Two important meetings as part of the process of agreeing a CAP reform took place earlier this week – the Agricultural Council on Monday and the Ecofin Council on Tuesday. The Agricultural Council meeting was notable for the success of the Irish Presidency in getting agreement on a compromise mandate on the Common Fisheries Policy reform after 36 hours of negotiations which it is hoped will be the basis for a political agreement with the Parliament before the end of the Irish Presidency in June.
We are not yet at the same point with the CAP reform dossier (see this recent update to the Irish Parliament by Simon Coveney, the Irish Minister representing the Council in the trilogue negotiations and this view from Mairead McGuinness, one of the shadow rapporteurs in the European Parliament). Both the Irish Presidency and the Agriculture Commissioner continue to make bullish pronouncements (as indeed they must) that an overall CAP package also acceptable to the European Parliament negotiators will be agreed at the next Agricultural Council in June.… Read the rest
A short bibliography on CAP greening
As this was a relatively quiet week for news on CAP reform, I thought it might be useful to gather together in one place some references to the debate that has taken place on CAP greening since the publication of the Commission’s proposals in October 2011. This remains one of the knottiest issues to resolve in the CAP trilogues. These papers provide a guide to the general issues in this debate. There is also an emerging literature which attempts to estimate the impact for particular regions and farming systems of implementing the greening measures which I do not cover here. The papers are presented in rough chronological order and include a number of my own contributions so there is a certain amount of repetition.
Alan Matthews, Environmental Public Goods in the New CAP: Impact of Greening Proposals and Possible Alternatives, 2012, Brussels, European Parliament.
This note prepared for the European Parliament’s COMAGRI discusses the greening component of direct payments in the Commission’s legislative proposals of October 2011 for the Common Agricultural Policy in the period after 2013.… Read the rest
MFF negotiations blown off course as European Parliament plays poker
Last week (Monday 22 April) the General Affairs Council (GAC) gave ‘guidance’ to the Irish Presidency for the negotiations with the European Parliament on concluding the MFF negotiations. The Irish Presidency’s objective is to reach agreement with the Parliament on the MFF by the end of June and to translate the overall MFF agreement into legal texts.
According to the conclusions of the meeting:
Ministers supported the presidency’s efforts to find a compromise with the European Parliament on the next MFF in a timely manner. Ministers expressed their willingness to discuss the four key elements of the European Parliament’s resolution (flexibility, revision, own resources and unity of the budget). Some ministers also stressed that substantial elements of the Parliament’s demands had already been agreed by the European Council in February, in particular as regards flexibility.
More than two months have passed since the European Council agreed its proposal on 8 February, and the Presidency was anxious to lose no more time.… Read the rest
What farmers should do to qualify for the new CAP green payment
This post originally appeared on the Environment Nexus website.
The trilogue process between the Council, the Parliament and the Commission on the new CAP regulations has now started. Over thirty meetings are scheduled to take place between now and end-June with a view to reaching a political agreement on the four main CAP regulations proposed by the Commission (direct payments, rural development, the single CMO, and the horizontal regulation).
The proposed greening of Pillar 1 payments is one of the key elements in the direct payments regulation. In their responses to the Commission’s proposal both the Council and the Parliament have moved to dilute considerably the impact of the three greening measures proposed by the Commission. The Council’s position on greening following the March 2013 Council meeting is well summarised by this post on the IEEP CAP2020 blog.
Although there is considerable convergence of views between the Council and the Parliament on the greening amendments they put forward to the Commission’s proposal, one area where a significant gap has opened up following the Parliament’s plenary vote concerns the possible role for equivalent measures.… Read the rest
CAP reform uncertainty and the market for entitlements
One little-emphasised feature of the current negotiations on CAP reform is that the rules for eligibility for payments under the new basic payment scheme (and thus also the other proposed layers of Pillar 1 direct payments such as the green payment, young farmer’s payment, area of natural constraints payment and redistributive payment where these are adopted) are in a state of flux. New amendments and modifications continue to be introduced at successive stages of the negotiation process. This uncertainty is reflected in the market for Single Farm Payment (SFP) entitlements and the prices farmers are willing to pay for entitlements where they become available.
The Commission’s original proposal was that farmers would receive entitlements based on the number of eligible hectares declared in 2014 (Article 21 of the direct payment regulation). I have previously discussed how the requirement for an eligible farmer to have received a payment (and thus have activated at least one entitlement) in 2011 was introduced into the Commission’s October 2011 proposals at the last minute.… Read the rest
Impact of CAP subsidies on productivity
I recently had an exchange on Twitter with Martin Crowe, an Irish dairy farmer and agri-consultant, over the apparent stagnation in Irish agricultural output over the past 20 years (follow on @xAlan_Matthews and @martincrowe). I attributed this, in part, to the role that direct payments play in Irish farm incomes. I argued that “If 70% of your income is coming as a cheque in post there is less incentive to innovate to grow the remaining 30%” (direct payments make up around 70% of Irish farm income in an average year). Martin tweeted back that the “70% gives the security and confidence to try and improve the 30%”.
At issue here is the impact of CAP direct payments on farm productivity. As the Twitter exchange indicates, there are potentially both positive and negative effects.
How direct payments might affect productivity
In the agricultural economics literature, the positive effects rely on credit constraints and assumptions about risk behaviour in agriculture.… Read the rest
How MEPs voted on CAP reform
The website VoteWatch Europe monitors the voting of MEPs on each resolution and piece of legislation. It published the following commentary on the CAP reform voting earlier this month (thanks to Xavier Pavard @xpavard on Twitter for drawing attention to this source) which I reproduce here.
(Note: Right click on the images below and select Show picture to get clearer view of the graphics)
… Read the restCentre-right wins battle over CAP reform; net contributor country MEPs outvoted
MEPs voted on a package of four legislative proposals that make up the reform of the Common Agricultural Policy (CAP). The subject was hotly debated, as CAP currently accounts for close to 40% of the EU budget. CAP is to be reformed with effect from 1 January 2014. To ensure better targeting of aid, the proposal gives Member States the responsibility for defining what constitutes an “active farmer”.
Other provisions are that no Member State’s farmers should receive less than 65% of the EU average, that young farmers should get a 25% top-up payment for a maximum of 100 ha and that direct payments to any one farm should be capped at €300,000.
Evolution of the direct payments regulation
In January I prepared a spreadsheet setting out the amendments to the Commission’s proposed direct payments regulation which took account of the COMAGRI rapporteur’s amendments May 2012, the Council’s position as summarised in the Cyprus Presidency document December 2012 and the COMAGRI compromise amendments Jan 2013.
Some readers found this useful so I have now updated the spreadsheet to take account of the COMAGRI proposal for a negotiating mandate in February 2013 (that is, after COMAGRI voted on the compromise and other amendments), the mandate following the European Parliament plenary vote in March 2013, and the successive versions of the regulation prepared by the Irish Presidency for the March 2013 Agricultural Council meeting. The updated spreadsheet can be downloaded here (use the download arrow in the top left corner when the Google Drive document opens to download the spreadsheet to your computer).
The Irish Presidency prepared three versions of Council’s general approach on the direct payments regulation.… Read the rest
Implications of the new redistributive payment
Ever since direct payments were introduced into the CAP, their unequal distribution has attracted unfavourable attention. The Commission’s 1991 paper The Development and Future of the CAP criticised the distribution of price support, noting that “80% of the support provided by FEOGA is devoted to 20% of farms which account also for the greater part of the land used in agriculture”. Yet the proportions remain exactly the same in both the EU-15 and EU-12 today, according to the Commission’s latest figures for the claim year 2009 (financial year 2010) (see diagram).
Even for those who argue that the specific nature of farming justifies a permanent system of direct payments support, the unequal distribution of support is hard to justify. The Commission has regularly made proposals to reduce payments to larger farms through either progressive modulation and/or capping. But these proposals equally regularly were either watered down or rejected by the member states.… Read the rest
Promoting innovation through the EIP Agricultural Productivity and Sustainability
Last week I attended a meeting of the High Level Steering Board of the European Innovation Partnership for Agricultural Productivity and Sustainability (EIP-A) representing the European Association for Agricultural Economists. The meeting was jointly organised by Dacian Ciolos, Commissioner for Agriculture and Rural Development, and Maire Geoghegan-Quinn, Commissioner for Research and Innovation.
It brought together 42 people representing member states, the farm and food sectors, NGOs, representatives from existing Joint Programming Initiatives in the food and agriculture area as well as scientific associations and the university sector. The purpose of the meeting was to provide input for drawing up the EIP Strategic Implementation Plan (SIP) and the agenda was organised around four questions relating to priorities, bottlenecks, mobilising farmers and delivery mechanisms and funding.
Given the diversity of interests around the table, the discussion highlighted inevitable tensions around (a) the concept of innovation and how to define it (b) the balance between agricultural and food innovation particularly in the context of the EU’s bioeconomy strategy, and (c) within agriculture, the emphasis to be given to increasing production with less external inputs compared to more agroecological approaches placing more emphasis on sustainability and less on production.… Read the rest