One of the success stories in the evolution of CAP reform has been the change from supporting the product to supporting the producer by moving, first, from market price support to coupled payments, and then by decoupling these payments.
The 2013 CAP reform has reversed this process. Coupled aids have started to grow again, from a projected €2.7 billion in 2014 to a projected €4.8 billion in 2015, an increase of nearly 75%. Their share of total direct payments will rise from 6.7% in 2014 to 11.6% in 2015. This step backwards was one of the negative outcomes of the recent CAP reform. The limited data available raise the question whether the new coupled payments fully comply with the criteria set out in the new direct payments regulation.
Coupled payments in successive CAP reforms
The decoupling of CAP direct payments started in the 2003 Fischler reform (implemented from 2005), continued with the subsequent reforms of individual commodity regimes and reached its high point in the 2008 Fischer Boel Health Check.… Read the rest
TTIP and the potential for US beef imports
Beef is generally considered to be a sensitive sector in the EU-US negotiations on a possible Transatlantic Trade and Investment Partnership (TTIP) agreement. Currently, imports of beef from the US are limited by high tariffs and by the refusal of the EU to allow the import of beef produced with the aid of pharmaceutical technologies such as hormones and beta-agonists (a class of non-hormonal compounds that act to increase feed efficiency).
Nonetheless, EU imports of non-hormone-treated beef from the US have been increasing in recent years. Different views have been expressed about the likely consequences for the EU beef market if market access were further liberalised under a TTIP agreement. I examine the background to this issue in this post.
The WTO beef hormones dispute
Negotiations to increase US access to the EU market for beef as part of a TTIP agreement take place against the background of special trade concessions agreed following a complex series of disputes taken originally under the GATT and, subsequently, under the WTO’s dispute settlement process.… Read the rest
Forum for the Future of Agriculture 2015 – Remarks on EU agricultural trade policy
The 8th Forum for the Future of Agriculture (FFA2015) was held yesterday in Brussels. This annual meeting, organised jointly by the European Landowners’ Association and Syngenta, attracts around 1400 participants and has established itself as one of the principal fora for debate on the future of agricultural policy. What makes the event interesting is that it attracts a good number of participants from among farmers and the agri-business sector while also being open to environmental NGOs and others critical of current agricultural practices.
The theme for yesterday’s meeting was the UN Sustainable Development Goals and possible implications for EU agriculture, with contributions from both Commissioners Hogan (Agriculture) and Vella (Environment, Maritime Affairs and Fisheries). Sessions explored issues ranging from global food security (do we really need to produce more food?), developing a sustainable agriculture (is organic the only legitimate solution?), implications of the circular economy concept for jobs and growth (is there more to this concept than simply pricing in the value of externalities?)… Read the rest
Farmers' share of food chain value added
In response to a question recently in the European Parliament from Mairéad McGuiness MEP, one of the Parliament’s Vice Presidents and a member of COMAGRI, the Commission presented updated figures on the distribution of the value added in the food chain between the various actors. Mairéad McGuinness had asked if the Commission could provide details on the average share/percentage of the final price that farmers receive for their produce, relative to the share/percentage received by other actors in the food supply chain?
The Commission had previously presented figures for the distribution of value added in the food chain between the years 1995 and 2005 in a staff working paper accompanying its communication A better functioning food supply chain in Europe in 2009. This analysis showed that value added for agriculture in the food chain dropped from 31% in 1995 to 24% in 2005, mainly in favour of other food chain actors.… Read the rest
The Energy Union package and agriculture
Last Wednesday 25th February the Commission launched its long-awaited Energy Union package comprising three Communications. The first proposes A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy with an accompanying roadmap setting out a projected schedule for the implementing legislation. This document sets out priorities for energy and climate policy, with a particular focus on achieving an integrated energy market, ensuring security of supply including through diversification, improving infrastructure and interconnection, improving energy efficiency, and speeding up decarbonisation in order to meet the EU’s climate goals. In total, it sets out 15 action areas to be addressed in implementing these objectives.
A second Communication prepares the EU’s contribution to the forthcoming United Nations Framework Convention on Climate Change (UNFCCC) Paris Summit in December where it is hoped to reach agreement on a legally binding agreement intended to ensure that the world is on track to achieve the below 2°C objective.… Read the rest
The UK milk ‘crisis’ – fact or fiction?
Reading the UK press over the past few weeks it appears that the UK dairy industry is on its last legs and that UK dairying will soon become an extinct species. The Daily Mail reports that “campaigners warned it was the worst crisis the industry has ever seen”. At the other end of the political spectrum, the Guardian headlines its story “No whey forward – future of Britain’s dairy industry hangs in the balance” and goes on to claim “Years of falling milk prices could spell an end to the fresh, safely produced dairy products we take for granted.”
According to Rob Harrison, the chairman of the NFU’s dairy board, in The Telegraph: “Being a dairy farmer at the moment is like being a boxer – on the ropes and taking body blow after body blow. There is only so much you can take before throwing in the towel.” The House of Commons Environment, Food and Rural Affairs Committee has just published a report on dairy prices in response to the alarm.… Read the rest
Why the poor EU response to higher grain prices?
Since 2007/08, the world has lived with substantially higher, if fluctuating, prices for grains following the global food price spike that began in 2007. Economists would predict that higher prices would lead to a global supply response. Indeed, global cereals production has increased by over 500 million tonnes in 2013 compared to 2006 production of just over 2 billion tonnes (FAOSTAT statistics are used throughout this post, and cereals production is measured inclusive of the volume of milled rice). This corresponds to an increase of 25% over this period, or a compound annual growth rate of 3.3% per annum which is impressive.
What is also of interest is where this supply response has taken place. Immediately after the food price shock it seemed that most of the supply response was taking place in developed countries, with only a limited supply response in developing countries. Various reasons were suggested for this. It was argued that there was limited transmission of the international price increases to domestic markets in developing countries, either because of high transactions costs (inefficient transport systems, expensive customs procedures) or because of deliberate government policies (reducing import tariffs or imposing export restrictions in order to limit the extent of price increases on domestic markets).… Read the rest
Commitments to rural development spending 76% below forecast in 2014
The publication by the Commission of its second Draft Amending Budget (DAB No.2) to the EU’s 2015 budget this week reveals in stark figures the extent of the hiatus in CAP rural development spending caused by the delays in passing the relevant legislation and in approving rural development programmes. I first highlighted how approval of rural development programmes was falling way behind schedule in this post; the Commission’s budget figures now allow us to quantify the extent of the damage.
The delays do not affect only rural development programmes but all programmes under the European Structural and Investment Funds, the Asylum, Migration and Integration Fund and the Internal Security Fund. The Commission reports that 645 programmes need to be approved in total, of which 118 are rural development programmes. It estimates that 252 programmes (39%) were adopted in 2014, 93 (14%) are eligible for adoption on 2014 appropriations carried over to 2015, and for the remaining 300 programmes (47%) the corresponding 2014 appropriations have been left unused.… Read the rest
Agricultural implications of British EU withdrawal for rest of the EU
This Sunday, the Greek general election may decide if Greece will leave the Eurozone, sometimes referred to as Grexit. None of the likely winners of the election, including Syriza, want this, but if there is an unwillingness to address the restructuring of Greek debt, particularly given Syriza’s promises to dramatically increase public spending, this could be the outcome. Whether Greece would then remain a member of the EU if this were to happen is uncertain, with The Economist arguing this week that, in all likelihood, Greece would have to leave the EU as well.
Later this year, on 7 May, the British general election takes place. The outcome of this election will influence the likelihood of Brexit, namely, British withdrawal, not from the Eurozone, but from the EU. David Cameron, the UK Prime Minister, has promised to hold a referendum on UK membership of the EU in 2017 if the Conservatives are returned to power.… Read the rest
Impact of the MFF negotiations on the CAP 2013 reform
The CAP 2013 reform was the first negotiated under the ordinary legislative procedure (co-decision) in which both the Parliament and the Council had equal powers. A project undertaken by the Centre for European Policy Studies in Brussels for the European Parliament’s Policy Department has sought to examine what impact and influence the Parliament had on the CAP 2013 out-turn as a result of co-decision. Did co-decision give the Parliament a greater opportunity to influence the final outcome, who were the key players in shaping the Parliament’s views and what did the Parliament use its influence to achieve?
The final study, when it is published, will throw light on these issues. The team behind the study (of which I was one) also commissioned a series of case studies on specific issues raised in the co-decision process. These case studies are now available on the CEPS website. They include a detailed amendment analysis by Imre Fertð and Attila Kovács of the Council and Parliament amendments to the Commission’s original draft proposals which evaluates the relative effectiveness of the two bodies in carrying their amendments into the final legislation, a detailed study of the role of COMAGRI by Christilla Roederer-Rynning, an analysis of the evolution of the greening debate by Kaley Hart, and an analysis of the European Parliament’s position on market regulation by Alessandro Olper.… Read the rest