Top Commission officials have confirmed that in the face of opposition from four member states (Czech Republic, Germany, Slovakia and the UK) as well as many farm unions, Mariann Fischer Boel has dropped plans to cut the very largest farm subsidy payments by 45 per cent. The plan, which would have affected an estimated 23,000 farms that receive in excess of €300,000 a year, a list which is dominated by Europe’s wealthiest landowners such as the Duke of Westminster, Prince Albert of Monaco and the Crown Prince of Liechtenstein. … Read the rest
European Parliament takes aim at CAP direct payments
A new report commissioned by the Budget Committee of the European Parliament makes interesting reading. The report, written by Jorge Núñez Ferrer (a former Commission fonctionnaire) and Eleni A. Kaditi, both of the Centre for European Policy Studies in Brussels, aims to asses whether the CAP provides ‘added value’. Núñez Ferrer and Kaditi define this as whether “the benefits outweigh the costs, not only of implementing the policy, but also the costs created in other areas.” The authors don’t pull their punches, particularly when it comes to direct payments which, costing some €30 billion a year, are by far the biggest ticket item in the CAP.… Read the rest
Farm unions split over payment limits
It should come as no surprise that the EU level farm union COPA-COGECA’s response to the Commission’s communication on the CAP health check is reminiscent of King Canute, trying to hold back the tide. What is very interesting, however, is that in important areas the response contains dissenting voices (or ‘reserves’) expressed by a handful of COPA-COGECA’s member groups.… Read the rest
Goepel plan: weak, weak, weak
The European Parliament’s agriculture committee published a working paper on the CAP health check at the end of last year. Tamsin Cooper and Martin Farmer at IEEP have already argued that from an environmental perspective it lacks ambition and is internally inconsistent. I have looked in detail at the working paper’s proposals for ‘progressive modulation’ which is put forward as an alternative to both the Commission’s proposals on payment limits and increased compulsory modulation.… Read the rest
European Parliament’s View of the Health Check Holds Little Promise for the Environment
The European Parliament is seeking an outcome to the CAP Health Check that does not compromise the competitiveness of EU farming or diminish the value of farm subsidy receipts. This is the vision presented in a working document drafted by German MEP Lutz Goepel of the Parliament’s Committee on Agriculture and Rural Development. The paper acknowledges the need for some evolution of the CAP, but presents a sometimes inconsistent set of suggestions, a number of which are likely to run counter to arguments in favour of promoting a more environmentally sustainable CAP. The paper is examined in further detail below. … Read the rest
Cross compliance: at crossed purposes?
The objectives of the present incarnation of the CAP are the subject of intense debate in policy circles. Cross compliance is seen by some as a way to justify the Single Payment Scheme, by aligning the receipt of largely untargeted subsidy payments to the delivery of public goods. To some extent this is true. Farmers need to meet a set of fairly basic standards centred on pre-existing EU environment, food safety and animal welfare legislation (called Statutory Management Requirements (SMRs) in CAP jargon). They must also respect a set of baseline soil and habitat maintenance standards (collectively referred to as standards for Good Agricultural and Environmental Condition (GAEC)). In the event of non-compliance, recipients of the Single Payment risk a deduction to the following year’s subsidy payment.… Read the rest
Health Check proposal on flat-rate Single Payment Scheme misunderstood
Many people are under the impression that the Commission’s Health Check Communication proposes that all Member States should move towards a flat rate regional single payment system. There is a widespread view that the Health Check would require those Member States which opted for the historic basis to begin to move towards a regional system between 2009 and 2013.… Read the rest
CAP direct payments poor value for money
The major weakness of the Commission’s CAP Health Check Communication is its failure to spell out a rationale for maintaining the Single Farm Payment after 2013. Yet another report, this time commissioned by the European Parliament’s Committee on Budgetary Control, lambasts the lack of efficient targeting and ensuing excessive cost of the SFP system. Written by Jorge Nunez Ferrer and Eleni Kaditi of the Centre for European Policy Studies in Brussels, and not yet published, the report examines both CAP market and rural development expenditures from the perspective whether EU interventions add value, that is, whether the benefits of these policies outweigh their costs. The report’s authors argue that CAP direct payments are highly inefficient and detrimental in terms of efficiency and value added in the way they are designed. … Read the rest
Limited administrative burden of the Single Farm Payment
Economists have long been interested in the costs associated with policies transferring income support to farmers. These costs include not only the resource costs associated with distorting production and consumption choices away from the market optimum (assuming that market prices fully reflect the social value placed on resources and outputs), but also the transactions costs of administering and monitoring the policy, indirect costs associated with distortions in other markets (for example, if tax revenue has to be raised to pay for direct payments or export subsidies), as well as rent-seeking costs.… Read the rest
Specious arguments against limiting payments to largest farms
Initial media reaction to the Commission’s Health Check proposals has been predictable, with most papers picking up as the lead story the Commission’s proposal to apply a tapering reduction to direct payments to larger farms. The Financial Times story was headlined “Communists and royalty fight farm subsidy cuts.” Much was made of the fact that the Commission’s illustrative proposals would reduce the payments received by the Queen of England, who apparently received £465,000 (€650,000) in 2005, by over £140,000 (€192,000). British and German officials were quoted as saying they would oppose these reductions as they were unworkable and undesirable.… Read the rest