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CAP Health Check

Ben Hall, writing on Wednesday at The Financial Times Online, reported that, “President Nicolas Sarkozy of France on Tuesday opened the way to a more radical reform of Europe’s Common Agricultural Policy after he promised to initiate a fundamental debate about its purpose next year.

“In his first big speech on agriculture, Mr Sarkozy said the CAP needed to be overhauled after 2013 and that France would begin to discuss the issue when it takes over the EU’s rotating presidency next year.

“The speech marked a change of approach by France, which had reluctantly agreed to a ‘health check’ of the CAP next year but had little intention of discussing, let alone implementing, far-reaching reform for the next five years.”

For more on the scope of the CAP Health Check, see this FarmPolicy update from May 30, which was posted from the German Marshall Fund EU Journalism Study Tour. The update contained this audio segment (MP3), which included discussion on the scope of the CAP Health Check.

For a more comprehensive and clear explanation of the CAP Health check, see this FarmPolicy interview with Jack Thurston, a London based Transatlantic Fellow with the German Marshall Fund of the United States (MP3 audio available here), which was also recorded on the GMF Study Tour. (To view complete FarmPolicy coverage of the EU Journalism Tour, just click here.)

Wednesday’s FT article also stated that, “[President Sarkozy] told farmers at a cattle fair in Rennes, Britanny, they had to learn to make a living from market prices rather than subsidies. But he framed a partly free-market message with a demand for greater Europe-wide protection for a sector he described as an ‘essential pillar’ of the French economy. The EU should set a goal of ‘stabilising markets’ in agricultural goods. It would do this by reestablishing the CAP on the principle of ‘community preference’, although he did not spell out what this would mean in practice.

“He said a reformed CAP needed to meet four objectives: ensure ‘food security’ for Europe; contribute to a growing global demand for food; preserve rural economies and landscapes; and help combat climate change.”

Lucia Kubosova, writing on Wednesday at the EU Observer Online indicated that, “On the eve of the official launch of the EU’s debate on how to reform its budget, French president Nicolas Sarkozy has publicly backed the idea of revising EU funding for farmers.

“Speaking in Rennes, west France, on Tuesday (11 September), Mr Sarkozy confirmed that an overhaul of the bloc’s Common Agriculture Policy (CAP) would be one of the top priorities of his country’s six-month period at the bloc’s helm in late 2008.

“‘The CAP as it exists today can no longer respond to the challenges of post-2013,’ Mr Sarkozy stated according to French media, adding ‘Everyone knows this, but nobody says it.’”

And Charles Bremner noted on Wednesday at The Times Online that, “President Sarkozy yesterday abandoned France’s long-held resistance to reforming Europe’s £30 billion farm subsidies.

“In his first address to the powerful farming lobby since his election in May, Mr Sarkozy, a lifelong city-slicker, struck a reformist tone far removed from the rural rhetoric of Jacques Chirac, his predecessor.”

Meanwhile, an update from Thursday at the CAP Health Check Blog stated that, “President of the European Commission Jose Manuel Barroso yesterday launched the Commission’s long-awaited review of the EU budget and looks to be squaring up for a fight with his Agriculture Commissioner Mariann Fischer Boel.

“He told reporters at a press conference: ‘This is Day 1 of a no-taboos debate about spending priorities. This is our chance to start with a blank sheet of paper. To look at what the EU will need to spend in the years to come and where that money will come from.’”

The Blog update went on to say that, “Agriculture Commissioner Mariann Fischer Boel has so far presented the CAP health check as a largely technical review that would not address core issues such as the level of farm subsidies, which she has always maintained are fixed until 2013. If President Barroso actually does what he says he’ll do, the health check could be much more than a tidying-up exercise.”

In other CAP developments, a Dow Jones article from today stated that, “The European Commission Thursday officially proposed to cut the 10% obligatory set-aside rate for autumn 2007 and spring 2008 sowings in response to increasingly tight cereal supplies.”

In a related item regarding land use and demand for biofuels, a piece that aired on National Public Radio’s (NPR) Weekend Edition Sunday (9.2), by Michael Sullivan, Martin Kaste and Emily Harris (“Biodiesel Demand Grows Across Continents”) indicated that, “The ultimate clean fuel, at least at first glance, is vegetable oil. Plants make it from sunlight, water, and a greenhouse gas — and they remove carbon dioxide from the air as they grow. The oil is easily converted into fuel for diesel engines.

“Around the globe, there’s now a rush toward so-called ‘biodiesel.’”

The NPR item focused specifically on three different locations, including Germany.

With respect to Germany, the item noted that, “Europe is the king of biodiesel; it makes an estimated 77 percent of all biodiesel, worldwide, and Germany alone makes half of this amount. Part of the secret to its success has been a tax break at the pump.”

Above, Rapeseed, FarmPolicy.com Photo

“Biodiesel is made in Germany with rapeseed oil, a seed similar to canola. In most cars, it mixes easily with ordinary diesel. Its share of the market is expected to grow as Europe pushes for 10 percent of transport fuels — and 20 percent of overall energy use — to be renewable by 2020,” the segment noted. (Below, A truck unloads rapeseed at Bio-Ölwerk Magdeburg, a biodiesel producer in Germany. From NPR Online)

More broadly, the NPR report stated that, “Trucks daily dump rapeseed, grown nearby, at Bio-Ölwerk Magdeburg. Some farmers have expanded into the biofuel business by planting on land once required by law to stay fallow. Others have put in rapeseed where wheat or barley once grew.

“Critics say this pits growing fuel against growing food.

“George Monbiot, author of Heat: How to Stop the Planet Burning, says agricultural land worldwide is already under stress from drought and urbanization.

“‘When you add the biofuels market to this mix, you see what could be a recipe for catastrophe. Already with far less than 1 percent of the world’s transport fuel coming from biofuel, we’ve seen a doubling in the price of corn, and near in price of wheat,’ Monbiot says.

“European Union officials contest this thought, saying that just a small proportion of the cost of food is related to the cost of the ingredients. But Monbiot and other critics want Europe to stop pushing biofuels until gasoline and diesel from corn stalks, straw, or even sewage are commercially available. That could happen in the next 15 years, according to some estimates.”

Meanwhile, an Associated Press article from Wednesday reported that, “Be it fettuccine, linguine or spaghetti, Italians will soon be paying up to 20% more for their pasta.

“Consumer groups are calling for a one-day pasta strike Thursday – not against eating it, but against buying it – to protest the increase. But producers say the strike targeting Italy’s national dish is wrong-headed because the price is linked to a global rise in the cost of grain.”

The AP article added that, “The increase in the price of pasta is being driven by rising wheat prices worldwide, economists and producers say.

“The demand for wheat is the result of several trends, chiefly an increasing demand for biofuels, which can be made from wheat, and improved diets in emerging countries where putting more meat on the table is raising the demand for feed for livestock, said Francesco Bertolini, an economist at Milan’s Bocconi University.

“As a result, wheat stocks worldwide are being depleted and grain prices are soaring. The U.S. Department of Agriculture said Wednesday that U.S. stockpiles are at their lowest level in 33 years.”

Keith Good