March 15th 2001
So here we go again!
Direct from Paris’ 6th Arrondissement comes the first
edition of upton-on-line for 2001. Upton-on-line has been off-line
for two months now trying to furnish an unfurnished apartment (which
in France means supplying everything from curtain tracks to light bulbs),
doing battle with France Telecom (an agency devoted single-mindedly
to causing maximum customer despair) and explaining to the children
that their tantrums are exquisitely audible for the lucky folks above
and below us in the building. All in all, very character building.
But the time has come to re-connect, this time from far beyond the
cultural asteroid belt that separates New Zealand’s diaspora from Godzone:
where wines have manifest fruit characteristics (big tick – I’ve begun
to yearn for them: sorry, Rumble) and cheese can’t be made from unpasteurised
milk (big cross – whatever the microbiological risks, the taste’s worth
Stringing for Kim
Upton-on-line cannot maintain last year’s hectic pace – nor its ever-so-reasonable
partisan bias (you didn’t really notice it, did you?). Instead, it has
entered into an association with the Kim
The plan is to produce an edition of upton-on-line every three weeks
on a Wednesday night (NZ time). The next morning (Thursday if you’re
not very chronological), upton-on-line will discuss the subject with
Kim on her programme. Kim, like upton-on-line subscribers, will receive
it the night before so it’s a bit of an experiment in linking radio
and internet media.
It’s fair to say that Kim’s programme is less enthusiastic about the
potential for this idea than upton-on-line is. (Indeed, Radio New Zealand
said that most of upton-on-line’s subscribers already listened to Kim.
Upton-on-line knows for a fact that – much as you all love Kim - many
of you are far too busy coping with the Inland Revenue, shifting electric
fences or battling with the latest glitch in your software to be really
concentrating on Kim. And if some of you are listening, then someone
had better be checking your time sheets…)
Whatever the merits, the hope is that the potential synergies benefit
both the column and public radio which, almost alone, soldiers on trying
to provide more than just animal stories, opinion polls and scams. As
ever, upton-on-line welcomes feedback - as does Kim’s programme – and
looks forward to confirming the existence of life after politics.
In Re: Mad Cows v. Sacred Cows. New
Zealand’s trade prospects in the wake of Europe’s agricultural crisis
Walk into McDonald’s here in Paris and you can’t miss the reassurances
of food safety. Or, more specifically, beef safety. Prominent notices
underline the strenuous efforts McDonald’s have gone to, to guarantee
the traceability and the quality of every animal that ends up being
But just to make sure that nervous parents have the necessary room
for manoeuvre, Happy Meals (which our two consider the gastronomic equivalent
of haute cuisine) provide the option of beef, chicken nuggets
or Croque Monsieur.
(This last choice – basically cheese grilled over ham on a slice of
bread – seems to be McDonald’s way of waving the white flag in the face
of unrelenting Gallic suspicion of American cultural hegemony.)
I don’t know whether McDonald’s has managed to turn the tide on boviphobia,
but the numbers for Europe look pretty glum. Consumption down, since
October, by 45% in Germany, 45% in Italy, and 28% in France. Together,
these three account for nearly 60% of European beef consumption. Only
Britain has managed a small come back – 3%, but that’s after a 30%%
fall since the crisis first broke almost five years to the day in March
Upton-on-line is unsure how much this reflects a complete distrust
of national regulatory agencies and/or agri-business operators - (there
have been sufficient incidents to puncture unthinking confidence) -
and how much it reflects a deeper risk aversion at the heart of European
culture. Certainly, Europe exhibits none of the laissez faire that exudes
from the sidewalks of America (although what Europeans let their dogs
do on the sidewalks is another matter again…)
But a sense of disquiet isn’t hard to understand with the way the mad
cow crisis has evolved, not to mention scandals like the dioxin-laden
fuel sludge mixed with animal feed in Belgium. Foot-and-mouth disease
seems almost wholesomely ‘natural’ in comparison. After all, Europeans
have lived with it since its first appearance in 1546. But coming as
it does in the wake of a series of events that have shaken consumer
confidence it seems finally to have ignited a political tide for change
that had long seemed incombustible.
Has the CAP met its match?
Everyone has been saying for years that the Common Agricultural Policy
(CAP) is unsustainable. It already consumes US$36 billion per year.
And that the entry of a raft of new member states from Central and Eastern
Europe will compel change. Countries like Poland are such big agricultural
producers the subsidies they would be entitled to under current rules
would break the bank. But thus far, attempts to pare back the excesses
have made heavy weather of it. The Germans tried, during their Presidency
in the first six months of 1999, but met stout opposition, especially
Now, the climate of general alarm seems to have undermined the CAP’s
foundations in a way that the laser beams of economic rationality have
never been able to. And leading the fray are three female ministers
of agriculture from northern Europe - Margareta
Winberg from Sweden, Ritt Bjerregaard
from Denmark and Renate Künaste from
Germany, the last, a Green Party minister catapulted into office by
the discovery of mad cow disease in Germany and the resignation of her
All three seem determined to take ‘green’ seccateurs to the CAP. The
case for reform is being argued on ecological rather than fiscal grounds,
and in the climate of public alarm, the message seems to have fallen
on fertile ground. Certainly, these Ministers seem to be determined
to change the shape of European agriculture. Sweden has already adopted
a target of converting 20% of its arable land to organic production
systems by 2005. The German minister has similar plans. With Sweden
currently holding the Presidency of the EU, the issue is going to be
kept to the fore. But let’s not get too excited about the prospect for
change. France has already signalled that it will not consider any fundamental
reform of the CAP until after the 2002 Presidential elections. This
apparently ‘set-in-concrete’ position has wider ramifications than CAP.
It affects the prospect of a launch of the trade round later this year.
So clean green, ever-so-remote New Zealand suddenly falls on its
Would that things were so simple. It would be hard to think of a more
complex tangle of prejudices, unknowns and conflicting agendas than
that facing an agricultural exporter like New Zealand. Upton-on-line
has come close to a neural melt-down trying to sort the strands out
for readers. And he is no expert. But here are a few thoughts.
If the world was a simple place…
It often helps to start (as economists habitually do) with the world
as it exists only in theory. Suppose there was free trade in agricultural
products (subject to sanitary and phytosanitary controls). A collapse
in consumer confidence in any product would provide a market opportunity
for the producers of alternative products that could provide the reassurance
that was lacking.
So in Europe’s case, New Zealand producers would look at the ways in
which they could differentiate their products and expand their market
share. So, making appropriate judgements about not being seen to make
tasteless capital out of others’ misfortunes, you might expect New Zealand
exporters to reinforce the environmentally and consumer friendly properties
of their own products (assuming they could verify them – in itself a
very interesting question: more of that later).
But how about the world as it really is?
Needless to say, things could scarcely be more different. The trade
in agricultural products would have to be the most politicised market
there is – and nowhere more so than in Europe. The simple expedient
of expanding market share is, to start with, impossible. As every New
Zealander has learnt by the age of 10, Europe has tied itself – and
everyone else – in knots designed to protect European farmers at the
expense of all other producers and at the expense of its own consumers
and taxpayers. If anyone thinks farmers captured the NZ National Party,
take a look at Brussels.
Depending on the product, non-European producers face a bewildering
array of quotas and tariffs. New Zealand’s celebrated butter deal with
the EU imposes a mere 67% tariff. (The out-of-quota rate is a more muscular
146%). We get luckier on sheep meat – a large quota – 226,700 tonnes
or 70% of the total imported into the EU – with zero tariff. But out-of-quota
the sledge-hammer comes down with 50% or more - just in case anyone
gets too successful.
But even within these straight-jackets, there are sensitivities about
politicised markets that are just as important. Basically, you don’t
upset the locals – hence the careful monitoring that our exporters do
to avoid being too visibly successful in sensitive markets. Furthermore,
given the fact that no-one expects the Europeans to be anything other
than limpet-like in resisting change, there’s a strong sense that departing
from the status quo carries even higher risks than staying with
the security of a hard-fought niche.
Take the so-called quota rents that accrue to countries with
special access arrangements. To the extent that European prices are
jacked way above the world price, special access deals (like ours for
butter or sheep meat) create ‘rents’ (or super profits) – being the
margin between the world price and the European price less any tariff.
One of the wonderful ironies about the CAP is that it makes allies of
its opponents. To argue for lower overall tariffs is to argue for the
destruction of those lucrative quota rents. Now it wouldn’t matter so
much if the quota was eliminated because you could sell more. But then
again, others might beat you to it. So there’s something distastefully
cosy about supping with the Devil - even if we have been using a long
So would a greening of the CAP benefit anyone outside Europe?
That’s the $640 million question. My guess is probably not, but there
are possibilities either way.
On the one hand, a move away from subsidies that favours the intensive,
large scale agri-business operators could significantly reduce Europe’s
self-sufficiency in some agricultural commodities. That would improve
the chances of larger import quotas – assuming the political courage
could be mustered to face down the vested interests. The sensitivities
of different parts of European agriculture to a differential phase-down
of subsidies is the sort of thing exporters in countries like New Zealand
should be funding - it’s crucial market intelligence in terms of future
access negotiations. Needless to say, it’s not being done.
On the other hand, the flavour of recent comments from the politicians
most interested in reforming the CAP makes it clear that they’re not
CAP busters. The prospects for a country like New Zealand are at best
equivocal. Take this comment from Margaret Winberg quoted in the Financial
"I believe that agriculture without some subsidies is not
possible it we want biological diversity and healthy animals. But
Sweden is not a friend of quotas and we want to see Europe move
toward more extensive farming that is more natural and better for
Well, New Zealand certainly farms extensively but there’s more to it
than that. There’s the production system as a whole that would inevitably
come under the spot-light. And what questions might be asked about the
sustainability of other countries’ production systems if this became
the benchmark for European agriculture – bearing in mind that the politics
of shielding Europe’s small farmers – organic or otherwise – will be
just as intense as it always has been.
Needless to say, the indefatigable Europeans have been working away
on these issues. Upton-on-line recalls that they were canny enough to
retain Anton Meister, a respected
economist at Massey University, to do some work on what sorts of costs
New Zealand farmers faced in meeting environmental requirements. The
results are contained in a paper that examines the relative competitiveness
of EU agriculture vis-à-vis its main competitors in the world
market when health and environment standards are factored in.
It’s not quite clear what the EU intends to do with this research,
but it doesn’t take a degree in agricultural economics to see what’s
coming next: a European claim that competitors like New Zealand ‘subsidise’
their agricultural sectors by not requiring them to bear the full (ecological)
costs of their use of resources like soil and water. The CAP could be
artfully re-constructed to meet the true environmental costs of sustainable
agriculture and – along the way – just happen to generate a whole new
set of reasons to keep other countries’ exports at bay.
Apoplexy or opportunity?
It remains to be seen whether European agriculture will head off down
this path. There are rafts of imponderables. Would a truly sustainable
approach to agriculture generate the volume of food consumed by Europeans?
Would they be prepared to pay the higher prices for food that could
result from less intensive production systems – or would farmers accept
It seems hard to imagine a world in which a radically organic agriculture
is imposed in Europe any time soon. But it is bound to get greener.
And if it does so with the assistance of European taxpayers – as seems
inevitable – New Zealand won’t find any silver green lining inside the
near-impenetrable clouds of agricultural policy debate in Brussels.
But one thing is clear: a green CAP would command much greater moral
support from European citizens than the present trough of subsidies.
At least in terms of its domestic marketability, the greening of the
CAP could be its political salvation.
This is certainly the line taken by the outspoken French leader of
the Confédération Paysanne, José
who has labelled the latest foot-and mouth (fièvre aphteuse
in French) outbreak as "la crise d’une système" and
called for "une réflexion approfondie sur le système
d’agriculture qui a été mis en place en Grande-Bretagne
mais qui se généralise malheureusement partout en Europe".
Bové’s organisation is aligned with the Via Campesina movement
that purports to speak for 50 million small farmers globally. At the
recent World Social Forum in Porto Alegre (Brazil) organised as a counter
to the rich and famous who descend annually on Davos (Switzerland),
Via Campesina’s leader Rafael Alegria
of Honduras declared not only that traditional agriculture could not
survive without protection but that –
"…it is the only [form of agriculture] that is compatible
with a sustainable agriculture that takes into consideration the
preservation of natural systems and social cohesion."
Europe is unlikely to return to this model. But it is equally unlikely
not to make sympathetic parallels between the concerns of such groupings
and its own concern for a greening of the CAP. In the context of trade
talks it could all be somewhat problematic for Cairns Group strategists
trying to head off a new round of trade protectionism just when they
thought the old rationales for barriers had finally started to crumble.
So do we all just switch off the electric fences & throw the
tractor keys in the creek?
That might be a little extreme. After all, there are other markets
and we’re doing rather well in some of them. But it does raise the question
whether New Zealand farmers have thought long and hard enough about
how to meet sustainability arguments that are likely to be pushed with
greater force in the years ahead. New Zealand has for long traded, in
a quiet way, on its clean green credentials. And in many respects, they
are good. The ambient environment in which much of our food is produced
is very clean
We’re not bombarded by an invisible hail of air borne industrial pollutants
as most European countries are, notwithstanding their remarkable clean-up
efforts on some fronts. Millions of dollars of research has confirmed
in a very precise way that we produce our food in an environment that
has some of the lowest ambient levels of dioxins in the world. Low population
density and brisk maritime winds keep the air pretty clean. Geographical
and ecological isolation has meant the absence – so far – of a host
of pathogens that lurk in many other markets. And we don’t have the
intensive animal production systems that dominate Europe and North America.
But that’s not the end of it. Who knows what questions the Europeans
may decide to ask or what further research they might commission. It
wouldn’t take too much digging on water and soil issues to draw attention
to some agricultural impacts that don’t look quite so pretty. Worse,
New Zealanders haven’t been assiduous enough about doing the monitoring
needed to verify the claims we might need to make if the sustainability
of our systems came under fire.
It seems reasonably clear that consumers – at least those in rich markets
which can afford to pay premiums – are going to go on taking a closer
and closer interest in what they eat, how it is produced, and how safe
it is. The positions they take won’t necessarily be rational. For instance,
the German reaction to mad cow disease has been to turn away from beef
regardless of its source. If the consumer is truly king, then producers
have to think about being able to cover themselves against a rising
tide of public concern about the safety and sustainability of the food
chain – and the inevitable spill-over that will have for trade talks.
Like so many New Zealanders in Europe before him, upton-on-line finds
himself marvelling at the tantalising opportunities of this rich and
fabulous continent and exasperated by how its political intrigues manage
to keep us just out of reach. Those mythical golden apples hang there
still, one branch beyond arm’s length…