Category: Blog posts

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The Brexit negotiations on the future trade relationship

On 23 March 2018, the European Council in its Art. 50 formation welcomed the agreement reached earlier last week by the negotiators on parts of the legal text of the Withdrawal Agreement covering citizens’ rights, the financial settlement, a number of other withdrawal issues and the transition. Prime Minister May wrote following that agreement to European Council President Donald Tusk giving her full support to the draft Agreement and highlighting, in particular, her support for efforts to solve the Ireland border issue. The European Council was therefore willing to set out its guidelines with a view to the opening of negotiations on the overall understanding of the framework for the future relationship, which will be elaborated in a political declaration accompanying and referred to in the Withdrawal Agreement.

In this post, I discuss some of the trade implications of the European Council’s guidelines, particularly for trade in goods. (I apologise in advance for yet another post on Brexit on this blog about the CAP, but given the importance of this future trade relationship not least for EU farmers I think the attention can be justified).… Read the rest

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Brexit Withdrawal Agreement forwarded to UK

The EU Commission yesterday forwarded a draft Withdrawal Agreement to the UK authorities for negotiation. This draft builds on the initial draft submitted by the Commission for approval by the Council (Art.50) and the Brexit Steering Group of the European Parliament on 28 February last. To accompany that initial text, the Commission published a helpful Q&A as a guide to the withdrawal process which still remains valid today. Press reports have highlighted that governments tweaked the initial text in some minor ways but retained the broad thrust of the document.

Negotiators are expected to work on the draft over the weekend and in Brussels on Monday and Tuesday next week. The hope is that sufficient progress will have been made in ironing out remaining differences that the European Council, which will meet in its Article 50 formation next Friday 23 March, will approve the guidelines to start negotiations on the framework of future relationships.… Read the rest

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Measuring changing farm structure in the EU

A particular type of farm structure is not an explicit policy objective of the EU’s Common Agricultural Policy (CAP). However, facilitating structural change is an objective of the CAP, set out in Article 39 of the Treaty on the Functioning of the European Union, as a way of ensuring a fair standard of living for the agricultural community and increasing the individual earnings of persons engaged in agriculture (the Treaty language speaks of “ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour”).

However, there is a widely-shared view that it is desirable to maintain the family farm model of European agriculture. There also seems to be broad political support for the view that assistance should be targeted on smaller family farms. There is keen interest in the evolution of agricultural structures, with many regretting the decline in the number of smaller farms and criticising the emergence of larger, ‘industrial’ holdings.… Read the rest

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A Tale of Two Policy Documents: DEFRA vs. Commission Communication

The Commission published its Communication The future of food and farming in November 2017 following an extensive public consultation process. Legislative proposals accompanied by an impact assessment are expected at the end of May. At the same time, the UK is preparing for life after Brexit. To this end, the UK Department for the Environment, Food and Rural Affairs (DEFRA) published a Command Paper (consultation document) on February 27 seeking views on a future post-Brexit agricultural policy. The paper provides a clear direction of travel for UK, or at least, England’s future agricultural policy, and will result in a White Paper and legislation in the form of an Agricultural Bill later in this parliamentary session. A comparison of the policy proposals in the two documents is thus of some interest.

An important clarification is needed at the outset. Agricultural policy is one of the devolved competences in the UK, meaning that the three devolved administrations in Scotland, Wales and Northern Ireland each have responsibility for the design of their own agricultural policies (presently, of course, within the parameters of the CAP legislation).… Read the rest

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Why national co-financing of CAP Pillar 1 payments is needed in the MFF

There are few things that unite Agriculture Ministers more than their rejection of the idea of national co-financing of CAP Pillar 1 (P1) spending. In their first public discussion of the Commission’s November 2017 Communication of the future of the CAP post 2020 at the AGRIFISH Council meeting on 29 January, various agriculture Ministers, including France and Poland, explicitly made clear their opposition to national co-financing (as has Spain as reported here).

In early February, the Commission circulated a Communication ahead of the forthcoming European Council meeting on 23 February outlining the implications of different choices with respect to EU expenditure and financing in the forthcoming Multiannual Financial Framework (MFF). In his press conference at the end of the AGRIFISH Council meeting on 19 February, Commissioner Hogan explicitly drew attention, in a manner indicating his approval, to the fact that there was no mention of national co-financing of CAP P1 payments in this document, as had been the case in the previous Commission Reflection Paper of the Future of EU Finances.… Read the rest

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Brakes removed from voluntary coupled support

I have previously written about the provisions for voluntary coupled support (VCS) in the 2013 CAP reform package in this blog post in 2015 entitled “Two steps forward, one step back: coupled payments in the CAP”. That post gives a historical overview of the gradual phasing out of coupled payments during the 2000s and the reversal of this process in the 2013 reform. In the recently-agreed Omnibus Agricultural Provisions Regulation (EU) 2017/2393, a significant relaxation of the conditions that Member States must meet in gaining approval for their VCS schemes was introduced. The negotiating history of this amendment is particularly opaque and sheds an interesting light on the secrecy and non-transparency of the trilogue process in which the Council and European Parliament, as co-legislators, try to reach agreement on legislative proposals.

In this post, I describe the changes introduced and assess their significance.

VCS in the 2013 CAP reform

To recap, the rules governing VCS following the last CAP reform were set down in the Direct Payments Regulation (EU) 1307/2103.… Read the rest

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The ANC delimitation controversy continues

Last week it was the turn of farmers in the south-west of France to take to the streets to protest against the introduction of new maps of Areas facing Natural Constraints (ANCs). I have explained the background to this controversy in a previous post , which essentially revolves around how to define ANC category (b) areas which are described in the Rural Development Regulation 1305/2013 as “(b) areas, other than mountain areas, facing significant natural constraints.”

For years the European Court of Auditors criticised Member States for designating these areas (previously referred to as Less Favoured Area (LFA) intermediate areas) without proper documentary evidence. It also concluded that Member States often had very different interpretations of the delimitation criteria which in previous periods included socio-economic as well as bio-physical criteria, thus undermining common conditions of competition within the single market.

Already in the Rural Development Regulation (EC) No 1698/2005 it was agreed in principle that socio-economic criteria would no longer be used to designate intermediate LFA areas and a new definition of these areas was agreed.… Read the rest

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Mr Oettinger’s budget arithmetic

Two events in the previous week give us a much clearer idea of what to expect for the CAP budget in the Commission’s proposal for the next Multiannual Financial Framework (MFF) at the end of May. Of course, the Commission’s proposal is only the start of the MFF negotiations. The MFF must ultimately be agreed unanimously by all Member States and (for the own resources decision) by their national parliaments, and also gain the approval of a majority in the European Parliament. Much can happen between the initial proposal and the final Council conclusions.

The two events in the previous week were Budget Commissioner Oettinger’s speech setting out his approach to the MFF proposal at a meeting in Brussels organised by the European Political Strategy Centre, the Commission’s in-house think tank, and his comments following the first presentation of his ideas to the Commission College.

Commissioner Oettinger states that he expects to make cuts of between 5-10% in both CAP and cohesion funding.… Read the rest

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EU farm incomes in 2017

Eurostat has produced its first estimate of agricultural income in 2017, and it makes interesting reading. Both real agricultural income per Annual Work Unit (called indicator A in Eurostat terminology) as well as real agricultural entrepreneurial income per unpaid Annual Work Unit (Indicator B in Eurostat terminology) reached record levels (see chart below). This is surely something to be welcomed, even if COPA-COGECA did not issue a press release to draw attention to this fact. Across the EU as a whole, income from farming when divided among those working in the industry is in a robust state, even if the regular grumbling from industry representatives sometimes gives the opposite impression.

I discussed these income trends in detail this time last year in this post, so today’s post is an update. Just as a reminder, Indicator A corresponds to the real income of factors of production in agriculture, defined as net value added at factor cost, per Annual Work Unit.… Read the rest

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Rethinking EU budget spending on agriculture in the next MFF

This post reproduces my key-note statement to the session More efficient use of scarce financial resources – An efficient Common Agriculture Policy and focussed structural Funds at the European Political Strategy Centre High Level Conference ‘Shaping our Future: Designing the next Multiannual Financial Framework’ which was held 8-9 January 2018 in Brussels. The delivered version was slightly abbreviated for time reasons.

The session was intended to reflect on more efficient use of scarce financial resources in the EU budget’s two largest spending categories – agricultural policy and structural funds. I expected my fellow panellists to have a lot to say about structural funds, so my presentation focused on agricultural policy.

The factual background

First, some background figures. CAP spending commitments including the Rural Development Fund make up 38% of the current MFF, just ahead of economic, social and territorial cohesion at 34%.

71% of CAP spending is currently devoted to Pillar 1 direct payments, hectare-based payments to all farmers with eligible land.… Read the rest