Author: Alan Matthews

Alan Swinbank of Reading University in the UK has been doing some detective work to understand the dramatic fall in the scale of the EU’s trade-distorting support (reported in the Amber Box under WTO rules) in the EU’s latest notification to the WTO which covers the marketing year 2007/08. His findings are reported in the latest issue of the online Estey Centre Journal of International Law and Trade Policy.

As previously reported on this blog, the EU figure for Amber Box support (called the Current Total Aggregate Measure of Support in WTO jargon) fell from €26.6 billion in 2006/07 to €12.4 billion in 2007/08. The significance of this reduction is clearly shown in the figure below.

EU WTO Domestic Support Notifications

It turns out that the reason for the more than halving of the reported EU AMS in 2007/08 compared to 2006/07 is that the EU no longer calculates an ‘equivalent measure of support’ for fresh fruit and vegetables.… Read the rest

The early September draft of the Commission legislative proposal for the new Rural Development regulation to be released on October 12th next was inconclusive on how Pillar 2 spending would be allocated across the Member States. The annual amounts available to each member state will not be determined in the Regulation, but will be left to a subsequent Commission implementing act, taking into account (a) objective criteria linked to the three objectives of the Regulation (agricultural competitiveness, sustainable land management and balanced territorial development) and (b) past performance.

The draft impact assessment on the new regulation which also has yet to be formally released provides some further guidance on the Commission’s thinking, and shows how the distribution across member states would be affected by the use of different objective criteria. The simulations show how judicious selection of the criteria can almost exactly reproduce the status quo!

Various options are considered in the impact assessment.… Read the rest

The Commission has published its latest international food price monitoring newsletter for September. This tracks price changes for five major food groups included in the FAO food price index. After hitting a record level of 237.7 in February 2011, the FAO Food Price index continues lingering above levels observed during the 2007/08 food crisis, settling at 231.0 in July 2011 and 231.1 in August 2011. Compared to June 2011 levels, meat and sugar indices strengthened, while other eased slightly. These high food prices continue to fuel concern about food price inflation in developing and emerging economies.

… Read the rest

The Commission’s impact assessment of the range of changes to direct payments included in its draft legislative proposals provide useful additional detail on the economic impacts to be expected from these changes and thus their political feasibility. The impact analysis has yet to be released officially but the relevant annex of the draft assessment can be found here.

Annex 3 of the impact assessment (IA) addresses all of the proposed changes in Pillar 1: greater convergence between Member States; the move toward flat rate payments within Member States or regions; additional income support in less favoured areas; capping of payments; the small farmer scheme; specific support for young farmers; a better definition of ‘active farmers’; as well as coupled aids (the ‘green’ payment option is evaluated in Annex 2 of the IA).

The IA considers a variety of options on which to base greater convergence of payments between Member States.… Read the rest

The two previous posts covered the Commission’s draft proposals for the Direct Payments regulation and the Rural Development regulation. In this post, I cover its draft proposal for a revised single common market organisation regulation.

Summary

• There is the first formal acknowledgement that the Commission is not going to propose legislation to renew the sugar quota regime when it expires in 2014/15, although there will be a one year extension. Ending the sugar quota system is given as an example of simplification of the CAP under the proposal.
• A single animal disease/loss of consumer confidence provision is extended to plant products given the experience with the e.coli outbreak in Germany over the summer.
• The general market disturbance clause is expanded to cover all sectors in the CMO. In this context, we should also recall the proposal for a new Special Reserve in the MFF regulation for crises in the agriculture sector with an annual ceiling of €500 million to be mobilised over and above the ceilings of the financial framework.… Read the rest

In a previous post I looked at the draft Direct Payment regulation, one of four key regulations which will shape the future CAP after 2013. In this post, I look at what is proposed in the Rural Development regulation. This comes with the health warning that the actual legislative proposals will not be released until October 12th, and some of these proposals may change in the meantime.

Summary of proposals

• Greater coordination of EAFRD spending to ensure complementarity of RD programming with the programming of the other shared-management funds, the Regional Fund, the Social Fund, the Cohesion Fund and the Fisheries Fund. The funds are placed under a Common Strategic Framework (CSF) at EU level which will be transposed into Partnership Contracts at national level. The CSF will replace the current approach of establishing separate sets of strategic guidelines for these funds. In principle, monies from these other funds can be used to support the priorities in the RD Regulation.… Read the rest

The International Centre for Trade and Sustainable Development has made copies of the draft Commission legislative proposals for CAP reform available here. These are the versions circulated within the Commission for comment, and they could change further before they are formally released to the European Parliament and the Member States on 12 October next.  Nonetheless, the draft regulations are worth analysing in detail because of the indications they give to the Commission’s thinking.

The proposals are contained in four main regulations which would replace the existing regulations governing the CAP, as follows:
–    A regulation governing direct payments under Pillar 1
–    A regulation governing rural development payments under Pillar 2
–    A regulation revising the single Common Market Organisation regulation
–    A horizontal regulation covering financing, management and monitoring of the CAP.

We look at the draft Direct Payments Regulation in this post and will comment on the others in later posts.… Read the rest

Pascal Lamy, WTO Director-General, used his keynote speech to a recent congress of European agricultural economists to address a perennial issue in agricultural trade policy, namely, whether agriculture should be treated like shirts, shoes and tyres and fall under the same trade regime?

“Now, while the international community broadly-speaking agrees on what the basic objectives of agricultural policy are, I believe that there continues to be a disagreement on what “global integration” can do for agriculture (in particular, international trade). Is greater global integration beneficial or harmful to agriculture? That is the question that underlies trade negotiations in this field at the World Trade Organization, but it is also a question for which a coherent response has yet to emerge.”

Lamy is an international civil servant accountable to the WTO membership as a whole, where countries hold very different views on this issue. He is thus limited in what he could say, but there are three things worth taking away from his talk.… Read the rest

This guest post is written by Professor Ulrich Koester, Professor Emeritus of Agricultural Market Analysis and Policy at the University of Kiel. It originally appeared in German as an opinion piece in the periodical Wirtschaftsdienst 8/2011.

Discussions on the EU medium-term financial framework 2014-2020 are currently taking place in Brussels. Of particular significance are the expenditures for agricultural and fisheries policies. These policies account until now for €58 billion of expenditure or 47.4% of the EU budget. According to the draft proposal this share should reduce to 39% by 2010. It is rather shocking that, at a time when budget resources are scarce, and in light of the poor experiences to date with the current instruments and the results of numerous scientific and internal EU analyses, that it appears that the volume and structure of EU expenditure will not be greatly changed.

The largest share of EU expenditure goes on the first pillar of the Common Agricultural Policy.… Read the rest

As a follow up to my earlier post on the complexities that may hold up the signing of the extended EU-Moroccan Free Trade Agreement, Korski and Leonard from the European Council on Foreign Relations in an op-ed piece in the International Herald Tribune today outline conflicting issues at play in EU-Egypt agricultural trade relations. The issue here arises from the e.coli outbreaks due to bean sprouts in northern Germany and Bordeaux earlier this year that killed at least 48 people and hospitalised hundreds more.

Apparently, investigators from the European Food Safety Authority found a link between these outbreaks and imported Egyptian fenugreek seeds used to produce bean sprouts. As a result, the Commission imposed a ban on the import not only of fenugreek seeds but all beans from Egypt until 31st October.

According to the article, the ban could affect up to 10 per cent of Egypt’s agricultural exports if kept in place for a full year.… Read the rest