A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Terre-net
  Point of view  
 

”Large-scale maneuvers over the CAP are in the offing”



Jacques Carles, Executive Vice President of momagri and President of Carles & Associés1


momagri’s point of view published in Terre-net Magazine



For momagri, the CAP reform will weaken further the European agriculture because it is not tailored to tomorrow’s issues. The think tank recommends a more effective reform based on “anti-crisis” counter-cyclical payments.

The CAP reform does not address the strategic issues confronting European agriculture. The post-2013 CAP is an interim solution that undermines Europe against giant nations with global agricultural ambitions, such as China, Russia and Brazil. The start of free trade negotiations with the United States should make us less naïve. It provides an opportunity for European farmers to benefit from the same advantages as on the other side of the Atlantic. Otherwise, we will validate our food dependence on the rest of the world.

Until we do so, the CAP reform will not pass the test of agricultural price volatility. As a matter of fact, convergence and greening do not form the pillars of a reform aiming to ensure food independence for 500 million Europeans. All the more so, since agricultural production must be increased by 70 percent in the next 30 years to feed the world population. It seems we are the only ones not to take stock of this number. We prefer to focus on peripheral topics due to a lack of bold strategic goals.


The thorny issue of agricultural price volatility

In addition, this debate on convergence and greening has eventually overshadowed the thorny issue of agricultural price volatility, which is nonetheless at the heart of policies in other major producing nations. This differentiates the European Union from its trade partners, since it no longer has specific measures commensurate with the market risks borne by farmers.

Our SGPA (global support to agricultural production) indicator, which provides a comparative analysis of governmental support to agriculture, thus leads us to ascertain that the CAP falls behind other agricultural policies. In fact, during the 2005-2010 years, per capita global support to agricultural production sharply increased in China, Brazil and the United States (respectively by 130 percent, 60 percent and 40 percent), while it barely stayed at the 2005 level in the European Union.

And the new post-2013 CAP does not address this volatility: Each major downturn of agricultural prices leads farmers to give up without any hope for a comeback.


Advocating regulation mechanisms

In this respect, the solutions for price hedging offered by financial markets have shown their limitations. This should restore prestige to regulation policies. Denying this fact directs us to increased agricultural price instability.
Yet, even if the prevailing attitudes insist on the fact that the European agricultural budget would have been saved, it is nothing but an illusion. It declines by 12 percent in constant euros and its spending will be strained by greening and convergence. Let’s not forget that at the same time, our competition boosts agricultural budgets and operates with counter-cyclical payments.

It is not an issue of pleading for more subsidies, but for adopting price and income regulation mechanisms that provide farmers with visibility. This is the case for counter-cyclical systems, as advocated by momagri in its “Another CAP is possible” plan. In the end, the CAP has become a “soilless policy” that turns its back to economic reality and mismanages public budgets.


Revisiting the CAP spirit

In fact, a system including 60 percent of uncoupled direct payments is no longer feasible, as it can be described as an ineffective settlement, and is perceived as unfair. When prices are high, the system comes on top of incomes; when they are low, it does not cover production costs. It is the very spirit of the CAP that must be revisited. For the pas several years, we have added environmental issues to the agricultural policy, which excludes the inbuilt strategic goals of agriculture and food.

This is the reason why, we at momagri, are convinced that the current CAP reform deals with a failing bureaucratic process backed by historically dated trends, while many are hoping for a reform adapted to tomorrow’s issues. Beyond today’s dangerous “small-scale maneuvers”, the CAP’s large-scale maneuvers are in the offing.


“Anti-crisis” counter-cyclical payments

momagri has designed an alternative plan––“Another CAP is possible”––that is more effective since based on “anti-crisis” counter-cyclical payments. It stays within current multi-annual budgets and even delivers substantial savings in years of high prices by stabilizing farmers’ incomes. By registering within the WTO limitations––unilaterally set by Europe while the U.S. overcomes them––momagri therefore shows that we can and must work differently with the backing of budget simulations.

Hence, we cannot enter into free trade negotiations with the United States without Europe stating what it wants for its agricultural activities. For if we stick to the study conducted by the Center for Economic Policy Research for the European Commission, we become part of the brainwashing process that has ushered the Doha Round.


Brainwashing

In fact, the economic model includes the same biases as the one used to tout the merits of a WTO agreement, along with announced welfare gains––€119 billion for the European Union and €98 billion for the United States––which are not based on any recognition of reality. Even worse, these numbers are very small compared to the economic potential of the two entities: Between 0.3 and 0.5 percent of GDP for the E.U. and between 0.2 and 0.4 percent for the U.S. Lastly, they are much lower than the model’s margin of error (5 percent). Consequently, they alone cannot justify far-reaching economic and political decisions.

But careful, the negotiation process has been launched. In view of this negotiation, we must therefore rethink the CAP reform, which might provide an opportunity for a European step forward based on a long-term strategy.


1 Strategy, outlook and lobbying consultancy firm.

Terre-net
Page Header
Paris, 10 December 2018