target for cuts appears to be the agriculture budget, which accounts for around 45% of all EU spending.

Here are some facts that might be of interest: [...]

The timing, if not the chicken, is delicious. On the same day (and in the same newspaper!) that German farms minister Horst Seehofer called for the EU to export its standards of environmental, animal welfare and food production regulations to China and India, it has been revealed that member state governments have been covering up the flouting of EU’s rules on cleaning chicken meat with chlorine solution. These rules have kept out all poultry imports from the US for the past eleven years. [...]

The WTO negotiations have become a live issue in Irish politics because Ireland is the only EU country which will hold a referendum to ratify the Lisbon Treaty, and the campaign provides an opportunity for interest groups to maximise their bargaining strength. For example, farm groups who are traditionally pro-EU in referendum votes have threatened to campaign against the Lisbon Treaty not because of the content of the Treaty but because of their dissatisfaction with the way they see Peter Mandelson as EU Trade Commissioner handling the WTO negotiations.

Padraig Walshe, President of the Irish Farmers’ Association, the largest of the Irish farm groups, gave a not-so-veiled warning recently when he noted that “it would be unrealistic to expect the farming community and rural people to vote for the Lisbon Treaty while Mandelson is planning the destruction of the Irish and European family farm structure.” [...]

Roger Waite is a long-standing member of the Brussels agricultural press pack and he will be giving a podcast round-up of the monthly Agriculture Council meetings, when farm ministers from all 27 EU member states met to decide the future of EU agriculture and rural development policy. In this month’s meeting, EU farm ministers debated the Commission’s ideas for the health check, the latest position of the WTO Doha Round negotiations and the impact of rising feed prices on European pig farmers.

As well as being the founding editor of the AgraFacts news subscription service, Roger is a Journalism Fellow of the German Marshall Fund of the United States.

The Chair of the agricultural negotiations at the WTO, Crawford Falconer, released his latest version of the draft modalities for an agricultural agreement on Friday last 8 February. This is the culmination of a series of intensive meetings since early January among a representative group of some 37 WTO members. Although there are still many square brackets in the text, representing areas where final political agreement will only be reached in the context of an overall trade-off against concessions in the non-agricultural market access (NAMA) negotiations, the text provides greater clarity on many of the more contentious issues that were outstanding in the previous incarnation of these draft modalities last July. These contentious issues include some of particular interest to developing countries, such as issues like the designation of Special Products and the operation of the Special Safeguard Mechanism. In this post, we look at some implications of the draft text for the EU.

[...]

International trade negotiations have been the most effective driver of CAP reform for over fiften years. I haven’t commented on progress in the Doha Round for some time because prospects have looked so bleak since the collapse of the G-4 talks at Potsdam. But there does seem to be a glimmer of hope. [...]

After Nicholas Sarkozy appeared to indicate that it was ‘business as usual’ in French agricultural policy, the appointment of Christine Lagarde as farm minister gives a ray of hope. Named as the 30th most powerful woman in the world by Forbes in 2006, she was formerly trade minister. [...]

Bilateral discussions have continued between the key participants in the Doha Round farm trade talks, most recently in London, but although clarification of the issues and what might be possible continues, there has been little real progress. Key participants in Geneva have described the overall mood as one of ’suspended pessimism’. [...]

Talks on the resumption of the stalled Doha Round took place in the margins of the World Economic Forum at Davos, Switzerland during the past week, but many hurdles remain to be overcome before an acceptable farm trade deal can be sketched out. [...]

An attempt by President Bush and Commission President Barosso to re-start the stalled Doha Round trade talks may not succeed in the face of rising protectionist sentiment in the new Congress and intransigence over subsidies in the EU. Meeting in Washington last week the two leaders instructed their chief trade negotiators to come forward with a deal ‘as soon as possible’. Talks involving the EU, US, Brazil and India are likely to take place in the margins of the World Economic Forum in Davos, Switzerland at the end of January. [...]

A report commissioned by the Indian Department of Commerce and carried out by UNCTAD’s Indian team challenges the EU’s argument that decoupled aid payments have only a minimal trade distorting effect. According to the researchers’ model, EU farm exports would fall by a massive 45 per cent if Green Box subsidies were removed and production would fall by close to 6 per cent. [...]