Subsidy WatchIssue 18, November 2007


  • Moving pillars: A comment on the November 2007 CAP healthcheck

    By Pierre Boulanger*, Paris Institute of Political Studies (Science Po)

    Direct payments were introduced during the CAP reform of 1992, allowing a transition from the earlier production-oriented CAP toward policies intended to promote rural restructuring and the positive externalities that can result from farm-related activities. Direct payments introduced in 1992, as farm income support instruments, were subsidies per hectare of crops or per head of animal. Current direct payments, which are partially decoupled from production and based largely on historical levels of farm support, have been criticized for perpetuating inequalities and inefficiencies.

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Also in this issue:

News

  • WTO upholds ruling on illegal U.S. cotton subsidies; Senate ignores ruling

    A World Trade Organization (WTO) compliance panel ruled in October that the United States has failed to abide by an earlier WTO ruling requiring it to eliminate illegal cotton subsidies.

    This latest development in the long-running dispute over U.S. cotton subsidies originated when Brazil complained to the WTO that the United States had not obeyed a 2004 ruling by a WTO panel declaring certain of its subsidies to cotton illegal.

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  • Austrian government to raise renewable energy subsidies

    Austria's conservative Austrian People's Party (AVO) has agreed to a compromise on subsidies to renewable forms of energy which would increase those subsidies from 17 to 21 million Euros a year, according to the Austrian daily Die Presse.

    The subsidies are being touted as necessary for the country to meet its target of 10% power consumption through renewables by the year 2010. Currently 7.8% of Austria's energy consumption needs are met by renewable forms of energy.

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  • Romania faces EU subsidy cut, as farmers take to the streets in protest

    The European Commission has threatened to cut EU agricultural subsidies to Romania if the county doesn't strengthen administrative controls over how that money is spent.

    Romania, which joined the EU in January 2007, faces a 25% cut in the amount of money it receives from the EU for farm support, amounting to more 100 million Euros.

    Romania, "still has time to rectify the situation, but it is a matter of urgency and swift actions are needed," the EU Agriculture Commissioner, Mariann Fischer-Boel, told Agence France Presse on 10 October.

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Studies

  • Expert group critical of irrigation subsidies in India

    An expert group convened to analyze groundwater management and ownership in India has criticized subsidy programs for contributing to rapidly falling water tables in many areas of the country.

    Landholders in India are free to extract water that runs below their property. With few controls to limit the use of groundwater, over-exploitation is occurring in many states, posing a crisis for a country where groundwater supplies 85% of the rural water supply, said the expert group.

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  • Statistics Norway advises against subsidizing hydrogen cars

    A new working paper by Statistics Norway suggests that governments should not provide subsidies for the introduction of hydrogen cars. According to the study, the current state of hydrogen-car technology is such that only funding for research and development is appropriate.

    The study, entitled "Lock-in and the transition to hydrogen cars: When should governments intervene?" examines what role, if any, governments should play in the development of hydrogen-car technology and infrastructure.

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  • OECD report says farm subsidies drop as food prices rise

    The Organisation for Economic Co-operation and Development (OECD) finds that government support to farmers dropped in 2006; although the decrease was due mainly to rising prices for agricultural commodities rather than changes to government policies.

    The OECD's "Agricultural Policies in OECD Countries: Monitoring and Evaluation", an annual report on farm policies in OECD countries, found that US $268 billion was provided to farmers in OECD countries in 2006. This represented 27% of total farm receipts, down from 29% the previous year.

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  • Farmsubsidy.org launches new quarterly, ranks Sweden #1 for transparency in the EU

    Farmsubsidy.org recently published the first issue of its quarterly newsletter focused on farm subsidies under the European Union's Common Agricultural Policy (CAP). The inaugural issue cited Sweden as being the most transparent country in the EU for, among other things, its willingness to provide extensive farm subsidy data in an easy to use format.

    Farmsubsidy.org is a network of researchers and journalists who use access to information legislation to obtain data relating to payments and recipients of farm subsidies in the EU.

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Events

  • Release of a global study on investment incentives

    The International Institute for Sustainable Development's Global Subsidies Initiative, the publishers of this newsletter, is holding a meeting to mark the release of a global analysis of investment incentives on 26 November.

    The report, authored by Kenneth P. Thomas of the University of Missouri-St. Louis, examines those subsidies that are designed to attract investment from one location to another. Investment incentives are common at every level of government and in many countries, representing tens of billions of dollars globally.

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