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The Warsaw Voice » Special Sections » September 2, 2011
Polska… tastes good!
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CAP Must be Reformed
September 2, 2011   
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By Marek Sawicki, PhD, Minister of Agriculture and Rural Development

This year’s weather has been kind to neither holiday-makers nor farmers. The farmer’s work is dictated by the seasons, making agriculture far more dependent on weather than any other sector of the economy. It is the weather that to a large extent decides whether a farmer succeeds or fails. No matter how hard they work, farmers can never be sure of their harvest and there are years when all the effort and labor goes to waste.
This is one such year and it may bring one of the most difficult harvests in decades. Things are looking bad and there will be less cereals than usual, but the harvest in Poland as a whole will be close to the average of many years. Crops from regions which have suffered the most from heavy rainfall will be of inferior quality, but it should be underlined that there is no need for disquiet over food supplies.

Contrary to what some politicians have claimed in the election campaign, the Ministry of Agriculture does not have the power to buy up crops during a good harvest and store them as a precaution against bad harvests. Poland has been in the EU for seven years now and the Common Agricultural Policy, one of the EU’s first common policies, imposes strict regulations on market behavior. The EU may only buy up crops when market prices fall below a set minimum, currently just above 100 euros per metric ton.

I have frequently proposed a more realistic price. We also need to work out new policy instruments to effectively deal with situations similar to those faced this year. Piles of consumer wheat sold fifteen times, but never moved from their storage place surely hint at a market abnormality. Speculative capital has disrupted the natural demand-to-supply ratio and the crisis we have been facing for the last three years has similar causes.

It was between 2007 and 2008 that speculative capital started to affect agricultural markets on such a large scale.

This example is a good illustration of recent dangers, as well as the scale of the challenges facing the planned reform of the Common Agricultural Policy. New regulations are expected to come into force at the start of 2014 and rather than cosmetic changes, they should reflect a wide-ranging, ambitious reform designed to live up to the progressing market liberalization in Europe. The new common policy has to be simple, clear and free from the repercussions of historic animosities. It has to result in a thorough modernization and restructuring of EU agriculture, ensuring that it is more competitive on the international market. What we need to avoid is thinking in national terms and making short-run plans that do not reach beyond the next election. European agriculture needs to be treated as one whole and a huge sector which should meet the needs of half a billion consumers in the EU, protect the environment and guarantee fair standards of living for farmers. Increasing requirements concerning farming conditions and environmental protection give rise to additional costs that affect the profitability of agricultural production. These are coupled with a tendency to deregulate trade. Competition from imported foodstuffs, not subject to similar requirements, becomes a threat as well. This obvious distortion of market competition is among the problems which need to be addressed by the new common policy.

The Polish government’s stance on the issue is unambiguous. We seek an ambitious and genuine reform of the policy. It is also essential to at least maintain the level of EU spending on agriculture and rural development. Initial reports indicate that the common budget for agriculture will do this. Its efficient allocation will require a considerable simplification of the Common Agricultural Policy. Costs borne by farmers and the administration should be reduced. The criteria for distributing funds between member states also need reconsideration. The current guidelines, linked to the past production of particular states, should be replaced by a more objective set of criteria, such as soil quality or difficult farming conditions, and any differences in allocation should be based only on such objective criteria.

Countering speculation on the sensitive agricultural markets is equally important. Incidents similar to those mentioned before harm both consumers and farmers, and should be avoided at all costs.

The past three years are a vivid demonstration of the inappropriateness of existing regulations, regarding both financial markets and the Common Agricultural Policy. The crisis has laid bare all weaknesses, which is why a thoughtful and efficient reform of the Common Agricultural Policy is crucial to prevent European agriculture from being shaped solely by dwindling motivation and flows of speculative capital.
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