FarmPolicy

July 29, 2014

Climate Legislation; Ag Economy; Crop Insurance; CFTC Issues; Nutrition Program Issues; and The EU’s Common Agricultural Policy (Analysis)

Climate Legislation

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.”

(more…)

“Analysis from Brussels”- by Roger Waite- Towards the Next, Truly Big CAP Reform- The Timetable

Towards the Next, Truly Big CAP Reform- The Timetable

By Roger WaiteRoger 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.

By Roger Waite