Summary
The EC has tabled proposals for the establishment of a new delivery model for the CAP, which devolves design of Strategic Plans to EU member states on the basis of a common EU policy framework and common EU tool box. EU member states are to have more flexibility in how they combine tools and there is to be a greater focus on risk management. The structure of financing remains unchanged as does the overall objectives of the CAP. There are concerns the granting of greater flexibility could lead to increased use of trade policy tools which are de facto trade distorting. Concerns also arise over the future use of the centralised crisis reserve fund particularly in the dairy sector, where EU intervention buying and storage have contributed to a sustained depression of global skimmed milk powder prices. While 9 specific objectives for the CAP are set out, no reference is included to the EU policy objective of ensuring the coherence of its agricultural policy interventions with its commitments to promoting policy coherence for development. Read more “The June 2018 CAP Reforms: Part 1 The EC proposals for Amendment of CAP Regulations”
Category: CAP
Ageing EU SMP Intervention Stocks See EU SMP Prices Discounted
Summary
EU SMP exports reached record levels despite declining prices in 2017, while the EU is committed to eliminating SMP intervention stocks in an orderly fashion, discounts have to be offered to encourage purchases. This exerts further downward pressures on SMP prices. No sustained recovery in SMP prices is likely as long as EU public intervention stocks overhang the market. Low SMP prices are a particular source of concern for African ACP countries, since imported milk powder prices provide a bench mark for local milk prices, undermining efforts to develop local milk-to-dairy supply chains in African regions targeted by EU exporters. Trends in EU SMP exports highlight just how divorced EU export patterns can be from underling price trends and the extent to which EU policy measures drive trade flows. Whether the profound effects EU policies have on the functioning of milk powder markets can be mitigated in ways which create new opportunities for the structural development of dairy production in ACP countries remains to be seen. Read more “Ageing EU SMP Intervention Stocks See EU SMP Prices Discounted”
EU Agri-food Export Growth Continues, Becoming Central to the Future EU Agricultural Prosperity
Summary
EU agri-food exports continued to grow in 2017 (+5.1%), re-confirming the EU as the leading global agri-food trader, with a surplus of €21.5 billion. The EU also maintains a large trade surplus with LDCs (equivalent to 46% of the value of agri-food imports from LDCs). While the EC asserts that following the implementation of CAP reforms ‘EU exports of agri-food products to developing countries are simply a response to supply and demand’, the deployment EU agricultural support tools and trade policy measures continue to have an important bearing on the structure of EU production and patterns of exports to ACP countries, particularly in the dairy, poultry meat and increasingly the sugar sector. While the EU is committed to policy dialogues with ACP governments to strengthen the contribution of the agri-food sector to rural and wider national development, this dialogue will continue to be one-sided unless the EU acknowledges the impact which the deployment of EU policy tools continues to have on patterns of EU exports which can undermine prospects for the structural development of key agri-food sectors. In Africa in particular patterns of EU private sector investment are needed which support rather than hold back the integrated structural development of agri-food sectors so growing African demand for high quality, high value food can increasingly be met from domestic integrated agri-food sector activities. Read more “EU Agri-food Export Growth Continues, Becoming Central to the Future EU Agricultural Prosperity”
Analysis of the CAPs’ Poverty and Employment Effects in Developing Countries Needs to be Country and Sector Specific
Summary
Analysis of the external effects of the deployment of CAP financial tools from the German Institute for International and Security Affairs (SWP) has argued ‘overall, the production and price effects of the current CAP are negligible’. It maintains if the CAP were completely abolished this would lead to only a small decline in EU production. It argues effects of other policies are often wrongly attributed to the CAP. However the impact of the CAP on developing countries needs to be assessed in the context of the wider policies which are associated with the deployment of CAP financial instruments (e.g. EU trade, food safety policy and SPS control policies) and needs to be assessed at the country and product specific level not the overall level. The SWP analysis says nothing about the price level which would need to prevail to achieve a production neutral outcome to the abolition of the deployment of CAP financial tools. The SWP analysis however rightly stresses the importance of involving developing countries in assessments of the external effects of the CAP, so potentially affected actors themselves can express whether and how the CAP is detrimental to their development. Read more “Analysis of the CAPs’ Poverty and Employment Effects in Developing Countries Needs to be Country and Sector Specific”
Will New Flexibilities in EU Voluntary Coupled Support Payments Provoke a WTO Challenge?
Summary
The timing of the EU’s decision to relax the requirements for the deployment of voluntary coupled support (VCS), which de facto removes the link between such payments and maintaining existing production in disadvantaged areas, could well fuel calls for a formal WTO challenge to VCS payments in the sugar sector under Articles 5 to 7 of the WTO Agreement on Subsidies and Countervailing Measures (SCM). The EC and some member states had opposed the amendment of the scheme ‘citing in particular WTO implications’, while an analysis from the European Parliament suggested the ‘market distorting effects …of the introduction of coupled support in the CAP 2014-2020’ should be addressed. The findings of modelling undertaken by Wageningen University Research on the impact of VCS payments in the sugar sector would appear to strengthen the basis for an effective challenge to EU VCS payments under the SCM provisions of the WTO agreement. Read more “Will New Flexibilities in EU Voluntary Coupled Support Payments Provoke a WTO Challenge?”
British Sugar Commissioned Study Favours Maintenance of Existing Sugar Trade Policies Post-Brexit
Summary
The debate on future UK sugar sector trade policy is intensifying. A British Sugar commissioned study recommends future UK sugar trade policy should: recognise the distortions in global sugar markets; ensure future UK policies address these distortions; avoid any unilateral cuts in sugar tariffs and replicate existing EU trade arrangements. The reports treatment of the subsidisation issue ignores the current effects of EU policies on EU27-UK trade in sugar and the knock-on effects this has on ACP/LDC suppliers, which are now being squeezed out of the UK market. The report also underestimates the difficulties of securing acceptance of the proposed apportionment of existing bilaterally agreed EU28 sugar TRQs between EU27 and UK markets post Brexit. Read more “British Sugar Commissioned Study Favours Maintenance of Existing Sugar Trade Policies Post-Brexit”
EU Sugar Quota Abolition Begins to Eat at ACP/LDC Export Volumes and Earnings
Summary
The reduction of EU sugar imports forecast to occur following the abolition of EU sugar production quotas is well underway, with exports to the sugar deficit UK market from traditional ACP sugar suppliers coming under particular pressure. Given the proposed 21 month transition period in EU27/UK trade relations this is likely to continue until at least 1st January 2021 and may extend beyond, depending on the nature of the long term post-Brexit EU27/UK trade arrangement set in place.
EU sugar exports are also growing faster than projected, with this reportedly contributing to the decline in world market sugar prices which has been underway. In the longer term growing EU export volumes could threaten production in less competitive sugar producing countries including in Africa (particularly West Africa and high cost Eastern African sugar producing countries). Against this background sugar sector trade policy could become a contested area in EU-Africa relations. Read more “EU Sugar Quota Abolition Begins to Eat at ACP/LDC Export Volumes and Earnings”
New French legislation on strengthening position of farmers in agricultural supply chains tabled
Summary
The French government is moving ahead with a legislative initiatives designed to give farmers first say in the basis of price formation for their products, based on agreed indicators of production and marketing costs. Meanwhile private initiatives are underway to try and take the sting out of the political pressures for a more equitable distribution of value along the supply chain. Regulatory initiatives in France however are restricted to French producers and are being designed in the context of a broader agricultural sovereignty strategy. It is therefore unclear how this national French initiative will be reconciled with an EU approach which sees prohibitions on unfair trading practices being applied equally to EU and non-EU supplier. Read more “New French legislation on strengthening position of farmers in agricultural supply chains tabled”
UK Government Fails to Extend Scope of Groceries Code
Summary
Despite evidence of some serious unfair trading practices along African-UK horticultural supply chains presented during the CGA review process the British government has declined to take any action in this area. While this is consistent with the governments’ decision not to broaden the scope of the Groceries Code and the activities of the Groceries Code Adjudicator, it sits uneasily with EU proposals to include third country supply chains in its proposed regulatory initiative on the elimination of unfair trading practices along agricultural supply chains. The raises the question as to how the UK governments plans to deal with the transposition of these new regulatory requirements into UK law during the period up to the 1st of January 2021. Read more “UK Government Fails to Extend Scope of Groceries Code”
EC Proposes New UTP Regulations Should Cover Sourcing from Developing Country Suppliers
Summary
EC proposals to eliminate unfair trading practices along agricultural supply chains are to apply to both EU and non-EU suppliers. This is a welcome development from an ACP perspective given the regularity of UTPs along ACP-EU supply chains for fruit and vegetable products. However the benefits gained by ACP agricultural producers will be critically affected by how the regulation is implemented in practice. It is now up to ACP governments in the countries most affected by UTPs such as Kenya, Tanzania, Ethiopia and Ghana in Africa and the Dominican Republic, Jamaica, Belize and St Lucia in the Caribbean, to ensure a designated authority is created which is empowered to ‘initiate investigations either on its own initiative or based on a complaint’ into unfair trading practices along ACP-EU supply chains. This issue could usefully be taken up under the trade chapter of the post-Cotonou ACP-EU negotiations which will be launched in August 2018. Read more “EC Proposes New UTP Regulations Should Cover Sourcing from Developing Country Suppliers”