CAP greening could cost farmers an extra €5bn

Common Agricultural Policy reforms could increase farm production costs by €5bn, according to an independent think tank on international trade.

A study by the International Centre for Trade and Sustainable Development calculated that the proposed greening measures would add €5bn (2%) to farmers’ input costs.

Study author Alan Matthews said that the bloc’s agricultural production potential would be hard hit.

“Greater emphasis on encouraging farmers to adopt environmentally-friendly farming practices will lower the EU’s production potential, compared to the status quo.”

The CAP proposals require farmers to respect three environmental conditions for receiving payments – maintaining permanent pastures, diversifying crop production and protecting ecological areas.

“Arable farmers will be particularly badly affected. It will also push up feed
prices and constrain any expansion in milk production,” Professor Matthews said.

But he added that plans to abolish sugar quotas would cause a rapid expansion in production which would have a knock-on effect for poorer, developing countries.

Imports from some developing countries could even be eliminated if world sugar prices remain high, damaging the economies of the least-developed countries in the African, Caribbean and Pacific regions.

Prof Matthews suggested that the CAP lacked ambition.

“A more ambitious reform, in which the targeting of direct payments was pursued more insistently and coupled payments were phased out, would have a greater impact in removing the distortions caused by the CAP on world markets.

“A more appropriate way to increase the EU’s production potential is through greater innovation leading to higher productivity”, he added.

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