Month: March 2012

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The cost of flat-rate agri-environmental measures

The Commission’s proposals to require shallow, one-size-fits-all, green measures across the EU as a whole in return for a green payment in Pillar 1 have been widely criticised as overly prescriptive, yielding limited environmental benefits (‘greenwash’), administratively complicated for member states and unnecessarily costly in terms of the trade-off with food production.

I reviewed these criticisms in a recent note for the European Parliament’s COMAGRI (link to appear when the note is published shortly). In the note I favoured a continuation of the past CAP reform trajectory in which a larger share of the CAP budget would be shifted to Pillar 2 in order to allow more ambitious and targeted agri-environmental measures (AEM). The apparent unwillingness of the Council of Ministers to countenance a larger Pillar 2 budget (presumably because of the difficulties created by the need for co-financing as well as due to political opposition from farm groups) is the biggest political obstacle to this approach.… Read the rest

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On the complexity of defining active farmers

According to the latest proposals of the European Commission, applicants whose CAP direct payments equal less than 5% of their total receipts obtained from non-agricultural income or failing to provide the minimum land cultivation will be excluded from the provision of direct payments.

This might appear a good definition at first sight but the devil, as always, lies in detail. First of all, it is pretty sure that such a proposal would increase bureaucracy, which is totally against the ‘cutting the red-tape’ principle of the Commission. Just imagine how this system would be implemented for each and every farm in Europe. Second, some argue that this definition would exclude part-time farmers but this is not entirely true. As the definition would not apply to small farmers (receiving less than €5000), the latter argument only holds for those part-time farmers not participating in the small farmers scheme, the number of which is limited for sure.… Read the rest

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Basic Direct Payments for EU Farmers: The Proposal of the Commission of the EU

Direct payments are the most important budget outlay

EU expenditure on Agriculture and Rural Development makes up a high share of total EU expenditure. The share was – according to official information – 41 per cent of total EU expenditure in 2011 and amounted to €55.269 billion. The position ‘Direct Payments’ was the most important budget outlay during the present Financial Framework with €39.771 billion in 2011; it made up a share of 72 per cent of the total expenditure on Agriculture and Rural Development.

This budget item came into existence in 1993 as the Council of Agricultural Ministers had decided in 1992 to reduce the intervention prices for grain by about 33 per cent and to also reduce the support price for oilseeds. It was a widely held agreement in 1992 that farmers should be fully compensated for the income loss incurred from the price cut. This item grew over time as institutional prices for other agricultural products had to be reduced due to international pressure.… Read the rest

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Who cares about capping?

According to the latest proposals of the European Commission, the amount of support from the basic payment scheme received per farm would be limited to €300,000 per year. Payments higher than €150,000 will be subject to progressive reductions but the costs of salaries in the previous year can be deducted before these reductions apply.

Several critiques appear regarding capping. As recognised by many, it would further weaken the anyway decreasing competitiveness of European large farms by creating a discriminative instrument in the provision of direct payments. It is also contradictory to the economies of scale (and efficiency) as well as would significantly increase bureaucracy, which is totally against the ‘cutting the red-tape’ principle of the Commission. Moreover, it might also result in a splitting of farms, which would have serious consequences to the European agricultural sector and would not be ethically fair either. Another rather theoretical reasoning state that direct payments serve as a remuneration for the production of public goods, produced on small farms and large farms alike, meaning that capping is against the equal production of public goods.… Read the rest

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Evolving alliance for saving the status quo

France has played an extremely active role during the past few weeks to create a strong alliance aiming to save the status quo in the future of the CAP. Bruno Le Maire, the French Farm Minister has proved himself to be successful in persuading his German, Spanish and Italian colleague to help France maintaining the CAP as it is.
Starting on 30 January, Mr. Le Maire met Mario Catania, the Italian Farm Minister to discuss the future of the CAP. Both ministers declared the existence of a ‘strong convergence’ between French and Italian opinions in the debate and asserted that the two countries will safeguard each other’s interests in the main issues like fund distribution or the ‘milk package’ in the future.

Having Italy as an ally, Mr. Le Maire moved further to Germany to meet his colleague Ilse Aigner to discuss the Commission’s proposals for the future CAP. The outcome is a two-page declaration nearly stating that the CAP should remain as it is.… Read the rest