Paris, 07/07/2008 (Agence Europe) - The EPP-ED group in the European Parliament devoted the third and last of its study days in Paris on Friday 4 July to the spiralling prices of agricultural products and to the challenges faced by the Common Agricultural Policy (CAP) to deliver more and better products.
French Agriculture Minister Michel Barnier highlighted a number of the causes of the rise in the prices of agricultural raw materials: the strong demand from China and India for food products, recurrent climatic disasters (as in Australia), and political problems in some producer countries (over 10 years, Ukraine has lost half its dairy production). Experts believe that the price of agricultural raw materials “will remain high, and that we will have to cope with it,” he commented. According to estimates, agricultural production for food will have to double by 2050 to be able to feed the world's population of 9 billion (at that date). Barnier said, “We have reasons for keeping the CAP and adapting it, redistributing some of the aid to take account of prices,” and this will be part of the CAP “health check”. Barnier put forward a number of ideas for meeting the food challenge: - changing the model on which the poorest countries have built their agricultural economy (the countries of Africa must be helped to produce food to feed their people and not just for export), for example by increasing agricultural funding in the European Development Fund (EDF); - setting up a permanent very high level group bringing together the major international institutions (World Bank, IMF, FAO and WTO, along with the major donors) to consider the issue of the relationship between agriculture and food, and a proper sharing of agricultural land (for producing food and for producing biofuels); - financing regional agricultural projects (by means of the EDF or funding from international donors) to help certain countries (East and West Africa, Horn of Africa, some parts of Latin America and Asia) rebuild their agricultural economy (pooling of certain crops, joint management of stocks, water and river management, etc.).
Former European Agriculture Commissioner and Chairman of the Rural Investment Support for Europe Franz Fischler spoke about the food challenge (how to feed the world's population), the environmental challenge and the challenge of rural areas and about the EU's responses to these challenges. He highlighted that: - the demand for food will rise by 50% within 20 years; - the percentage of the world's population living in urban areas will rise from 50% to 60% (one billion people will not be involved in producing their food and will have to buy it); - there is ever increasing competition between food products, feeds and the biomass; - 70% of the world's food production comes from temperate regions; - the amount of agricultural land is not limitless; - intensive farming will have to increase. He set out new objectives for the CAP (not simply the self-sufficiency in food which still features in the draft Lisbon Treaty): - integrated solutions to resolve food and environmental problems; - new measures to avoid price volatility on the market; - enhancing the food chain; - a system for storing carbon.
Hafez Ghanem, FAO Assistant Director General for Economic and Social Development, also said that the rise in prices was not transitory, and he said there was a 77% correlation between the rise in the price of oil and the increase in the prices of food products. Between 2005 and 2007, the number of people in the world going hungry rose by 50 million. He also noted the continuing fall in food aid.
Mathilde Lemoine, Director of Economic Studies and Market Strategies at HSBC France, spoke about speculation, which is in part responsible for spiralling food prices. She said that futures could not be called into question, their having existed since the end of the 18th century (and having brought a certain stability to investment). However, the size of fluctuations has a harmful effect on food supply when there is not full transparency. She raised the idea of “suspending quotations when variations are very great”, and suggested that there should be reflection with central bankers on the conduct of monetary policy (on changes in assets). “Food products are also speculative products to make money. This causes problems for us, politicians,” said Joseph Daul.
Alojz Peterle (EPP-ED, Slovenia) said that he EU was “not properly equipped to face up to these challenges”. He backed Barnier's idea of a very high level group to reflect on agriculture and food. He suggested that this group should also consider health (the Chinese are eating increasing amounts of animal protein). Mairead McGuinness (EPP-ED, Ireland) spoke about how the WTO negotiations were going, production costs, which were continuing to increase for farmers, and biofuels “which are getting a very bad press”, and speculation. Petya Stavreva (EPP-ED, Bulgaria) called for account to be taken of the farmers from the new member states (ensuring equal treatment for all farmers in the EU) and said that she felt that the reformed CAP had to take account of the new challenges (climate change, biofuels, water management). Philip Bushill-Mathews alluded to the “excessive” fears, in his eyes, about genetically modified organisms (GMOs). Astrid Lulling from Luxembourg mentioned the World Bank's controversial report stating that biofuels had provoked a price rise in foodstuffs of 75% since 2002. She also posed the question of whether they should, “revise the energy and climate change objectives”. Pilar Ayuso from Spain asked for measures to be taken in the CAP framework to develop and “encourage production”. Ioannis Kasoulides asked whether they should, at least partially, go back to a “policy of increasing production quantitatively for certain agricultural products”. Agnes Schierhuber from Austria referred to the Commission project for using non-used CAP funding for food programmes in poor countries.
In reply to these questions, Michel Barnier explained: “We will try and make this CAP” (as part of the debates on the health review, due to end in November 2008) more preventative (crisis management measures) and fairer (better distribution of aid); the orientation taken today is to increase production (not leaving land fallow, ending cereal import taxes); not all agricultural regulation and stabilisation tools will be got rid of (they are particularly useful in the milk sector); the energy model of all farms should be changed (the French minister suggested that CAP funding for 2008 that was not used up could be used to fund such energy assessments); the European position on biofuels is “reasonable” (7% of biofuels in 2010-2012), while the US and Brazil were counting on 30%); they need to explain to the public that GMOs are required for productivity, protecting salinity and against drought, for combating certain diseases (cystic fibrosis) and reducing the use of chemical products in the paper and food industries; GMO authorisation and imports should be regulated at a European level.
In connection to the WTO, Michel Barnier noted that, “some want to rush towards an agreement” but “we consider that the conditions for a balanced agreement are not there”. He added that, “there is no balance in the agricultural arena, just as there is none for the services and industrial arenas”. The French minister said that there is a real risk of destabilisation in entire branches in Europe (rearing, fruit and vegetables, sugar) and that the biggest losers from a “bad agreement at the WTO” will be poor countries. He affirmed that if they got rid of customs duties for everyone, they would lose the tariff advantages benefiting African countries (zero customs tariffs for African products exported to Europe).
Joseph Daul, the president of the EPP-ED group declared, “on all these topics, which are of strategic importance for the future of the European Union and the whole continent, we will make ambitious yet realistic proposals. We wish to safeguard the security of European citizens without setting protectionist measures”. (L.C./trans/r.h.)