Tuesday, November 22, 2005

In which the CAP does good things for good people, and for partridges too

I think it’s probably not too controversial to say that the European Union’s Common Agricultural Policy doesn’t have a good reputation, especially in the UK. The average UK voter doesn’t really know all that much about what the EU actually does and doesn’t really want to either. Instead, a lot of facile clichés and myths are served up as facts and are peddled by lazy journalists and editors. Amongst these are the famous stories about how the EU specifies the acceptable curvature of bananas and wants to ban the Traditional British Banger. But one of the more legitimate concerns of voters throughout Europe is amount of money that the EU spends on agriculture through the CAP. By the end of 2005, the EU will have spent 46% of its budget, €49 billion, mainly on guaranteeing minimum prices and export subsidies. Indeed, until 1992, that is all that the CAP’s budget paid for, meaning that all subsidies were directly linked to production. Within Europe, this system meant that overproduction was endemic, as was the environmental damage linked to intensive agricultural production. Although there have been reforms to decouple production from subsidies, by and large the same problems still persist. Approximately 80% of the CAP’s budget goes to only 20% of EU farmers, while 40% of small farmers receive only 8% of the available subsidies.

To summarise, the productivist model of the CAP work like this. The more a farm produces, the more it receives in subsidies. The more farmers produce, the less agricultural commodities are worth. The less they’re worth, the more the EU has to compensate the farmers. As too much has been produced for the EU’s needs, it has to be exported. As it’s too expensive due to guaranteed prices, the EU has to subsidise exports so that European producers can undercut others. As a result, Third World producers especially can’t compete and go bankrupt. But it’s not only sugar cane growers in Jamaica who suffer. If you run a large farming concern in the EU, it’s all gravy. You can benefit from economies of scale to produce as much as possible, and you’re rewarded for it. This encourages you to use pesticides and artificial fertilisers liberally. There’s no incentive at all to stop hammering your environment and producing commodities that are of no use to anyone. But if you’re a small family farm, you can’t produce enough volume to make it worth your while, you can’t increase your yields because agricultural chemicals and especially machinery is unaffordable and won’t pay for itself on your small acreage. So you build up hopeless amounts of debt to stay in the game and end up selling up to the local barley baron to compensate for having a worthless pension. You can’t easily convert to another crop or diversify because you’re working to pay off your debts and can’t afford the initial investment or the risk. In fact, small farmers caught in the CAP productivist system are in a situation that is familiar to their aforementioned Jamaican counterparts.

So you’ll be glad to read that the Militant Pine Marten brings you agricultural tidings of great joy, having just witnessed the beneficial effects of the CAP reforms that were made in 2003. Briefly, in 2003 the EU decided to decouple subsidies from production gradually and instead to link direct single payments to environmental practices, animal welfare and food safety. In the UK, this mostly comes in the form of Defra’s various Stewardship schemes. The Militant Pine Marten was visiting a small family farm of the sort that was at the receiving end of the previous productivist model. This farm hadn’t really made any money for a decade or so. Suddenly, the kitchen has been redecorated, the tractors are looking in far better repair. Oh, you may not care very much, but you’ll probably be more impressed by the environmental benefits: people like that generally. The environmental benefits come in the form of an explosion on the local population of grey partridges (English partridges if you’re English, Hungarian ones if you’re from North America). Populations of grey partridges throughout the EU collapsed as intensive farming practices were introduced in the 1950s and 1960s especially. The thing is that young partridges live on insects in grass and fields. However the use of vast amounts of pesticides, the destruction of grass banks and hedgerows to rationalise fields weren’t conducive to vast insect populations. The grey partridge is as good an indicator of environmentally friendly agricultural practices as you could want. I am glad to report that the partridges are back, in high densities, to the extent that three of them will grace my table later this week.
The CAP has been a bad thing. It’s still far from ideal. It needs to stop doing things like making Tate & Lyle the single largest recipient of subsidies in the UK (to the tune of £127 million last year, for Christ’s sake). The shameful export subsidies need to be scrapped, although Peter Mandelson doesn’t seem to be doing too well on that front. But other stated aims of the CAP such as “to ensure fair living standards for the agricultural community” and now to improve and protect the environment, landscape, wildlife are being met, and as more reforms in this vein are introduced, the situation will improve. So you see, it’s not all lazy French farmers stealing money from hardworking British management consultants! Give the EU a chance. It stumbles around like a drunk a fair amount, but it will find the way home eventually.

UPDATE: Today the EU announced that in accordance with a WTO ruling, it was abandoning the insane sugar subsidies. This was by a long way the worst example of ill-considered agricultural policy. Well done the Council of Ministers! You see? I told you they were sorting themselves out.


Anonymous said...

MPM: "Give the EU a chance."

We have, it has had thirty years to show it is useful. That seems to me to be enough.

Pine Marten said...

Mister Anonymous: in 30 years, the EU has absorbed three former dictatorships and made them into democratic, open and relatively prosperous countries, then a second wave of former Eastern Block countries, and more are striving to sort themselves out economically and politically in a bid to join. If you're not interested in what the EU does for foreigners and only concerned in what it did for the UK, then go and have a look at Wales, Scotland and Cornwall where countless infrastructure projects are funded by the EU, to the great economic benefits of those who live there. So I'd say that despite its numerous shortcomings, it has been quite useful.

Anonymous said...

Pine Marten says: "has absorbed three former dictatorships and made them into democratic, open and relatively prosperous countries,.."

Well, lets just look at that statement for an instant. I assume you mean, Greese, Portugal and Spain?. Of course you are (for your own reasons) putting the cart before the horse. They were democratic countries BEFORE they entered the EU. All of them had 'had a guts-full' of the Generals, who, apart from Franco had been rather inept at governing their respective countries.

But the three of them could have probably joined any trading block in the World and given the same massive transfer of funds become equally prosperous.

What may give them a chance of abiding prosperity is not the EU but free trade. They could all have experienced that outside the EU.

Of course, I may be wrong, the three former dictatorships you may have meant could have been, Germany, Italy and Vichy. But it couldn't have been them, because by your lights since the EU didn't exist when they were dictatorships then by the same token those countries couldn't have become democracies.

As to the EU regional grants to the UK regions. The grants themselves amount to less than the membership fee the UK pays to be in the EU. We could have built all those projects for ourselves and probably much more efficiently if they had been funded directly from Westminster rather than from Westminster via Brussels.