Europe's common agricultural policy is broken – let's fix it!
Following a Swedish proposal and widespread support in the Agriculture Council, the Commission announced the intention to set the level of compulsory set aside at 0% for the 2008 harvest. This is bad news for Europe’s wildlife and suggests a disappointing level of commitment to environmental sustainability on the side of the EU and its Member States. It also seems like a textbook case of ill conceived decision making.
On the other side of the Atlantic the five-yearly federal farm bill debate is reaching its climax. A bill approved unanimously by the powerful House agriculture committee has been roundly attacked by reformers who wanted to see less in the way of multi-million dollar payouts to large agribusinesses and more resources for conservation programmes and economic development assistance for rural areas.
Last month the European Union suspended export subsidies for the dairy sector and following the 2005 reforms of sugar subsidies, Europe is set to become a net importer of sugar. It is also imports beef, soya and cereals, mainly from Brazil. Yet a new report (PDF) just issued shows that Europe has consolidated its position as the world’s largest food exporter, ahead of traditional commodity giants the United States and Brazil, and by 2006 it was exporting more by value than it was importing. How can this be?
International trade negotiations have been the most effective driver of CAP reform for over fiften years. I haven’t commented on progress in the Doha Round for some time because prospects have looked so bleak since the collapse of the G-4 talks at Potsdam. But there does seem to be a glimmer of hope.
British dairy farmers are leaving the industry in large numbers, but world milk and milk product prices are heading upwards fast. How can one explain this paradox? The simple answer is, of course, that the key UK liquid milk market is largely insulated from world market factors.
In the long run it is going to be difficult to justify a Single Farm Payment (SFP) model that is based on historical receipts. This model originated in the generous compensation given to cereal farmers for cuts in intervention payments in the 1992 MacSharry reforms. There will be a shift to a regional model with a flat rate payment per hectare in each region. This is already under way in England, Finland and Germany and all the new member states have a flat rate payment system.
The fruit and vegetable reform agreement is another step on the road to a more market oriented CAP. Yet in some ways it is more significant in terms of how it was secured and what it reveals about decision-making in an EU with 27 member states.
The European Commission is experiencing a bitter three-way split over biofuels policy, with no real sign of who will prevail. Chief among the biofuels boosters is DG Energy & Transport, which sees a rapid expansion of biofuel production and consumption as a core part of meeting high-level commitments to green energy and reducing dependency on fossil fuel imports from unstable regions like the Middle East or unreliable countries like Russia. DG Energy is in a bitter disagreement with DG Environment on the question of whether biofuels are part of the solution to climate change or part of the problem.
A number of producer interests would like to revive food security as a major driver of agricultural policy. Organisations like the Commercial Farmers Group (CFG) in the UK, a small grouping of leading producers, argue that new threats are present in the form of population growth, pandemic diseases, climate change, terrorist actions and increased demand for renewable fuels. They want to change the balance between the environmental and food safety concerns that have been driving agricultural policy in recent years and return to more traditional productionist priorities.
The UK Department for Environment, Food and Rural Affairs (DEFRA) Agricultural Change and Environment Observatory recently published a statistical analysis of the breakdown of the Single Farm Payment (SFP) in England, one of the four regions for the purposes of administering the SFP scheme in the UK. The report analyses 2005 payments, with some historical comparison with the distibution of payments in previous years. One of the findings is that average payment rates per hectare are related more to farm type than to farm size. Apart from the very smallest farm size group (holdings with between 0 and 0.5 Standard Labour Requirements), the average payment per hectare for all remaining farm sizes varies minimally between £187 and £197/hectare.… Read the rest