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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Measuring food system emissions

A paper just published in Nature Food by researchers from the EU Joint Research Centre (JRC) and FAO has for the first time provided a consistent database of food system greenhouse gas (GHG) emissions globally and for every country with yearly frequency for the period 1990-2015. The authors justifiably claim that it represents a milestone in our understanding of how the global food system has developed. This post looks at some of the main messages provided by the paper.

It is first important to understand what the data are measuring. Although they cover food system emissions, these data are not consumption-based food system emission estimates or footprints. There is no international trade in the estimating framework. The emissions from animal feed imported from one country to another, or deforestation in one country caused by the export of beef to another country, remain attributed to the source country and not with the country of consumption.… Read the rest

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Prospects for progress on the WTO agricultural agenda

The WTO General Council recently decided that the next WTO Ministerial Council meeting would be held in November this year in Geneva, rather than in June in Kazakhstan as had been planned. Although normally WTO Ministerial Conferences are held every two years, MC12, as it is called, will be the first Ministerial Cfonference since MC11 in Buenos Aires in December 2017.

That Conference was notable for its failure, for the first time, to agree a ministerial declaration affirming the continued importance of the WTO to the global trading system.  Specifically, on agriculture, there were no agreed outcomes and no agreed work programme for the future. While many countries, particularly developing countries, wanted negotiations to continue based on the Doha Round Declaration in 2001 and a single undertaking, other countries such as the US argued that this declaration was out-dated and no longer relevant.

One element of Sustainable Development Goal 2 to end hunger, achieve food security and improved nutrition and promote sustainable agriculture agreed by world leaders as part of the 2030 Agenda for Sustainable Development is a commitment to “Correct and prevent trade restrictions and distortions in world agricultural markets, including through the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect, in accordance with the mandate of the Doha Development Round.… Read the rest

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Improving governance of the future CAP

The proposed CAP legislation launched in 2018 made two important innovations in the governance of the CAP. First, it gave much greater flexibility to Member States in the way CAP interventions and CAP rules could be defined in individual countries. Second, it proposed to change the monitoring of Member State actions and the use made of the EU CAP budget from detailed compliance with very specific rules set out in legislation to a more performance-based approach.

The Commission’s motivation was clear. It expected that giving greater flexibility to Member States to design their own CAP interventions and rules would ensure better value for money because the interventions would be more effective. As former Commissioner Hogan noted when launching the policy proposal, the ‘one size fits all’ approach is no longer appropriate in a Union with very diverse agricultural structures and challenges. He also defended this approach on the grounds that it would lead to greater simplification of the policy for national administrations and farmers, though we can agree that this was never really going to convince anyone.… Read the rest

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Farm and non-farm income comparisons

One of the objectives for EU agricultural  policy set out in the Treaty of Rome (now the Lisbon Treaty) is to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture.  In its Communication The Future of Food and Farming in November 2017 that launched the public consultation phase of the current CAP reform, the Commission included a graph comparing average farmer income with average gross wages and salaries in the total economy to make the point that farmers’ income is still lagging behind salaries in the whole economy. Thus it concluded that “direct payments [that partially fill the gap between agricultural income and income in other economic sectors] remain an essential part of the CAP in line with its EU Treaty obligations”.

The Commission continues to use this comparison in support of its argument that direct payments are necessary to close this perceived income gap between farm and  non-farm incomes.… Read the rest

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Issues at stake in the trilogues: II Public intervention

This is a second, long-delayed, post on the issues at stake in the trilogue negotiations between the Council, Parliament and Commission on the CAP reform dossier. The first was on relevant definitions, this time on the rules for public intervention.

I have previously discussed the history and described the rules for public intervention in the run-up to the 2013 CAP reform in this post. Anyone who wants a quick refresher might find it useful to re-read that post. The Commission also has a website explaining the market management measures under the current CAP.

The issues at stake in the current trilogues are like the debates in 2013. The Parliament’s desire to maintain and strengthen public intervention (which in this post I will take to also include private storage aids (PSA)), given the likelihood of greater future market volatility, is reflected in its amendments to the Commission proposal, while the Council reiterates its concern to avoid tampering with the market orientation of the CAP.… Read the rest

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Level playing field provisions in the EU-UK TCA

My previous post discussed the general background to the EU-UK Trade and Cooperation Agreement (TCA) and specifically its provisions on tariffs and non-tariff barriers.  An innovative part of the Agreement concerns what are called ‘level playing field’ provisions in various areas including state aids, taxation, competition policy, labour standards, and environmental protection and climate change.

By demanding that the Agreement address these issues, the EU wanted to avoid a situation where the UK could use government subsidies, a more beneficial tax regime or more lenient regulatory standards to give its producers an advantage in competing with EU producers in the tariff-free free trade area which might be seen as unfair.

The Agreement includes reciprocal commitments not to reduce the level of environmental or climate protection or fail to enforce laws in a manner that affects trade or investment (the so-called ‘non-regression’ clause). Both sides have the right, in certain circumstances, and subject to arbitration, to take countermeasures if they believe they are being damaged by measures taken (or not taken!)… Read the rest

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The EU-UK Trade and Cooperation Agreement

Let us be clear at the outset. Brexit was always going to be a lose-lose situation for both the UK and the EU. Having said that, the Trade and Cooperation Agreement (TCA) agreed on Christmas Eve between the UK and the EU which provisionally entered into force on 1 January this year was a very significant achievement for the two negotiating teams.

It represents a significant improvement over the ‘no deal’ Brexit that had threatened in the previous weeks. Critically, it prevents the imposition of tariffs on UK-EU trade, although subject to rules of origin to determine eligibility for the zero-tariff preferences. As important, it provides an agreed basis on which to develop the longer-term relationship between the two parties. This is far preferable to the outcome we would have faced if there had been a bad-tempered break-up followed by a debilitating blame game.

The Agreement respects the red lines of both parties.… Read the rest

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COVID-19 leaves limited traces in preliminary 2020 agricultural accounts

Eurostat has now published its preliminary estimates for the economic accounts for agriculture in the EU for 2020. This gives us the first authoritative overview of the impact of the COVID-19 pandemic on agricultural markets and farm incomes in what has been an extraordinary year. Until now, information on monthly trends in agricultural prices and agricultural trade has given us some partial insights into the impact of COVID-19 on the agricultural sector. Despite wobbles in some sectors, by and large these indicators show that the agricultural sector has been remarkably resilient. Despite this, significant aid packages have been made available to farmers by EU Member States. These preliminary estimates of the 2020 agricultural accounts give us a status update over these developments.

The accounts confirm a small fall in the value of EU agricultural output in 2020 and a greater fall in farm income compared to 2019, although not all of this is linked to COVID.… Read the rest

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Farm consolidation continues

How farms are structured in the EU has become the focus of increasing attention as a result of growing political concern over trends in farm consolidation and farmland concentration. This political interest has focused on different elements of structural change in EU agriculture. For some, the focus has been on land grabbing and the rise of large-scale land deals; for others, it is safeguarding the position of the family farm; for some, it is opposition to industrial farming and the growth of ‘mega’ farms; for others, it is defence of small farms, often seen as integral to food sovereignty; for some, the issue is generational renewal; while yet others focus on the decline in the overall number of farms. Common to all is the view that current patterns of farm structural change should be halted or even reversed.

Interestingly, this view is at variance with the objectives set out for the Common Agricultural Policy (CAP) in the Treaty of Rome and repeated in the Treaty on the Functioning of the European Union.… Read the rest

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The CAP Transitional Regulation and Next Generation EU funds

The European Parliament approved last Tuesday evening the common position on the CAP Transitional Regulation previously agreed with the Council. Once the Council gives its formal approval, it will take effect from 1 January 2021. The Regulation provides legal certainty regarding the rules for payments to farmers by continuing the application of the rules of the current CAP framework in the two calendar years 2021 and 2022 under the ‘old rules, new money’ principle.

The Regulation makes necessary amendments to the four CAP Regulations that make up the 2013 CAP reform (direct payments, rural development, single common market organisation, and horizontal matters). It also governs the spending of the EAFRD element of the European Union Recovery Instrument (EURI) during the two-year period 2021-2022. In this post, we focus on the rules introduced to govern EURI expenditure.

Although the Transitional Regulation broadly continues existing rules, there are some novel features that are worth noting.… Read the rest