Author: Alan Matthews

Alan Matthews is Professor Emeritus of European Agricultural Policy in the Department of Economics at Trinity College, Dublin, Ireland. His major research interests are agricultural policy analysis, the impact of international trade on developing countries, and computable general equilibrium analysis of trade and agricultural policy reforms. He has worked as a consultant to the European Parliament, the OECD, the Food and Agricultural Organisation of the United Nations and the UN Industrial Development Organisation, and has been a panel member in a number of WTO Dispute Settlement procedures. He is a former President of the European Association of Agricultural Economists but writes here in a personal capacity.
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Brexit and Irish agri-food trade

I am preparing to give evidence to the Irish Oireachtas Joint Committee on Agriculture, Food and the Marine on Tuesday 17 January on how Brexit might impact on the Irish agri-food sector. Ireland is the EU Member State with the most to lose from Brexit, and the Irish agri-food sector is the most vulnerable economic sector because of its high dependence on the UK as an export market. More than 80 per cent of Ireland’s key beef and dairy production is exported. Although there has been some diversification away from the UK over the past decade, it still takes 43% of all Irish agri-food exports.

In thinking about the potential impact of Brexit on Irish agri-food trade, I draw heavily on the excellent study of the potential impact of Brexit on Irish agri-food trade prepared by two Teagasc economists Trevor Donnellan and Kevin Hanrahan just prior to the Brexit referendum. Although the study was finalised in April 2016, its key messages are still valid after the referendum result.… Read the rest

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Why further reform of the CAP is needed now

Yesterday I took part in a meeting at the European Parliament under the heading “CAP – Out of the box thinking‘ jointly organised by the RISE Foundation and the European Landowners’ Association. The event was part of the preparation for a report by the RISE Foundation under the leadership of Professor Allan Buckwell aiming to provide ideas for the CAP post 2020. My contribution was to argue that further reform of the CAP is needed now. Below is a slightly edited transcript of my remarks.

Reform of the Common Agricultural Policy has been ongoing since the seminal McSharry reforms in 1992. They have covered both the common market organisations, which have become more market-oriented, as well as rural development programming.
Direct payments were originally introduced to compensate for the reduction in market intervention prices in the MacSharry and later reforms, but were subsequently extended to farmers in new Member States where this rationale did not apply.

… Read the rest
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Designating new Areas with Natural Constraints

One of the longer-running sagas in EU agricultural policy-making is now entering the end game. I refer to the redesignation of certain less favoured areas (now called Areas with Natural Constraints) for the purpose of determining eligibility for ANC payments under the CAP. After much foot-dragging, it was agreed in the 2013 CAP reform that updated designation criteria would be used for ANC schemes in the 2014-2020 Rural Development Programmes, but Member States were given leeway to delay their introduction until 2018.

Presentations by DG AGRI officials at two recent workshops on the new ANC criteria, one organised by the European Network for Rural Development in October last year, and the other organised by COPA-COGECA in November last year, provide an overview of the state of play. While a number of Member States/regions have completed the redesignation, the great majority are still outstanding at this point in time.

Purpose of the ANC scheme

The purpose of ANC payments is to provide total or partial compensation to farmers for the natural or specific disadvantages of farming in areas with natural or specific handicaps to ensure that this land remains in agricultural production and to prevent land abandonment.… Read the rest

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First COMAGRI discussion on Omnibus Regulation

On 5 December last, COMAGRI had a first exchange of views on the so-called “Omnibus” proposal for a Regulation on the financial rules applicable to the general budget of the Union and amending a number of sectoral regulations. In my previous post, I flagged that this legislation provided the first opportunity to make changes to the CAP basic acts since the 2013 CAP reform was concluded.
It was thus interesting to listen to the mood of the Committee as the co-rapporteurs for the opinion, Albert Dess (EPP) and Paolo De Castro (S&D) introduced the discussion (a video of the discussion can be viewed here, beginning at 16:07).

The general tenor of the remarks from the COMAGRI co-rapporteurs as well as other contributors to the debate was that the Committee should adopt a narrow interpretation of its powers to amend the proposal, keeping in mind that its purpose is to deliver simplification of the CAP both for managing authorities and for farmers.… Read the rest

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Triggering the next revisions of the CAP

I have long puzzled over the timeline, processes and trigger points that could lead to the next revision of the basic CAP regulations. As long ago as September 2014 I wrote a lengthy post on the prospects for the next CAP reform before even the ink was dry on the 2013 reform. This highlighted the mid-term review of the 2014-2020 Multi-annual Financial Framework (MFF) as a possible trigger point. It also discussed the complications of the parliamentary timetable for concluding a new MFF for the post-2020 period and the implications this might have for a further round of CAP reform.

I returned to this issue in a post in November 2015 in which I asked whether there would be a proposal for a CAP reform in 2017 to coincide with the publication of the Commission proposal for the next MFF? My conclusion was that we were more likely to see a rolling series of proposals for incremental changes in the various basic acts over the period of the Commissioner’s tenure, designed to address specific problems and issues, but without fundamentally changing the structure of the 2013 reform.… Read the rest

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More on the future of direct payments

Yesterday, I had the privilege of presenting my report on the future of direct payments to a workshop on the future of the CAP after 2020 organised by the AGRI Committee in the European Parliament and its Policy Department (AGRI Research). I reproduce below my statement to the workshop which attempted to convey the flavour of my report.

It is an honour to be invited to address you today on the background note that I have prepared on the future of direct payments. Direct payments accounted for around 72% of the CAP budget and for just less than 30% of the EU budget in recent years. They are also an important source of income on many farms. They are therefore central to the debate on the future of the CAP.

Direct payments came about largely in response to successive reforms of the CAP. In the most recent reform, an important innovation was to convert a 30% share of direct payments into a greening payment to farmers respecting certain agricultural practices beneficial for the climate and the environment.

… Read the rest
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Bibliography of proposals for CAP post 2020 Feb 2017

As the debate on ‘modernisation and simplification of the CAP’ in the period post 2020 gathers pace, I thought it would be useful to start a page which brings together relevant contributions from political, think tank, academic, industry and NGO sources as well as relevant blog posts. I will plan to update this occasionally as new contributions are made. There will inevitably be a bias towards contributions in the English language. Readers are very welcome to draw my attention to omissions which might be added to this page.

Political and official documents (listed in time sequence)

Dutch Government, Food of the future – the future of food, Background paper for the informal AGRIFISH Council, 24-25 May 2016.
French Government, A reformed CAP for competitive, sustainable and resilient agriculture, Contribution to the informal AGRIFISH Council, 24-25 May 2016
Conclusions of agricultural Ministers gathered at Chamborg at the invitation of the French Agriculture Minister Stéphane Le Foll, 2 September 2016
The Cork 2.0 Rural Development Declaration, 6 September 2016.… Read the rest

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The US farm safety net

In its most recent Farm Bill in 2014, the US eliminated its decoupled direct payments, in part because it was hard to justify making income support payments to farmers at a time when farm incomes were booming due to favourable prices. Instead, it substituted a new set of counter-cyclical payments as part of the US farm safety net. At the same time, it expanded the scope of its federal crop insurance programmes by introducing a new programme to cover ‘shallow losses’ not normally covered by these programmes.

These US developments have led some in Europe to argue that the CAP should move in the same direction. Direct payments should be reduced and the money used instead to support insurance products for farmers or to fund counter-cyclical payments. This blog post does not discuss the merits of these proposals (for discussion, see this report prepared for the European Parliament’s COMAGRI). The US programmes are not widely known.… Read the rest

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The future of direct payments

My previous post highlighted the somewhat muted commitment in the Commission’s 2017 Work Programme to “take forward work and consult widely on simplification and modernisation of the Common Agricultural Policy to maximise its contribution to the Commission’s ten priorities and to the Sustainable Development Goals. This will focus on specific policy priorities for the future….”.

Member States as well as the European Parliament are also beginning to prepare their positions on what may or may not become the next CAP reform. Next week, on November 8th in Brussels, the European Parliament’s COMAGRI and Policy Department B are organising a workshop on Reflections on the agricultural challenges post 2020 in the EU: preparing the next CAP reform. To prepare for this workshop, three background notes were prepared for COMAGRI covering the future of direct payments, the future of market measures and risk management schemes and the future of rural development. I have contributed the note on the future of direct payments.… Read the rest

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Has the starting signal sounded for the next CAP reform?

Yesterday, the Juncker Commission released its third annual Work Programme for 2017. This year’s Work Programme proposes 21 key initiatives as well as a further 18 REFIT proposals intended to improve the quality of existing EU legislation. In addition, the Commission Work Programme identifies 34 priority pending proposals made in the past two years where it seeks swift adoption by the Parliament and Council.

The Work Programme Communication contains two specific references to agricultural policy development. The full paragraph reads as follows:

The Commission will take forward work and consult widely on simplification and modernisation of the Common Agricultural Policy to maximise its contribution to the Commission’s ten priorities and to the Sustainable Development Goals. This will focus on specific policy priorities for the future, taking account of the opinion of the REFIT Platform, and without prejudice to the Commission proposal to revise the Multiannual Financial Framework. As concerns the position of farmers in the food supply chain, in the light of the outcome of the ongoing work of the Agricultural Markets Task Force and the High Level Forum on the food supply chain, the Commission will consider further action as necessary.

… Read the rest