On July 18th 2008 the EC launched a proposal for the establishment of a €1 billion special facility to assist developing-country farmers to improve agricultural production. The funds are expected to be approved by November 2008 with disbursement taking place in 2009. Significantly the facility allows for ‘partial retrospective financing, including support for measures ‘already initiated before the adoption of this regulation’. Support will be extended through international organisations such as the FAO, IFAD, WFP, UNICEF and the World Bank and through regional organisations. Funding is to be drawn from unutilised funds under the EU’s agricultural budget and would thus be additional to already allocated development-assistance commitments. ‘The facility would give priority to supply-side measures, improved access to farm inputs such as fertilisers and seed, possibly through credit and to safety-net measures aimed at improving productive capacity in agriculture’. Speaking in support of the programme Agriculture Commissioner Mariann Fischer Boel said ‘it’s so important that farmers in the developing world are given the means to help themselves’.
In July 2008 the FAO launched a US$21 million initiative in 48 countries to improve the access of smallholder farmers to ‘seeds, fertilisers and other agricultural inputs’. The aim was to assist in increasing production in the coming season. For the FAO this was seen as being a forerunner of a much larger programme for which international support was being sought. The FAO has estimated short-term financing needs for programmes to boost smallholder agricultural production at US$1.7 billion for 2008/09.
In July the EC posted a further analysis of the situation and prospects for high prices on agricultural commodity markets.
EC, High prices on agricultural commodity markets, Brussels, July 2008
http://ec.europa.eu/agriculture/analysis/tradepol/worldmarkets/high_prices_en.pdf
EC, press release, IP/08/1186, July 18th 2008
http://europa.eu/rapid/ pressReleasesAction.do?reference=IP/08/1186&format=HTML&aged=0&language=EN&guiLanguage=en
EC, proposal for a Regulation, Brussels COM (2008) 450/5, 2008/0149 (COD)
http://ec.europa.eu/agriculture/foodprices/com2008_450_en.pdf
FAO Newsroom, July 9th 2008
http://www.fao.org/newsroom/en/news/2008/1000877/index.html
The ‘retrospective financing’ provisions of the EC facility could prove to be the key to the success of this initiative, in that it allows major international organisations to begin to roll out existing programmes with a reasonable expectation that the EC will contribute to picking up the bill. This is critical to efforts to boost agricultural production in developing countries in the coming season.
However, there is also a wider significance linked to the financing of time-sensitive EPA-related adjustment processes. This facility could establish a precedent for the retrospective financing of EPA-related adjustment programmes in such areas as fiscal, trade and production adjustment, provided prior agreement has been reached on the types of adjustment measures which could be supported and the broad parameters of the interventions to be financed.