Monday, June 16, 2008

Is there anything good for developing countries in the CAP health check?

Source: EU News no. 4, May 2008

The Commission recently adopted a communication outlining a series of measures to be taken in the context of the so-called ‘health check’ of the Common Agricultural Policy (CAP).

Changes such as the abolition of set-aside land, the phasing out of milk quotas, the decoupling of direct aid to farmers and harmonisation of a single payment scheme (with a few exceptions) as well as the moving away from historical payments aim at freeing farmers from unnecessary restrictions and letting them maximise their production potential. On the same track, the Commission proposes to abolish intervention for durum wheat, rice and pig meat. For feed grains, intervention will be set at zero. A series of small support schemes will be decoupled and shifted to the Single Payment Scheme and the energy crop premium would be abolished.

The EC also proposes to simplify cross compliance standards, whereby farmers receive aid in exchange for meeting environmental, animal welfare and food quality standards. The EC also suggests that a higher share of direct aid should be transferred to the rural development budget in view of reinforcing programmes in the fields of climate change, renewable energy, water management and biodiversity.

No mention of export refund, a main concern for developing countries
The commitment previously made to abolish all export refund by 2013 is absent from the CAP ‘health check’ proposals. This measure is the one with the greatest immediate impact on EU food and agricultural exports to developing countries but it seems that export subsidies are still viewed as one of the ‘defences against occasional crises’ which the EC wishes to be able to deploy as need arises.

However, recent reports from African partners about the devastating impact of subsidised EU pigmeat exports on local producers in African countries demonstrate once again how export refund can be damaging for developing countries.

The value of meat exported to Sub-Saharan Africa (without South Africa) is €145 million with an average price per kilogram of 0.98 Euro. The bulk of pigmeat exported to West and Central Africa consists of prepared meat and of meat cuts of low preference on the European market that are exported at a price ranging from 0,35 to 0,70 Euro per kilo. According to an EC regulation adopted in November 2007, export refunds have been granted for pigmeat exports to non EU countries without limitation on quantity or destination since December 2007. Export figures for the first months of 2008 show that the decision to reintroduce export refunds is leading to an increase of subsidized meat exports, and subsequently is leading to lowering prices for locally produced pigmeat in West and Central Africa. The import price of pigmeat is far lower at approx. 0.70 Euro per kilo than the production price in any African country. The impact is similar to the ruin of African poultry farmers faced with cut throat prices of EU frozen chicken exports described earlier.

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On the issue of pigmeat exports read also the article by Karin Ulmer in European Voice: 'Making a pig’s ear of African agriculture'.

A management committee for pigmeat met on 22 May to take a decision on future of export refunds. Minutes are normally posted right after the meeting but this time unforeseen delays have occurred and information was not available yet at the time of closing the EU News.

EC website on the CAP Health check

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