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The Doha Round is back on track

On Thursday 27 November 2014 last, the WTO General Council approved three decisions related to public stockholding for food security purposes, the Trade Facilitation Agreement and the post-Bali work programme. With these agreements the hiatus in the WTO’s post-Bali work caused by India’s position on the 2013 Bali Ministerial Council decisions has been unblocked. India had demanded a commitment to faster progress on finding a permanent solution to the treatment of official procurement prices for food security stocks under domestic support disciplines, as well as the copper-fastening of the terms of the interim peace clause, in return for its willingness to approve the Protocol of Amendment to allow the Trade Facilitation Agreement to come into effect.
The drama leading up to these decisions and their significance is well described in this Bridges article. Addressing the General Council , the WTO Director-General Robert Azevêdo said:

By agreeing these three decisions we have put ourselves back in the game.

… Read the rest
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FADN data highlights dependence of EU farms on subsidy payments

Last week, the DG AGRI Farm Accountancy Data Network, FADN, made available aggregated data in its public database for the 2012 accounting year. In addition, there is now a Farm Economy Focus, or country fact sheet, based on the 2012 data for each member state which presents key FADN results in a graphical form for a general audience.
The FADN database is a key tool both for policy-makers and researchers seeking to understand the behaviour of farmers and the agricultural economy. The survey does not cover the smallest farms, but it is representative for over 4.9 million holdings across the Union. It contains a wealth of information on the economics of farm businesses, and the FADN team makes it easy to access this information through a very friendly user interface to their public database.
While the FADN tool is a terrific resource, some of the data it contains tell a less-than-encouraging story about the economic condition of EU farming.… Read the rest

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EU sugar beet prices to fall by 22-23% when quotas eliminated

After much lobbying the Council and Parliament finally agreed that sugar quotas (including quotas on isoglucose) would be extended until the end of the 2016/17 season but would be abolished with effect from October 2017. In January this year, the EU’s Joint Research Centre (JRC) Institute for Prospective Technological Studies published its assessment of what might happen to the EU sugar market as a result of the abolition of sugar quotas. It is worth examining this report in some detail both for its substantive conclusions but also for some insight into the factors likely to affect the EU sugar market balance in the years after 2017.
The JRC study was completed at end-2012. It compares two alternative scenarios in the year 2020 – one scenario assuming that sugar quotas continued (the reference scenario) and one scenario in which sugar quotas are assumed eliminated in 2015. In the latter scenario, three alternatives are simulated with different assumptions regarding the share of isoglucose in the EU sweetener market.… Read the rest

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An agricultural perspective on the European Council 2030 climate and energy framework conclusions

The European Council agreed on a set of climate and energy targets for 2030 (the 40/27/27 package) at its meeting last month. The agricultural sector has a particular interest in these conclusions given that it is affected by climate change targets in three different ways:

  • Agriculture is a very energy-intensive sector, so policies designed to raise the cost of fossil fuel energy will increase its costs of production, particularly for nitrogen fertiliser where around 80% of all inorganic N used in EU agriculture is produced domestically. The most important factor here is the level of ambition set for the ETS sector and thus the future price of emission allowances which the fertiliser industry must buy.
  • Agriculture must contribute to mitigation efforts if the EU is to meet its long-term target of reducing GHG emissions in 2050 by 80-95% compared to 1990 levels. Reducing agricultural GHG emissions is difficult particularly if food production is increasing.
    • … Read the rest
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    Farmers may have to pay for Russian crisis aid

    One of the successes of outgoing Agriculture Commissioner Dacian Ciolos in the 2013 CAP reform was to maintain the size of the CAP budget in the 2014-2020 multi-annual financial framework (MFF), at least in nominal terms (and even in real terms in the Commission’s original proposal). This was no mean achievement given the extent of the financial crisis in Europe, the pressures on public spending and the competing demands for spending at EU level.
    His success was due to persuading his fellow Commissioners that a larger share of the CAP budget would be devoted to paying for public goods, particularly environment and climate actions. However, in the subsequent negotiations on the details of the CAP reform, these commitments were greatly weakened, much to the frustration of the other Commissioners. It now appears that the other Commissioners have had enough and are fighting back, using the first amending letter to the 2015 EU budget as their instrument.… Read the rest

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    Agriculture in the 2030 Climate and Energy Package

    The European Council comprising the EU Heads of State and Government will meet at the end of this week 23-24 October to take a final decision, among other issues, on the EU’s new climate and energy policy framework. The plan is to agree on the target level of GHG emission reductions for 2030 so that the EU can submit its contribution for the conclusion of a global climate agreement in Paris at the end of next year at the latest by the first quarter of 2015, in line with the timeline agreed by the UNFCCC. However, according to the EUObserver, there are still significant differences of view on the targets between member states, and deadlock at the meeting is not ruled out.

    The state of play

    The Commission Communication presenting the climate and energy framework was published in January this year and contained the following elements:

      – a greenhouse gas emissions reduction target of 40% below 1990 levels, to be achieved only through domestic measures (without the use of international credits);
      – this overall target to be met through a reduction of 43% in emissions from the ETS sector and a reduction of 30% in emission from the non-ETS sector, both compared to 2005.
    … Read the rest
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    What is the growth potential of EU agriculture?

    Commissioner-designate Phil Hogan committed himself to a growth, jobs and investment agenda for agriculture in his confirmation hearing with the EP’s COMAGRI. Given the stuttering EU recovery and continued high unemployment in EU countries, this is an understandable objective. But can EU agriculture rise to the challenge? Not on its past record, at least without substantially changing the policy paradigm.
    It is rarely recognised just how disappointing the growth performance of EU agriculture has been over the past two decades. As shown in the figure below, the average growth rate over the period 1990-2011 for the EU-28 has been a mere 0.2% per annum. That is, over the 21-year period, the volume of agricultural output in the countries that make up the EU today grew by just 4.5%.

    These data are calculated using FAOSTAT data; the data from Eurostat tell a somewhat more optimistic story with a growth rate (for the EU-15) of 0.8% p.a.… Read the rest

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    Phil Hogan confirmed as Commissioner

    Agriculture and Rural Development Commissioner-designate Phil Hogan was strongly confirmed following his hearing before the European Parliament COMAGRI yesterday by 32 votes to 10 on the question whether he is qualified to be a Commissioners, and by 31 votes to 11 on whether he is qualified to take responsibility for his portfolio.
    There were no surprises in either Phil Hogan’s opening statement or in his answers to questions (the DG AGRI website has a copy of his opening statement and a video link to the hearing). I see no reason to revise my previous assessment of the priorities for agricultural policy under Hogan’s mandate.

    There appears to be little appetite for further substantial steps towards a more targeted CAP focused on the delivery of public goods. On the contrary, the specific mandate given to Hogan by the Commission President is to increase the focus of the CAP on “jobs, growth, investment and competitiveness”.

    … Read the rest
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    Trends in EU agricultural self-sufficiency

    Worries and concerns about food security, real or imagined, have figured prominently in the debate on EU agricultural policy since the Commission launched its consultation document on the recent CAP reform in 2010, stimulated by the price spike on global food markets in the years 2007-08. This week, at the informal Farm Council in Milan on Tuesday 30 September under the Italian Presidency, agricultural ministers will discuss how EU agriculture can contribute to the food security challenge.

    One of the issues that constantly pops up in this debate is the importance of food self-sufficiency as a guarantor of food security. Food self-sufficiency is defined as the proportion of domestic consumption met from domestic production. In my view, identifying food security with food self-sufficiency is misleading and, indeed, potentially dangerous if it diverts attention away from more real threats to food security, but that argument is for another day. Nonetheless, to debate this issue requires, at least, good information on the underlying figures and trends.… Read the rest

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    Prospects for the next CAP reform

    The newly-elected MEPS are now finding their feet in Brussels and committee memberships have been assigned. Commission President Juncker has allocated portfolios to the Commissioners nominated by member states, and the European Parliament has scheduled its confirmation hearings beginning next Monday 29 September. The hearing for the Commissioner-designate for Agriculture and Rural Development, Phil Hogan, is scheduled for Thursday 2 October.
    What will the new Commissioner and the new Parliament mean for future CAP reform? With the implementation of the Ciolos CAP reform not even begun, it might seem presumptuous to turn to thinking about the timetable and prospects for the next CAP reform. Nonetheless, in this post, I discuss the likely timeline and speculate on the possible outcome.
    A possible reform timetable?

    A number of possible trigger points are already set. The most important of these is the renegotiation of the EU’s Multi-annual Financial Framework (MFF) for the period after 2020 (the duration of this remains to be decided but must be of at least five years).… Read the rest