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On the justification for direct payments

Despite the numerous critiques of direct payments expressed in the vast majority of the professional literature analysing the future of the CAP, the European Commission seems to maintain them in the future. In order to justify the decision, the EC has found out a new slogan for saving this ineffective policy instrument –  the provision of public goods.

However, this is not the first time in history when the Commission searches for justifications in order to save direct payments. Founded in 1992, the original idea behind direct payments was to compensate farmers for the price cuts of the MacSharry reform. This can be treated as an economic justification for the instrument as farmers, at least to the Commission, will be better off with this support than without them.

By the beginning of the 21st century, it turned out that direct payments have many problems like unequal distribution by members and farmers, the dissipation of these payments to input suppliers and landowners, etc.… Read the rest

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The legislative timeline for CAP reform

The publication of the Commission’s legislative package for CAP reform is merely the starting gun for the EU’s legislative procedure to debate the regulations before they can take effect. The regulations now enter the co-decision procedure involving the Council of Ministers and the European Parliament (EP).

In an article this week in the Irish farming press, Mairead McGuinness set out the timeline as seen from the Parliament’s perspective. Mairead McGuiness is the EPP Group shadow rapporteur for the direct payments report contained within the legislative package, and thus centrally involved in formulating the EP’s position.

According to McGuinness, the current timeline envisages that draft reports will be prepared for consideration by the Agriculture Committee by April next, with a vote in Committee taking place in September on the changes proposed by MEPs.

However, she warns that given the complexity of the reforms proposed this timetable is by no means certain and that divergent views may delay the work programme.… Read the rest

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Updated analysis of Commission legislative proposals

The International Centre for Trade and Sustainable Development has now published the final updated version of my paper looking at the trade and development implications of the Commission’s legislative proposals for the CAP post 2013. Apart from making some corrections to the preliminary version, it takes account of the main changes in the Commission’s proposals on October 12th last compared to what was in the heavily-leaked drafts as well as the full impact assessments released at the same time.

The main changes include:
– The replacement of the firm commitment to have a uniform payment per hectare across all land and member states by 2029 in the regulation itself, to an aspirational commitment in the preambular material that member states will work towards this goal in the next financial perspectives period.
– The possibility for Member States to modulate up to 10%, rather than 5%, of their Pillar 1 envelope to enhance their Pillar 2 funds.… Read the rest

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Analysis of the Commission's legislative proposals due tomorrow Wednesday 12 October

Tomorrow the Commission will unveil its legislative proposals for the future CAP regulations after 2013. As readers of this blog will be aware, the proposals have been widely flagged in various leaked draft versions. But it will be fascinating to see to what extent, if at all, the the final version will take account of the intense lobbying of the Commission by member states in recent weeks.
The International Centre for Sustainable Trade and Development (ICSTD) has just published a draft paper that I have written which attempts to summarise the likely changes to be announced tomorrow and to assess their implications for trade and development. This version is obviously preliminary, and it will be revised in the light of the actual legislative proposals. I hope to provide my own assessment of any significant changes from the leaked draft versions on this blog over the next couple of days.

… Read the rest
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Analysis of the Commission’s legislative proposals due tomorrow Wednesday 12 October

Tomorrow the Commission will unveil its legislative proposals for the future CAP regulations after 2013. As readers of this blog will be aware, the proposals have been widely flagged in various leaked draft versions. But it will be fascinating to see to what extent, if at all, the the final version will take account of the intense lobbying of the Commission by member states in recent weeks.

The International Centre for Sustainable Trade and Development (ICSTD) has just published a draft paper that I have written which attempts to summarise the likely changes to be announced tomorrow and to assess their implications for trade and development. This version is obviously preliminary, and it will be revised in the light of the actual legislative proposals. I hope to provide my own assessment of any significant changes from the leaked draft versions on this blog over the next couple of days.

… Read the rest
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The future role for the European Innovation Partnership for agricultural productivity and sustainability

One of the new initiatives to be announced by the Commission when it publishes its legislative proposals for the CAP post 2013 on Wednesday 12 October next will be the European Innovation Partnership (EIP) for agricultural productivity and sustainability. The Commission attaches great importance to this instrument to address lagging productivity growth in agriculture and to contribute to increased innovation.

To date, there is relatively little information on how this new instrument would work and what it will mean. The Commission is still in the process of internal reflection to define the objectives and governance of the EIP. However, some light is thrown on the Commission’s thinking in the evidence of Commissioners Ciolos and Geoghegan-Quinn to a recent UK House of Lords inquiry into Innovation in EU agriculture.

The emphasis in the new tool is very much on overcoming perceived bottlenecks to getting research results adopted on the ground. According to the Commission’s analysis, the main problem is the insufficient information flow and missing links between different actors (farmers, advisers, enterprises, and researchers).… Read the rest

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Eurobarometer on CAP reform

A new Eurobarometer public opinion poll shows widespread support among European citizens for the Commission’s main CAP reform proposals. The poll, conducted by TNS Opinion and Social, interviewed 26,713 adults, enough for a representative sample in each member state.

The first question, concerning setting a cap on the amount of aid to the largest farms found that 47% of respondents favour a limit while 28% opposed a limit. 15 per cent didn’t know. Support for capping was strongest in Cyprus (+54%), Denmark (+36%), Finland (+33%) and Sweden (29%). Malta was the only country where more people thought a limit was a bad thing (-20%). In the agriculture council the strongest opponents of capping have traditionally been the UK, Germany, Czech Republic and Slovakia. However, in each of these countries, a clear plurality of citizens favoured capping subsidies to larger farms.

A second question asked about strengthening the link between direct payments and the protection of the environment.… Read the rest

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Production effects of moving to flatter structure of direct payments

What might be the production, consumption and trade effects of the Commission’s proposals to redistribute direct payments by moving to a flat(ter) structure of direct payments across the Member States, and to redistribute payments within Member States by moving from the historic basis of farm payments (in the majority of Member States which operate this system) to a regional flat rate system?

A silly question, some might respond, for are not the EU’s direct payments decoupled (leaving aside the continued existence of a share of coupled payments) and thus not meant to have an effect on farm production? If a direct payment is truly decoupled, then moving payments from one farm to another, or from one country to another, will affect relative incomes but not output.

But there is widespread agreement that even decoupled direct payments do have an effect on production, even if there is less agreement on how strong this effect is in practice.… Read the rest

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Updating the base period for SPS entitlements

One of the more significant changes proposed by the Commission in its draft legislative proposal on direct payments is to eliminate those existing entitlements to support which farmers have built up in the past. The basic payment scheme will replace the Single Payment Scheme and the Single Area Payment Scheme as from 2014. The new scheme will operate on the basis of payment entitlements allocated at national or regional level to all farmers according to their eligible hectares in the first year of application.

The proposal to allocate new entitlements on the basis of land farmed in 2014 has provoked a massive protest in Ireland (see, for example, this Irish Examiner story). It is alleged that, in an attempt to build up their claim to entitlements in 2014, farmers are taking back land which is currently leased out, thus creating massive disruption in the land rental market and discriminating against those farmers who are actively farming the land.… Read the rest

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Problems viewing graphs in posts using Internet Explorer

Apologies that there appears to be a problem in viewing in-post images in previous posts using Internet Explorer, which means that often the browser does not display the associated graphs. At the moment I don’t understand the reason for this, but if you want to see the graphics, then please use an alternative browser such as Firefox, Chrome or Opera.

… Read the rest