Category: Blog posts

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DG Agri study: Don’t be afraid of liberalization

Farm interests routinely threaten that any reduction in support will provoke a slump in production, endangering EU food security, and threatening massive land abandonment to the detriment of rural life and biodiversity. The findings of the Scenar 2020-II – Update of scenario study on agriculture and the rural world, commissioned by DG Agri, strongly contradict such panicmongering about the looming end of EU agriculture.

The study looks at three scenarios. The reference case assumes a 20% (nominal) CAP budget reduction, reduced intervention stocks, full decoupling, a 30% direct payment reduction, a 105% increase for the second pillar, and a moderate Doha agreement (based on the Falconer paper, including the elimination of export subsidies). The conservative scenario presumes that the Health Check results are largely maintained, direct payments reduced by only 15% and second pillar payments raised by 45%. The liberal scenario is very liberal indeed, with a 55% CAP budget reduction, no intervention stocks, no direct payments, a 100% increase for the second pillar and no tariffs.… Read the rest

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OECD research on the CAP

Agricultural ministers of the OECD met in late February 2010 – the first time since 1998 – and issued a communiqué that touches on everything and says close to nothing. For once, such an empty statement is perfectly fine. The OECD Secretariat doesn’t need its ministers in order to do an excellent job in providing intellectual guidance and hard data.

The flagship of OECD research is certainly the country-level analysis of agricultural policies, based on Producer and Consumer Support Estimates and enriched by a brief description of recent policy developments in the report on Agricultural Policies in OECD Countries: Monitoring and Evaluation 2009.

New research on the CAP has been presented at an OECD Workshop on the Disaggregated Impacts of CAP Reform in March 2010.

The OECD also prepares a regular report on the Environmental Performance of Agriculture.

Equally important are the thematic research pieces. A 2009 piece on the ‘Adjustment Options and Strategies in the Context of Agricultural Policy Reform and Trade Liberalisation’ compares the liberalization experience in various OECD countries.… Read the rest

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12 March: Sarko steals the headlines

Quite a week for Nicolas Sarkozy, then.

After skipping the opening ceremony of the Salon d’Agriculture, the French president wrapped up the show by announcing that France is ready to accept farm budget cuts – but only if EU farmers are given more protection against imports.

Speaking at a debate on Saturday, Sarkozy said Paris would be “supple” about the budget but “rigid” in its demand that agricultural imports be subject to the same standards of production as those adhered to by EU farmers.

“I am ready to accept reducing the share of agricultural spending in the EU budget provided that we use community preference,” Sarkozy said, a reference to the high standard of environmental rules followed by EU producers

This, then, indicates a significant shift in thinking. Only three months ago, Bruno Le Maire, Sarkozy’s agriculture minister, hosted a meeting of 21 other EU nations to defend the agricultural budget beyond 2013.… Read the rest

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The Socialist Revolution

1789: the people of Paris take the Bastille. 1848: republican upheaval all across Europe. 1917: the Communists take power in Russia. 2010: the European Socialists & Democrats declare that the CAP needs to be revolutionized. Admittedly, the S&D do not pretend to lay claim to quite such daring historical parallels – but there is no doubt that they make bold claims: the ‘one step at a time while maintaining the original philosophy’ approach of the 1992, 2000, 2003 and 2008/09 reforms has been ‘overly timid’. Explaining that progressives are those who anticipate and guide ambitious reform processes, whereas conservatives only tackle the issues when forced to do so by the emergence of crises or external constraints, they conclude that, ‘the reform of the CAP over the last 15 years has generally followed this second path.’

The S&D give two reasons a ‘New Start’ (yes, in capital letters, just like the ‘New Deal’ they are calling for) is imperative.… Read the rest

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Sarkozy offers a deal on CAP reform

President Sarkozy took farmers into his confidence in a recent speech at the Salon d’agriculture where he proposed a new direction in France’s position on CAP reform post 2013. Noting that there were farms in France where the share of subsidies equals the value of production, he declared that this does not make sense if the farmer is a producer. He criticised the policy approach of accepting compensation for reductions in prices because, some day, there is no longer sufficient funds to continue to pay for the subsidies.

Instead, he proposed to the other EU partners a deal whereby France would be flexible on the share of the next financial perspective going to agriculture provided that this was balanced by more rigorous Community preference which, implicitly would lead to a higher market return. His argument is that if third country producers had to respect the high environmental, traceability and animal welfare rules which must be respected by European producers, then European farmers would be able to compete on price alone.… Read the rest

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5 March: The circus comes to town

The world’s largest food and farm show, France’s Salon d’Agriculture, is taking place in Paris this week.

Europe’s new agriculture commissioner Dacian Ciolos cut the ribbon — a first for an EU commissioner — after President Nicolas Sarkozy broke with tradition and skipped the opening ceremony. The French premier will wrap up proceedings on Sunday instead.

The event comes after a year in which French farming has suffered its worst crisis in decades. According to Reuters, it is a “chance for Europe’s top agricultural producer to convince the visiting public and foreign officials it is worth safeguarding a sector undermined by declining revenues.”

Target number one is Commissioner Ciolos.

As the Financial Times put it, “the invitation comes as Europe begins a thorny debate over financing the CAP … France wants to lead the debate [and] believes it has an opportunity to push its view, and the invitation of Mr Ciolos is a sign of its confidence.”… Read the rest

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New Danish farms minister in subsidy storm

Yesterday’s reshuffle of the Danish government included the appointment of a new minister for agriculture: Henrik Høegh. Less than a day into his new job, he is becoming embroiled in a political row over a perceived conflict of interest. The reason? Mr Høegh is a farmer who receives more than sixty thousand euro a year in EU farm subsidies.

Data on farm subsidies shows that since 2000, Mr Høegh has benefited from the CAP to the tune of 604,787 euros over the nine years from 2000 to 2008. Farm subsidies appear to be something of a Høegh family business: it seems his son and daughter are also significant recipients. Mr Høegh is now responsible for signing his own subsidy cheques, but also, as a member of the EU’s Council of Agriculture Ministers, deciding on the future of the CAP.

Henrik Høegh - conflict of interest?

Høegh’s appointment to such a high profile and sensitive post came as something of a surprise since he’s only been a member of parliament for less than three years, before which time he was a Vice President of Danish Agriculture, the farmers union in Denmark, just the most recent position in a career spent in agricultural and farmer associations (read his CV in English here – PDF).… Read the rest

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CAP Reform Conversations: Paolo De Castro MEP

In the first of a series of video conversations with leading figures in the debate over the future of the CAP, Jack Thurston talks to Paolo De Castro MEP, chair of the parliament’s Committee on Agriculture and Rural Development and a former two-term Italian agriculture minister and professor of agricultural economics.

De Castro explains that he has always regarded himself as a CAP reformer and sets out his vision for a reshaping of the EU’s farm subsidy system. He advocates a shift to a basic flat rate aid payment to farmers, plus additional funds to be allocated at the discretion of member states. He argues for introducing minimum and maximum thresholds for payments (a minimum around 300 euro and a maximum in the range 400,000-500,000 euro). He speaks in favour of co-financing of the CAP, so long as it’s not optional for member states. He explains his vision for the European Parliament’s role under the new Lisbon Treaty rules, including his idea of a permanent seat for the Agriculture Committee on the Agriculture Council and how he’d like COMAGRI to take part in CAP comitology.… Read the rest

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NMS farm ministers flex their muscles

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

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CAP support levels reach new high

CAP subsidies as reported to the WTO reached a ten-year high of over €90 billion in the 2006/07 marketing year, but conveniently most of them have been parked in the allegedly non trade distorting green box, something that has provoked disquiet in Geneva. The EU notified €90.7 billion of support to the global trade body for 2006/2007 – up from €75.6 billion in 2002, when support was at its lowest in the last fifteen years.

More from ICTSD.… Read the rest