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

The greying of Europe's farmers

Problems in the generational transfer of farms have been a focus of EU agricultural structures policy since the 1990s and in individual member states for an even longer period. Europe’s farmers are getting older, and the shortage of ‘new blood’ entering the industry is frequently seen as a problem requiring a policy response to correct.
The ageing of the agricultural population results from a combination of two things: a reduced rate of entry by new young recruits, and a reduced rate of retirement or exit by older farmers. This is taking place in the context of a long term reduction in the agricultural labour force in EU countries.… Read the rest

Posted on

The greying of Europe’s farmers

Problems in the generational transfer of farms have been a focus of EU agricultural structures policy since the 1990s and in individual member states for an even longer period. Europe’s farmers are getting older, and the shortage of ‘new blood’ entering the industry is frequently seen as a problem requiring a policy response to correct.

The ageing of the agricultural population results from a combination of two things: a reduced rate of entry by new young recruits, and a reduced rate of retirement or exit by older farmers. This is taking place in the context of a long term reduction in the agricultural labour force in EU countries.… Read the rest

Posted on

Court of Auditors wants clearer objectives for post-2013 CAP reform

The European Court of Auditors is best known as the watchdog of the reliability and legality of the EU’s accounts. In its special reports it often undertakes an assessment of specific areas of Union activity, and it has published various reviews of specific aspects of agricultural expenditure over the years.

It can also submit opinions at the request of one of the other institutions of the Union, and it has just released an opinion on the Commission’s legislative proposals for the CAP post-2013 announced in October 2011.

The opinion focuses on whether and to what extent the Commission’s legislative proposals remedy weaknesses already identified by the Court following its audits.… Read the rest

Posted on

How the CAP contributes to world market food price volatility

The contribution of export bans to the world food price spike in 2008 is now well-established, particularly for commodities such as rice (for example, see Abbott, 2012 and Sharma, 2011). Martin and Anderson (2012) have calculated that over the 2005-2008 period more than 45 per cent of the explained change in the international price of rice was due to changes in border restrictions that countries used in an attempt to insulate themselves from the initial increases in price.

Countries resort to export bans in an attempt to keep down the price of food to domestic consumers. When undertaken by countries whose level of trade is big enough to influence the world market price, then an export ban also has ramifications for other countries.… Read the rest

Posted on

Latest EU AMS notification confirms declining trend in WTO amber box support

The EU has just submitted its domestic support notification to the WTO for the year 2008/09 (hat tip to LB) and this year there are no surprises. Total support (using the WTO definition) was a shade over €80 billion, but the value of its trade-distorting support (the so-called ‘amber box’, given by its current total Aggregate Measure of Support) fell to its lowest level ever, at just under €12 billion.

In that year, the EU used just over 16% of its Total AMS commitment (its bound ceiling) of €72.2 billion. In other words, the EU could have reduced its AMS commitment by over 80% in that year and would still have fulfilled its WTO amber box obligation.… Read the rest

Posted on

Are the CAP 2013 proposals a major reform?

The economist’s dilemma

Economists evaluating the Commission’s legislative proposals for the CAP post 2013 face a dilemma.

Economists work within a paradigm in which agriculture is an industry no different from any other, where markets by and large do a good job in allocating resources, and where the only justification for government intervention requires both the existence of market failures and demonstrating that governments have access to relevant information or resources which would allow them to address those market failures effectively.

This is an extremely powerful toolkit because it allows economists to distinguish between welfare-enhancing policy interventions and those which are largely about shifting resources and rents from one group to another (the distinction between PERTs and PESTs using Gordon Rausser’s terminology in his well-known 1982 AJAE paper).… Read the rest

Posted on

End the use of export subsidies in the 2013 CAP review

A rather specific feature of the EU’s agricultural policy has been its use of export subsidies to maintain market prices on its domestic market in the past. While the EU was not the only country to make use of this policy mechanism, it accounted for around 90% of global expenditure on formal export subsidies (while arguing that other countries provide export support through more indirect means, such as through state monopoly marketing boards or through food aid).

EU use of export subsidies has fallen dramatically although they still have not disappeared. Total expenditure on export refunds fell from €3.8 billion in 2003 to a projected €139 million set aside in the EU’s draft 2012 budget (at their peak in the late 1980s and early 1990s, they amounted to €10 billion per year).… Read the rest

Posted on

EU biomass targets put pressure on global land resources

There is a now a widespread awareness of the tensions created by mandated EU biofuels targets for global land use and food markets. The requirement that 10% of EU transport fuel should come from renewable sources by 2020 is set out in the Renewable Energy Directive 2009/28/EC adopted by the European Council in April 2009.

The other important target in this Directive is that 20% of the EU’s gross final consumption of energy should come from renewable sources by 2020. Indeed, from a land use and food markets perspective this target could have a potentially greater impact.

While much of this renewable energy in the electricity sector will come from wind, overall by 2020 biomass will remain the most important source of renewable energy in the EU (accounting for 57% of the total, according to an analysis of Member State National Renewable Energy Action Plans undertaken by The Netherland Energy Research Centre and reported in AEBIOM’s 2011 Annual Statistical Report).… Read the rest

Posted on

The cost of flat-rate agri-environmental measures

The Commission’s proposals to require shallow, one-size-fits-all, green measures across the EU as a whole in return for a green payment in Pillar 1 have been widely criticised as overly prescriptive, yielding limited environmental benefits (‘greenwash’), administratively complicated for member states and unnecessarily costly in terms of the trade-off with food production.

I reviewed these criticisms in a recent note for the European Parliament’s COMAGRI (link to appear when the note is published shortly). In the note I favoured a continuation of the past CAP reform trajectory in which a larger share of the CAP budget would be shifted to Pillar 2 in order to allow more ambitious and targeted agri-environmental measures (AEM).… Read the rest

Posted on

Leaked Commission figures sound death knell for biodiesel

Euractiv has a post purporting to contain the default carbon emission values to be assigned to biofuels made from feedstocks such as palm oil, soybean or sugar beet when the European Commission releases its proposed legislation on biofuels and indirect land use change later this spring, based on a leaked draft of the proposal.

Any application of the leaked values would severely hamper the ability of biodiesel manufacturers to enter into the EU’s new biofuels certification plan, announced last August.

Assuming that the EU does not relax its overall target for renewable energy in transport fuel (10% by 2020), if biodiesel fails to make the grade this would raise the demand for bioethanol made either from domestically-produced sugar beet or imported either from Brazil or Southern Africa.… Read the rest