WTO dimensions of a UK 'Brexit' and agricultural trade

January 5, 2016October 28, 2019

WTO dimensions of a UK 'Brexit' and agricultural trade

Following a first round of discussions on UK demands for a renegotiation of the terms of its membership of the EU at the European Council meeting last month, it now seems that the February meeting of the Council will agree on some package of measures and promises in response to UK Prime Minister David Cameron’s demands. It will then be up to Cameron to decide if this package is sufficient for him to campaign to stay in the EU in the referendum promised to take place before the end of 2017 and possibly later this year.

Even if Cameron decides to campaign in favour of staying in, there is no guarantee that the UK voters will follow him. A possible Brexit, or UK exit from the EU, remains a distinct possibility.

If a Brexit were to occur, the UK would have to decide on what agricultural and agricultural trade policy it wished to pursue outside the EU.… Read the rest

December 29, 2015

Is the removal of quotas responsible for the increase in EU milk production in 2015?

The plight of milk producers supplying the dairy cooperative Arla in Denmark and Sweden was the lead article in my Danish newspaper yesterday morning. Interviews with a number of farmers supplying Arla highlighted their loss-making situation at current milk prices. The journalist writing the story highlighted that a number of factors were responsible for the current low milk prices: the Russian import ban on EU dairy products, lower import demand in China but also increased production in the EU which he attributed to the removal of milk quotas in April of this year.
That EU milk production has increased is clear, as shown in the figure below. Production has increased from 135.2 mt in 2008 to a forecast 149.4 mt in 2015 and an estimated 150.8 mt in 2016. More recent data from the Milk Market Observatory (MMO) Dashboard for 23 December 2015 even suggests that the expected increase in 2015 will be significantly higher at 1.8% rather than the 1.1% shown in the December 2015 short-term outlook.… Read the rest

December 6, 2015August 27, 2019

Greenhouse gas emission targets and Irish agriculture

Ireland faces a huge challenge in reducing its greenhouse gas emissions in the coming years. Taoiseach (Irish Prime Minister) Enda Kenny got into hot water last week for apparently saying one thing in his official speech to the Paris COP21 climate conference and another thing in unscripted remarks to journalists afterwards. Much of the subsequent controversy during the week revolved around the Irish government’s attitude to agricultural emissions and whether it was seeking special favours for the Irish agricultural sector in the current negotiations on setting national emissions targets for the period to 2030 in the framework of the EU’s 2030 Climate and Energy Package. I look at the background to this controversy in this post.

In his speech to the COP21 conference, Mr Kenny pointed out that Ireland’s national long-term vision is presented in climate legislation. This sets out its intention “to substantially cut CO2 emissions by 2050, while developing an approach towards carbon neutrality in the land sector that does not compromise our capacity for food production”.… Read the rest

November 25, 2015January 4, 2026

The EU has finally agreed to eliminate export subsidies…three cheers!

As long as I have been commenting on the CAP, its most criticized feature has been its use of export subsidies, also called export refunds. In the late 1980s and early 1990s, the EU was spending €10 billion a year on export subsidies, almost one-third of the CAP budget, in order to allow traders to get rid of the EU’s growing export surpluses by paying the difference between the EU’s high internal prices and lower world market prices.

Export subsidies allowed EU exporters to grab market share in import markets from competing exporters, put downward pressure on the level of world market prices, and competed unfairly with local producers in many developing countries. The damages caused were brilliantly highlighted and analyzed in a series of powerful reports and pamphlets by development NGOs such as Oxfam (Stop the Dumping! How EU Agricultural Subsidies are Damaging Livelihoods in the Developing World, 2002; Dumping on the World: How EU Sugar Policies Hurt Poor Countries, 2004); Aprodev (No More Chicken, Please, 2007; Preventing Unfair ‘Dumping’ of EU Subsidized Food, 2011); ActionAid (Milking the Poor; How EU Subsidies Hurt Dairy Producers in Bangladesh, 2011) and Brot für die Welt (Milk Dumping in Cameroon: Milk powder from the EU is affecting sales and endangering the livelihoods of dairy farmers in Cameroon, 2009).… Read the rest

November 17, 2015July 22, 2019

Gainers and losers from the CAP budget

In thinking about the prospects for a future CAP reform, one of the relevant factors is the political economy of member states’ negotiating positions, which in turn is heavily influenced by their net position as a contributor to or a beneficiary from CAP expenditure. Countries are more likely to defend a high level of CAP expenditure if they are likely to benefit from it. The net transfers arising from the CAP budget are thus an important predictor of a country’s stance on CAP reform.

These net transfer positions are not routinely published, although DG Budget provides the raw data in its annual calculation of the ‘operating budgetary balances’ of member states. A member state’s operating budgetary balance is the difference between allocated operating expenditure (excluding administration) and its ‘national contribution’ to the EU budget.

A member state’s ‘national contribution’ represents its contribution to the EU budget’s ‘own resources’ apart from the traditional own resources of customs duties and sugar levies.… Read the rest

November 15, 2015

Will there be a CAP reform in 2017?

On Friday last, I took part in a panel discussion at the Centre for European Policy Studies in Brussels on the theme “Will there be a mid-term review in 2017? And, if so, what should it do?” My contribution focused on the timing and procedural issues which will influence the prospect of a substantive early review of the CAP basic acts. Other speakers on the panel (Allan Buckwell from IEEP, Rolf Moehler formerly of DG AGRI and Paolo de Castro MEP from the Socialists and Democrats Group in the European Parliament) addressed what the contents of such a review might or should be.
The purpose of the event was to formally launch the book The Political Economy of the 2014-2020 Common Agricultural Policy: an Imperfect Storm which has been edited by Johann Swinnen and published by CEPS together with Rowman & Littlefield International. This book is a fascinating series of essays on the story behind the 2013 reform but also includes three chapters looking ahead to the future by three of Friday’s panellists, including one which I contributed.… Read the rest

November 3, 2015

The CAP and biodiversity

Two weeks ago I gave a talk at a biodiversity conference organised by Teagasc, the Irish Agriculture and Food Development Authority. The proceedings of this conference can be downloaded here. The title for my talk was ‘Could European agricultural policy do more to promote biodiversity?‘ In today’s edition of the Irish Farming Independent I have a short article which summarizes the talk. I reproduce the article below and also the presentation accompanying the talk.
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The 2013 CAP reform had three overall objectives: viable food production; sustainable management of natural resources and climate action; and balanced territorial development. The emphasis on sustainable management in the second objective was a response to the growing awareness that the twin issues of land abandonment and agricultural intensification lead to severe environmental problems which required an EU policy response.
Among these environmental problems is the growing loss of farmland biodiversity. The recent mid-term review of the EU’s 2020 Biodiversity Strategy concluded that the EU was making no progress towards its target to bring about a measurable improvement in the conservation status of species and habitats that depend on or are affected by agriculture.… Read the rest

November 2, 2015

The intervention logic of the CAP

One of the innovations in the 2013 revision of the CAP Basic Acts was to extend a formal system of monitoring and evaluation of the CAP’s performance beyond Pillar 2 rural development, where it had been long-established, to also cover Pillar 1 direct payments and market management. This Common Monitoring and Evaluation Framework (CMEF) was set out in Article 110 of the Horizontal Regulation. This requires the Commission to measure and assess the combined impact of all CAP instruments in relation to three common objectives set out in this Article.
The three objectives set out for the CAP (which essentially ‘reinterpret’ the objectives contained in Article 39 of the Lisbon Treaty) are:
• viable food production, with a focus on agricultural income, agricultural productivity and price stability;
• sustainable management of natural resources and climate action, with a focus on greenhouse gas emissions, biodiversity, soil and water;
• balanced territorial development, with a focus on rural employment, growth and poverty in rural areas.… Read the rest

October 13, 2015

EU’s declining importance in agrifood trade

The fact that twelve countries reached agreement on the terms of the Trans-Pacific Partnership free trade area last week (albeit ratification is by no means assured) underlines the changing geography of international agrifood trade. The EU is still an important player, but it is remarkable how quickly its importance is declining as other exporters make their appearance and other import markets grow in size (see this post for a previous discussion). The table below shows the trends over the past two decades (click to enlarge).

The table shows the EU’s share of global exports and imports of agrifood products, but excluding fish (SITC 03). When trade within the EU itself (intra-EU trade) is included, then the EU accounts for 38% of world agrifood exports and imports. This represents a fall from a share of 45% of global exports and imports in the mid-1990s. On the surface, this is a relatively gentle fall over a period of nearly two decades.… Read the rest

October 11, 2015

What biodiversity benefits can we expect from EFAs?

The recent release by the Commission of its Mid-Term Review of the EU’s 2020 Biodiversity Strategy makes for sorry reading when it comes to Target 3 “To increase the contribution of agriculture and forestry to maintaining and enhancing biodiversity..”. Specifically, Target 3A dealing with agriculture had the following objective:

By 2020, maximise areas under agriculture across grasslands, arable land and permanent crops that are covered by biodiversity-related measures under the CAP so as to ensure the conservation of biodiversity and to bring about a measurable improvement in the conservation status of species and habitats that depend on or are affected by agriculture and in the provision of ecosystem services as compared to the EU 2010 Baseline, thus contributing to enhance sustainable management.

The Mid-Term Review concludes that there has been no significant progress towards this target. One indicator, illustrated in the figure below, is that there has been no measurable improvement in the status of the majority of agriculture-related species and habitats covered by EU nature legislation since the last reporting period.… Read the rest