Category: Blog posts

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Gunfight for CAP Budget Money

It has been clear for some time that most of the key issues of the CAP reform will be negotiated upon in the framework of the negotiations on the Multiannual Financial Framework (MFF) by foreign ministers and heads of state of the EU Member States. The Danish Presidency prepared a special document – a Negotiating Box, which should define all the negotiating issues and facilitate the conclusion of negotiations. The negotiations have thus started to heat up, negotiators have presented their arguments and formed the clubs of like-minded countries. Before the negotiations culminate, expectedly at the turn of 2013, we shall try to define the positions of individual actors on the key issues and speculate on the possible outcome of negotiations on the basis of the available sources (Agra Europe, Agra Focus, internal positions of Member States).

Two major groups have been formed in the negotiations on the MFF, which is manifested in common meetings and statements.… Read the rest

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The EU as a destabilising force in world grain markets

I have argued before on this blog that the EU’s policy during the food price spike of 2007-08 in lowering applied tariffs on staple foods may have helped to mitigate the impact of higher food and feed prices on livestock producers and, to some extent, on consumers, but at the expense of exacerbating the global price increases facing other countries, including developing countries.

The EU’s policy of varying applied tariffs within its bound rates contributed to destabilising world market prices just as did the export restrictions applied by other countries, and undermines its moral authority, in the G20 and elsewhere, in seeking strengthened WTO disciplines on export restrictions as a way to enhance global food security.

In a paper [requires library access] published in the American Journal of Agricultural Economics in January this year, Philip Abbott of Purdue University provides some quantitative evidence of this effect. His methodology is straightforward. He compares the evolution of producer prices for staple commodities with the trend in retail food prices over the 2006-2008 period, distinguishing between major grain exporters which left borders open and major grain exporters which restricted exports.… Read the rest

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Negotiations on future CAP have speeded up

Despite the hot summer across Europe, the previous weeks were quite busy in Brussels. On June 18th and 19th 2012, the European Parliament’s Agricultural Committee Rapporteurs presented their four draft reports on the reform on the Common Agricultural Policy, while one week on, on June 25th, these draft plans were confronted with national interests (based on the report ‘The CAP Reform: The State of Play in National Parliaments’) at a meeting between Agriculture Committee MEPs and representatives of national parliaments. This process is due to the Parliament’s newly engaged co-decision powers with the Council based on the Lisbon Treaty. Meanwhile, the Danish Presidency has also submitted its report to the Agricultural Council on the progress achieved during the first half of 2012.
On the 18th and 19th meeting, draft plans regarding direct payments, rural development, the single common market organisation and the common provisions for financing, management and monitoring were tabled in the COMAGRI meeting, providing the first official indication of the thinking in the European Parliament on the original legislative proposals of the Commission.… Read the rest

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Co-financing rates in Pillar 2

The Agricultural Council meeting on 18 June held a discussion on the proposed rural development regulation in response to a Presidency questionnaire (the webcast of the Council discussion is here). One of the questions posed by the Presidency was:

Is the proposed provision concerning increased EAFRD contribution rates relevant for meeting the objectives of the rural development policy, or should alternative operations qualify to receive a higher rate of co-financing?

According to the minutes of the Council meeting:

Co-financing rates for rural development support are part of the negotiating box for the MFF (2014- 2020). Member states spoke in general terms of the need for a simple and targeted system for financing activities to meet the EU objectives for rural development. In its proposal, the Commission envisages a single maximum co-financing rate for most of the measures supported by the European agricultural fund for rural development (EAFRD) with only a few exceptions which could benefit from higher co-financing rates.

… Read the rest
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Paper on CAP greening

I presented a paper at a seminar of the European Association of Agricultural Economists today which reviews the debate on greening the CAP in Pillar 1 in the light of the Commission’s original legislative proposal, the discussions in the Council summarised in the Danish Presidency’s progress report this month, and the COMAGRI rapporteurs’ reports.
The message of the paper is that the greening proposals under discussion are a missed opportunity. They serve primarily to try to justify the continuation of the existing level of Pillar 1 direct payments. The Commission’s original proposals for three simple, generalisable measures would lead to limited additional environmental benefits, and the various flexibilities proposed by the Council and COMAGRI rapporteurs would reduce the additional benefits even further.
The main changes sought by the Council and COMAGRI rapporteur would make greening in Pillar 1 voluntary, would provide a range of options by which farmers could claim eligibility, and would greatly complicate the adminstration of Pillar 1, running completely counter to member states’ desire for greater simplicity.… Read the rest

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A mandatory minimum spending requirement on agri-environment-climate change measures in Pillar 2?

The Agricultural Council meeting on 18 June 2012 held a discussion on the proposed rural development regulation in response to a Presidency questionnaire. One of the questions posed by the Presidency was:

Should the Rural Development regulation contain a requirement for a minimum percentage of the EAFRD budget to be spent on environment related actions, and which measures should be taken into account when calculating the spending on environment related actions?

The press release following the meeting highlighted the range of views in the Council on these issues:

Member states broadly support the principle that the CAP should significantly contribute to addressing the challenges concerning environment, biodiversity and climate change mitigation and adaptation. However, member states opinions were divided over setting a threshold in recital 28 of the rural development proposal, where the Commission suggests, as a guideline that member states spend a minimum of 25% of the total contribution from the EAFRD to each rural development programme on climate change mitigation and adaptation and land management.

… Read the rest
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What Rio+20 has for the CAP?

20 years have passed since the Earth Summit was organised in Rio de Janeiro in 1992. The United Nations Conference on Sustainable Development (UNCSD) will also be held in Rio this week and the apparent question comes what has happened in 20 years time. Almost nothing, many argue, as global sustainability is more on the table than ever. Increasing emissions and soil degradation, decreasing biodiversity, shrinking water supply and increasing hunger in many areas are just a few of the challenges the world is facing. These problems are partly due to agricultural policy failing to provide the appropriate answer to these challenges.
It seems we were facing almost the same challenges twenty years ago as suggested by the “Beyond the Limits” book managed by Dennis Meadows urging a paradigm shift in global sustainability. It is now the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD) or the Green Economy Report (UN), amongst others, calling for a paradigm shift in global agricultural policy, research and development.… Read the rest

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More supply management demanded in COMAGRI single CMO report

The French EPP member Michel Dantin is the COMAGRI rapporteur for the Commission’s draft revisions of the single CMO regulation. His draft report is detailed and comprehensive – he alone has tabled 434 amendments to the Commission’s draft regulation. Many of these amendments implement the two guiding principles which animate his report, namely, distrust in the ability of markets to always work satisfactorily where agriculture is concerned, and the desire to emphasise the legislative role of the Parliament vis a vis both the Council and the Commission.
Mr Dantin is a believer in the theory of ‘agricultural exceptionalism’ and that farmers require state assistance to operate in dangerous markets.

The fact that agricultural markets are, as a result, becoming more volatile implies first of all that the CAP budget, especially where the Single CMO is concerned, has to continue on its present scale if it is to cope with the crises which can, at any moment, threaten Europe’s agricultural production potential and hence jeopardise the CAP’s prime aim, namely to ensure that Europeans can enjoy food security.

… Read the rest
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Danish Presidency CAP reform progress report

The Danish Presidency has submitted its report to the Agricultural Council on the progress achieved during the first half of 2012 on CAP reform. The report indicates the main amendments suggested by the Presidency to the Commission proposals and on which the Presidency has noted broad support from delegations. The overview report contains a list of working documents in the Annex prepared by the Commission which provide further explanations of its proposals.
In addition to the overview report which notes the positions taken in the Council on the various elements of the Commission’s proposals, the report is accompanied by a series of revised draft regulations which include the specific amendments proposed by the Presidency. The Presidency proposals for the four main revised regulations are as follows.
Proposal for a Regulation of the European Parliament and of the Council establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy (CAP Reform) – Presidency consolidated revised text
Proposal for a Regulation of the European Parliament and of the Council establishing a common organisation of the markets in agricultural products (Single CMO Regulation) (CAP Reform) – Presidency consolidated revised text
Proposal for a Regulation of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural development (EAFRD) – Presidency consolidated revised text
Proposal for a Regulation of the European Parliament and of the Council on the financing, management and monitoring of the common agricultural policy (the horizontal regulation) – Presidency consolidated revised text
An interesting parlour game for CAP watchers for the rest of the summer will be to compare the Presidency draft text for the four regulations with the COMAGRI rapporteurs’ draft texts which will be discussed in COMAGRI on 18-19 June.… Read the rest

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COMAGRI draft report on rural development

As noted in a previous post, the draft reports by the COMAGRI rapporteurs on the four main CAP regulations were published last week. They include the reports on the future of direct payments and support for rural development by Mr Luis Manuel Capoulas Santos, the report on the single common market organisation by Mr Michel Dantin, and the report on the common provisions for financing, management and monitoring of the CAP by Mr Giovanni La Via. This post summarises the main changes proposed in the Capoulas Santos draft report on support for rural development after 2013.
Investments in physical assets. The draft report advocates that the provision in the current regulation providing for support for complying with new Community standards in the fields of environmental protection, public health, animal and plant health, animal welfare and occupational safety should be maintained, but limited to support of specific investments undertaken by farmers.… Read the rest