Thursday, 4 November 2010

Book Review - EU policy for agriculture, food and rural areas

Updated on 4 December 2010

EU policy for agriculture, food and rural areas
edited by: Arie Oskam, Gerrit Meester and Huib Silvis, 443 pp including Index
published by Wageningen Academic Publishers, ISBN-13: 978-9086861187, price £40.00

The book is recommended for education, but is claimed that it is not intended as a theoretical textbook because of the limited links to academic literature. Like a textbook, it is intensive and comprehensive. However, the many charts and diagrams are helpful, especially the one for the Ordinary Legislative Procedure which is also provided as a flap to the inside of the back cover. A good up-to-date review of the EU institutions and decision-making processes is contained in the one long chapter in the book (the rest are short to very short).

Sixty-one authors contributed to more than 25 chapters. They are primarily academics from the Netherlands (30), Belgium (8), and the UK (10), although there are contributions from the US, the Organisation for Economic Co-operation and Development (OECD) and the French National Institute for Agricultural Research (INRA). Others come from the World Trade Organisation – Sanitary Phytosanitary (WTO-SPS), the European Commission and the World Bank.

Although a common plea is made for fair international rules and institutions to oversee the increasing liberalisation and globalisation of markets, the proposal is that success is based on the continuation of trade liberalisation and market integration, which is reflective of the authors’ backgrounds.

It is stated that EU policies are based on the EU legislation which contributes to the acquis communautaire, having the objective of achieving certain targets. Some may claim that policies come before legislation. But either way, the authors clearly show that scientific approaches to analysing political policies have taken over from traditional methods.

Although the authors set out the objectives of the Common Agricultural Policy (CAP) in Article 39 EEC Treaty of Rome, recently article 33 Treaty of the European Union, they also give political reasons to explain how the strong resistance to integration of agriculture and trade in agricultural products in a common market was overcome. For example, it is claimed that political integration in Europe was important from the 1980’s onwards because of the economic need to compete with the United States and Japan (p 30). Further according to the authors, CAP is receiving somewhat lower priority today in relative financial terms compared to other common policies such as “the ‘Lisbon strategy’ of the European Union to be the most competitive and dynamic knowledge-based economy in the world” (p 39). This is carried forward with the prediction of a focus in Europe on the continued development of knowledge-intensive and capital-intensive agriculture as part of the quest for higher value-added innovative food products.

The authors set out the history of the relinquishment of food sovereignty, explaining that Agri-environmental measures were not adopted until the MacSharry reform in 1992 which was extended first by Agenda 2000 and then by 2003 Mid-Term Review (better known as the Fischler reform) that led to the Single Payment Scheme. Further, in the WTO context, agriculture did not become an integral part of international regulation until the conclusion of the Uruguay Round and the Agreement on Agriculture in 2004. The culmination of this history was that the WTO now sets limits on the freedom of European and national governments in forming policy.

The chapter on genetically modified organisms (GMOs) is for the most part conventional and the chapter I found the least informative. However, the author does make the pertinent observation in the conclusion that excessive use of monopolistic power is something to keep an eye out for. Also, it is interesting that the GMOs chapter came under the second part of the book called ‘Institutional Framework’.

The EU budget – as well as such esoteric phenomena as Coasean solution, Engel’s Law, Baumol’s disease, and the New Food Economy – all contribute to the wide coverage of the economics of agriculture and food. With the discussion on globalisation of the agricultural product market, forward contracts, options and futures markets, debt financing, natural hedging, the multi-product hedging approach, short and long hedging, and bonds, the reader can soon understand the financial complexities that face farmers and their advisers today.

Several chapters cover the basics on biodiversity, plant and animal welfare, nature preservation and rural areas in relation to agriculture. One comment was that rural areas will more and more be used as resorts and playgrounds for busy city dwellers. The idea is that this will create opportunities for entrepreneurs which should be supported with EU co-financing schemes. But whether or not this will be any better for biodiversity and the environment than agricultural activities is not touched upon.

The concluding view is that traditional government policy has been replaced by partners in the market, and agriculture becomes ‘business’. Whether this will come to predominate in policy and legislative development in agriculture as much as the authors suggests remains to be seen. Whether it is a good idea that it should is entirely another question.