CAP Reform

In presenting its proposals for the 2014-2020 MFF on June 29th last, the Commission Services produced a helpful guide to the proposals in the form of a Q&A Questions and Answers memo. Intriguingly, there appear to be two versions in circulation.

For example, one version on the EUBusiness.com website (also picked up by NFU Online) contains the following paragraph on CAP Pillar 2.

The allocation of rural development funds will be revised on the basis of more objective criteria and better targeted to the objectives of the policy. This will ensure a fairer treatment of farmers performing the same activities. In order to avoid a reduction in farmers’ income, the Commission will propose to allow Member States, if they so wish, to maintain the current nominal level of funding through transfers from Pillar Two to Pillar One.

However, in the version now available on the Commission’s MFF website, this paragraph reads:

The allocation of rural development funds will be revised on the basis of more objective criteria and better targeted to the objectives of the policy.

… Read the rest

One of the revelations in the Commission’s proposed Multiannual Financial Framework was its proposal to move funding for the programme of food assistance to the most deprived persons out of the CAP Pillar 1 budget to the European Social Fund, thus saving an estimated €3.5 billion which could then be used for other agricultural spending.

Whether the EU should be funding social programmes of this kind remains controversial in the Council of Ministers, although there is unalloyed enthusiasm for the programme in the European Parliament given that the majority of parliamentarians there favour spending of all kinds.

Origins of the programme

The scheme had its origins as an emergency measure in the exceptionally cold winter of 1986/87, when surplus stocks of agricultural produce were given to Member State charities for distribution to people in need. The measure was subsequently formalised and based on intervention stocks. As agricultural surpluses reduced, the programme has been supported by a direct financial contribution, and the scheme was amended in the mid-1990s to make it possible to supplement intervention stocks with market purchases in certain circumstances.… Read the rest

The publication of the Commission’s proposals for the next Multiannual Financial Framework (MFF) 2014-2020 brings a little more clarity to its thinking on the likely shape of CAP reform post 2013.

Overall, the proposal represents a slight increase in the total size of the EU budget in the next programming period, by between 3.5% and 5% depending on whether one looks at commitment or payment appropriations. While a number of member states have sought a total freeze in real terms, this still represents a much more modest increase than that proposed recently by the European Parliament (which was a 5 percentage point increase in the share of the EU budget in GNI). The Commisison proposal would see the share of the EU budget in GNI shrink (in payment appropriations) from 1.06% in the current MFF to 1.00% in the next MFF.

The CAP budget

In commitment terms, the proposal allocates €281.8 billion for Pillar 1 of the CAP and €89.9 billion for Pillar 2 of the CAP (representing 76% and 24% of the total CAP budget, respectively).… Read the rest

A concern about increased price volatility facing EU farmers marks virtually every statement on the challenges facing the CAP post 2013, with the presumption that new instruments to address this challenge should be part of the CAP reform proposals. Income insurance and ‘contractualisation’ (greater use of written contracts and new collective bargaining powers for producer organisations) are the new tools most often mentioned in this context. A new report by Stefan Tangermann published by the International Centre for Trade and Sustainable Development punctures these claims and flatly concludes that intensified risk management instruments for EU agriculture are not warranted.

His argument is based around five points.

• Farmers may well face greater price volatility in the future, but there is little that can be done to dampen volatility of agricultural prices on international markets. While use of trade policy can help to limit the transmission of world price volatility into the EU market, this is always at the expense of trading partners including developing countries and so should be avoided.

… Read the rest

Much of the recent discourse around CAP reform emphasises that European agriculture has an important role to play in the future in contributing to global food security. This concern has been driven by the growing awareness of the challenge of increasing global food production in a sustainable way, which in turn was underlined by the impact of the two recent food price spikes (2007-08 and 2010-11) on global hunger.

Estimates by the U.N. Food and Agriculture Organization (FAO), the U.S. Department of Agriculture (USDA), and the World Bank concluded that between 75 million and 160 million people were thrown into hunger or poverty as a result of the 2007/08 global food crisis. One response to this finding is that it apparently contradicts the conventional wisdom that low global food prices (for example, brought about by high OECD agricultural protection) were responsible for increasing hunger and poverty in developing countries in previous years (see the paper by Jo Swinnen for a discussion of this issue).… Read the rest

This month (June 2011) sees the real start of the negotiations on the future EU budget framework for the coming years. On Thursday 9 June the Parliament will vote on the opinion prepared by its Policy Challenges Committee setting out its views on the size, structure and duration of the next multi-annual financial framework (MFF).

On 29 June the Commission will publish two legislative proposals, one on future own resources and the other on the MFF. These will be accompanied by impact analyses including of potential new own resources. This will be the first real indication of the Commission’s thinking on the future resources to be made available for the Common Agricultural Policy, although many months of hard negotiating lie ahead before an eventual agreement is reached. The current MFF runs until the end of 2013.

The Policy Challenges Committee report

A year ago, the Parliament set up a special committee on the policy challenges and budgetary resources for a sustainable European Union after 2013, also known as the SURE or Policy Challenges Committee.… Read the rest

The enterohaemorrhagic E. coli (EHEC) ‘cucumber’ crisis raises many questions. The most immediate is the public health dimension. The scale of the outbreak has been described as unprecedented by public health officials and the cause of the outbreak has yet to be localised. To date there have been 18 fatalities, all but one in Germany, and at least 499 people have haemolytic uraemic syndrome (HUS), a life-threatening kidney disease (see update from a German spokesman here). For comparison, according to the University of Edinburgh National Creutzfeldt-Jakob Disease Research & Surveillance Unit, 209 people have died in the EU (168 in the UK alone) from vCJD (‘mad cow disease’) since 1990.

The outbreak also raises questions once again about the governance of the food system – is the mixture of market incentives, public regulation, legal liability and socially-enforced moral standards of behaviour working sufficiently well to warrant consumer trust in the governance of food safety?… Read the rest

It’s customary that on the eve of a reform of the Common Agricultural Policy, Chris Haskins (Baron Haskins of Skidby, an appointed member of the House of Lords) sets out his case for radical change.

In the 2011 edition, Haskins argues for a cut in the CAP budget and a redistribution from farmers in western Europe to farmers in the east. With an outlook of increasing commodity prices, the CAP should focus less on subsidising farmers and more on providing help declining rural areas, particularly in eastern Europe, following the model of EU structural and cohesion policy.

A former Chairman of Northern Foods, one of the UK’s biggest processed food companies, Haskins joins the growing chorus of those rejecting the notion that preserving the CAP is necessary for European food security:

“The main economic justification for an EU common agricultural policy is that, consistent with the rules of the single market, it offers all EU citizens secure and adequate supplies of affordable food.

… Read the rest

Stefan Tangermann’s study on Direct Payments in the CAP post-2013 which was released by the European Parliament on February 11th last is a masterly deconstruction of the fragile rationale behind many of the proposals for the redesign of direct payments in the Commission’s Communication on the CAP post-2013 published last November. A powerpoint presentation of his study is also available.

The closely-argued report is divided into five sections, each of which deserves comment in its own right. In this post, I comment on the introductory section entitled The EC communication: another CAP reform?

In this opening section, Tangermann starts from the Commission’s standpoint that a further reform of the CAP is needed to prepare EU agriculture for the challenges of the future. The Communication identifies three challenges of food security, environment and climate change, and territorial balance. Tangermann argues that, while these are real and important challenges, the policy proposals in the Communication are hardly consistent responses.… Read the rest

This week, the French national federation of environmental NGOs, France Nature Environnement (FNE), federation of hundreds of environmental groups, launched a poster campaign that raised considerable controversy. It showed, in a rather shocking way, some (real or alledged) environmental damages caused by agriculture. Adding insult to injury, this took place a day before the annual “salon de l’agriculture”, a big national fair in Paris that attracts close to 1 million visitors and where every politician goes to cuddle farmers. All farmers’ organisations became mad, and claimed that the campaign indiscriminately accused farmers of being polluters. The French Minister of agriculture, Bruno Le Maire talked about “a scandal”. Opening the agricultural fair, President Nicolas Sarkozy said that the poster campaign was a “loathable”, and compared FNE (for some strange reason) to the National Front taking over ongoing debates on the status of islam. Probably under some political pressure, the Paris metro advertising branch refused to display the posters (invoking bizarre reasons like the need for Quentin Tarentino’s approval on the “kill bees” poster below…).… Read the rest