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.
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Fitting the CAP into the next MFF long-term budget

The Commission Communication on The road to the next multiannual financial framework published in February 2025 put forward several proposals for the reform of the MFF structure prior to the formal legislative proposal now pencilled in for July 2025. For the Commission, the key priority is the scale of the budget and the means to finance what it sees as inevitably greater expenditure in the coming programming period. It notes in bold print on page one of the Communication that Europe needs to square the circle: “there cannot be an EU budget fit for our ambitions and notably ensuring the reimbursement of NextGenerationEU, and, at the same time, stable national financial contributions without introducing new own resources”.

The arguments for increased EU budget expenditure are well known. On this occasion they are amplified by the needs to support a surge in defence spending, to address the lagging competitiveness of European industry as identified in the Draghi report and to support the Clean Industrial Deal, as well as to start repayments of the borrowing undertaken to fund the Next Generation EU.… Read the rest

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Trump II tariffs and the EU agri-food sector

That the US now intends to impose additional tariffs of 25% on EU exports (along with those of other countries) is now stated US policy following remarks President Trump made at his first cabinet meeting yesterday. The question is not whether, but when. It would be prudent to plan for high tariffs on EU farm exports to the US.

‘Tariff Man’ Trump has threatened tariffs on other countries previously and then, at least temporarily, backed off. On February 1, 2025, he imposed a 25% additional tariff on imports of Canadian- and Mexican-origin goods (since suspended for 30 days, but he has now confirmed that they will be introduced on March 4th having previously stated April 2nd) and a 10% additional tariff on imports of Chinese-origin goods. The additional tariff on Chinese imports is now in effect and China announced limited retaliatory measures a few days afterwards. Today President Trump announced a further 10% tariff on Chinese imports to take effect from March 4th.… Read the rest

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Addressing generational renewal: the situation in Ireland

Generational renewal in farming is a big topic in Brussels right now. It is likely to feature heavily in the Vision for Agriculture and Food that the Commission is expected to publish shortly in response to the report of the Strategic Dialogue on the Future of Agriculture. Von der Leyen’s Mission Letter to the incoming Commissioner for Agriculture and Food Christophe Hansen directed him “to present a strategy for generational renewal in agriculture, notably supporting family farms and young farmers to access capital”.  In his confirmation hearings with the European Parliament, Hansen stated that “Creating the conditions to turn the trend of lagging generational renewal, by making sure that farming remains a viable and attractive vocation decades from now, will be the central tenet of my Vision.” In line with this commitment, generational renewal was one of the issues addressed in the first Youth Policy Dialogue organised by DG AGRI last December.… Read the rest

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Rise of the far right in the EU

All with an interest in EU policymaking must take note of current developments in Austria where the leader of the far-right Freedom Party FPÖ Herbert Kickl was given the task of forming a new government by the Austrian President Alexander Van der Bellen on Monday last. This followed the breakdown of government negotiations between the conservative, liberal and centre-left parties and the resignation of the former leader of the conservative ÖVP Karl Nehammer at the weekend.

Kickl is no stranger to the Austrian government. He previously served as Interior Minister between 2017 and 2019 when the Freedom Party was the junior party in a coalition with the ÖVP led by Chancellor Sebastian Kurz. At the time Austria faced punitive measures from other EU member states for admitting a party founded by former Nazis into government. Now the new leader of the ÖVP, Christian Stocker, has indicated that he is open to talking with the Freedom Party.… Read the rest

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Limited impact of Mercosur Partnership Agreement on the EU beef market

The EU reached a negotiated agreement on the final texts of what is now called the EU-Mercosur Partnership Agreement on 6 December last (for details see this Commission web page). They include the texts agreed in June 2019, plus the political and cooperation components of the deal agreed in June 2020, as well as additional elements resulting from negotiations between March 2023 and December 2024.

The agreed texts have led to major upheavals within the EU. Several Member States, including France, Ireland, Austria and Poland, have come out to oppose ratification of the agreement over concerns about the deal’s potential impact on both European agriculture and the Amazon rainforest. Italy appears to be sitting on the fence and could go either way. These positions reflect opposition to the deal from farmer organisations as well as from environmental organisations in these countries and at EU level.

Much of this opposition has focused on the perceived negative impacts of the concessions the EU has made in the beef sector.… Read the rest

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Agricultural policy reform in England and the 2024 UK budget

UK farmers are preparing to protest tomorrow November 19th outside Parliament against inheritance tax changes in the new Labour Government budget announced last month. They claim these changes will have a devastating impact on family farm businesses. Perhaps surprisingly, the accelerated phase-out of direct payments also announced in that budget has not been the focus of attention. In this post, I discuss the phasing out of direct payments, leaving the inheritance tax issue to one side.

The UK has been preparing and implementing its post-Brexit agricultural policy since 2018 with the most significant changes taking place in England among the four UK countries. The broad outlines were set in the White Paper Health and Harmony: the future for food, farming and the environment in a Green Brexit published in February 2018 when Michael Gove was the Secretary of State for Environment, Food and Rural Affairs in the UK Conservative government. This formed the basis for a public consultation that eventually led to the passage of the Agriculture Act 2020 in the UK. … Read the rest

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How net balances might influence Member State views on the size of the next CAP budget

In this post, I look at Member State net budget balances when it comes to CAP expenditure – which Member States would be net gainers or losers from an increase or decrease in the CAP budget, assuming the allocation criteria in play in 2023 were continued. The justification for this exercise is that these net balances likely feed into Member States’ views on the appropriate size of the CAP budget. Net recipients are more likely to favour an expansion in the budget, net payers the opposite. We know that the ‘juste retour’ principle is alive and well when it comes to negotiating the next Multi-annual Financial Framework (MFF).

The basic data are extracted from the DG budget Excel spreadsheet on EU spending and revenue 2000-2023. The assumption is made that we are interested in marginal additions or subtractions to the CAP budget, and that these will be financed by the residual own resource, namely the Gross National Income (GNI) contribution.… Read the rest

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GHG inventory recalculations and misleading climate targets

This post is a rather technical note on how we set and interpret climate targets where the underlying data series are subject to frequent revisions. In the EU’s climate architecture, the level of ambition is usually expressed in terms of reduction commitments relative to a base year. Sometimes these reduction commitments are in percentage terms but are then converted into absolute figures using data from the National Inventory Reports for a recent year or period. In other cases, the reduction commitments are already expressed in absolute terms, but the size of the required reduction has previously been determined by reference to national inventories in a base year or period. But what happens to these targets if the data used in these National Inventory Reports are later subject to recalculation?

For example, the Effort Sharing Regulation (EU) 2018/842 as amended by Regulation (EU) 2023/837 has an Annex I which sets out for each Member State the required percentage reduction in covered emissions in 2030 relative to their 2005 levels.… Read the rest

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The overlooked role of exchange rates in EU agricultural competitiveness

My attention was caught by a post on X (formerly Twitter) this week from Franz Sinabell, economist at the Austrian Institute for Economic Research. He reproduced a graph based on European Central Bank data showing the evolution of the nominal effective exchange rate for the euro over time. As can be seen from the post below, this shows a steady, if uneven, upward trend indicating a gradual appreciation of the euro, reaching a peak in August 2024. Franz commented that “Sectors that earn money on international markets – e.g. with agricultural goods or food – are currently not having an easy time”.

The post brought home to me how little attention exchange rate movements seem to get in discussions of EU agricultural competitiveness.… Read the rest

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Future enlargement and its impact on the CAP budget

Yesterday’s vote in Moldova resulted in a razor-thin majority in favour of enshrining the goal of EU membership in the country’s constitution. It appears that significant efforts may have been made by outside interests to influence the voting but, even taking this into account, Moldova appears to be a country deeply divided about the future direction it wants to take. Here, the prospects for EU membership and the cost of the steps that need to be taken for membership to become a reality play an important role.

Moldova applied for EU membership on 3 March 2022, the same day as Georgia and just a few days after Ukraine made its application on 28 February 2022. These membership applications were made just a few days after Russia launched its full scale invasion of Ukraine and were obviously a response to it. Moldova has benefited from trade preferences with the EU under Autonomous Trade Measures since 2008 and signed a Deep and Comprehensive Free Trade Agreement which entered provisionally into force in September 2014.… Read the rest