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EU ‘Millionaire’ Farm Subsidies Likely To Stay
21 June 2013 EU ‘millionaire’ farm subsidies likely to stay By Roger Harrabin Environment analyst Stuart Meeson says subsidies enable farmers to meet the growing world demand for food Stuart Meeson is a rather happy farmer. It looks as though the 1m-euro subsidy for the farm he manages in Lincolnshire will remain intact under current EU reform plans. The European Commission wanted to cap single farm payment subsidies at 300,000 euros (£257,000; $397,000) a year, but governments led by the UK and Germany are reported to have crushed that proposal. Big farmers are often the most efficient, they said, and should not be penalised for that. The UK and Germany have many big farms, efficient at producing food intensively, and the big landowners are a powerful lobby in both countries. In contrast, France has many small, traditional farms, often less efficient. It is the latest blow to the Commission’s plans, as its master scheme to radically reform the Common Agricultural Policy approaches an endgame, with key negotiations in Luxembourg next week. It is already clear that the Commission’s original proposals for “greening” the CAP – forcing farmers to earn 30% of their subsidies by protecting the environment – have been heavily watered down after resistance from big farmers. The Commission wanted farmers to safeguard pasture land, diversify crops and leave 7% of farmland for wildlife. Paler shade of green? Irish Agriculture Minister Simon Coveney, who is steering the talks, told me compromises would be needed to seal a deal, but environmentalists complain that it is again the environment that seems to have been compromised. The latest proposal from the Irish presidency suggests that a single tree in a field should qualify for the same subsidy as 200sq m (2,153 sq ft) of crop land left for wildlife. David Baldock from the Institute for European Environmental Policy told me: “Given the widespread presence of trees and hedges in several parts of Europe, it would appear likely that farmers over large areas would have to do nothing at all to qualify for their greening payment. This seems pretty outrageous, since it is meant to be a new initiative and a major change in the CAP.” It also seems that a proposal to pay farmers twice under different budget headings for the same environmental practices remains on the negotiating table. A spokesman for the Commission diplomatically said: “There is a risk of a dangerous dilution of greening. We remain optimistic that a political deal is still feasible before the end of the month.” Time is running out. The parameters of the overall budget have already been set by heads of state, with an overall cut of about 12% in the agriculture budget. Diverse land use West Yeo Farm, Devon: Will EU subsidies continue to safeguard rare habitats? The talks really matter to farmers and the countryside. I visited two farms in the UK to gauge reaction. In Lincolnshire, Stuart Meeson was cautiously optimistic. The farm he runs on behalf of a major local landowner is highly productive and profitable. He says he manages between 5% and 7% of the land for wildlife, especially to encourage grey partridges for shooting. Without the 1m-euro payments he would be tempted to put even more land into food production, he says. “We employ an awful lot of people in the area. As a farming company we need to produce food competitively for the world market. With an ever-growing population for the world, if we are going to feed it, we need some subsidies which are applied to virtually all countries.” But does he really need 1m euros a year? That remains to be decided. At the other end of the spectrum is the 29-hectare (71-acre) West Yeo Farm near Tiverton in Devon. It receives 15,000 euros a year, half of it for encouraging wildlife. The farmer, Kate Palmer, has reinstated a stretch of culm grassland, a habitat unique to the West Country, thanks to the presence of a soft sooty coal in the soil. It is grazed when the flowers are over by a herd of rare-breed Ruby Red Devon cattle. “I really believe the public is prepared to pay subsidies to keep farmland like this for our grandchildren,” she said, among the ragged robin and marsh orchids. “The farming organisations don’t seem to represent farms like ours, they seem only to be interested in the intensive farmers who have taken away our wildlife.” So how green will the greening of the CAP really be? The “trialogue” of MEPs, ministers and Commission will be wrestling over it from Monday to Wednesday. Doubtless if a deal is done it will be declared a triumph, but the details may not emerge until Thursday. Continue reading
Farmland Values Still Climbing, But Pace Slows
High quality farmland is still in demand, and buyers are competing for top acres that are currently in short supply. More about: Viewer Photo Galleries, Energy Issues, Crop Insurance, Immigration Issues, Crop Reports, Lygus, PBWs, Irrigation Systems, Climate Change, Biotechnology, Pesticide Regulation An accelerated farmland sell-off at the end of 2012 has led to continued low supplies of premium quality property, according to Farmers National Company, the largest farmland and ranchland real estate company in the country. Last year’s rush, prompted by economic uncertainty and tax law changes, continues to have an impact into 2013. High quality land is still in demand, and buyers are competing for top acres that are currently in short supply. Competition for land has kept values strong, averaging 20 percent higher values over comparable land in 2012. Much of the continued rise is due to auction activity driving sales prices as purchasers vie for parcels of land. Mid- to high-quality properties are still seeing such rises in value, while lower quality land values are staying steady. “Values are still going up, but the pace has slowed overall,” said Derrick Volchoff, ALC, vice president of real estate operations at Farmers National Company. “Many transactions for high quality land are being sold via auction, which drives prices through competitive situations.” Auctions today have turned very competitive with bidding wars becoming the norm for high quality land sales. Areas of the country that normally do not run auctions, such as the Delta region, are now seeing them on a regular basis, according to Volchoff. “Despite an overall moderation in the number of sales transactions since the end of last year, there has been noticeable growth in the size of parcels being sold per purchase,” said Volchoff. Moving into the third quarter of 2013, Farmers National Company expects the number of transactions being closed to increase, based on activity seen in the past 60 days. “During the first two quarters of 2013, there has been a hiccup in activity based on the surge at 2012 year-end,” said Volchoff. “However, the trend seems to be shifting upward again and transaction numbers for the balance of the year should remain relatively steady.” Investors are sticking with land as a safe, long-term investment while farmers are putting cash from past yearly profits back into operations. Built up cash reserves for farmers are prompting farm operators to buy premium land when it becomes available to add to their inventory and to accommodate the return of younger family members to farms. For both groups, economic uncertainty is still driving purchase decisions. Farmers are looking for premium land on which to expand, while investors may purchase properties based on price and projected return on investments. “Even with recent drops in crop size for farmers, profits are still at a level higher than in 2010,” said Volchoff. “Farm debt is still low in relative historical terms.” According to Volchoff, several issues in the U.S., such as healthcare and interest rates are likely to impact economic trends and thus land inventory levels and sales activity once they are resolved. The direction of market and political issues will likely shape the rest of 2013. As the housing market improves, developers will likely begin to buy land for development. This could trigger more 1031 tax deferred exchanges pushing new money into the market. Farmers National Company, an employee-owned company, is the nation’s leading agricultural real estate and farm and ranch management company. The company has sold over 3,500 farms and more than $2.0 billion of real estate during the last five years. Farmers National Company currently manages more than 4,700 farms in 24 states. Additional services provided by the company include auctions, appraisals, insurance, consultation services, oil and gas management, lake management and a national hunting lease program. For more information on land listings in your region, visit the Farmers National Company website at www.FarmersNational.com. Continue reading
Missouri Moves To Lift Ban On Foreign Farm Owners
Alan Scher Zagier, AP 4:47 p.m. EDT June 18, 2013 (Photo: Amanda Lucier, AP) JEFFERSON CITY, Mo. (AP) — Weeks before a Chinese conglomerate agreed to buy Smithfield Foods in the largest such takeover of a U.S. business, Missouri lawmakers quietly approved legislation removing a ban on foreign ownership of agricultural land. Missouri is one of several Midwest states with little-known laws passed in the 1970s amid concerns over Japanese investment that prohibit or restrict foreign farmland ownership. The company has operations in 26 U.S. states, including several in the Midwest. Smithfield has said it doesn’t believe these issues will be an obstacle to the takeover deal being approved. Meanwhile, Smithfield announced Tuesday it is laying off 120 more workers as part of its previously announced closure of a Virginia facility that makes hot dogs and deli meat. The Smithfield, Va.-based pork producer plans to close its Portsmouth, Va., plant in the middle of August, said Jeff Gough, Smithfield’s senior vice president for human resources. A northern Missouri legislator whose amendments to a pair of larger bills helped push the plan through the state legislature and onto the desk of Gov. Jay Nixon said he wants to provide greater oversight of foreign ownership, which will be capped in Missouri at 1% and require state approval. The changes were approved on the final day of the legislative session. “The law doesn’t work,” said Rep. Casey Guernsey, R-Bethany, citing legal loopholes that allow foreign owners to mask their assets behind domestic-based groups. “What I want to do is make it work … It will provide a degree of accountability for an international corporation that it wouldn’t have before.” Shuanghui International Holdings announced its plans to purchase Smithfield Foods on May 29 in a deal that still requires shareholder approval and a federal regulatory review by the U.S. Committee on Foreign Investment. The deal’s expected value is $7.1 billion, including debt. In Oklahoma, the law limiting foreign farmland ownership exempts swine operations, said Diane Clay, an Attorney General’s Office spokeswoman. And in Iowa, the office of Attorney General Tom Miller said it expects Smithfield Foods’ new owner to “comply with all (laws and) agreements,” including a consent decree related to livestock production by meatpackers. “We hope to close the loop soon, whether it’s a final letter from Smithfield to us or a memo of understanding from our office to Smithfield,” said Geoff Greenwood, a Mille spokesman. The Missouri bill awaits Nixon’s approval, and his office declined to say whether he would sign it. The offices of Attorney General Chris Koster and the state Department of Agriculture also declined to comment. A Columbia-based group that opposes the corporate consolidation of the agriculture industry criticized Guernsey’s handling of the legislation. Language removing the foreign ban was added to two Senate bills in late April while in the House Agribusiness Committee, which is chaired by Guernsey. The underlying bills to which the amendments were added deal with farm loans and University of Missouri Extension districts. In early May, Guernsey added an amendment while the bill was on the House floor that doubled the allowable foreign farmland ownership from half a percent to 1%. “To call it a coincidence is doing a disservice to the democratic process,” said Tim Gibbons of the Missouri Rural Crisis Center, referring to the legislative votes that preceded the Smithfield sale announcement and the absence of broader debate. “These things should have been discussed. And they weren’t.” Guernsey, a dairy and beef cattle farmer, countered that he introduced a similar bill in May 2012. He bristled at suggestions that the foreign ownership ban was lifted at the request of Smithfield, which he said is the largest employer in his five-county district and a campaign contributor of Guernsey’s. “I didn’t even know about Smithfield until we were out of session,” he said. “Trust me, the last person Smithfield tells about any of their business decisions is Casey Guernsey.” While Guernsey said he “can’t stand the thought of the Chinese owning our largest employer,” he’s eager to see the potential economic benefits of a deal that some observers believe was driven by greater demand among Chinese consumers for U.S.-produced food. U.S. Sen. Roy Blunt shared a similar sentiment. “That’s a great opportunity for U.S. agriculture and a great opportunity for American agriculture,” he said. “Once people get better food they universally do not want to go back to the bad food again. Not only is there going to be more people but there’s going to be more demand and more competition for the food that’s out there. ” Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed Continue reading
