Over 30,000t of SMP sold from intervention
The volume sold and the price is higher in the latest skimmed milk powder (SMP) tender.

Some 30,067t of skimmed milk powder (SMP) has been sold from European intervention stocks for €1,251/t in the latest tender this week.

The price has risen from €1,231 and is an increase on the 20,033t sold in the last tender at the end of October.

For this tender, no maximum buying-in price was fixed and no stock was bought in.

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Court of Auditors report critical of direct payments to farmers
The European Court of Auditors has dismissed Commissioner Hogan's proposals as being more of the same.

As the Irish Farmers Journal went to print on Wednesday, news was breaking in Brussels that the European Court of Auditors (ECA) had published a report that was critical of the CAP proposals that would cover the period 2020 until 2027.

In brief, their main grievance is that the proposals launched by the Agriculture Commissioner Phil Hogan a year ago were too like the present CAP and weren’t strong enough on environmental issues and measurement of delivery of these was also not considered to be robust enough by the ECA.

Another area that will be of particular concern to farmers is that they don’t consider direct payments as “the most efficient way of supporting viable income”.

Worrying for farmers

This will send a shiver down the spine of Irish farmers and their colleagues across the EU27.

The UK will, over this period, formulate their own agriculture policy.

On this, Conservative MP and chair of the DEFRA committee in Westminster Neil Parish warned that a future UK agriculture policy would “all go into greening” without a focus on agriculture and food production.

If the ECA report were to become policy, it is clear that direct payments, such a critical part of farm incomes, would be dispensed with and no doubt directed towards environmental supports.

Process waiting on budget

These proposals from the ECA are the first truly critical assessment of Hogan’s proposals for CAP post-2020, apart from the NGO circuit, which would be expected.

While the ECA is in a position to comment, ultimately CAP 2020 will be shaped by the trilogy of Commission, parliament and heads of state.

On this issue, it was more encouraging for farmers that the parliament's agriculture committee this week was in favour of actually increasing the CAP budget by 18% to offset its decline in real value.

While that is welcome, of course parliament does not have money-raising powers, so, ultimately, it doesn’t have the accountability for expenditure.

Hogan pushback expected

While the ECA report will put the Commission on the defensive, they still have plenty to push back against the report with.

They will refer to the extensive consultation process that was undertaken prior to Hogan tabling his communication of what he expected the CAP after 2020 to look like.

His big challenges from a farmer and wider user perspective was to achieve simplification.

This wasn’t referenced by the ECA and by inviting member states to bring forward their own proposals within an EU framework and for EU approval was seen as an attempt to allow local farming conditions across the length and breadth of the EU be reflected.

On the issue of direct payments, there was widespread support in the consultation for funding farmers and he will point to having a basic qualifying environmental standard to access direct payments, plus separating the greening element to a separate application, as evidence that the environment is receiving enhanced priority in the next CAP.

This is really the opening salvo in a debate that will run to the conclusion of CAP discussions sometime next year.

For the environmental lobby, nothing will be sufficient unless it is exclusively an environmental payment, as is being mooted in the UK post-Brexit.

MEPs back increase to CAP budget
The Multi-Annual Financial Framework (MFF) proposed in May this year included a cut to the CAP budget of 5%.

The European Parliament budget committee has backed an increase to the Common Agricultural Policy (CAP) budget.

This is part of its position on the overall EU Budget for 2021 to 2027.

If implemented the CAP budget would rise from the €336bn proposed by the Commission to €408bn, but would require the contribution from member states to rise from 1.08% of Gross National Income (GNI) to 1.27%.

IFA reaction

“It is highly significant that the parliament has supported the CAP budget being maintained in real terms. This is the first clear acknowledgement at EU level that CAP payments have been eroded by inflation,” IFA president Joe Healy said.

The Multi-Annual Financial Framework (MFF) proposed in May this year included a cut to the CAP budget of 5%.

However, the IFA says that the real impact of this would be a cut of 15%, based on the EU proxy inflation rate.

“This would have a devastating effect on the low-income farming sectors who are very dependent on CAP payments.

“Average farm incomes are 40% of average earnings in other sectors across the EU.

“On cattle rearing and sheep farms, direct payments account for up to 115% of average farm income,” Healy said.

EU global leaders in pursuit of free trade
As the UK prepares to leave the EU, the search for deals continues for the remaining countries.

Farmers wrestling with weather and bad market prices may wonder what the EU is doing in relation to global trade deals and negotiations has got to do with them. The short answer is an awful lot.

This week, DG Trade published its second annual report on the implementation of free trade agreements (FTAs) that the EU is participating in.

The accompanying map is a graphic summary of the global reach of agreements or negotiations that are in place.

Basically, there is engagement with over 100 countries, including all the major economic powerhouses, with only Russia and a handful of smaller countries outside the loop.

Different types of FTA

There are different types of agreement that are already in place, as well as a series of negotiations that are ongoing.

The most integrated of course is the European Union itself, comprised of 28 countries at present, reducing to 27 after the UK leaves in March 2019.

Next to membership, the closest arrangement is membership of the European Economic Area (EEA), which applies to Norway, Iceland and Lichtenstein. This is basically being part of the single market, but excluding being part of a customs union.

Switzerland unique

Switzerland isn’t formally a member of the EEA, but has many of the same characteristics through a series of bilateral treaties delivering a similar outcome to EEA membership.

They are members of the European Free Trade Association (EFTA), as are the EEA members.

Turkey is not part of either of these, but has a customs union with the EU. This means that Turkey cannot independently enter third-country trade deals, but is bound by trade deals entered into by the EU.

Partnerships

Moving further out, there is a series of what are described as first-generation free trade deals, which are essentially confined to tariffs alone. These involve Middle Eastern, African and Central American countries.

Many of these didn’t include agriculture at the outset, with it often being added later, if at all. One of these, with Mexico, was updated in 2018.

These also include Stabilisation and Association Agreements (SAAs), with the Balkan countries of Albania, Kosovo, Montenegro and Serbia.

The EU has also a series of Economic Partnership Agreements (EPAs) with 29 African, Caribbean and Pacific countries.

These are all developing economies and the arrangement is that the EU will allow them duty-free and quota-free trade to EU markets, while they, in turn, commit to moving to liberalising their market access for 80% of their imports over a 15- to 20-year period.

Recent FTAs

New-generation FTAs are more comprehensive and go beyond tariff-free trade. They extend to services and public procurement, with the most recent including South Korea and Canada.

These are what is described as deep and comprehensive free trade agreements on the basis that they go well beyond the basics of a FTA.

The deal finalised with Japan also goes into this category and it is one that is particularly favourable for farmers, given that they are among the top importers in the world of agri produce.

A final category of agreement is the deep and comprehensive free trade area, which is seen as a forerunner to full EU membership. Georgia, Moldova and the Ukraine are currently in this category of relationship with the EU.

Negotiations

As well as signing deals with Vietnam and Singapore recently, the EU is currently in negotiations with the group of South American countries that are part of Mercosur, Australia and New Zealand.

All of these pose threats to Irish and EU farmers because they are all huge exporters of agri food produce.

One deal that remains to be sorted is with the departing UK.

This will be unlike any other, because it is the first time that a deal is negotiated with a country that was previously a member.

It is the outcome of this that will impact on farmers either side of the Irish border the most of all.