Theme 7. Agricultural policy of the eu

Plan:

7.1. Necessity and special approach to agricultural|farin| policy of the EU

7.2. Principles and mechanism of agricultural|farin| policy|politics| of the EU

7.3. Basic|main| directions and measures|step| of agricultural|farin| policy|politics| of the EU

7.4. Structural|structure| policy|politics| and rural development

Keywords: problems of rural development, Common Agricultural Policy, common internal market, legal frameworks, agriculture, programs, subsidies, rural locality, prices.

Literature: 1, 3, 4, 5.

Question and task:

1. Necessity of Common Agricultural Policy realization.

2. Special measures of agricultural policy.

3. Aims of Common Agricultural Policy.

4. Joint organization of agricultural markets.

5. «Agricultural structures» of the EU.

6. Measures on development of rural locality.

7. Reforms if Common Agricultural Policy.

8. European model of development of agriculture.

9. Types of prices on agricultural products.

10. European Agricultural Guidance and Guarantee Fund (EAGGF)

Case Studies:

Case 13 – Dairy industry of the EU

Gather together assorted business types – travel agent, house builder, car dealer, advertising executive – and ask them why times are hard. They will surely finger the same culprit: the global economic crisis. Then visit the protests being staged by dairy farmers across Europe (tread carefully, as these usually involve burning hayricks, spilled milk and a clutch of confused cows). Ask why they think raw-milk prices have collapsed and it will take a time before anybody says “economic crisis” or “consumer demand”. Instead, the protesters are swift to blame the European Union and what they see as its failure to prop up prices. This is both telling and depressing. Farmers elsewhere may be unhealthily dependent on state aid. But Europe’s dairymen are so obsessed by the need for regulation that the worst economic slump in more than 70 years barely enters their consciousness.

Look at what the protesters want above all else: the preservation of strict production ceilings on milk. Since 2008 these quotas have been on a slow path towards abolition as part of a modest series of reforms to the Common Agricultural Policy (CAP). Many protesters blame today’s plunging prices on a slight easing of quota ceilings last year and this. Some want new production curbs imposed immediately to make milk scarcer and thus more expensive. (Others attack the supermarkets, accusing them of profiteering: retail prices for milk have hardly fallen, though prices at the farm gate have collapsed.)

But market forces explain the low milk price far better than the EU’s decision to reduce its meddling. Look at the facts. Though Europe’s dairy sector was permitted to increase production by 2-2½% in the year 2008-09, farmers did not take up this slack. Indeed, EU milk production fell by 0.9%, leaving overall European production some 4% below the quota. In other words, most farming is responsive to market forces. Yet the protesting farmers want to head backwards towards state planning.

Politicians and the press have rushed to pander to the demonstrators. “Europe deaf to farmers’ cries,” shouted the front page of one Belgian newspaper after hundreds of tractors gummed up central Brussels on July 22nd. Better market regulation is the “only solution”, thundered a Belgian minister. In a joint statement the French and German farm ministers called on the European Commission to step up such market-meddling horrors as export subsidies and buying up surplus butter, saying measures taken so far fall short of what is needed. And though the plan is to raise the Europe-wide milk-production ceiling by 1% each year until quotas vanish altogether in 2015, the ministers suggested that Eurocrats should reconsider this plan and ponder suspending the 1% easing scheduled for 2010.

The European Milk Board, a farmers’ lobby, wants EU dairy production curbed by 5% immediately, either through quotas or by paying farmers to limit production voluntarily. It is a seductively simple solution. Farmers are suffering: prices for raw milk have fallen by half in some countries since 2007, tumbling below the cost of production on many farms. Imposing tight quotas would raise prices.

But the plight of Europe’s dairy industry is not so simple. The record high prices for milk and other farm commodities in 2007 were a bubble caused by many factors, including new demand in emerging markets (China’s middle-classes developed a taste for yogurt, for example), and by unforeseen events (Australia suffered a terrible drought). In contrast, the recession has hurt global sales of cheese, a relatively pricey food that is a marker for rising affluence. This is especially painful to EU farmers since cheese-making consumes nearly half of all European milk.

Moreover, the EU’s farmers are split. In places such as Italy, Denmark and the Netherlands, they yearn to produce more than the quotas allow. But French milk production is well below the ceiling set by the quotas, thanks to national rules that hobble production in dairy-friendly spots like Normandy, while helping pretty but unproductive regions such as the Alps. None of this stops French farmers from rioting for the preservation of the milk quotas - just as they did when the EU introduced them in 1984. Back then French farmers fought for an earlier system of buying dairy produce at guaranteed prices (a ruinous policy that created the EU’s famous “butter mountains”).

As it happens, quotas are finished. Whatever farm ministers imply in public statements, most EU governments are committed to abolishing them, France included. But under pressure from national governments, there has been a sliding away from a market-based approach. The European Commission will spend €600m this year on export subsidies and buying unwanted dairy goods which will then moulder in cold storage (the EU is not recreating mountains, insists one Eurocrat, “more a butter hillock”).

There is an economic crisis, national officials say, when challenged on this backsliding. Yes, but it will end. If the authorities restrict production harshly, European dairies will be caught on the hop when global demand resumes (cows need to reach milking age, so you cannot just increase production by turning a tap). Dairy markets are global, and rivals like New Zealand dauntingly efficient. Europe should be a premium producer – creating butter mountains is disastrous for that brand image.

Farm policies tend to have perverse effects. Tax rules and regulatory incentives intended to preserve small farms make it hard to create larger, more competitive ones. Laws to protect small shops block the opening of new supermarkets and promote local and regional cartels – and the easy bullying of farmers. Governments need to be braver, and tell their protesting farmers: “Milk is good for you. It helps you to grow strong. So do markets.”

Source: Milky mess // The Economist. – 2009. – 6th August.- [Electronic resource]. - Access mode: http://www.economist.com/node/14170799.

Dictionary:

culprit - обвиняемый hayrick – стог сена a clutch - стадо to prop up - поддержать to blame - осуждение to be obsessed – быть охваченным, одержимым consciousness - осознанность modest - умеренный plunging - погружаться curb – узда, ограничение scarcer - дефицитный to accuse - винить meddling - вмешательство

slack - послабление to pander - потворствовать to ponder - обдумывать to suspend - откладывать to tumble - падать fight - узкий plight - обязательство drought - засуха affluence – достаток, изобилие split - раскол to hobble - затруднять rioting - восстание harshly - резко rival - соперник

Questions:

1. Why 2007 was more profitable for farmers then previous years?

2. What was the reason for production of milk by French farmers is well below quotas?

3. Why farmers in some countries of the EU yearn to produce more than the quotas allow?

4. What was the reason of so called “butter mountains” forming?

5. Compare the opinions of some ministers of EU countries according to the problem of dairy industry.

6. What was the reason of farmers protesting?

7. Compare regulating mechanism of dairy industry development in the EU and other countries of the world. Try to make a table.

8. What is the solution of dairy industry problems?

9. What’s functions and aims of the European Milk Body?