Europe's common agricultural policy is broken – let's fix it!
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
It is with great sadness that I report to readers of CAP Health Check the sudden and unexpected death of Secondo Tarditi, one of the agricultural policy experts contributing their thoughts to this blog. A fuller appreciation of Secondo’s life and his contribution to European agricultural economics will follow. In the mean time we express our sadness and extend our sympathies to Secondo’s family and friends who are mourning the loss of a talented, vivacious and charming man.
Fellow blogger Wyn Grant presented a paper in Paris last month which presents a wide-ranging overview of the changes in CAP policy instruments since its inception to the present day. His basic thesis is that over time the instruments have changed much more than the objectives and that this does reflect a shift in the content of the CAP and its ultimate goals. He concludes that it is changes in CAP policy which have led to changes in policy instruments, although he does cite some examples where the introduction of new instruments, possibly by creating obvious anomalies, can spark off wider policy debates (trading SFP entitlements, voluntary modulation).… Read the rest
Speaking at a meeting of the Parliamentary Agriculture Committee in Nicosia, Cyprus on 29 June, Agriculture Commissioner laid out her current thinking on the future of the CAP, in particular the changes she will be proposing later this year for the CAP Health Check.
John Gummer MP, the former UK Agriculture Minister who is currently advising Conservative Party leader David Cameron on farm policy, has taken a swipe those in his party who call for a repatriation of the EU’s common agricultural policy:
“There is no doubt at all that unless we get a kind of common deal in the EU farmers will get no money at all. No British government of any kind is prepared to foot the bill. Anybody who dares to talk about repatriation doesn’t care about farming because you won’t have it.”