Development Has Limited Role in CAP Reform Debate

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By Alan Matthews* | IDN-InDepth NewsAnalysis

DUBLIN (IDN | CAP Reform) - Olivier De Schutter, the UN Special Rapporteur on the Right to Food, called January 17 for members of the European Parliament (MEPs) to take into account the impact on developing countries when voting on amendments to the draft CAP (Common Agricultural Policy) regulations post-2013. Among other issues, he called on MEPs to support the views of the European Parliament's Development Committee, which voted unanimously in favour of a mechanism to monitor the CAP's development impacts. In the voting January 23-24, COMAGRI (Committee on Agriculture and Rural Development) MEPs declined to do this.

De Schutter had previously issued a report with some controversial recommendations on how this round of CAP reform could help to realise the right to food in developing countries. Developing country interests have played a role in the debate around the Communication of the European Commission, The CAP towards 2020 (of November 18 , 2010) – notably being used to support a delay in the elimination of sugar quotas beyond 2015 and also more generally as part of the argument that the EU needs to produce more food in order to contribute to global food security – there is a good rebuttal of this argument in this study.

However, in general, the development interest has not had as great a profile in the debate on the CAP2020 regulations as in previous rounds of CAP reform, despite the effort of the Netherlands in particular to raise the issue at the Agricultural Council and a rather thin annex on the CAP and development in the Commission's impact assessment of alternative reform strategies. There are a number of reasons for this.

Limited role of development

Previous CAP reforms, together with the rise in world market food prices, mean that, even if the CAP is still not fully coherent with development objectives, its trade distorting impacts are now much less than before. EU agricultural policy now has a much less significant impact compared to other issues and policies affecting food production and food security in developing countries, such as world market volatility, climate change and biofuel policies (see this paper by Ole Boysen and myself which attempted to measure the impact of the CAP on Uganda, for example).

Perhaps not surprisingly, development NGO campaigning strategies have moved on to give greater attention to these other issues – for example, the Enough Food for All IF campaign launched by 100 development charities in the UK focuses on four issues – aid, land, tax and transparency – with no mention of the CAP.

Agricultural trade barriers and subsidies remain the most significant way in which developing countries are affected by the CAP. Export subsidies are a part of the negotiations on the single Common Market Organisation regulation, but expenditure on export subsidies has fallen to very low levels. – on January 17 the Commission cut remaining poultrymeat export refunds, which now apply only to exports to North Africa, yet again, much to the chagrin of French exporters who are the main beneficiaries.

The current CAP reform deals mainly with the level and structure of decoupled direct payments where the development perspective is not very prominent. Although these payments undoubtedly have a production impact, the size of this impact is much less than the impact of trade barriers.

From a development perspective, the action on the CAP has moved more towards trade policy (not just the stalled WTO Doha Round, but also the role of agriculture in the increasing number of bilateral trade agreements such as Economic Partnership Agreements (EPAs), EU-Mercosur, EU-India, EU-Mediterranean, EU-ASEAN and so on).

However, the EU offer of duty-free quota-free market access to all least developed countries since 2001 and to all other ACP (African, Carribean, Pacific) countries that signed interim EPAs since January 2008 has meant that, for this important group of developing countries, EU agricultural trade barriers are no longer relevant (albeit the Commission has tabled a proposal to remove this duty-free access from ACP countries which have not completed their EPA negotiations by January 1, 2014 which has been opposed by the Parliament and by some member states).

The growing differentiation between individual developing countries and their different trade relationships with the EU mean that it is now much more difficult to identify a common 'development' interest. Net exporters have different interests to net importers. Some developing countries benefit from preferential access to the EU market, others do not. And within developing countries, food producers have different interests to food consumers. Countries where poverty is concentrated in rural areas will be affected differently by CAP reform than countries where poverty and hunger is increasingly an urban phenomenon. This growing differentiation makes it impossible to design a CAP that only has positive effects on developing countries, and it makes it more difficult to campaign around a simple message.

Changes in world food markets

Identifying the most development-friendly EU agricultural policy is also complicated by the changes in world food markets. The CAP was rightly criticised in the past for depressing world market prices and encouraging increased competition with developing country producers both on their home markets and on export markets. Now, most net-food-importing developing countries are more concerned by the prospect of higher world food prices, low reserve stocks leading to greater price volatility, and export restrictions in exporting countries than by export support policies. Both sets of policies distort world food markets and undermine food security, but the shift in focus makes it harder to demonise the CAP

The fact that trade distortions due to EU agricultural policy are no longer very important (which is not to say that the remaining incoherence should not be removed) has led some development NGOs, and indeed De Schutter, to focus on alleged incoherence arising from agricultural trade flows as such, rather than distortions to these flows due to the Common Agricultural Policy.

This new line of criticism argues that the EU should not be a food exporter (because this makes it more difficult for developing countries to strengthen their agricultural sectors) but neither should the EU be a food importer (because it increases pressure on natural resources in developing countries, only benefits large exporters in developing countries thus marginalising smaller farmers and allows commodity buyers to play off foreign producers against domestic producers thus increasing their share of added value in the food chain). This infatuation with national food self-sufficiency policies (which De Schutter calls 'relocalisation') is both inconsistent and inefficient and would be disastrous for global food security.

Imbalances will continue

Trade plays a number of important roles in guaranteeing food security. The places where populations live and where food can be efficiently produced are not necessarily the same. Even with accelerated agricultural growth in countries that rely on imports these imbalances will continue. Trade allows millions of farmers everywhere, many of them small farmers, to enjoy higher incomes and thus greater food security than would otherwise be the case. Trade is also an essential buffer against domestic production fluctuations which are projected to become even more frequent, particularly in developing countries, as global temperatures rise as a result of climate change.

Trade is not a panacea. It also brings risks and redistributes income between different population groups, so policies to manage risk, to provide adjustment assistance, to protect environmental resources and to deliver social safety nets are a necessary accompaniment to open trade policies.

Protectionism is rarely an efficient solution and, as we have learned from the CAP, the benefits go primarily to the better-off farmers. Poor people (and hence the food insecure) typically encompass both food buyers and sellers so border measures are particularly blunt instruments. The prominence of ill-conceived and irresponsible positions in different flavours (food sovereignty, food self-sufficiency, relocalisation) has undoubtedly contributed to the marginalisation of the development interest in the current CAP debate.

Monitoring the impact of the CAP

Europe is the most important single player in global agricultural trade, and thus its policies do have an impact on developing countries. The EU is committed to Policy Coherence for Development, which can be defined as a process whereby developing countries’ interests are taken into account in decision-making on EU policies with the objective of increasing the contribution of these policies to the achievement of EU development goals. Given the heterogeneity of developing countries, these impacts are likely to differ from country to country.

Keijzer and King in a recent ODI report review some of the institutional options as to how these impacts might be monitored with a view to identifying scope for possible remedial action by the EU. They identify four mechanisms to monitor the impact of the CAP on developing countries which have been put forward by different stakeholders:

A monitoring mechanism with objectives for process and results enshrined in the legal regulations of the CAP, as put forward by Aprodev and other development NGOs.

A monitoring mechanism without specific objectives enshrined in the legal regulations, where the monitoring of results provides a basis to judge whether any effects are unwanted, as put forward by the European Parliament Development Committee.

A more general EU-led monitoring mechanism covering all EU policies likely to affect outcomes in developing countries rather than one focused on the CAP alone, as proposed by the Commission in its PCD work programme for 2010-2013.

Monitoring undertaken by secondary stakeholders possibly on a comparative basis including other countries, for example, by the OECD as part of its peer reviews of member countries’ development cooperation policies, or by an independent think tank along the lines of the Center for Global Development’s Commitment to Development Index.

This study provides a good overview both of the technical and political difficulties in initiating monitoring. The authors concluded that the European Parliament Development Committee’s proposal (a monitoring mechanism to analyse the effects of the CAP in developing countries without setting explicit objectives in legislation) was the most desirable. They noted that the recently formed Advisory Group on International Aspects of the CAP (experts brought together at the Commission’s invitation) could provide a useful platform to discuss proposals that could be developed by DG AGRI in collaboration with other DGs. Such an institutional mechanism to allow discussion of the contribution of the CAP to global food security would be a valuable initiative.

However, as noted above, COMAGRI rejected the Development Committee proposal. The European Parliament plenary March 11 to 14, which will review the COMAGRI negotiating mandate for the trilogue process with the Council, gives a further opportunity to include an amendment making reference to policy coherence for development and a possible monitoring mechanism.

*Alan Matthews is Professor Emeritus of European Agricultural Policy in the Department of Economics at Trinity College, Dublin, Ireland. A version of this article appeared in the CAP on January 30 website. The Environment Nexus website maintained by the Institute for International and European Affairs, Dublin carried it on January 29. [IDN-InDepthNews – February 1, 2013]

2013 IDN-InDepthNews | Analysis That Matters

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