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Carbon efficiency and trade policy

In an earlier post, I wondered whether there were data on the relative carbon efficiency of agricultural production in Europe versus third countries. A recent FAO study arising from a collaborative effort by FAO and the International Dairy Federation which assesses GHG emissions from the dairy food chain throws light on this. The study uses a Life Cycle Analysis (LCA) approach, and thus includes the land use change induced by the consumption of feed (principally soybeans) in intensive dairy systems.

The results are unambiguous:

“A global trend emerging from the results is the lower level of emissions per unit of product in intensive compared to extensive systems.

… Read the rest
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BirdLife takes aim at Lyon

On the letters pages of this week’s European Voice, Ariel Brunner, head of EU policy at Birdlife International, has launched a stinging attack on the European Parliament’s agriculture committee. It’s worth republishing in full.

Dear Sir,

The result of this week’s vote on George Lyon’s report, ‘The Future of the CAP after 2013’, is clear evidence that the European Parliament’s Agriculture Committee is more interested in protecting the privilege of vested interests than creating a policy fit for the 21st century.

The report robustly defends the direct payment system, yet provides no evidence for its claims that direct payments help ensure European food security, meaningfully stabilise farming incomes or secure environmental benefits.

… Read the rest
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The worst case scenario examined

A new study from the University of Wageningen in the Netherlands has attempted to model the effects of the abolition of EU farm subsidies. The authors of the report state that their study is very much a ‘worst case assessment’ since,

“It does not take into account farmers’ behaviour, although the past has shown that farmers do adapt to changes in the Common Agricultural Policy. It also assumes a fixed cost structure and abstracts from changes in factor prices and structural change, all elements which would reduce the impact of reform on farm incomes.”

The report makes it clear that the effect of subsidies – and their removal – is not felt evenly across Europe.… Read the rest

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The future of direct payments

As Valentin’s blog post yesterday explains, the CAP is not only a European agriculture policy, it’s a European income redistribution policy. The centrepiece of the CAP is the €42 billion a year in ‘direct aids’ or income support to farmers, funded entirely from the pooled EU budget. Valentin points out that in an era of fiscal austerity, the idea of billions of euros moving from one country’s taxpayers to another country’s farmers is likely to be politically controversial. Particularly when the biggest payouts go to Europe’s wealthiest citizens and most profitable companies.

As national governments decide by how much they are going to pay of nurses and school teachers, how many university places they will cut and which taxes they are going to have to increase, the idea that aids to farmers are ringfenced from cuts will come as a surprise to many.… Read the rest

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Which member states pay for wasteful farm income support?

So, is examination of member states’ financial net contributions a shameful exercise: hiking up national egoism and ignoring the larger benefits of European integration? Not at all. If CAP funds were spent exclusively on European public goods, such as climate change mitigation or the protection of endangered species, national bottom lines would indeed not matter. The money should be allocated wherever greenhouse gas reductions can be achieved most cheaply or where the need for wildlife protection is the greatest.

But as things stand, CAP subsidies are mostly free handouts to member states and their farming communities – they do not create commensurate value for European citizens.… Read the rest

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The historic roots of agricultural protectionism in Europe

Great Britain went through a protectionist phase in agriculture after the defeat of Napoleon in 1815, lasting for three decades until the repeal of the Corn Law in 1846. In food-importing Great Britain, the interruption of trade through Napoleon’s Continental Blockade had driven up food prices and farmers resisted the subsequent resumption of trade in peacetime. But the historic roots of continental agricultural protectionism, I always thought, were somewhat more recent, namely the transport cost revolution of the second half of the 19th century. As it became economically efficient to transport grain by train from the US Midwest to the East Coast, and then by ship to Europe, agrarian interests defended the higher rents on scarcer European land against the international convergence of factor prices.… Read the rest

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A three pillar CAP?

Attila Jambor and David Harvey presented a new paper to the Annual Conference of the Agricultural Economics Society a few months ago in which they argue that “two pillars are not enough for a sustainable future for the CAP”. They note that:

“The CAP, post 2013, is supposed by many to be required to contribute to meeting the major and diverse challenges of: global food security and climate change; environmental and land conservation and management; rural development; agrarian transition; food quality and safety; bioenergy and biofuels; regional and sectoral competitive (dis)advantages; market volatility and business risk and, no doubt, other issues as well.”

… Read the rest
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A tale of two visions

The reformist zeal of the 15 professors in the German scientific advisory board on agriculture is remarkable, and their statement (in German) largely concurs with the declaration for ‘A Common Agricultural Policy for European Public Goods’ signed by experts from all across Europe half a year ago. The statement even goes beyond the recent proposals (in German) made by the German Advisory Council on the Environment (SRU): agricultural economists overtake environmental experts in their demands for CAP reform.

According to the scientific advisory board on agriculture, market price, direct income and farm-level investment support should be removed. There is no reason to fear a massive breakdown in EU agriculture: 61% of German agricultural area is rented out, so that large share of direct payments does not benefit farming anyway; bioenergy makes it increasingly attractive to continue farming; structural change will allow significant cost reductions to make farming more competitive; several agricultural sub-sectors are economically viable, and have been so for a long time, without receiving significant subsidies and tariff protection; the extra costs of higher EU standards are low for most farms (less than €50/ha); and targeted payments to maintain agriculture in areas threatened by undesirable land abandonment can compensate adverse effects.… Read the rest

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The limits of (evaluating) rural development policies

The evaluation of rural development policies has improved over the years. The current mid-term evaluation, with all member states applying the sophisticated Common Monitoring and Evaluation Framework (CMEF) underpinned by voluminous Commission guidelines, is another step forward. DG Agri is adding further tools to make evaluations even more productive, such as an Internet platform for all stakeholders involved in the evaluation process.

The philosophy of monitoring, learning and adjusting is correct – but it can lead to an excessive trust in our abilities to manage economic processes, including their social and environmental implications. We must recognize the limits of our ability to glean information about the diverse challenges on the ground, to identify the locally diverse and multifaceted effects of policy interventions, to process this information intelligently and impartially, and to draw adequate conclusions.… Read the rest

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The development angle

“Waste at home and damage abroad”. That is how one Member of the European Parliament described the common agricultural policy. Gabrielle Zimmer, a German MEP who sits on the parliament’s development committee, was speaking at a conference convened last month by the United Nations Millenium Campaign to look at the impact of Europe’s farm tariffs and subsidies on developing countries.

According to Eckhard Deutscher, Chair of the OECD Development Assistance Committee (DAC) and another participant in the same meeting,

“The biggest challenge the EU’s development aspirations are facing is the lack of policy coherence. The trade, development, agriculture and environmental policies are simply out of sync with regard to developing countries.”

… Read the rest