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. The declaration was signed by ten Member States, including Estonia which is sometimes seen as part of the CAP reform camp. Only the Czech Republic attended as an observer but did not sign. The USDA FAS report contains the translation of the agreed declaration which can also be downloaded from the Polish Ministry of Agriculture website here.… Read the rest
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.
The Council explicitly argues against the idea that farmers should be remunerated for fulfilling their statutory obligations with respect to the environment, animal welfare and food safety (cross compliance). It also justifies full EU financing of most of the payments “so long as these are directed to fulfilling EU objectives”, thus apparently advocating that some of the existing co-financed agri-environmental payments in Pillar 2 might be moved to Pillar 1 at least as far as financing modalities are concerned.… Read the rest
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.
But I think we may need to take into account the context of this confirmation hearing, which was solely before members of the EP’s Committee on Agriculture. Thus, Mr Ciolos was faced with a totally one-sided perspective on agricultural policy by agrarian representatives. Committee members sought his views on the reintroduction of price supports, higher barriers against third country imports and more support for their special interest groups.… Read the rest
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.
Some light may be thrown on the way the EP will exercise its new legislative role by looking at trade policy, another area where the Parliament gained new powers under the Lisbon Treaty. Currently, the EU-South Korean Free Trade Agreement, which was negotiated under the old Nice Treaty rules, is up for ratification under the new Lisbon rules.… Read the rest
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
Despite the very tight global market, EU sugar beet supplies have moved in the opposite direction. The EU expects a bumper sugar beet harvest this year, with beet yields among the best in years. Combined with imports from developing countries which now have free access to the EU market, the EU will have a considerable surplus over its domestic needs.… Read the rest
Lessons from the 2009 EU dairy market crisis
The EU dairy market is now recovering from the severe drop in milk prices in 2009. Perhaps the clearest sign of this recovery is the setting of export refunds on dairy products to zero since mid-November, as world market prices for dairy products have strengthened in recent months.
It is thus an opportune time to evaluate the EU’s response to the crisis, and to see what lessons might be drawn for how the Union can address similar problems in other farm sectors in the future. My view is that there is a lot to be learned from the dairy crisis, and that the outgoing Commissioner deserves credit for the way she handled it.
EU milk prices improving
Let us first review the evidence that the milk market is improving. The trends in the EU market prices (proxied by the German price and represented by the blue line) and the EU intervention price (the red line) for butter and skim milk powder (SMP) have been graphed by CLAL.it… Read the rest
Eurostat preliminary farm income figures for 2009
Eurostat has just published its first estimates for real agricultural income per worker in 2009. For the EU27, the figure is down 12.2% on the 2008 figure, but with considerable variation across countries, from -35.6% in Hungary to +14.3% in the UK. While differences in commodity price trends and variations in commodity composition across countries will account for much of the variation, other factors include the further phasing in of direct payments (in the NMS) and currency fluctuations against the euro (important in explaining the UK trend).
Eurostat also publishes a comparison of trends since 2005. Choosing any one year as a base is always problematic, given the possibility that the base year is an untypical year. This is the case for Ireland, for example, where double payment of the direct payments in the transition to the SPS resulted in unusually high farm incomes in that year.
Overall, average real agricultural income per agricultural worker has more or less held constant over the last four years, with the 2009 index (base 2005 = 100) for EU27 standing at 98.3.… Read the rest
Paris Declaration on the Common Agricultural Policy
You can read here the agreed communiqué from the 22 countries which were invited by France to discuss the future of the CAP in Paris yesterday. The meeting itself was surrounded by some controversy given that 5 member states (UK, Sweden, Denmark, Netherlands and Malta) were not originally invited, although the UK did send along a civil servant as an observer. The French Agriculture Minister Bruno Le Maire talked at length about the objectives of the meeting in an extensive interview with Le Monde.
The countries attending were those which had supported the call by France and Germany for stronger measures to support dairy farmers in October this year. The meeting took place in the shadow of the start of the debate on the next financial perspective, and was in part a reaction to the leaked Commission reflections in October on the parameters for the next financial perspective, which foresaw a substantial reduction in the CAP budget.… Read the rest
Comprehensive market price data from DG Agri
Following the recent interest in food price developments, DG AGRI has now released long-term monthly price data for a wide range of farm and first-stage processed products from its AGRIVIEW database. AGRIVIEW is a data warehouse providing a common repository for integrated data for DG AGRI which is normally only available to internal Commission analysts. For example, it includes financial information, market prices, tariff data, and data on export refunds. The market price data on a monthly basis from January 1997 until the most recent date, for both the EU on average and for individual member states, is now available for download as a 7MB Excel file from the DG AGRI website. Unlike Eurostat information which is supplied by national statistical offices, the AGRIVIEW price information comes from the agriculture ministries in Member States. The data are presented in tabular format as well as in attractively formatted charts. A nice Christmas present for those who like messing with figures…..… Read the rest
Changes in GM feedstuffs rules on the way?
There now seems to be momentum building up to change EU rules on GM feedstuffs in order to assist the future of the pig and poultry industries in Europe, with the Commissioner Mariann Fischer Boel waxing eloquent on this issue on her blog last week after she raised the issue at the monthly Agricultural Council. According to a Reuters report, the Commissioner has indicated that a proposal on a maximum level for GMO residues in imports should be ready before the end of the year.
The problem arises for two reasons. The first is that the EU has tended to lag behind other countries in the approval of new GM varieties for use in animal feedstuffs. The EU is hugely dependent on the import of feeds, particularly soya, and as the main soya exporters, the US, Brazil and Argentina, increasingly turn to GM varieties, it is becoming increasingly difficult to source non-GM feedstuffs.… Read the rest