Tag: prices

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2022: a record year for farm income

2022 was a challenging year for farming in the EU. Buffeted by weather extremes, disease outbreaks and rising input costs due partly to the lifting of COVID-19 restrictions but particularly following the Russian invasion of Ukraine in February, there was a sharp drop in agricultural production. Yet despite the predictions of doom and gloom, 2022 was a record year for EU farm income.

We had effectively the converse situation to the farmer in Shakespeare’s Macbeth who ‘hanged himself on the expectation of plenty’. Shakespeare’s farmer had hoarded grain in order to sell it later, when prices went up. But when prices went down instead due to a good harvest, he goes bankrupt and hangs himself in despair. In 2022, EU production went down but the rise in prices more than compensated, and farmers in aggregate had a very good year. This post looks at the outcome at year end, based on the preliminary Eurostat figures published in mid-December.… Read the rest

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Food for thought against food security concerns

World food prices are on the rise again. In December 2010, they exceeded the dramatic peak they had reached during the global food crisis in 2007/08. Add to this threatening megatrends, such as population growth and climate change, and think of recent news about the severe drought in Russia or the once-in-a-century flooding in Australia, both major staple food exporters. Who wouldn’t get an uneasy feeling that the specter of famine might come to haunt Europe again?

The European Commission has concluded in its communication on the post-2013 CAP that the CAP must preserve the EU’s food production potential, ‘so as to guarantee long-term food security for European citizens’. Similarly, ministers of agriculture from 22 member states claim in their Paris Declaration that ‘only an ambitious, continent-wide policy can safeguard Europe’s independence’.

Surprisingly, however, there are no scenarios and no calculations to substantiate this perceived threat. Only the Department for Environment, Food and Rural Affairs (Defra) has conducted a Food Security Assessment.… Read the rest

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Franco-German position on future of the CAP

This week the governments of France and Germany have published a short document setting out their common position on the future of the common agricultural policy. It makes for fairly light reading though the following points are worth remarking on:

– The common position endorses further moves towards greater market orientation in the CAP but suggests countervailing measures are needed “to buffer devastating effects of growing price volatility and market crises”.

– There is nothing concrete on the future budget of the CAP and it is stressed that “a final decision on all questions relating to finances will be made when decisions are made on all policies and the entire EU financial framework”. In other words, there is not going to be another stitch-up like the Chirac-Schroeder deal of 2002 which effectively fixed the CAP budget for the next 11 years, short-circuiting the normal EU budget-setting processes.

– The two pillar structure of the CAP should be maintained, and no national co-financing should be required of pillar one expenditure (i.e.… Read the rest

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DG Agri study: Don’t be afraid of liberalization

Farm interests routinely threaten that any reduction in support will provoke a slump in production, endangering EU food security, and threatening massive land abandonment to the detriment of rural life and biodiversity. The findings of the Scenar 2020-II – Update of scenario study on agriculture and the rural world, commissioned by DG Agri, strongly contradict such panicmongering about the looming end of EU agriculture.

The study looks at three scenarios. The reference case assumes a 20% (nominal) CAP budget reduction, reduced intervention stocks, full decoupling, a 30% direct payment reduction, a 105% increase for the second pillar, and a moderate Doha agreement (based on the Falconer paper, including the elimination of export subsidies). The conservative scenario presumes that the Health Check results are largely maintained, direct payments reduced by only 15% and second pillar payments raised by 45%. The liberal scenario is very liberal indeed, with a 55% CAP budget reduction, no intervention stocks, no direct payments, a 100% increase for the second pillar and no tariffs.… Read the rest

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Lessons from the 2009 EU dairy market crisis

The EU dairy market is now recovering from the severe drop in milk prices in 2009. Perhaps the clearest sign of this recovery is the setting of export refunds on dairy products to zero since mid-November, as world market prices for dairy products have strengthened in recent months.

It is thus an opportune time to evaluate the EU’s response to the crisis, and to see what lessons might be drawn for how the Union can address similar problems in other farm sectors in the future. My view is that there is a lot to be learned from the dairy crisis, and that the outgoing Commissioner deserves credit for the way she handled it.

EU milk prices improving

Let us first review the evidence that the milk market is improving. The trends in the EU market prices (proxied by the German price and represented by the blue line) and the EU intervention price (the red line) for butter and skim milk powder (SMP) have been graphed by CLAL.it… Read the rest

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Comprehensive market price data from DG Agri

Following the recent interest in food price developments, DG AGRI has now released long-term monthly price data for a wide range of farm and first-stage processed products from its AGRIVIEW database. AGRIVIEW is a data warehouse providing a common repository for integrated data for DG AGRI which is normally only available to internal Commission analysts. For example, it includes financial information, market prices, tariff data, and data on export refunds. The market price data on a monthly basis from January 1997 until the most recent date, for both the EU on average and for individual member states, is now available for download as a 7MB Excel file from the DG AGRI website. Unlike Eurostat information which is supplied by national statistical offices, the AGRIVIEW price information comes from the agriculture ministries in Member States. The data are presented in tabular format as well as in attractively formatted charts. A nice Christmas present for those who like messing with figures…..… Read the rest

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US farmers want out of conservation, environmentalists resist

The current high prices for arable crops mean that farmers in the US and Europe are reconsidering whether putting their land into government-financed conservation schemes is such a good idea financially. The EU is well on the way to releasing all its set aside land back into production, and in the US Congress is considering whether to allow farmers to leave long term conservation contracts without facing any penalties. … Read the rest

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Farm land price boom

The cost of agricultural holdings across the EU has risen to record levels. However, this is not entirely good news for farmers. It makes it even harder for those who do not inherit to enter the industry, while only farmers wanting to retire can cash in. Tenant farmers face higher prices making life more difficult for them.… Read the rest

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The mixed up world of US Senator Chuck Grassley

We all know that the legislators who write US farm policy are not the brightest bulbs in the box. Even so, Senator Chuck Grassley treated us to an unusual insight into his own very special, mixed-up world during a telephone press briefing last week, reported in the Des Moines Register. Asked about the contribution of the US Government’s massive food-to-fuel subsidies to rising world food prices and the resulting hunger, poverty and social unrest, Grassley denied there was any connection and suggested the responsibility lay with people in China eating too much meat.… Read the rest