In a previous post, I discussed the significance of the current buoyant markets for dairy products for the likely success in pursuing further reform of the EU dairy regime. The insight that world market conditions may influence the trajectory of CAP reform can also be extended to other CAP regimes. Producers have not been as optimistic regarding long-run price trends for agricultural commodities for many years. Food demand prospects appear bright, driven by population growth and rising incomes in many emerging markets. Non-food demand, particularly for biofuels, is a further positive driver. Many believe that, after many false dawns, we really are on the cusp of reversing the long-run decline in real agricultural prices since the Second World War and entering a Malthusian world.… Read the rest
Irish farmers now totally dependent on direct payments for their income
The dependence of Irish farm incomes on the Single Farm Payment and other direct payments was starkly revealed by the publication of the 2006 results of the annual National Farm Survey (NFS) this week. Fully 98% of Family Farm Income (FFI) on Irish farms in 2006 was derived from the Single Farm Payment and other direct payments; only 2% represented the return from the market, the lowest recorded since the Survey commenced. Market FFI per farm in 2006 was only €334. In 2004, 86% of Family Farm Income came from direct payments and subsidies, and 14% from the market place.
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Puzzle over co-decision
It is far from clear how agricultural issues will be dealt with under co-decision once the reform treaty is enacted. Under current rules, most CAP dossiers are decided under the ‘consultation’ procedure, where the Council must wait for an EP opinion, but has no obligation to incorporate EP amendments into the final text.
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Good prospects for dairy reform
A particular milestone in the CAP was passed last month when the European Commission set export refunds on dairy products to zero for the first time ever in the management of the EU dairy regime. This reflects the extraordinary jump in world market prices for milk products in the past twelve months, with prices for skim milk powder more than doubling in US dollar terms.
Source: USDA Dairy: World Markets and Trade July 2007
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Set-aside: ensuring the environmental benefits
Ariel Brunner in a recent post lamented the fact that the EU has proposed to set the rate of compulsory set-aside to 0% for the 2008 harvest without putting in place alternative measures to secure the environmental benefits which set-aside land provides. The reason why the decision only concerns autumn 2007 and spring 2008 sowings is that a decision to eliminate set-aside can only be done in the context of a global review of arable crops policy. This will be undertaken as part of the CAP Health Check, when the Commission has promised an analysis on how and by which means we can address the positive environmental side effects of set aside.… Read the rest
Less likelihood of cuts in Single Farm Payment
The Irish Farmers’ Journal reports that the value of the Single Farm Payment (SFP) is not likely to be greatly eroded by “financial discipline” cuts in order to accommodate the payments to new Member States within the European Union. This is because more buoyant farm prices mean that there will be huge cuts in the cost of traditional market support measures, such as intervention and export subsidies, leaving sufficient money in the CAP budget to fund the SFP. Agra Europe forecasts that the cost of traditional support measures will fall by half by 2013, and that budget-related cuts in the SFP of no more than 2% will be necessary by 2013 to stay within the CAP budget ceiling.… Read the rest
Set aside: act now, think later…
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.
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How not to reform farm subsidies (American style)
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.
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Europe becomes net food exporter
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?
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Glimmer of hope over Doha
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.
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