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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What can we learn from the dismantling of GAEC 8?

Annex III of the CAP Strategic Plans Regulation (EU) 2021/2115 sets out the conditionality rules that farmers seeking CAP payments should follow. Under the climate and environment heading, and with the intention to protect the quantity and quality of biodiversity, GAEC standard 8 required a minimum share of the agricultural area devoted to non-productive areas and features, with a derogation for holdings where more than 75% of the area is used for permanent grassland or for the production of grasses or other herbaceous forage, or for the cultivation of crops under water. Holdings with an arable area less than 10 hectares were also exempt, as were certain holdings in areas of natural constraints in Member States with more than 50% of their total land surface area covered by forests.

Specifically, this obligation could be fulfilled in several ways:

  • Minimum share of at least 4% of arable land at farm level devoted to non-productive areas and features, including land lying fallow.
… Read the rest
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Good prospects for 2024 farm incomes

The European Commission has just released its Autumn 2024 short-term Outlook for agricultural markets which highlights a gradual but fragile return to stability. Eurostat has also released data on agricultural output and input price movements for the first two quarters of this year. The Commission’s short-term Outlook does not contain a forecast for farm income developments in 2024 – we must wait until mid-December for the first official forecast when Eurostat publishes its preliminary estimate for 2024 farm income. However, with these two sources of information in hand, we can begin to make some educated guesses about the likely farm income outcome this year.

We need to have due regard to all the sources of uncertainty highlighted in the short-term Outlook. These include the potential for further extreme weather events to impact on production, the potential impact on both input costs and markets of geopolitical developments such as the wars in Ukraine and the Middle East and trade disputes with China, and possible plant and animal disease outbreaks.… Read the rest

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What does the outcome of the European Parliament elections mean for EU agrifood policy?

The confirmation of Ursula von der Leyen’s nomination as Commission President by the European Parliament today may give the appearance of business as usual in the European Union for the coming political cycle 2024-2029. But this would underestimate the pressures for change under the apparent veneer of stability. The political priorities set out by von der Leyen as she sought support for her nomination on this occasion are subtly different to the Green Deal platform on which she sought support in 2019. This also applies in the area of agrifood policy, an area which has been marked by protests and policy reversals in the last year of her previous mandate.

Changing priorities are a response to changes in context and circumstance. These include the wake-up call due to Russia’s brutal invasion of Ukraine which highlighted inter alia an unhealthy dependence on Russia for energy supplies, geo-political tensions including the need to address China’s growing role in frontier technologies, conflicts in the Middle East and Africa which contribute to migration pressures, as well as the increasingly obvious need to adapt to climate change while also pursuing ambitious mitigation goals,  

Changing priorities also reflect changed political circumstances arising from the June 2024 election to the European Parliament.… Read the rest

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More on farm-retail price spreads during food price inflation

My previous blog post dealt with trends in the farm-retail price spread at the aggregate food basket level in EU Member States (both for food purchases for at home consumption and for food consumption away from home) based on a new FAOSTAT data series on the food value chain. A key conclusion was that farmers’ share of consumer spending on food tends to fall over time because of the increased quantity and quality of the marketing services added to farm raw materials as living standards rise. A falling farm share in every euro spent on food at retail or food service level is not necessarily an indicator that there is unequal bargaining power and thus an unfair distribution of value added along the food value chain, although neither does it rule out that possibility. I suggested that the soon-to-be-established Agri-food Chain Observatory intended to make developments in margins along the food value chain more transparent would do well to build on this initiative.… Read the rest

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Distribution services take more than half of spending on food at home in EU countries

Anger over the gap between farm and retail food prices has been one of the factors behind the farm protests earlier this year. Particularly when  prices at farm level move in the opposite direction to retail prices – more specifically, when retail food prices increase even when farm prices are falling so that margins are increasing – there is suspicion that more powerful players in the food chain are exploiting a period of price volatility for their own benefit. There is a strong belief among stakeholders that farmers’ remuneration can be improved if changes are made to the operation of the food value chain (all of the downstream actors up to and including consumers).

In March 2024, the Commission circulated a non-paper with proposals to address this issue. The Commission proposed a portfolio of immediate, short-term and longer-term measures. The measure of particular interest for this post is the proposal to create an Observatory of costs, margins and trading practices in the agri-food chain.… Read the rest

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Greater transparency needed in national aids to agriculture

On 2 May 2024, the European Commission adopted an amendment to the State aid Temporary Crisis and Transition Framework (TCTF) to allow Member States to continue to provide aid to farmers affected by persistent market disturbances up to €250,000 to end-December 2024. This followed the European Council’s endorsement in its conclusions following its meeting 17-18 April 2024 of “the proposed extension of the temporary framework on State aid and the possibility to increase the ceiling on de minimis aid for agriculture.”

Following on the European Council’s conclusions, Germany on behalf of 16 Member States informed the last AGRIFISH Council meeting in April 2024 that it was seeking an increase in the de minimis aid amounts for farmers from a total of €20,000 over three years (€25,000 in certain circumstances) to an amount of €50,000. This would become the relevant ceiling once the TCTF derogation expires at the end of the year.… Read the rest

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The European Council’s Strategic Agenda 2024-2029

Two defining events for the European Union take place in the next eight weeks:  the European Parliament elections take place on 6-9 June and will determine the balance of power between the various political groups with differing priorities for the future of Europe; and the European Council meeting on 27-28 June will adopt the EU’s Strategic Agenda 2024-29 as well as attempt to agree on nominees for the EU’s top jobs, including the President of the European Commission. The climate organisation E3G has produced a very nice graphic that illustrates the key steps in the political timeline for the rest of this year .

Source: E3G.

In this post, I focus on the preparation of the Strategic Agenda for the period 2024-29, a process that takes place every five years. It is easy to be cynical about this process. The European Council has a history of producing conclusions with high-sounding principles and commitments that on closer inspection turn out to be rather vague and woolly.… Read the rest

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Introducing a tax on agricultural GHG emissions? The Danish case

In its first progress report on EU climate policy published in January 2024, the newly-established European Scientific Advisory Board on Climate Change noted that there is no EU-level price on emissions in agriculture/food, forestry and land use, which suffer from an overall lack of incentives to reduce emissions and increase removals. It recommended that the EU should start preparations now with a view to expanding the pricing regime of EU GHG emissions to all major emitting sectors, including agricultural/food and LULUCF, through a legislative proposal for after 2030.

In November 2023 the Commission published an exploratory study investigating ways to price GHG emissions from agricultural activities along the agri-food value chain and how this could be accompanied by providing farmers and other landowners with financial incentives for climate action. The study responded to a 2021 report by the European Court of Auditors, which recommended that the Commission should “assess the potential of applying the polluter-pays principle to agricultural emissions, and reward farmers for long-term carbon removals”.… Read the rest

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Long-term structural change in EU agriculture

The reduction in the number of farms and farmers in the EU has attracted increasing attention in this EU legislative period. It has been a distinctive message of the Commissioner for Agriculture Janusz Wojciechowski, who emphasised the ongoing decline in the number of farms in his confirmation hearing before the European Parliament in October 2019 and has regularly highlighted the issue, most recently in his address to the DG AGRI Agricultural Outlook conference last December. It has also been a consistent theme in debates in the European Parliament and in statements by farm group representatives.

I have previously posted on structural change in EU agriculture. For example, in this post, I discuss changes in the number of holdings between 2005 and 2020 and ask whether there is evidence that the rate of decline in the number of holdings has changed over time. My answer was that no clear answer emerged from the relatively short period examined in that post.… Read the rest

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What does the Commission’s proposed 2040 climate target mean for agriculture?

On 6 February last, the Commission published its Communication Securing our future:  Europe’s 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society. The Communication proposes a Union-wide, economy-wide 2040 target reaching 90% net GHG emissions reduction compared to 1990 levels “that will put the EU on an effective, cost-efficient, and just trajectory towards climate neutrality by 2050, as called for under the European Climate Law”.

In fact, what the Climate Law calls for is ambiguous. In recital (30), the Commission should propose a Union intermediate climate target for 2040, as appropriate, at the latest within six months of the first global stocktake carried out under the Paris Agreement and which was concluded at COP28 in Dubai in December 2023. But in the text of the Law, Article 4(3) states that the Commission “at the latest within six months of the first global stocktake … , the Commission shall make a legislative proposal, as appropriate, based on a detailed impact assessment, to amend this Regulation to include the Union 2040 climate target, ..’.… Read the rest