Brian Gardner's Blog

The farm lobby’s supporters in the European Parliament are clearly determined on only minimal adjustments to the common agricultural policy in return for guarantees of the continuation of the €55 billion a year largesse from the taxpayer. Deliberations in the Agriculture Committee indicate strongly that MEPs will not support the Commission’s very modest plans for ‘greening’ the CAP until details of the new post 2013 budget provisions are known. Even less are they prepared to commit to reform in advance of a new multilateral trade agreement in the Doha Round.

Apparently guaranteeing every farmer in the EU27 an average €250 a hectare before they set hand to plough is not enough to ensure that they also perform minimal environmental stewardship functions. With arable farm profits at an all time high, there is certainly little justification for perpetuation of the single farm payment on income support grounds. This does not prevent the farm industry’s parliamentary supporters arguing that more market competition likely to result from an eventual Doha deal should automatically justify even more financial compensation.

This argument conveniently ignores the principle embodied in the original reform accords of the the last two decades that income subsidies were designed to alleviate possible farm income shocks resulting from adjustment to a more competitive, market oriented agriculture policy. In other words, a transitional and temporary policy. The approach laid out in the report by the Agriculture Committee’s rapporteur Albert Dess with ‘green subsidies’ to be financed out of Pillar 2 of the farm budget, rather than the main subsidy disbursing Pillar 1, can only lead to increases in overall subsidy expenditure.

Meanwhile, at government level, the ministerial majority continue to pursue the red herring of the alleged role of speculators in inflating food prices and depriving farmers of income. So obsessed is President Nicolas Sarkozy and his cohorts with this issue that the French President has put it at the top of this year’s G8 and G20 agendas, and is summoning G20 agriculture ministers to Paris in June to discuss it in detail.

Unsurprisingly, there is considerable scepticism on the issue among a freer trading minority. While the French Government maintains that controlling financial speculators is necessary to prevent their allegedly destabilising food commodity markets, the British and Brazilian Governments are proposing an alternative prescription to improve food security: increased food production and the eradication of trade barriers. This, they argue, is the only way to smooth food price volatility in the long run. A statement by the two governments doubts whether derivatives markets actually increase volatility. “In principle, they should help to reduce volatility on spot markets,” a joint declaration states and stresses that financial instruments must remain “fully available” to producers and consumers “to enable them to manage the risks of price volatility”.

Paying more subsidies to European farmers, or even maintaining them at present levels, will contribute little or nothing to improving global food security.

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