Dismantling CAP poses ‘threat’ to EU food security, warns IFA leader

DISMANTLING the EU’s common agricultural policy threatens the food security of the entire region, according to Irish Farmers’ Association president Padraig Walshe.

Speaking at an IFA Grain Conference in the Curragh, Mr Walshe said the dismantling of market supports for agricultural commodities and a reliance on unregulated market forces threatens food security and price stability.

“Today, over a billion people across the world do not have enough food and this number is growing.

“The move to dismantle price supports for agricultural commodities has led to a dramatic increase in price volatility.

“According to the Commodity Research Bureau’s Volatility Index, price volatility for commodities in the nine-year period from 1992 to 2000 inclusive averaged 12%. In the last eight years, 2001 to 2008 inclusive, this increased to 25% and for 2008 it reached 78%,” he said.

“Traditionally, agricultural commodity prices were driven by the market fundamentals of supply and demand.

“This is no longer the case, as financial players and other influences beyond the farm gate increasingly determine price. The collapse in equity and property values over the last two years has seen investor focus turn to oil and soft commodities, including grain and oil seeds,” Mr Walshe said.

The IFA leader said the long-term view was that investment in agricultural commodities would give higher returns.

“This is driving price volatility, as was clearly evidenced during the 2007 and 2008 harvest, and threatens the European model of family farm food production.

“Family farms, because of the low-margin nature of the business, cannot survive these boom-bust cycles,” he warned.

Mr Walshe believes we now have a ridiculous situation where the barrel of oil is traded up to 16 times and every trade is looking to make a margin. Speculators carry out the bulk of these trades.

He said the same is happening on agricultural commodities.

These trades, he argues, are facilitated by virtue of the fact that speculators can bet on the future price either falling or rising and this is done with a cash investment of less than 2%.

“Food and energy security and price stability are vital for the proper functioning of society.

“Politically, world leaders need to face up to and address the challenges of unregulated markets before it is too late,” Mr Walshe said.