Brussels, 11/10/2011 (Agence Europe) - Measures to introduce a “greening” of some aid to farmers could lower the EU's agricultural production potential by raising farm input costs by €5 billion, or around 2%, a new study, published on Tuesday 11 October, reveals.
The study, by Prof. Alan Matthews for the International Centre for Trade and Sustainable Development (http://www.ictsd.org/i/library/115162/ ), shows that EU production capacity could fall slightly if governments press ahead with Commission proposals that would encourage farmers to adopt more environmentally friendly - “greener” - agricultural practices, and that would also redistribute direct payments to more marginal areas.
The European Commission is expected to propose this Wednesday, 12 October, (see EUROPE 10470 and 10449) that 30% of direct payments should be allocated for practices which have positive effects on the environment. The three new environmental conditions to respect are: - maintaining permanent pastures; - diversifying crop production and; - protecting ecological “focus areas” (at least 7% of land should be devoted to environmental ends).
Matthews study finds that cereal producers will be particularly affected by this move towards environmentally-friendly farming practices. Furthermore, higher feed prices will also: - reduce EU pig and poultry production and: - squeeze any expansion in milk production.
The study also suggests that EU cotton output could fall, as “coupled” cotton payments that are linked to production levels will be reduced slightly. “The remaining support continues to unbalance the playing field for developing country exporters, particularly in West Africa”, Matthews says.
The Commission is planning to eliminate sugar quotas from 30 September 2016. This, the study suggests, could lead to a substantial increase in EU production. The EU will import less sugar from suppliers that benefit from preferential market access, in particular the least developed countries and exporters in the African, Caribbean and Pacific (ACP) regions, whose exports to the EU could even be eliminated if world sugar prices remain high, Matthews predicts.
Plans to abolish milk quotas will not, however, affect world markets significantly, according to the study. EU beef and sheep production will probably be higher than would otherwise be the case, partly as, under Commission proposals, these sectors are likely to continue receiving the production-linked payments and partly because direct payments are likely to be redistributed to parts of Europe where beef and sheep farming is more important. Matthews advocates a more ambitious reform of the common agricultural policy (CAP) in which the targeting of direct payments is pursued more insistently and coupled payments are phased out. This would have a greater impact in “removing the remaining distortions caused by the CAP to world markets”, he says. (LC/transl.rt)