Does the CAP still fit? – Food Policy Briefings

Does the CAP still fit?

Does the CAP still fit?

by Alison Bailey, Tim Lang and Victoria Schoen

The Common Agricultural Policy (CAP) has evolved through various reforms since its outline in 1958 and formal inception in 1962. It has changed from a policy focused on farm production outputs to one focusing more on social, rural and environmental support. UK policy interest in the CAP is being shaped by the Referendum decision on whether or not to remain a part of the EU. To disentangle UK food and farm policy from that of European neighbours and then to re-establish workable trading links is not a small task. We argue that ideally the CAP would become a Common Sustainable Food Policy or Common Food Policy. This framework would help integrate farm and fisheries policies with diverse measures that are needed to reduce food’s impact on health, environment and social inequalities. Policy-makers at EU and national levels must help shift the food system to meet the needs of the 21st century.

1 Comment

  1. Some comments on “Does the CAP still fit?”

    Brian Chatterton.

    Food prices.

    One of the accidental success of the CAP during the early years was the fact that high food prices did not have an impact on the standard of living because median incomes were rising faster than food prices. The proportion of the median income that was spent on food actually fell. Now we face a different economic policy with rising inequality and static or even falling median incomes. I don’t know the figure for Europe but in the US the median income reached its peak in 1975 and since then all the increase in GDP has gone to the top few percent. Europe is not as bad as USA but inequality has been rising.
    Food prices for the poor – particularly good quality food – has become a serious problem. While out of season asparagus is flown in from Peru, millions need food banks for their basic diet.
    It is unrealistic to expect the current economic policies that favour the top few percent of the population to change quickly so food poverty will be with us for some time even if policies change.
    Europe finds it hard to consider the example of other countries (except USA) but India might provide a model. India has its Food Corporation which is too innovative for European politics at present but it also has its chain of Fair Price Shop. Amartya Sen has criticised the Indian Food Corporation for not distributing its food stock more effectively through these shops to the poor but the concept of Fair Price shops should not be discarded just because it is not perfect. In Europe the obvious choice would be to try to incorporate the existing food banks into such a network and widen their brief from food charity to cheap and good food.
    The question of good food I will take up later.
    The food shops should be owned and operated by community groups not a centralised bureaucracy and should work with farmers to shorten food chains and increase direct sales. The flexibility already incorporated into CAP means that Britain could probably start such a program within the CAP umbrella.
    Trying to provide cheap food through subsidies to farmers will always fail. The food chain it too long and the impact too diffuse. Cheap bread does not come from cheap wheat but through the desire of supermarkets to have loss leaders to increase footfall.
    The experience internationally has been that poverty reduction is most effective when it is done through direct interventions. Cheap food, cheap house etc are effective means of lifting people out of poverty.

    New Zealand and Australia.

    There is a reference to the New Zealand shock therapy inflicted on the New Zealand farmers by a Labour Government on the lines advocated by Milton Friedman. It is possible to glibly brush over the human cost and say that land prices have now recovered forty years later. New Zealand has become a free market/globalisation paradise but at considerable cost to the environment. When we were there recently we found Kiwi fruit (a NZ invention or conversion from the Chinese Gooseberry) being imported from Italy while NZ kiwi went to Asia and worst of all some ginger and lime tea bags. These were from Poland. The ginger and lime were imported from Asia presumably. The mixture was then exported to Australia, put in bags and re-exported to NZ. The carbon footprints of these trades is huge. While a carbon tax would be an excellent idea it does have problems in the case of food. It will have a greater impact on poor Egyptians importing wheat from Australia than New Zealanders importing ginger and lime from Poland.
    Australia did not carry out such a ruthless abolition of its subsidies which were in any case much less than NZ and funded in the most part by consumers directly rather than through the tax system. At the same time the marketing organisations were abolished or their monopoly power removed with the collaboration of the majority of farmers. They were sold ideas of freedom rather than stability. The free market has benefited the very large farmers but medium and small farmers have not had the time to monitor the market continually and are becoming disillusioned with their new freedom. They are too busy farming. It has led to a bonanza for the intermediaries, the consultants and the market advisers. Many farmers have decided to sell their products through pool arrangements which are of course exactly what the old marketing boards did but they could do it more efficiently because of their economies of scale and their low promotion costs.

    Price stability for farmers.

    Farmers need a degree of price stability to enable them to invest in mechanisation and innovation. CAP rules on rotations make the requirement of stability even more important as farmers cannot move quickly out of one crop into another.
    In the past the market provided a degree of stability of income if not prices. When crops were low the price went up. Good harvests meant lower prices. Now there is no relationship at all. Prices are determined by floods or droughts on the other side of the world. African farmers have suffered more than most. During droughts when crop yields are extremely low their prices usually fall to almost zero as their country is flooded with famine relief. The current crisis in the British dairy industry has been attributed by many commentators to reduced purchases of dairy product from New Zealand by China.
    Swaminathan, a leading Indian plant breeder involved in the Green Revolution, says that the Indian Food Corporation’s role in the Green Revolution was vital. Without good and stable prices the farmers would never have invested in the technology. That side of the Green Revolution has been written out of the history books which have described it as a technological triumph of plant breeding, nitrogen fertiliser and water.
    Providing price stability is not necessarily the same as subsidies but seems to have been completely ignored not only in terms of CAP reform but also in the African farming development agenda. The technological utopia that is going to solve the food security problem receives all the attention but the price regime for farmers has dropped off the agenda.

    Too much of a good thing.

    There are some fundamental contradictions in the CAP policies and none more than the twin objectives of competitive markets and sustainable farming.
    The market economy is credited with driving growth. More nitrogen fertiliser is sold, more herbicides and antibiotics. The GDP increases and the market economy is proving a great success particularly for agribusiness.
    On the sustainable farming side of the equation we are having to impose bans, regulations and restrictions to save the community from their gross over use. A good example comes from Pakistan. Even though it is not a developed country we can perhaps still learn from it. A NGO decided to help Pakistani cotton growers produce organic cotton as it has now become a highly sort after fashion item. They found they did not have the resources (organic farming is essentially the substitution of chemicals with knowledge) to train the farmers in organic farming so they decided to look at chemical use. They found they could reduce chemical use by 70% without reducing yields. It is easy to sneer at the unscrupulous village merchants but farmers in Europe are also in the hands of the chemical industry as governments have effectively dismantled their advisory services.
    The reaction has been to regulate the use of chemicals which is of course necessary. Self regulation has proved to be a failure in many areas and I am not suggesting it for farming but there is a mutual interest between farmers and regulators in reducing chemical use. The regulators are concerned about contaminated food and farmers want to reduce their costs. At present they do not have an effective independent advisory service to set against the advertising blitz from the chemical industry.
    The story of glyphosate is an excellent example. It is a very effective weed killer and if it is applied to weeds will not contaminate our food but the manufacturers have been extending its use to food crops so it will now be banned or at least severely regulated. Perhaps there is a possibility of anticipating the gross over use and moderately use before it becomes a severe problem.

    When it comes to food we face exactly the same problem. It is not sugar, salt, or fat that it the problem but the fact that we have too much. Here the opposition to independent advice is strident. The food industry can bombard children with advertising and promotions but if the government makes the slightest move to count this avalanche it is accused of being a “nanny state” and trying to interfere with the fundamental freedoms of the people.

    NIFFE

    One suggestion is to establish NIFFE – a National Institute for Food and Farming Excellence. This is roughly equivalent to NICE – the National Institute for Clinical Excellence. It differs from NICE as it is more of an advisory organisation than an executive one. It would develop an independent centre for advice on food and farming. This would be used by Fair Price shops, schools and concerned parents to encourage better nutrition. It would be used by farmers as a counter to advertising from agribusiness.
    One of the major differences between NICE and NIFFE is that both food and farming have a local base. The organisation must reflect this and it would be a great mistake to establish a centralised group of academics alone. The organisation must have regional or county committees and the central unit must be accountable to them not them to the central unit.
    The NIFFE would not just advise consumers and farmers but would also advise governments on providing incentives and penalties to encourage the adoption of better practice. Sugar taxes and those on nitrogen fertilisers are examples of penalties and cooking schools and training course might be incentives.
    One of the potential benefits of such an organisation would be to reduce the anomalies in the current CAP environmental program. These are currently hopelessly centralised. Farming is local and applying uniform solutions is crazy. My neighbour is planting ecologically focused fodders to obtain a large subsidy but the farm is more than half forest which is common in Umbria and the wildlife have plenty of habitat. There are many other environmental interventions that would be more effective.
    In the cereal areas it could be useful have seed crops for birds but an even more useful environmental intervention would be to introduce a rotation of annual pasture with the cereals to reduce the appallingly high rate of soil erosion.

    Food security.

    Food security is a much abused term in these discussions. In the 1950s as Europe was emerging from wartime famines and acute shortages it was simple. Adequate cereals, fats, sugars and proteins were the core with most other food as add ons almost luxuries. Now it is much more complex as we have reached the stage of “too much” with sugars and fats. We, at least in the developed world, are not on the brink of famine and need to look at long term healthy diets. This becomes an extraordinarily difficult balancing act and is probably why no one wants to become involved in defining a “food security basket.” Just to give one example of the difficulties we all recognise the vital role of fresh food particularly fruit and vegetables but does this include asparagus flown in from Peru, beans from Kenya and mangoes from Brazil. Having decided on a food security basket what happens next. Do we decide on strategic production levels, stock piles or prices.

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