Archive for the ‘Agriculture’ Category

Iceland’s path to EU membership may be a rocky one

Monday, July 27th, 2009

I see that the EU Council of Ministers has asked the European Commission to deliver an opinion on Iceland’s application to join the EU, just 10 days after Reykjavik submitted its formal request for membership.  The Swedish presidency wants the report by the end of the year, and foreign minister Carl Bildt has implied that Iceland’s status as an EEA country could speed the process of the application, in contrast to the slow progress for the Balkan applicants.

The Icelanders no doubt remain shell-shocked by the collapse of their banking system and the consequent halving in the value of the krona, and crave the stability of the eurozone, but it strikes me that the path to membership may be far from smooth.  At the end of the process – say in 2011 – lurks a referendum:  by then the mood of the country may have changed.

Fisheries could be a major stumbling block. Seafood accounts for almost half of Iceland’s exports and 10 per cent of its gross domestic product, which is quite something when another chunk of the country’s economy – the banking system –  has disintegrated.  The cod wars of the 1970s, when Iceland extended its territorial limits to 200 miles and the Royal Navy sent frigates to protect British fishing vessels, showed the depth of national feeling on this issue.

Even now international relations on fisheries policy remain poor. I gather for instance that Iceland has been excluded from negotiations on the management of mackerel stocks in the North Atlantic and has therefore opted out of catch allocations. The country is very concerned to rebuild cod stocks, which is a key economic asset.  Stocks may be recovering but there will be intense opposition to surrendering quota to EU fishermen under the common fisheries policy.  Just to add to the sensitivities, Iceland still has a whaling industry.

At least the review of the EU common fisheries policy is timely, with signs that ministers have accepted the need for fundamental change (just as well, as many fish stocks in European waters are on the point of collapse – and see Sarkozy’s change of heart).  However, the fisheries chapter in the Commission’s Iceland report will be one of the most difficult to compose. Could it be the catalyst for the creation of a new fisheries policy, or will it hark back to the disastrous EU policy which has been pursued since 1973?

Becoming part of the eurozone is the big driver for Iceland, but there could be difficult issues here as well, given the level of Iceland’s public debt (about 100 per cent of gdp). For Iceland to qualify for eurozone membership could be an even greater challenge than is faced by the Baltic states and Hungary.

The vote in the Althing to apply for membership was a close run thing – 33 in favour, 28 against – and it would certainly be wrong to underestimate the negotiating difficulties which lie ahead. If the Irish vote “no” on Lisbon then the prospects for any enlargement would be gloomier still.

Meanwhile Britain’s Conservative shadow foreign secretary William Hague continues to inveigh against Lisbon. But whatever you think of his views, he is a consummate speaker. You may like to savour his recent performance in the House of Commons on the possibility of Tony Blair becoming president of the European Council under a ratified Lisbon Treaty. No wonder Gordon Brown needs a holiday!

Posted in Agriculture, Enlargement, Eurozone, Fisheries, Treaty of Lisbon, UK politics | No Comments »

EU fisheries warning on climate change

Monday, April 27th, 2009

If you want a flavour of the political challenges we face in dealing with global climate change, then take a look at European fisheries. It’s a disaster area! We should heed the warnings it sends.

For year after year political expediency has triumphed over the evident need for drastic action to save a vital resource from almost complete destruction. The indisputable need to curb fishing effort and allow the recovery of fish stocks has been consistently defeated by short term pressures.

The European Commission’s recent green paper on European fisheries has a note of desperation about it.  It’s a discussion paper, designed to prepare the way for an incoming Commission to devise a new EU policy by 2012. Its analysis shows that up to now the common fisheries policy has been a complete failure.

It’s been known for more than 30 years that many fish stocks in Europe’s waters are in danger. That now applies to 88 per cent of species. According to scientists nearly a third of those species have dropped below the “sustainability” level at which the stocks could regenerate even if they were now to be effectively protected.

It’s a disgraceful story. Apparently 93 per cent of the cod fished from the North Sea is caught before it can reproduce.  Large quantities of fish are dumped dead into the sea (“discarded”) because quotas have been exceeded. The Commission reckons that the subsidies which several member states give their fishing industries amount to more than the value of the fish which they catch, as well as maintaining a fishing capability which is too great for the resource. Some of us are paying twice, as consumers and taxpayers.

A common policy operating across many jurisdictions ought to be ideal for fisheries. After all, fish can’t read. They don’t recognise national boundaries. They breed in one area and mature in another. Only common action can deal with a major threat to the resource. Yet this common policy has worked in an entirely negative way as ministers vie with each other to defend their quotas in Brussels and hold back from applying strict controls at home.

I know one shouldn’t underestimate the difficulties faced by national governments. They have to confront their fishing constituencies, provoking serious political backlash, disorder and blockaded ports. But surely after 30 years . . .  Paradoxically, every year’s failure to act foreshortens the future of the industry.

The green paper considers a separate policy for coastal fishing. This would apply within the 12 mile limit and would have a strong regional and social element. A policy of much stricter controls would be applied to the deep sea fleet, together with a substantial cut in capacity. This divide-and-rule approach might take off some political pressure from fishing communities, although it is not easy even now to keep the big boats away from relatively rich coastal fisheries – or to keep smaller vessels from deeper waters.

A specific policy for coastal fisheries might have the added benefit of fostering the creation of conservation areas where fishing is banned altogether. Where such areas have been designated in close consultation with local fishermen, for instance in specific areas off the Scottish and Spanish coasts, there has been a significant increase in stocks of many species – an indication that something can be done.

So where should the authority lie for implementing an effective common fisheries policy? The present system of ministerial bidding in the Council has palpably failed. The Commission could maybe do the job through a management committee system, as it suggests in its green paper, and take detailed decisions itself.  The blame for tighter controls could then be laid on “Brussels”, but the Council will be reluctant to delegate power in this way. Another possibility, also suggested by the Commission, is for the fishing industry itself to take more responsibility.

It is clear that something must be done if European consumers are to continue enjoying fish from European waters and indeed if Europe’s  fishing industry is to have any future at all. This is a major challenge of sustainability, a crisis which requires the same sort of political leadership and the courage to confront special interests which will be essential in developing an effective policy on climate change.

Posted in Agriculture, Climate change, Fisheries | No Comments »

Bendy bananas and curly cucumbers back on the shelves?

Thursday, November 20th, 2008

In Britain’s popular culture the marketing restrictions on bendy bananas and curly cucumbers have always been associated with the Bureaucrats of Brussels. Nothing so well underpinned a public perception of meddling officials in a foreign country imposing their will on a hapless populace by setting fruit and veg dimensions by millimetre and by degree. The story was always guaranteed to provoke a curious mixture of exasperation and delight.

The Commission has now announced a relaxation of the EU rules. As from July 2009 the EU standards for 26 fruit and vegetable categories will be abandoned altogether and for the 10 most widely purchased, such as apples, strawberries and tomatoes, national governments will be free to permit the public sale of non-classified produce as long as it is labelled as for jam-making or similar.

I suspect that in many cases it is national governments which displayed the real passion for regulating. It’s worth recalling that a year ago Commissioner Verheugen dismissed the idea that the use of imperial measures (pounds and ounces for instance) was illegal under EU law, but this didn’t stop the criminal prosecution of some market traders in Britain for using the old measures.

Certainly past experience suggests that the supermarkets will continue to demand uniformity and quality when negotiating with their suppliers. But at least there should be no more martyrs such as those shopkeepers who did not abide by the rules and were prosecuted in consequence.

The Agriculture Commissioner Mariann Fischer Boel takes credit for the latest moves, but this decision is very much in tune with the campaign for Better Regulation which the Barroso Commission has been pursuing. Its main front-man Commissioner Verheugen is still pushing hard, as you can see from his recent speech. All strength to his elbow!

Posted in Agriculture, Better regulation, UK politics | No Comments »

Doha collapse: bitter disappointment for the Commission

Thursday, July 31st, 2008

Collapse of the Doha Round after seven years of negotiation must have been a major disappointment for the European Commission. As the Barroso team moves towards the twilight year of its five year term a positive result in Geneva would have somewhat alleviated the gloom following the Irish referendum, the suspension of the Lisbon Treaty process and the stormy economic environment facing Europe.

For Commissioner Peter Mandelson it was a bitter personal blow, since negotiation of a new global trade agreement was almost the raison d’être of his five years in Brussels.

Doha was named the WTO’s Development Round. It was intended to reflect the change in priorities which gave more recognition to the needs of developing countries and acknowledged the emergence of new economic powers. Unlike previous rounds, this was not a private party between the European Union and the United States. The powerhouse economies such as Brazil, India and China were major players and the poorer developing countries were expected to be major beneficiaries.

The talks apparently foundered on Indian and Chinese demands for a high level of protection against surges in food imports. The United States was fiercely opposed to these safeguard arrangements. So was Brazil and other agricultural exporters among the developing countries.

Impending elections played their part, certainly as far as the US was concerned, but also in India – see Carl Mortishead’s analysis in the London Times of the Indian political situation.

Failure in Geneva marks the end of an era when policy-makers across the globe pushed to open up trade and when vast numbers of people across the world benefited from rising living standards as a result.

There will be attempts to rescue something from the wreckage, but there are big dangers ahead. Protectionism is a real risk in a time of economic downturn. A new US president could be tempted down the same path as was taken by Bush in his early years, when he rushed to protect US steel and agriculture. Bilateral deals are likely to increase.

Europe has a crucial role to play in this uncertain environment. At least the EU maintains its commitment to an open world trading system and it must play to its considerable strengths to defend it. The fact that European trade policy is set at one remove from the pressures of national politics is a great advantage: even an irritable Sarkozy can be resisted. The Barroso Commission must keep up the good fight through the rest of its term of office.

As Brussels goes on holiday, so does this blogger. Back in September!

Posted in Agriculture, Trade | No Comments »

Policy makers in crisis mode over food and fuels

Wednesday, April 30th, 2008

The surge in world food prices, oil prices at well over $110 a barrel and measures to boost the use of biofuels in the US and Europe are putting policy-makers into crisis mode.
 
It is extraordinary how this situation has taken fire in just a few months and how intertwined the different factors are. A perfect storm, indeed. International organisations warn that the rising cost of food will threaten the stability of nations, especially developing countries. Even for a country like China food inflation is a major threat to the government.  A “silent tsunami” is how the head of the World Food Programme has described the global situation.
 
The European Commission has responded with an increase in emergency food aid, just as it should, but we are witnessing more than a short-term crisis. Commissioner Louis Michel pulled no punches when he spoke to the European Parliament recently. While announcing an increase in EU food aid spending to nearly €300m so far this year, he also warned just how dangerous the international situation was becoming.

The current food price situation focuses attention on the future of the common agricultural policy. You might think that high market prices for cereals (somewhat mitigated by the strength of the euro) would reduce the need to spend European taxpayers’ money on expensive support arrangements for EU agriculture, but that’s not how French farm minister Michel Barnier sees it.
 
For him the present situation proves the need for an expensive protectionist policy. He even urges other countries to follow suit and build their own c.a.p., so everyone would aim for autarkic self-sufficiency. His German counterpart Horst Seehofer is walking in the same direction. On the other hand this particular view was swiftly rebutted by Agriculture Commissioner Mariann Fischer Boel who took a pro-trade stance, just one month before her proposed overhaul of the CAP.
 
Of course agricultural ministers always resist change, but these interventions suggest that longer term moves to review the future of the c.a.p. will run into stiff opposition. We can probably kiss goodbye to any hope of completing the Doha Round before the US elections. Interestingly, Brazil is making tariffs on biofuels a key aspect of its position on Doha.
 
Pressure on the EU biofuels commitment continues to build. Commission President Barroso has asked for an assessment of the impact of biofuel production on food prices and on development. The Commission press room is thick with rumours of division in the college. Some officials are briefing that the 10 per cent commitment for biofuels in transport fuel by 2020 has been sidelined, while others dismiss any such talk.
 
Among member states the British appear to be reconsidering their biofuels commitment after a national 2.5 per cent obligation came into effect. Prime Minister Gordon Brown is concerned that some biofuels do not meet the necessary sustainability criteria and may call for changes in the EU targets.

The fact is that European and American subsidies for biofuels, which were designed to prime the pump until the industry could become viable in its own right, have produced a host of unpredictable and positively absurd consequences.
 
For instance, it seems that a big chunk of Europe’s biofuel industry has been put out of action because of the imports of “splash and dash” biodiesel from the US. All you need is a tanker load of biodiesel, maybe exported from the EU or South America, add 1 per cent of mineral oil, collect a subsidy of €200 per tonne from the US administration and then ship it back to Europe where you collect further subsidy. The EU companies have now lodged a formal anti-subsidy and anti-dumping complaint.
 
The debate over GMOs is going to hot up as well. It takes on a new urgency as world food prices continue to soar and is bound to provoke some intense debate in Commission, Council and in the member states. No doubt there are risks to be analysed and assessed, but I wonder how the arguments against the use of genetically modified crops could stand up in the face of a major world food crisis and massive malnutrition in developing countries.

Posted in Agriculture, Biofuel, Climate change, Energy, Environment, European politics, International, UK politics | No Comments »

It’s time to love the common agricultural policy.

Tuesday, December 11th, 2007

Maybe the time has come to love the common agricultural policy. The world is short of food. In consequence we see an explosion in agricultural commodity prices and a drive to expand production.

The grain and butter mountains which shamed the C.A.P. have disappeared. Europe has become a net importer of cereals for the first time. Prices of wheat have almost doubled in a year; world stocks of soya, which is essential for animal feed, are headed for zero, with China importing 40 per cent of world tradable supplies; food prices are rising and the impact is being felt in the shops – Germany now has 3 per cent retail price inflation for the first time since 1995.

Things have got so tense that the Commission proposes suspending import duties on cereals to ease the pressure a bit. See this Commission press release for details. Without a strong euro prices would be even higher.

The talk now is of food security. I’m reminded of the early 70s, when the Club of Rome, led by European Commissioner Sicco Mansholt, warned of a Malthusian world shortage of commodities – too many mouths, too little production. Yet in following years the food surpluses returned. Will it be different this time?

It does seem likely. Rising populations and greater prosperity are boosting global food demand from people who this time can pay for it.

At least Europe has the capacity to increase food production after some indifferent harvests and has a policy structure in the c.a.p. which can provide some confidence and continuity for producers, although a shift away from price support to more direct assistance will no doubt be a theme of the review of EU farm policy which has just been launched and will give more scope for producers to respond more quickly to market signals.

But what irony! Just as our farmers were being encouraged and applauded as protectors of Europe’s natural environment, paid to be custodians of the countryside as much as producers of food, the market is taking over.

A farming friend of mine has been maintaining the farm hedges, providing runways for birds such as skylarks (yes, they are called runways) and leaving a good headland of uncultivated land around his arable fields to help wildlife, but now the EU set-aside scheme which kept farmland out of production and encouraged wildlife is being abandoned for the 2008 season. Britain’s Royal Society for the Protection of Birds is seriously worried about this threat to these new habitats. 

Over the years since it was created the common agricultural policy has built one complexity on another, just as all farm policies tend to do, often with quite unforeseen consequences. The latest manifestation is the subsidisation of biofuels.

Of course arresting climate change is an absolute priority, but I do wonder if policy makers take full account of what they do. Take this example of screwed-up policy: the United States gives big subsidies for production of biodiesel, so palm oil is imported to the US from Latin America, processed by the addition of 1 per cent diesel oil and then exported to the EU as biodiesel, where of course it undercuts European prices.

In Europe too we are subsidising ethanol, producing it mainly from rapeseed oil, yet the production of ethanol in this way is reckoned to produce more CO2 than it saves. It is the consequence of setting arbitrary targets such as the 5.75 per cent of transport fuels from biofuels by 2010. I wonder how much impact assessment has been done to look at the whole picture in Europe and beyond.
It’s the knock-on effects which matter. Diversion of land from food to biofuel can pose some real threats. Worse, maybe, from a climate change point of view is the destruction of forest to grow fuel crops.

Even in Europe there is diversion of land from food to fuel production. Commissioner Mariann Fischer Boel says it only amounts to 2 per cent of EU cereal production, but marginal changes can have a major impact on commodity prices and this is presumably only the beginning.

A UN adviser has called the rush for biofuels a “crime against humanity”. These are strong words indeed and I note that it has become a real cause celebre among NGOs, maybe eclipsing the GMO issue.

But surely everything depends on the raw material and the technology used. Sugar cane is apparently four times as efficient as maize as a biofuel feedstock and there is a lot of research and development into alternative crops and by-products which may provide real benefits without the accompanying negatives.

The surge in agricultural prices has meant big savings for the EU budget, so unspent agricultural commitments are being transferred to fund Galileo in a deal approved by ministers on November 30. The Portuguese presidency seems to have used some nimble footwork switching from a budget decision (unanimity required) to a transport vote (qualified majority) in order to isolate the Spanish, who were holding out for their own Galileo ground station. See the Council conclusions here.

Following the Council decision the Commission will now be fully responsible for Galileo, using the European Space Agency as the procurement agent. Let’s hope the project can at last get on track for the stars.

Competition policy has become another impressive contributor to the EU budget. Fines of €490m have just been imposed on the European flat glass manufacturers for price fixing.

This brings EU anti-trust fines imposed so far this year to €3,000m – an extraordinary figure which partly reflects the success of the leniency regime, which offers reprieve or mitigation for any company which blows the whistle on a cartel in which it participated. A favourite question among law firms is: how do you advise your client when he tells you that the CEO of competitor company X failed to turn up to the annual informal golf weekend in Portugal last week?
 

Posted in Agriculture, Biofuel, Climate change, Competition | No Comments »