Jim Tankersley reported in yesterday’s Los Angeles Times that, “As the battle over healthcare unfolds, its attack ads, spin-doctoring and town hall rhetoric are being watched with special attention by the combatants in Washington’s next big fight — President Obama’s energy and climate plan.”
Yesterday’s article explained that, “Groups on both sides ‘are not just watching healthcare closely, but calibrating how we go about doing this based on what we see happening out there,’ said Matt Bennett, vice president for public affairs at Third Way, a centrist Democratic think tank engaged in both the healthcare and climate fights.
“Supporters of the climate bill are particularly intent on avoiding what some see as the Obama administration’s biggest stumble in the healthcare debate: its failure to convince voters, particularly middle-class workers, that the legislation would tangibly improve their lives.”
By Roger Waite – Roger is editor of AGRA FACTS, the Brussels-based newsletter on EU agriculture policy, and is a Journalism Fellow at the German Marshall Fund of the United States. “Analysis from Brussels” is posted exclusively at FarmPolicy.com.
Having previously outlined the timetable for the next, big reform of the EU’s Common Agriculture Policy [see- Towards the Next, Truly Big CAP Reform- The Timetable], a number of the major players are starting to take the stage. Firstly, with the Commission President José Barroso now near-certain to stay for another 5 years, attention is turning to the other Commissioners – and whether or not Mariann Fischer Boel will stay on as EU Agriculture Commissioner. Secondly, with “co-decision” likely to enter into force from next year, the European Parliament will play a much greater role in farm policy decision-making in the future – and the new Parliament has just elected an Italian Social Democrat, former Italian Farm Minister Paulo De Castro to the influential position of Chairman of the EP Agriculture & Rural Development Committee. The third and most important player in farm policy negotiations is the Council, i.e. the Farm Ministers from the 27 different Member States – and there, too, we have seen a number of changes in recent months, including the appointment of new German and French Ministers, who have immediately set up a joint Franco-German working party to consider the future direction of the CAP.
To recap, we will get a “Communication” from the Commission on the post-2013 CAP in July or September 2010. This will be debated for 6-9 months, before the Commission publishes it legislative proposals for reform in July 2011 (with the overall package of proposals for the EU Budget from 2014 until 2019 or 2020 – the so-called “Financial Perspectives”). The decision-making process involves adjusting the Commission proposals until they have a qualified majority of support from the EU’s 27 Member States, under the weighted voting system. Unlike all previous reforms, however, where the European Parliament was merely “consulted”, i.e. the Council could ignore the EP demands, the next reform will almost certainly be decided using “co-decision”, i.e. where the Council has to negotiate with the Parliament in a 1st and 2nd Reading with an obligation to take MEP issues on board.
Fischer Boel – Will She Stay Or Will She Go?
Taking first the Commission, it seems as if Commission President José Barroso will be reappointed for another 5 years. (He has been unanimously backed by EU leaders, but MEPs have now delayed their approval of his reappointment until the autumn.) He has a major say in the appointment of the other 26 Commissioners in the next Commission College – in that he can veto candidates proposed by Member State governments, and the allocation of portfolios is up to him.
Last time around – 5 years ago – it looked as if former Dutch Farm Minister Cees Veerman was about to be appointed EU Farm Commissioner, but, with Barroso keen to appoint as many female Commissioners as possible, he persuaded Denmark to nominate its Farm Minister Mariann Fischer Boel as Commissioner – and also offered the Dutch the high profile “Competition” dossier, if they could find an appropriate female candidate [and they did in the form of Neelie Kroes]. Fischer Boel, it must be said, was a pretty unspectacular Minister of Agriculture. She had held the EU Presidency in 2002, but had done little to impress. And she was following on from Austrian Franz Fischler, arguably the best ever Farm Commissioner.
Five years on, Fischer Boel has surprised all the doubters and been a particularly good Commissioner (one of the best in the current, relatively unspectacular Commission College) – having steered through sectoral reforms for the sugar sector, wine, fruit and vegetables, as well as last November’s Health Check. In short, she is a safe pair of hands. But she recently turned 66, and has previously indicated that her intention was always to retire at the end of the year, once her mandate was over. I remember interviewing her a couple of years ago and asking her whether I should ask the question about staying on for another 5 years. She merely discouraged me from asking the question and, at the end of the meeting, gave me a friendly slap on the shoulder (as she does) and pointed at a poster on the wall in her office with an old woman in a circus outfit with the headline “Do you know when it’s time to stop?”. Despite Barroso and even the Danish government asking her to stay on, I believe it’s more likely that she will go. If you twisted my arm, I’d say about 60%-70% certain that she’s going – with a decision likely to be announced in September or October.
For the time being, there is absolutely no indication of any other names under discussion for the post. Based on past experience, we can assume that Fischer Boel’s successor will have served as Minister of Agriculture (and is maybe still in the post) and will not come from one of the “big Member States” (i.e. France, Germany, UK, Italy, Spain, or Poland). In Brussels, the only name mentioned so far in the corridors is former Dutch Minister (& academic) Cees Veerman – possibly because he came so close to getting the nomination 5 years ago. The Romanian media have debated at length the merits of their former Farm Minister Dacian Ciolos as a candidate – but his name has not be heard in Brussels. Curiously, he has been appointed Director in the Commission’s DG AGRI, and has now managed to delay taking up the post until December. Realistically, with doubts about the proper implementation of CAP funding rules in Romania still remaining – and the newest of Member States having such a massive interest in agriculture [29% of the workforce are employed in the agricultural sector, it seems!], it strikes me as highly improbable that a Romanian will get the job, however well qualified. My instincts tell me that the next Farm Commissioner should be from one of the more liberal countries, i.e. so that he/she naturally favours the ongoing evolution of farm policy – but I’m not going to stick my neck out at this stage. [I guess I’ll have to do that in the autumn.]
European Parliament Ag Committee Headed by Paolo De Castro
While the Commission is still working on its next Commissioner, the European Parliament has this month established its Agriculture Committee for the next 5 years – following June’s elections. The first thing to say is that this EP will be more important than ever before in CAP legislation. Under the Lisbon Treaty, which should come into force from the start of next year (if the Irish population backs it in a second referendum in early October), EU Farm Ministers in the Council will be obliged to negotiate with MEPs during the end-game phase of talks because the legislative process for CAP rules will now involve “co-decision”. Until now, the system of “consultation” has merely meant that the Council must wait for the EP opinion, but can simply ignore all EP recommendations.
While this will of course make life much more difficult for the Council – and the process of legislation-making will be 18-24 months, rather than 9-15 months – it will also make life much more difficult for the Parliament. Until now, under “consultation”, MEPs from farming constituencies have merrily been able to advocate unrealistic, but popular demands in farm policy debates, i.e. without having to worry how they might be financed. From now on, however, that will not be possible. And we wait to see with interest not only how this change of responsibility will affect the level of debate within the Agriculture Committee, but also how such views will fit in with the Budget Committee, for example – recalling of course that all positions have to be agreed in the full EP Plenary.
In that sense, it is worth recalling that the European Parliament is unlike almost any other Parliament in the world in that voting sometimes divides down Party lines (and there are now 6 big Party groups), but it also sometimes divides along national lines. [In my experience, farm policy initiatives tend to be voted along national lines.] Anyway, looking at past battles in the US Congress, we may now face additional divisions based on Committee loyalties, i.e. Ag Committee vs Budget or Environment or Development Aid Committee.
In this context, the EP has formally agreed all members of the new EP Ag Committee – under the Chairmanship of a newly elected MEP – Paolo De Castro. In the 30-year history of the EP, he is also only the second ever Socialist/Social-Democrat to head the Committee, as the farmer vote in most Member States has always tended to be Christian Democrat. However, 51-year-old De Castro is particularly well-qualified to take on the job. [And maybe more experienced than the next Farm Commissioner!] Having become Professor of Agricultural Economics at the respected Bologna University, De Castro served as an economics adviser to Prime Minister Romano Prodi from 1996-1998 before becoming Italian Agriculture Minister (1998-2000). After Prodi was made Commission President (1999-2004), he also served as an external adviser on agricultural issues for most of 2000. After more academic experience, De Castro was elected to the Italian Parliament in 2006 and again served as Minister of Agriculture from May 2006 until October 2008, when Silvio Berlusconi defeated Prodi in the general election.
With many senior MEPs having retired (or not been re-elected) – such as Neil Parish, Lutz Goepel and Friedrich-Wilhelm Graefe zu Baringdorf – the EP Agriculture Committee is relatively inexperienced, but has a number of colourful and potentially politically influential characters. Among them are José Bové – radical French farmer famed for having gone to prison for vandalising a MacDonalds restaurant as part of a protest. He is now a Vice- Chairman of the Committee! Other potential stars include former Portuguese Farm Minister Luis Capoulas Santos, former Irish TV presenter Mairead McGuinness, and former Scottish NFU President George Lyon.
New French Minister Underlines Franco-German Coalition
So while the main protagonists in the post-2013 CAP debate are taking office in the European Parliament and the European Commission and will be there for the next 5 years, the carousel of EU Farm Ministers continues to turn. I will just draw attention to 2 significant changes of late – in the two Member States that have traditionally dominated the CAP – Germany and France.
In Germany, a Bavarian woman Ilse Aigner took over last autumn as farm Minister from a Bavarian man (Horst Seehofer – who became prime minister of the regional government of Bavaria/Bayern). First impressions of the 44-year-old indicate that she is competent, but has a tendency of following her regional boss (Seehofer) more than her real boss (Angela Merkel), for example on GMOs. She is likely to take a more independent position towards the end of the year, if Merkel’s Christian Democrats win the September 27 German elections as current opinion polls indicate. Nevertheless, she will face the very difficult choice on future farm policy priorities as the strong Bavarian farm lobby (with its small farm structures & highly conservative attitudes) tends to contrast with the larger, more competitive attitudes seen elsewhere in the country.
In France, too, there has been a recent change as stalwart Michel Barnier was elected to the European Parliament. (In fact, he is expected to be the next French Commissioner – not for agriculture – and sees 5 months in the EP as a good stepping stone.) Barnier’s replacement as French Farm Minister, appointed in June, is Bruno Le Maire, 40-year-old former Minister for EU Affairs, who rose through the ranks of the French conservative party machinery as an adviser to former Foreign Minister and Prime Minister Dominique de Villepin. Curiously French President Nicolas Sarkozy took the opportunity to rename the job title to Minister for Food, Agriculture & Fisheries – the first time “food” has been acknowledged. (It remains unclear whether or not this might be significant in policy terms.) With predecessor Barnier having acknowledged the pressure for changing the EU’s Common Agriculture Policy after 2013 [see- France Embraces CAP Reform], it is clear that Paris has already woken up to the challenge of justifying CAP subsidies in the future. What is particularly interesting though, is Sarkozy’s decision to appoint as Farm Minister a fluent German speaker, whose main role as Minister for EU Affairs was to bring Paris & Berlin closer together. Sure enough, within a month of taking office, Le Maire has made clear that the French and German government will form a joint working party to look at the future of the CAP. Although the Franco-German alliance on the CAP is not what it used to be (when there were only 6 or even 9 Member States), it is a combination which will still have enormous influence over any future debate. In combination with Belgium, Luxembourg, Ireland, Austria, Finland and maybe Portugal, Spain, Hungary, Slovenia, Slovakia, Greece and Italy, such an alliance will play a key role in the forthcoming negotiations.
In part, ERS indicated that, “Net farm income is forecast to be $54.0 billion in 2009, down $33.2 billion (38 percent) from the preliminary estimate of $87.2 billion for 2008. The 2009 forecast is $9 billion below the average of $63.2 billion in net farm income earned in the previous 10 years [related graph].”
“In 2009, crop prices [related graph] have continued to decline and prices for livestock animals and products have experienced sharp declines. With economic conditions deteriorating worldwide, demand for exports has tailed off, with few options available to expand marketing elsewhere. Sharply declining demand in 2009 has forced farmers to accept prices that are lower than were expected earlier in the year when production plans were made,” ERS said.
Earlier this week, in a column published in the Omaha World Herald, Secretary of Agriculture Tom Vilsack stated that, “Throughout history, America’s farmers and ranchers have embraced the opportunities presented by science to improve productivity and make our country the breadbasket of the world.
“Today, rural America has the opportunity to once again embrace science and lead efforts to create clean-energy jobs, achieve energy independence, mitigate climate change and transition to a clean-energy economy.
“But America’s farmers are justifiably concerned about how the climate change bill currently being debated in Congress will impact their bottom line. That’s why we instructed top economists at the United States Department of Agriculture to prepare an analysis of the costs and benefits to American agriculture.”
An update posted yesterday at FarmWeek (Illinois Farm Bureau) indicated that, “The iffy proposition of lucrative ag carbon ‘credits’ for farmers is unlikely to square with ‘the certainty of higher input costs’ under current congressional climate proposals, according to U.S. Sen. Mike Johanns (R-Neb.), former ag secretary and an outspoken critic of House cap-and-trade proposals.
“After health care, Johanns sees climate debate as the next hot button for Congress this fall: President Obama wants that, and I think it’s going to be one of the next issue queued up, But the feeling in farm country is quite different — he argues Nebraska farmers are ‘enormously skeptical, if not downright opposed’ to proposed greenhouse emissions caps projected to impact future electrical, fuel, and input costs.
“‘You’ll pay more for fertilizer and diesel fuel and electricity to run your irrigation pump,’ Johanns warned during an RFD Radio/FarmWeek interview Monday. ‘On the other side, I think the benefits are very, very uncertain. I think this idea that farmers are going to make money by trading credits is very uncertain promise.
“‘If I were a farmer out there, I’d want the certainty of what I’m doing now, and even at that, that can be very uncertain. Add cap-and-trade to it and what you add is higher input costs with no promise of what comes out on the other end.’”
Elisabeth Rosenthal reported in Saturday’s New York Times that, “Mato Grosso means thick forests, and the name was once apt. But today, this Brazilian state is a global epicenter of deforestation. Driven by profits derived from fertile soil, the region’s dense forests have been aggressively cleared over the past decade, and Mato Grasso is now Brazil’s leading producer of soy, corn and cattle, exported across the globe by multinational companies.
“Deforestation, a critical contributor to climate change, effectively accounts for 20 percent of the world’s carbon dioxide emissions and 70 percent of the emissions in Brazil. Halting new deforestation, experts say, is as powerful a way to combat warming as closing the world’s coal plants.
“But until now, there has been no financial reward for keeping forest standing. Which is why a growing number of scientists, politicians and environmentalists argue that cash payments — like that offered to [farmer José Marcolini] — are the only way to end tropical forest destruction and provide a game-changing strategy in efforts to limit global warming.”
Traci Watson reported earlier this week at the USA Today Online that, “New forests would spread across the American landscape, replacing both pasture and farm fields, under a congressional plan to confront climate change, an Environmental Protection Agency analysis shows.
“About 18 million acres of new trees — roughly the size of West Virginia — would be planted by 2020, according to an EPA analysis of a climate bill passed by the House of Representatives in June.
“That’s because the House bill gives financial incentives to farmers and ranchers to plant trees, which suck in large amounts of the key global-warming gas: carbon dioxide.”
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Secretary of Agriculture Tom Vilsack was close to wrapping up his rural-tour event Wednesday when farmer Mike Ver Steeg stood up and explained one of the key items he thinks would help agriculture: the defeat of climate-change legislation.
“‘We need to not pass the cap-and-trade bill,’ Ver Steeg said, citing how much he spends on energy now for his hog operation. ‘If that goes through, it’s going to add 30 to 50 percent more to my costs right now, and that’s going to hurt small farmers, I think.’
“Ver Steeg’s concerns opened the door for Vilsack to talk about climate legislation currently in Congress with the 200 or so people who came to see their former governor at the Iowa State Fair. Since taking office in January, Vilsack has maintained that controls on greenhouse-gas emissions would translate into a more positive outlook for farmers, though some major farm groups are pessimistic.”
Towards the Next, Truly Big CAP Reform- The Timetable
By Roger Waite – Roger is editor of AGRA FACTS, the Brussels-based newsletter on EU agriculture policy, and is a Journalism Fellow at the German Marshall Fund of the United States. “Analysis from Brussels” is posted exclusively at FarmPolicy.com.
Even before last year’s relatively minor reform of the EU’s Common Agriculture Policy (CAP) – called the CAP Health Check – it was clear that there will be a major reform of European farm policy for the period after 2013. Back in 2005, the EU budget was set for the period 2007 to 2013 – the 2007-2013 Financial Perspective – with agriculture accounting for just under 40% of the budget. Since then, it has been clear that politicians are keen to spend greater amounts on issues such as climate change, research and development, creating jobs and growth – and that this seems more justifiable to the taxpayer. With the financial crisis underlining that the next Financial Perspective is not going to see a major increase in the overall level of public spending, the writing is on the wall. The CAP faces a budget-driven reform for the period after 2013.
While this is not new, we have had some clarification in recent weeks of the likely timetable for this reform. A Commission “Communication” on the reform concept will be published in July or September 2010. Equivalent to a White Paper, this report will be used to stimulate a formal public consultation for about 6 months, as well as seeking input from the European Parliament and from Member State Ministers of Agriculture in the Council.
On the basis of the responses to the Communication, the Commission will then come forward with formal legislative proposals for the post-2013 CAP in July 2011 – as part of a bigger package on the post-2013 Financial Perspectives. Experience from 1999 – when the “Agenda 2000” CAP reform was agreed within the package of the 2000-2006 Financial Perspectives – suggests that Farm Ministers will try to agree to a policy reform broadly within the parameters of the proposed Financial Perspectives, but that this will then be adjusted by EU leaders when they finalise the final package.
Another significant change is the fact that the decision-making procedure will involve “co-decision” with the European Parliament – assuming that the Irish vote “yes” to the Lisbon Treaty when it hoes to a second referendum in early October. Under current “consultation” rules, the Council can ignore recommended changes from the European Parliament. Under co-decision, however, the Council is obliged to incorporate EP ideas into the final deal, making the decision-making process much longer and more complex. It also adds considerable unknown factors. While we already know more or less what priorities Member States have, we don’t yet know how the EP will react to its new powers in agriculture policy-making, e.g. whether the voices in favour of shifting EU spending away from agriculture will get the upper hand over the more conservative farm policy attitudes.
Poland holds the Presidency from July-December 2011, for the immediate reaction to the proposals, but we can already assume that the crucial elements of the [1st Reading] negotiations will probably come in the first half of 2012 (under the Danish EU Presidency), with a view to reaching the overall end-game by the end of 2012 (under Cyprus’s first ever EU Presidency). While the Danes have always had excellent, well-run Presidencies – unlike many larger Member States, putting Europe’s priorities ahead of national issues – it remains to be seen how such a small Member State as Cyprus will cope with the responsibility of chairing the end-game sessions. I would guess that this will probably strengthen the Commission’s hand in the negotiations.
One alternative might be to delay the end-game until the first half of 2013 (under the Irish Presidency). This would have the advantage of having a very farm-aware Presidency in the chair, i.e. the policy content would be relevant, rather than just the budget considerations. However, it would also probably mean that the implementation of any changes would have to be delayed until 2015. In other words the 2013 budget would be rolled-over for 2014, but that the overall transition for farm policy might have to be 1 year shorter, e.g. 6 years rather than 7 years.
Strong Signal that CAP Direct Payments Are Not Dead
EU Ministers of Agriculture meet more often than almost any other Ministers in Europe. Well, after all, the CAP is a common policy, and one of the very few areas of policy where the principle political decisions are taken at EU, rather than national or regional level. In addition to their monthly Council meetings in Brussels (In actual fact the April, June and October meetings take place in Luxembourg), Farm Ministers get together once every 6 months in an informal setting, in the Member State holding the Council Presidency. Although policy-making has changed considerably over the years, I still maintain that these Informal Councils are very useful sessions which allow Ministers to build individual relationships with their counterparts in other Member States, with a view to finding allies for subsequent policy negotiations. In the course of the 2½-day meeting, there is a always a “formal” debate of one subject of particular interest to the Council Presidency. Six months ago in Annecy (under the French Presidency), Farm Ministers had their first serious discussion about the future of the Common Agriculture Policy after 2013. At the start of this month, Ministers travelled to the Czech 2nd city of Brno – where 2 days of interesting farm and cultural visits ended with a detailed discussion about the future of the CAP system of Direct Aids – within the context of the post-2013 CAP.
In broad terms, the debate highlighted that virtually all Member States still see direct aids as a significant instrument in the future CAP, but also a general acceptance that the current system of aid amounts based on historic receipts had to be simplified and changed towards a much fairer system of paying farmers for the public goods that they provide. At the end, EU Farm Commissioner Mariann Fischer Boel outlined the likely timetable for the post-2013 reform initiative, highlighting that the first formal Commission Communication on the reform is little more than 12 months away.
To put the discussion in context, figures produced in the build up to the Health Check highlighted that the current rates of CAP direct support (extrapolated to a per hectare basis) show a remarkable variation among Member States. Whereas Latvia gets less than 100 € per hectare, Greece and Malta are close to 550 €/ha. Another notable point is that the average amount received in the “Old” Member States is roughly 300 €/ha, whereas it is just 200 €/ha in the New Member States.
It was therefore perhaps only logical that the Czech Republic opted to pursue this debate under its Presidency. With an average farm payment of 270 €/ha, the Czechs could claim to be an honest broker on the issue.
Clifford Krauss and Jad Mouawad reported in today’s New York Times that, “Hard on the heels of the health care protests, another citizen movement seems to have sprung up, this one to oppose Washington’s attempts to tackle climate change. But behind the scenes, an industry with much at stake — Big Oil — is pulling the strings.
“Hundreds of people packed a downtown theater here [Houston] on Tuesday for a lunchtime rally that was as much a celebration of oil’s traditional role in the Texas way of life as it was a political protest against Washington’s energy policies, which many here fear will raise energy prices.”
“This was the first of a series of about 20 rallies planned for Southern and oil-producing states to organize resistance to proposed legislation that would set a limit on emissions of heat-trapping gases, requiring many companies to buy emission permits. Participants described the system as an energy tax that would undermine the economy of Houston, the nation’s energy capital,” the article said.
Anna Palmer reported yesterday at Roll Call Online that, “With health care town halls continuing to dominate the August recess, energy and environmental interest groups are making an aggressive lobbying push to bring the climate change debate to the fore.
“The American Petroleum Institute, along with several other trade groups, including the American Farm Bureau Federation and the National Association of Manufacturers, are launching a series of 19 ‘Energy Citizen’ rallies Tuesday.
“The first, taking place in Houston, will feature Houston Astros CEO Drayton McLane as the keynote speaker, according to API spokeswoman Cathy Landry.”
An article posted this morning at Roll Call Online reported that, “With health care town halls generating all the heat this August, global warming legislation has been left to simmer on the back burner.
“Democrats and President Barack Obama are in the throes of an all-out public relations war to rescue their health care plans, which have been beset by falling poll ratings and increasingly vitriolic attacks. As such, Democrats have been far less focused on their climate change ambitions, which they still hold even as the calendar gets more crowded and lawmakers’ stomachs for tough votes shrink.”
Lauren Etter reported in today’s Wall Street Journal that, “Some of the nation’s biggest food and agriculture companies are planning to release a flurry of studies in coming weeks that scrutinize the potential impact of climate-change legislation, warning that it could lead to higher food prices.
“A group of agriculture giants including Cargill Inc., along with meat company Tyson Foods Inc. and food maker General Mills Inc., is concerned the companies might bear a disproportionate share of the costs of such legislation, according to a memo reviewed by The Wall Street Journal.”
Janet Kubat Willette reported yesterday at AgriNews Online (Rochester, Minn) on comments made by House Agriculture Committee Chairman Collin Peterson (D-Minn.) at the FarmFest gathering that took place last week in Minnesota.
“Rep. Collin Peterson, D-7th District, said this Congressional session has been like drinking out of a fire hydrant,” the article said, adding that, “Once the farm bill passed, the chairman of the House agriculture committee wanted to focus on the ag department.”
“The department review was pushed onto the back burner by pressing issues caused by the collapse of the financial markets. Peterson, an accountant by training, devoted his time to studying credit default swaps and derivatives. He and Rep. Barney Frank are in 95 percent agreement on a bill to regulate Wall Street, Peterson said.”