Article: Food and Ag Policy Briefing 16 June

This article is taken from policy article dated 15/06/20.

While the European Parliament successfully pushed for more COVID-19 support for the EU's agricultural sector last week, US farmers kept demanding more emergency aid from their federal government.

At their meeting on 11 June, the European Parliament's Agriculture Committee (AGRI) set out some changes to the rules proposed by the European Commission to transform the remaining funds from the CAP's Rural Development budget into direct crisis aid for farmers.

Based on an agreement reached with agriculture ministers in the Council, the MEPs agreed to increase the upper limits for the aid and to give EU member states more time to distribute the money.

The EU parliamentarians also successfully pushed the European Commission to come up with more market support for fruit, vegetable and wine producers two days earlier (9 June).

The Agriculture Committee had threatened to reject the EU executive's original aid proposal for these sectors because they considered it insufficient to truly help farmers deal with COVID-19 disruptions.

The two measures are both part of a wider support package adopted by the Commission on 4 May.

Meanwhile, the negotiations on the future of the CAP got a severe hit as the Parliament's Environment Committee (ENVI) decided to end the negotiations with their AGRI colleagues on the environmental aspects of the future policy.

The move, which seems to be an attempt by ENVI to get more power over the bloc's farming policies, risks causing further delaysto the troubled reform talks and the implementation of the next CAP.

F2F fears

At the AGRI meeting on 11 June, the Commission also once again tried to ease MEPs' concerns over the impact of its recently proposed Farm to Fork strategy on the socio-economic situation of EU farmers.

The plan aims to drive more sustainable food consumption and production in the EU and sets out four key EU-wide targets, namely reducing the use and impact of pesticides, fertilisers and antimicrobials while increasing the amount of agricultural land under organic farming.

But AGRI MEPs have criticised the Commission for not considering how these green ambitions will affect food production and farmers' incomes.

National agriculture ministers expressed similar fears at the Council meeting earlier in the week (9 June), claiming that the new targets could jeopardise the EU's food security and competitiveness.

French food labels

The key developments on food law took place in France last week, as it adopted a new legislative act to boost the transparency of information on agri-food products - thereby once again becoming a front-runner in the EU on food labelling.

Most notably, the law requires exact country of origin labelling (COOL) on honey and cocoa and bans words associated with animal products - such as burger, sausage and cheese - on labels of vegetable-based products.

The country is also preparing the introduction of a tax on processed foods with poor nutritional quality that score only a D or E on the colour-coded Nutri-Score labelling system.

At the same time, a new voluntary "vin méthode nature" label approved by the French government raised questions in the European Parliament and Commission about whether it breaches EU law, which bans the term 'natural' on wine products.

US farmers demand more aid

In the US, farming unions continued to ask their lawmakers for more COVID-19 support to provide relief to the sector.

The American Farm Bureau Federation (AFBF) called on Senate leaders to go beyond extra payments to farmers in their next aid package and include measures that support aspects such as loans, labour and rural broadband.

Similarly, maize growers told Congress that they need more federal aid to deal with their severe lossesin income and revenue caused by COVID-19. To underscore their hardship, they cited April estimates from the Food and Agriculture Policy Research Institute (FAPRI) predicting that total net farm income could fall by billions of dollars in 2020 and 2021 without additional government payments.

The precise timeline for the new US aid package is still uncertain, but it is expected to be introduced shortly after lawmakers return from the July 4 recess.

Meanwhile, House Agriculture Committee members questioned USDA Secretary Sonny Perdue about the implementation of the direct payments to farmers under the Coronavirus Food Assistance Program (CFAP). In particular, the lawmakers raised concerns that the support is insufficient to offset the losses incurred by producers and excludes some of them from receiving the financial assistance.

Produce Safety Rule inspections on American farms may also resume this week after the FDA gave states the green light for this restart, as long as the checks comply with their own reopening rules and the states follow federal safety guidelines to prevent the spread of COVID-19.

The controls had been halted in March, when the FDA issued the Stop Work Order in an effort to halt the spread of COVID-19. However, the situation is expected to be anything but typical in the beginning as it will take some time before things return to where they were before the start of the pandemic.

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.