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

EU budget review cautious on future spending priorities

The Commission has published its long-delayed budget review which follows a public consultation on the EU budget which began as a mid-term budget review in 2008-09. An earlier version leaked last year, and apparently drafted by Commission President Barroso’s advisers (see Jack Thurston’s post on this), recommended specific targets for the reallocation of EU spending, including a reduction in agricultural spending to around one-third of the budget.

The review published today is a more anodyne document, and it shies away from making specific recommendations on which expenditure areas might see their budgets cut. In this it closely resembles the leaked document on CAP reform put into the public domain earlier this month and which also summarises the conclusions of a public consultation.… Read the rest

Posted on

Commission leaked draft fails to advance reform debate

The draft Commission communication on the CAP towards 2020 is an underwhelming document, not just for those seeking to push an ambitious reform agenda but also for those seeking a roadmap to address issues that the Commissioner himself has identified as up for discussion. As Mairead McGuinness, the Irish MEP, commented, it lacks both detail and substance, and is devoid of both figures and analysis.

Nonetheless, it does contain some clues on what DG Agri might like to see in the final package, however cautiously they are expressed. The language used does nudge the debate on the future CAP in slightly different directions to the current CAP.… Read the rest

Posted on

Production effects of agri-environmental programmes

EU agri-environmental policy dates back to the mid-1980s and became a mandatory part of the EU agricultural policy toolkit in 1992. Initial implementation in many Member States emphasised policies designed to mitigate the environmental harm associated with agricultural intensification (e.g. by paying farmers to lower fertiliser inputs) but over time and under Commission prodding the objectives have shifted more to environmental enhancement.

Around two-thirds of EU agri-environmental programme payments are classified in the OECD’s Producer Support Measure (PSE) calculations as ‘payments based on input constraints’. Such programmes would be expected to reduce EU production. Empirical attempts to measure the impact of the CAP on EU production and world market prices generally ignore their production-restraining impact and thus tend to over-estimate the world market effects of EU agricultural policy.… Read the rest

Posted on

Carbon efficiency and trade policy

In an earlier post, I wondered whether there were data on the relative carbon efficiency of agricultural production in Europe versus third countries. A recent FAO study arising from a collaborative effort by FAO and the International Dairy Federation which assesses GHG emissions from the dairy food chain throws light on this. The study uses a Life Cycle Analysis (LCA) approach, and thus includes the land use change induced by the consumption of feed (principally soybeans) in intensive dairy systems.

The results are unambiguous:

“A global trend emerging from the results is the lower level of emissions per unit of product in intensive compared to extensive systems.

… Read the rest
Posted on

Sarkozy offers a deal on CAP reform

President Sarkozy took farmers into his confidence in a recent speech at the Salon d’agriculture where he proposed a new direction in France’s position on CAP reform post 2013. Noting that there were farms in France where the share of subsidies equals the value of production, he declared that this does not make sense if the farmer is a producer. He criticised the policy approach of accepting compensation for reductions in prices because, some day, there is no longer sufficient funds to continue to pay for the subsidies.

Instead, he proposed to the other EU partners a deal whereby France would be flexible on the share of the next financial perspective going to agriculture provided that this was balanced by more rigorous Community preference which, implicitly would lead to a higher market return.… Read the rest

Posted on

NMS farm ministers flex their muscles

The USDA Foreign Agricultural Service carries a useful report of the meeting in Warsaw on 3 February last attended by the agricultural ministers from the new Member States which concluded with a declaration on the future of the CAP after 2013. Its a fairly uncompromising defence of a large agricultural budget after 2013. The USDA notes that not only are the NMS sore about the unequal distribution of direct payments, but they are rapidly losing ground in the production of primary agricultural commodities. Poland, for example, now imports more pork than it exports, while meat and dairy exports from West to East have surged.… Read the rest

Posted on

German call for reform of CAP payments

The German Council for Sustainable Development has just published a report highlighting the environmental damage caused by intensive agriculture and calling for a reform of the CAP direct payments system. It proposes a three-fold structure of payments: an environmental basic payment, a series of targeted agri-environmental payments for farmers who accept higher obligations, and a series of payments for high nature-value areas where the continuation of agricultural production is desirable but threatened on economic grounds.

For the environmental basic payment, it suggests that eligibility would be conditional on farmers turning over at least 10% of their area to environmentally-friendly husbandry with a view to maintaining a high level of biodiversity in the agricultural landscape throughout the EU.… Read the rest

Posted on

Ciolos confirmation hearing poor reflection on the Parliament

It is now over a week since the confirmation hearing of Commissioner-designate for Agriculture and Rural Development Dacian Ciolos before the European Parliament, but it was only this weekend that I had the opportunity to listen to the EP’s video of the hearing itself. Commentary elsewhere on Mr Ciolos’ performance has been rather negative (my colleague Jack Thurston described it as a lack-lustre performance both in style and substance) and I would not disagree with this assessment – his responses on co-financing and on the legitimacy of equal per hectare payments across all EU Member States were just two examples of woolly and obfuscatory replies.… Read the rest

Posted on

What does co-decision have in store?

When the Lisbon Treaty came into force on 1 December 2009, one of the big winners was the European Parliament which gained equal status with the Council of Ministers in most EU decision-making, including for the first time agricultural policy-making (although with some ambiguity about its role in setting prices and aid levels to which Wyn Grant has drawn attention). There is considerable interest in whether these new powers will be used to promote or block CAP reform. The pessimistic view is that the EP will become the focus of intense sectoral lobbying which will be used to block reform.… Read the rest

Posted on

Keeping an eye on the sugar market

Sugar did not experience the massive price spike in 2007-08 of other commodities, but has been making up for this with a tremendous increase in prices in 2009, driven by poor harvests in Brazil (the world’s largest producer) and strong import demand in India (the world’s largest importer). Raw sugar prices have risen from around 10 USc/lb in May 2008 to over 27 USc/lb currently, and market analysts expect further increases in the coming months.

The increase in world prices means that world prices are now above the (much reduced after the recent sugar reform) EU reference price. Recent price trends are shown in the following figure, reproduced from the SugarTraders website

sugarprices

Despite the very tight global market, EU sugar beet supplies have moved in the opposite direction.… Read the rest