August is the traditional month long break in Brussels – but it is a reasonable bet that the farm commissioner, Phil Hogan, will not be heading off for a carefree holiday. It is not of his making, but he finds himself having to cope with a crisis over prices and incomes that is getting worse by the day – and while the dairy sector has been getting the publicity, in reality all sectors of agriculture are suffering.
This is normally when you can do an end of term report on a commissioner, and for Hogan his is effectively the end of this first year in the post. For style he certainly scores high marks. He is much more approachable than his predecessor, Dacian Ciolos. He is happy to get out around the member states of the EU to debate problems with farm lobby organisations and farmers. He has set some good priorities, not least simplification of the CAP – and he has delivered some progress on the greening regulation, although more is needed. He has built around him an impressive, mainly Irish, team of advisers. However all these positives are undermined by the fact that he is having to deal with a growing crisis across agriculture. If he scores well for style, to do equally well for substance he has to accept there is a crisis that needs to be tackled.
To be fair to Hogan the problems are not of his making. He has already committed 150 million euro this year to support markets, mainly fruit and vegetables, because of the impact of the Russian food ban. This has now been in place for a year and will be there for another year, with all the signs that Moscow is hardening its line, as the EU and others maintain diplomatic pressure over Ukraine. While it is dairy issues that have made the headlines, other sectors are also facing problems. These include fruit,vegetables, pigmeat, lamb and beef. Indeed apart from poultry it is difficult to think of any sector doing well at the moment – with the situation made all the worse here by the huge competitive advantage eurozone suppliers are enjoying because of the weakness of the currency.
One of the big drives is to convince Hogan to think again on dairy intervention. A number of countries including Poland are now using intervention, but a price set in 2005 really does need to be reviewed. The odds are still against this happening – but even if it does there is no guarantee buying in milk powder would be a speedy solution. The problem is an over-supplied global market and weak demand, and whatever the EU does on intervention will not change that situation. Hogan probably knows this, and it is perhaps one of the reasons he is reluctant to invest a large part of his fairly tight budget in something his advisers are probably insisting will not significantly improve the milk price.
That may be a fair argument, but what Hogan does have available to him is around 800 million euro deducted in superlevy payments in the final year of milk quotas. In theory this cannot be used in the agriculture budget, but given the scale of the crisis this is a case Hogan needs to be making to other commissioners. The Russian import ban was a direct result of EU diplomatic policy and it is wrong that farmers should be expected to carry the cost. That is a point the farming lobby needs to be making more strongly, since there were false promises at the outset that they would not suffer for the EU imposing diplomatic sanctions on Moscow. That has certainly not been the case, and there is no question that the Russian ban is making a bad global situation worse in Europe – and even worse where because of the weakness of the euro against sterling.
Over August Hogan needs to begin preparing for a special farm council in the first week of September. This has been called by the Luxembourg presidency specifically to discuss the problems in markets.
It will coincide with a big protest by farmers, organised by COPA, and if past experience is anything to go by farm ministers and the Commission will be left with no doubts about the strength of farmer feeling – and the fact that this is not just a dairy crisis, but an agriculture-wide crisis that has to be tackled now.