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.
Posted on

Simplification as a top priority in 2015

The heading of this post is taken from the title of the speech delivered by the Commissioner for Agriculture and Rural Development Phil Hogan when addressing the EP COMAGRI on 3 December last. It follows his commitment in his confirmation hearings to a simplification and subsidiarity strategy for the CAP. It seems simplification will be a big buzz word in CAP discussions in 2015. But what can we expect from this initiative, and how important is it likely to be in practice?

Simplification: a Sisyphean task

CAP simplification has been a mantra of all previous Commissioners. For example, shortly after taking up office as Commissioner for Agriculture in 1995, Franz Fischler, in a speech on 28 September 1995, declared:

For my part, I intend to contribute to review existing E.U. legislation, notably in my area of competence, so as to make the C.A.P. easier to understand and to apply. C.A.P. simplification is an overriding objective, not only because our farmers, in particular the smaller ones, seek it and need it, but also because, without it, it will prove exceedingly difficult to implement the C.A.P.

… Read the rest
Posted on

The 2015 EU budget and agricultural spending

A provisional agreement has now been reached on the 2015 EU budget between the Council and Parliament following their inability to reach an agreement on the Commission’s first draft budget proposal in November (read here the reactions to the deal of the Commission, of the Council and of the Parliament). In terms of the headline figures for overall EU spending, the agreement is closer to the Council’s position, particularly in terms of payment appropriations, an outcome which was predicted as a consequence of the Lisbon Treaty changes in a series of papers by Giacomo Benedetto of the University of London.
The Parliament’s main demand was not so much adjustments to the 2015 figures but rather addressing the increasing backlog of unpaid bills (the result of a rising gap between commitment and payment appropriations in recent budgets). The amount of unpaid bills rose from €5 billion in 2010 to €23.4 billion at the start of 2014 and without an increase in 2014 payment appropriations would have risen further in 2015.… Read the rest

Posted on

Rural development programming 2014-2020

Rural development programming for the MFF period 2014-2020 seems to be a disaster zone, and it would be interesting to hear comments from those more directly involved in the process as to the reasons and implications of the huge delays which have built up.
At a recent Rural Development DG AGRI Civil Dialogue Group meeting, the Commission presented an update on the programming of the new Rural Development Programmes (RDPs) from which the table below is taken. It expects only 10 RDPs out of a total of 118 to be approved by the end of this year. Nearly all of the 118 RDPs have been submitted (2 are still outstanding), and the Commission has returned its observations on 75 of these (see table below).
So a huge workload remains. The DG AGRI estimate is that just another 15 or so RDPs will be approved by the end of March, with the remaining 93 having to wait until ‘after MFF review’.… Read the rest

Posted on

The Doha Round is back on track

On Thursday 27 November 2014 last, the WTO General Council approved three decisions related to public stockholding for food security purposes, the Trade Facilitation Agreement and the post-Bali work programme. With these agreements the hiatus in the WTO’s post-Bali work caused by India’s position on the 2013 Bali Ministerial Council decisions has been unblocked. India had demanded a commitment to faster progress on finding a permanent solution to the treatment of official procurement prices for food security stocks under domestic support disciplines, as well as the copper-fastening of the terms of the interim peace clause, in return for its willingness to approve the Protocol of Amendment to allow the Trade Facilitation Agreement to come into effect.
The drama leading up to these decisions and their significance is well described in this Bridges article. Addressing the General Council , the WTO Director-General Robert Azevêdo said:

By agreeing these three decisions we have put ourselves back in the game.

… Read the rest
Posted on

FADN data highlights dependence of EU farms on subsidy payments

Last week, the DG AGRI Farm Accountancy Data Network, FADN, made available aggregated data in its public database for the 2012 accounting year. In addition, there is now a Farm Economy Focus, or country fact sheet, based on the 2012 data for each member state which presents key FADN results in a graphical form for a general audience.
The FADN database is a key tool both for policy-makers and researchers seeking to understand the behaviour of farmers and the agricultural economy. The survey does not cover the smallest farms, but it is representative for over 4.9 million holdings across the Union. It contains a wealth of information on the economics of farm businesses, and the FADN team makes it easy to access this information through a very friendly user interface to their public database.
While the FADN tool is a terrific resource, some of the data it contains tell a less-than-encouraging story about the economic condition of EU farming.… Read the rest

Posted on

EU sugar beet prices to fall by 22-23% when quotas eliminated

After much lobbying the Council and Parliament finally agreed that sugar quotas (including quotas on isoglucose) would be extended until the end of the 2016/17 season but would be abolished with effect from October 2017. In January this year, the EU’s Joint Research Centre (JRC) Institute for Prospective Technological Studies published its assessment of what might happen to the EU sugar market as a result of the abolition of sugar quotas. It is worth examining this report in some detail both for its substantive conclusions but also for some insight into the factors likely to affect the EU sugar market balance in the years after 2017.
The JRC study was completed at end-2012. It compares two alternative scenarios in the year 2020 – one scenario assuming that sugar quotas continued (the reference scenario) and one scenario in which sugar quotas are assumed eliminated in 2015. In the latter scenario, three alternatives are simulated with different assumptions regarding the share of isoglucose in the EU sweetener market.… Read the rest

Posted on

An agricultural perspective on the European Council 2030 climate and energy framework conclusions

The European Council agreed on a set of climate and energy targets for 2030 (the 40/27/27 package) at its meeting last month. The agricultural sector has a particular interest in these conclusions given that it is affected by climate change targets in three different ways:

  • Agriculture is a very energy-intensive sector, so policies designed to raise the cost of fossil fuel energy will increase its costs of production, particularly for nitrogen fertiliser where around 80% of all inorganic N used in EU agriculture is produced domestically. The most important factor here is the level of ambition set for the ETS sector and thus the future price of emission allowances which the fertiliser industry must buy.
  • Agriculture must contribute to mitigation efforts if the EU is to meet its long-term target of reducing GHG emissions in 2050 by 80-95% compared to 1990 levels. Reducing agricultural GHG emissions is difficult particularly if food production is increasing.
    • … Read the rest
    Posted on

    Farmers may have to pay for Russian crisis aid

    One of the successes of outgoing Agriculture Commissioner Dacian Ciolos in the 2013 CAP reform was to maintain the size of the CAP budget in the 2014-2020 multi-annual financial framework (MFF), at least in nominal terms (and even in real terms in the Commission’s original proposal). This was no mean achievement given the extent of the financial crisis in Europe, the pressures on public spending and the competing demands for spending at EU level.
    His success was due to persuading his fellow Commissioners that a larger share of the CAP budget would be devoted to paying for public goods, particularly environment and climate actions. However, in the subsequent negotiations on the details of the CAP reform, these commitments were greatly weakened, much to the frustration of the other Commissioners. It now appears that the other Commissioners have had enough and are fighting back, using the first amending letter to the 2015 EU budget as their instrument.… Read the rest

    Posted on

    Agriculture in the 2030 Climate and Energy Package

    The European Council comprising the EU Heads of State and Government will meet at the end of this week 23-24 October to take a final decision, among other issues, on the EU’s new climate and energy policy framework. The plan is to agree on the target level of GHG emission reductions for 2030 so that the EU can submit its contribution for the conclusion of a global climate agreement in Paris at the end of next year at the latest by the first quarter of 2015, in line with the timeline agreed by the UNFCCC. However, according to the EUObserver, there are still significant differences of view on the targets between member states, and deadlock at the meeting is not ruled out.

    The state of play

    The Commission Communication presenting the climate and energy framework was published in January this year and contained the following elements:

      – a greenhouse gas emissions reduction target of 40% below 1990 levels, to be achieved only through domestic measures (without the use of international credits);
      – this overall target to be met through a reduction of 43% in emissions from the ETS sector and a reduction of 30% in emission from the non-ETS sector, both compared to 2005.
    … Read the rest
    Posted on

    What is the growth potential of EU agriculture?

    Commissioner-designate Phil Hogan committed himself to a growth, jobs and investment agenda for agriculture in his confirmation hearing with the EP’s COMAGRI. Given the stuttering EU recovery and continued high unemployment in EU countries, this is an understandable objective. But can EU agriculture rise to the challenge? Not on its past record, at least without substantially changing the policy paradigm.
    It is rarely recognised just how disappointing the growth performance of EU agriculture has been over the past two decades. As shown in the figure below, the average growth rate over the period 1990-2011 for the EU-28 has been a mere 0.2% per annum. That is, over the 21-year period, the volume of agricultural output in the countries that make up the EU today grew by just 4.5%.

    These data are calculated using FAOSTAT data; the data from Eurostat tell a somewhat more optimistic story with a growth rate (for the EU-15) of 0.8% p.a.… Read the rest