New report confirms downside to EU Green Deal

New report confirms downside to EU Green Deal

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GOALS: Action foreshadowed by the EC will reduce antimicrobials for farmed animals and chemical pesticides by 50 per cent. A similar approach to reducing nutrient losses in the environment is expected to result in a decrease of fertiliser application of 20pc.

GOALS: Action foreshadowed by the EC will reduce antimicrobials for farmed animals and chemical pesticides by 50 per cent. A similar approach to reducing nutrient losses in the environment is expected to result in a decrease of fertiliser application of 20pc.

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The report has confirmed the Green Deal strategies will cause a reduction in EU production capacity with commensurate impact on farmers' incomes.

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IN 2019 the European Union adopted its Green Deal as the roadmap for implementation of the United Nation's 2030 Agenda and Sustainable Development Goals.

From the other side of the world that might seem vague and of questionable relevance to Australia but the reality is that there will be significant implications within Europe for agricultural production, commodity prices, impact on farmers, cost to the consumer and effect on EU trade policy.

In the context of trade deal negotiations that have a time span measured in years, that suggests a moveable feast of complexities may lie in wait.

The Green Deal includes two key strategies, Farm to Fork Strategy (F2F) and Biodiversity Strategy for 2030 (BDS).

In essence the F2F strategy is intended to enhance the positive and reduce the negative environmental impacts of farming, promote sustainable and socially responsible production methods and provide access to sufficient healthy, nutritious and sustainable food.

The F2F ambition with regard to environmental sustainability of farming is far-reaching.

Action foreshadowed by the EC will reduce antimicrobials for farmed animals and chemical pesticides by 50 per cent.

A similar approach to reducing nutrient losses in the environment is expected to result in a decrease of fertiliser application of 20pc.

The sustainability agenda also includes a legislative approach to animal welfare and the objective of at least 25pc of the EU's agricultural land being under organic farming by 2030.

Incentives to support sustainable food production may include targeted VAT (GST) rates and a fairer tax system.

Lower VAT rates could be applied to encourage consumers to choose what the European Commission deems to be a sustainable and healthy diet, while the tax system could be tweaked to ensure that the prices of different foods reflect what are considered their real costs in terms of environmental externalities.

The BDS meanwhile is designed to halt biodiversity loss by setting of at least 10pc of existing agricultural land as high-diversity landscape in addition to the 25pc required to be organic.

Reduction in pesticide and fertiliser use will reduce yields and result in lower production as will conversion to organic and taking agricultural land out of production.

This outcome of lower production and its associated financial impact on the farming sector has obvious knock-on implications for the EU's Common Agricultural Policy.

The green architecture of the current revised version of CAP (called CAP LP due to its legal proposals) has close synergies with the Green Deal.

CAP LP has yet to be agreed by member states but contains significant changes in functionality which will be important if not vital to the success rates of the F2F and BDS strategies.

In its earliest form almost 60 years ago, CAP was concerned with food security, improving productivity, market stabilisation and income support.

In contrast, CAP LP is now more about environmental and climate goals.

Under the new CAP, payments to farmers will be linked to results and performance and are expected to become a major income support incentive for those who deliver on the green ambition.

But as beneficial as the EU maintains that the Green Deal will be, it has studiously avoided calls from the agriculture sector for an impact assessment of the F2F and BDS strategies.

Now in the midst of the summer holidays and without any announcement, the EU has released a technical report from its Joint Research Centre which confirms what the farming sector has feared, an unprecedented reduction in EU production capacity with commensurate impact on farmers' incomes.

Cereals and oilseeds are predicted to decline by 15pc, vegetables by 12pc, dairy by 10pc, beef by 14pc and pigs and poultry by 16pc.

All throughout the tortuous process of CAP revision and the Green Deal, it has been argued that some loss has to be occasioned in agriculture to achieve the desired reduction in greenhouse gas emissions.

But if the extent of production and economic loss identified in this report was not a big enough shock, it also exposes the inconvenient truth that the largest part of the reduction in emissions achieved through the F2F and BDS strategies will be erased through sustainability leakage to third countries.

The report states, "With regards to the integrity of the GHG emission reductions achieved in the EU, no change in the CAP means that close to 70pc of all emissions reduced in the EU are substituted by emission increases in the rest of the world. The leakage rate is reduced by 23pc (falling to around 50pc) when the assumed CAP LP is implemented."

Reacting to this and other aspects of the report, Pekka Pesonen, Secretary General of Copa Cogeca (the united voice of farmers and agri-cooperatives in the EU) said, "Strategies like F2F and BDS will create an ever-widening gap in practices and competitiveness with our international competitors. If we do not want to organise the relocation of part of our agriculture to third countries, the EU must be as ambitious in its trade policy as it is with its in-house strategies."

Cattle supply and rates holding

FOR this time of year Queensland processors are reasonably placed for cattle with a couple of weeks out front and assured of getting five days to the end of the month at least.

There has been little or no change in rates with the majors on 710-715c/kg for 4-tooth ox and 655 for heavy cow.

Supply in the south, however, remains very tight with a number of works reported to be doing only two to three days.

While the current COVID situation in NSW has not interrupted processing, it is affecting the domestic market, particularly for foodservice items such as tenderloins.

Overseas the trim job into the United States continues to pick up with latest FOB East Coast price for 90CL blended cow up another three cents to US279c/lb.

Shipping worldwide was described by one processor contact as a congested mess with China ports particularly affected which is influencing what those with access are sending there.

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