Agricultural Policy

Potential for Blue Box Subsidies Increase under CAP Changes Says WTO

According to a report by the World Trade Organisation (WTO), changes in the CAP have allowed a shift in EU farm payments from income support based payments into more Blue Box payment types which can distort trade.

Under WTO rules, the Blue Box is for subsidies that are tied to programmes that limit production and can therefore distort trade. Blue Box payments include payments which relate to animal numbers and acreage but within schemes that also function to limit production in some way or which require land to be set aside.

At present, farm subsidies remain decoupled from both production and prices and this latest WTO report may highlight potential repercussions for UK administrations designing new payment scheme proposals in England and Wales.




FUW Raises Concerns Over New Immigration Point System

Earlier this month, the UK Government announced the end of free movement and the introduction of an Immigration Bill to bring in a points based system designed to cater for highly skilled workers.

Under the new proposals, points will be awarded for a suitable job offer, being able to speak the English language and a salary threshold. The government accepted the Migration Advisory Committee's (MAC) recommendation to lower the salary threshold from 30,000 to 25,600 pounds; with some flexibility for those wishing to take up work in a profession where there is a skills shortage . The salary threshold for the latter has been set at 20,480 pounds. Applicants will also be able to trade characteristics, such as qualifications, against a salary lower than the threshold.

Initiatives are being developed for sectors such as agriculture, however there remains a concern that the current system could result in higher labour costs; particularly for seasonal workers who work long hours and play a vital role in horticulture businesses. Where the points based system leads to a shortage of workers in the processing sector it is likely that throughput will be slowed, reducing efficiency and indirectly forcing farmers to keep stock for longer, increasing costs and bringing potential welfare issues.

The UK Government confirmed that the Seasonal Agricultural Workers Pilot for 2020 would allow for 10,000 pickers to enter the UK for harvest, although Defra Secretary George Eustice requested at least 20,000 spaces.

The FUW have continuously expressed concerns over the potential for post-Brexit labour shortages throughout the agricultural industry and it is essential that future migration policies do not place additional costs upon a sector which already suffers from low profitability and tight margins.


Is the UK preparing to break with the EU at WTO meeting?

The City A.M. website has reported that Downing Street is considering taking an independent stance on food safety at a forthcoming WTO meeting, raising concerns that the way is being paved for a US-UK trade deal that would allow the importation of food produced to standards not currently legal in the UK.

The meeting on sanitary and phytosanitary (SPS) measures is expected to see the UK making a statement about future intentions in relation to issues such as beef hormones, gene editing, GM foods and the use of acid to wash poultry.

Aside from concerns about allowing imports of food produced to environmental, animal welfare and other production standards which fall short of those legally required of UK farmers, the reports have also raised concerns that such a statement could breach commitments made within the UK-EU Withdrawal Agreement.

Last November, leaked US-UK trade negotiation documents revealed the degree to which the US wants UK standards to be relaxed to allow imports of food currently illegal in the UK and EU.


Just over half New Zealand EU sheep quota met in 2019

2019 saw imports of New Zealand lamb to the EU at just over half the allocated import quota as Brexit uncertainty led to products being delivered to stronger non-EU markets.

The overall weakness of the pound is thought to have been a factor in reducing exports to the UK to 47,000 tonnes, a fall of by 22% compared to 2018, but the strength of non-EU markets, especially China, is also considered to have been a factor.

NZ Lamb and beef exports to the EU between October 2018 and June 2019 fell by 18% compared with the equivalent 2017-18 period, while exports to northern Asia increased 16% to 126,400 tonnes, accounting for 37% of all NZ lamb exports.

NZ meat industry experts have warned that if the UK and EU fail to reach a trade agreement, UK lamb normally sold in the EU will flood the UK market, collapsing prices and making exporting to the UK uneconomical - but also potentially creating an opportunity for NZ to fill the gap on the continent.

Meat Industry Association trade and economic manager Sirma Karapeeva recently told the New Zealand Farmers Weekly that the country’s negotiations will centre on a NZ-UK free-trade agreement, and that its red meat sector is looking to build on current World Trade Organisation access rights in the current EU-NZ trade negotiations.


French President promises to safeguard EU farm payments

French President Emmanuel Macron has promised to defend the EU’s Common Agricultural Policy budget after opening the annual Paris farm show.

Speaking just a day after talks on the next EU budget broke down, Mr Macron told farmers that France would continue to oppose cuts to farm payments, saying the CAP budget “...cannot be the adjustment variable of Brexit. We need to support our farmers.”

The UK’s departure from the EU will leave a 12% hole in the EU budget, meaning spending cuts must be implemented if increases in Member State contributions are to be avoided - and with spending on agriculture and fisheries currently making up around 40% of EU expenditure, the CAP budget is coming under increasing pressure. Around 9% of the EU’s CAP budget is currently allocated to the UK.

The impact of US tariffs on french farmers was also at the top of the agenda at the Paris show, as France’s wine sector fears up to €400 million euros in annual sales could be lost if a 25% US import tariff remains in place.
French exporters have estimated that the duties led to a €40 million fall US sales in the last quarter.Mr Macron promised to fight for compensation for French producers hit by the tariffs.





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