You can be sure of Shell

Royal Dutch Shell provoked a furious backlash from campaigners yesterday when it announced plans to scale back its renewable energy business and focus purely on oil, gas and biofuels, we are told.

This report we see a day before "Earth day", where a group of climate hysterics are supposed to be gathering in Coventry to hear their leader James Hansen tell us we are all going to die unless we trash all our coal-fired power stations and mothball the "death trains".

Anything at all that inspires fury in the breasts of the hysterics, therefore, is warmly to be welcomed, although – in keeping with our beliefs, perhaps we should be cool about it. Cool is the new cool.

The demon of the moment, it seems, is Jeroen van der Veer, the chief executive of Shell. He is saying that renewables are a big no-no, resorting to corporate-speak when he tells us that, "I don't expect them to grow much at Shell from here, due to portfolio fit and the returns outlook compared to other opportunities."

Linda Cook, who heads Shell's gas and power business, elaborates, adding that wind and solar power "struggle to compete with the other investment opportunities we have in our portfolio". In other words, big oil is getting windy about wind.

Given the renewables obligation, which makes wind inherently profitable, it is a little surprising that wind is seen as so unattractive, but then with drop in the wholesale price of gas and oil, and the concomitant fall in the wholesale price of electricity, the balance of advantage has changed since we last looked at the economics. Not least, construction costs – especially for offshore wind – have soared.

But when we have John Sauven, the executive director of Greenpeace UK, declaring that Shell has "rejoined the ranks of the dirtiest, most regressive corporations in the world", we know we're on to a winner. Squirm, baby, squirm! I shall make a point of going to a Shell garage next time I need petrol.

COMMENT THREAD

Bio-fudge

It is some time since we tackled the vexed question of the EU's biofuels regime but that does not mean that it has gone away. Once the EU digs its claws into an issue it never, never lets go.

As of yesterday, the highly contentious commission proposal that ten percent of road transport fuel should come from renewable sources by 2020 passed through the EU parliament, going to the wire in the third "conciliation" stage where there are direct negotiations between the parliament and the council to reconcile differences in their respective common positions.

The agreement, however – to judge from the limited coverage, including Reuters - seems to be a glorious fudge, as the overall target has been reduced by between a quarter and a third (depending on which report you read) and replaced with a requirement that the overall quota of ten percent "renewables" is made up with green electricity.

This, ostensibly means that member states will have to commit to promoting a huge expansion of electric cars, although how there can be any guarantee that they are recharged with electricity from renewable sources is anyone's guess.

But the fudge goes deeper than that, with the electricity component extending to cover trains as well as road transport, allowing those run by "green" electricity to count towards the renewables quota.

In a further twist, the commission has also agreed that, by 2010, it will come forward with proposals to limit the scope for using virgin land or forestry for biofuel production, answering criticisms that some types of biofuel production create more CO2 than they save. Production will have to be "sustainable", to which effect, the commission is also looking at non food-crops as feed stock – the so-called second generation biofuels.

Although this agreement will have a very significant impact on the UK, it goes without saying that the UK parliament has not been involved. It has much more important things to deal with, like the privileges of its members and the fate of the Speaker.

In due course, it will get its chance to rubber-stamp the proposals but the one thing it will not be able to do is change them. Such issues are can no longer be left to national parliaments as they, clearly, need the time to discuss endlessly their own internal workings and are thus far too busy to deal with tiresome things like environmental legislation.

MPs are, no doubt, eternally grateful that the EU has taken from them so much of their workload in order to allow them to concentrate on the issues that really matter (to them).

COMMENT THREAD

The green-con boom

If there was any more evidence needed that the climate change scam has become precisely that – a vast money-making scam – turn to The Times today (business section) for an interview with Chris Osborne, "boss of the LECG consultancy".

The egregious Chris is touting the idea that there should be an International Court of the Environment in London, which should become "the supreme legal authority for settling issues regarding harm to the environment". Apart from another boost to tranzie ambitions, this would, of course, provide another generous income stream for high-priced city lawyers - as well as jobs for the LECG "experts".

But the main contribution of Mr Osborne is his conviction that:

… we are heading for an investment gold rush in new green technologies comparable to the dot-com boom a decade ago. America, where the providers of capital already have close links with the academics researching the technologies, is ahead of Europe. "The same VCs who were sticking money into the dot-coms world as an emerging, pattern-breaking transformation are back again. They have the money. They have the clout. They are looking for stuff that will provide the breakthrough," he says.

And just like the dot-com bubble, this green-con boom will burst in due course. In the meantime the money men and the corporates are rushing in to milk it for all it's worth.

Osborne sees the development of renewables such as wind, solar power and biofuels as "seed corn", businesses that are still insignificant today in profit terms. But, noting the "professed devotion" of Shell and BP to renewables, he dismisses the accusation of "greenwash". "Greenwash is a pejorative term," he says. "I'm not sure that's warranted. These are companies like any other companies and they exist to make money."

Quite.

COMMENT THREAD

Plundering the private purse

It was the great economist and philosopher Adam Smith who wrote:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

Now, they do not even bother to hide their intentions – they just cite "climate change" and lobby the government so that they can "compete for the lucrative business" made possible by its measures.

Such is clearly the motivation of the Corporate Leaders Group on Climate Change which, under the aegis of the Prince of Wales's "Business and the Environment Programme", have written a letter to the prime minister and the leaders of the opposition parties calling for "the cross-party effort that is essential to deliver a low climate risk economy."

What, in effect, they are asking for is a suspension of the political (i.e., democratic) process, their stated aim being to encourage "a new cross-party political consensus" on the scale and speed of change required, and a constructive political debate on how their "lucrative business" can be delivered.

The companies signing the letter are Anglian Water Group, B&Q, BAA, Centrica, E.on, F&C Management, Faber Maunsell, John Lewis, Johnson Matthey, Lloyds TSB, Reckitt Benckiser Group, Shell, Standard Chartered Bank, Sun Micro-systems, Tesco, Thames Water, Unilever and Vodafone.

Most of these, in one way or another, stand to gain financially from implementation of climate change measures, some more directly than others. The energy companies Shell, Centrica and E.on in particular stand to make money from the ETS and the allied emission mitigation measures.

Companies like Faber Maunsell, a "multi-disciplinary, award-winning consultancy specialising in the planning, design and engineering of buildings, transport systems and environmental services", also stand to make a packet out of climate change mitigation contracts. And Johnson Matthey, which just happens to produce components for fuel cells, is nicely placed to grab some of the "lucrative business".

The multi-billion international investment company, F&C Management is also a very interesting example of self-interest in action. It has actively lobbied the US congress for "cap and trade" and is keen to follow in the footsteps of al Gore and make a tidy fortune out of carbon trading.

The same "lucrative business" opportunity awaits Lloyds TSB and the Standard Chartered Bank, the latter gleefully talking up the prospects for the carbon trading market.

The Anglian Water Group is heavily involved in renewable energy, as indeed is Thames Water, which is already the largest generator of renewable energy within the M25 and is very keen on developing electricity generation from sewage sludge.

B&Q stands to gain considerably from increased retail sales of insulating materials and energy saving devices, as do – to a certain extent – Tesco and John Lewis.

For these two latter companies, their involvement also – in their own eyes – confers a PR bonus. Being seen to be "environmentally conscious" is good for business. That probably explains the presence of BAA - anxious to demonstrate its corporate responsibility - the involvement of Vodafone (although the latter sees product development opportunities as well) and of the Reckitt Benckiser Group.

PR is certainly one of the motivations of Sun Micro-systems. However, Vinod Khosla, co-founder of the company is pumping millions into developing biofuels using "synthetic biology". Unilever is also heavily into biofuels and is actively promoting second generation biofuel.

Thus, although this initiative is presented as business expressing "concern" about climate change, the letter to the prime minister is nothing more or less than a naked expression of pork-barrel politics.

Ironically, Greenpeace is accusing some of those involved of "hypocrisy of a previously unknown magnitude". In so doing, however, it misses the point. As we pointed out earlier, the greenie agenda has been hijacked by big business, who see in the raft of climate change controls huge money-making potential.

The letter to prime minister is just another example of that dynamic, where the players have recognised the scam for what it is, an opportunity to plunder the private purse.

Adam Smith must be turning in his grave.

COMMENT THREAD

Autres directions

A perspicacious Guardian today notes that the EU is in as much disarray about how to handle the looming recession as it is over how to confront Russia's belligerence in the Caucasus.

Drawing on the experience so many of us have had of baffling French road signs, it suggests that "toutes directions", the often confusing signpost at crossroads in French provincial towns, just about sums up eurozone government responses so far.

Actually, we can do better than that. Attempting to find our way to Strasbourg one day, driving through the by-ways of Alsace completely lost, we came to a T-junction in a small town, unmarked on our map. Witnessed by my increasingly acerbic co-editor, then one of my backseat drivers passengers, we were utterly confounded by a single sign offering the choice between "toutes directions" and "autres directions". That, it seemed to us, was the most appropriate paradigm for the European Union.

Returning to The Guardian, it tells us that France, as holder of the EU presidency, is effectively pushing for a concerted series of activist, counter-cyclical measures to be adopted when finance ministers meet in Nice in the middle of next month - even if it means busting the bloc's three percent budget deficit limit.

In this – predictably - it can count on support from its "Club Med" partners in Italy and Spain but Germany, determined to maintain fiscal discipline and avoid a repeat of the 1970s, is resolutely opposed. And so is the EU commission, while the UK is out on a limb, together with the Irish and the Nordics (several limbs, actually).

Although it retails a sorry tale of confusion, it is a pity though that the paper cannot see the bigger picture. It is not only the "looming recession" and the question of "how to confront Russia's belligerence in the Caucasus" that finds the EU in disarray. The impending clash over the Common Agricultural Policy will point up yet more disarray, while the continued impasse over GM crop approvals, the disagreement over biofuels and the energy policy generally, are all examples of the EU haring off in "toutes directions".

In fact, from the experience of the Common Fisheries Policy – branded by its own commissioner as "immoral" - to the waste policy, immigration and high level initiatives in the Middle East, nothing the EU touches ever works. It leaves behind it a trail of wreckage, disarray and confusion.

Never more has it ever been more urgent that we in the UK should be looking for that sign which says, "autres directions".

COMMENT THREAD

The great biofuels con

A long news focus piece in today's Sunday Telegraph comes from the Booker/North team.

One of our most bizarre findings is from a Cornell University study shows that biofuel production from farm crops such as corn takes 29 percent more energy than is yielded by the fuel itself - and that does not include the distribution energy to transport the ethanol.

To produce a "fuel" which actually consumes more energy than it delivers can only be described as insane – a "crime against humanity". The use of such inefficient feedstocks is made possible only by subsidies ($3 billion a year in the United States, just to support ethanol production) and the power of vested interest. These have basically hijacked the alternative fuel policy.

The equation looks even more insane when it is realised that an average US automobile travels about 20,000 miles per year and uses about 1,000 gallons of petrol per year.

To replace only a third of this petrol with ethanol, 0.6 ha of corn must be grown. Currently, 0.5 ha of cropland is required to feed each American. Therefore, even using highly optimistic data, to feed one automobile with ethanol, substituting only one third of the gasoline used per year, Americans would require more cropland than they need to feed themselves.

There is not and never has been any justification – economic, moral or environmental – for turning high-input food crops like maize and wheat into fuel. It is actually, beyond insanity. Which is why, presumably, the EU is so keen on the policy.

*** Forum temporarily down ... I'll post a link as soon as I can.

Priced out of the market?

Although biofuels have recently taken the blame for some of the increase in global food prices, there is emerging something of an irony – that the higher price of corn is threatening to slow down the production of ethanol.

In 2007, the US ethanol production capacity was about 8.4 billion gallons and was expected to increase to about 11.4 billion gallons in 2008. That, we are told would have increased corn demand by one billion bushels; from 3 billion bushels in 2007 to 4 billion in 2008. But now, both the capacity expansion and the increase in corn usage are in jeopardy.

Early last year, ethanol plants were making as much as 53 cents per gallon profit but, currently, after a year of losses – sometimes reaching 22 cents a gallon - net returns range from 8-16 cents per gallon.

Ostensibly, with the increase in crude prices, causing gasoline and ethanol prices to rise, the profitability should be good. Unfortunately, the corn feedstock price has risen even more on a percentage basis.

Some smaller plants, plus a few larger plants that were having trouble with financing arrangements, have already shut down. Some 16 ethanol plants either were in bankruptcy or are preparing to file for bankruptcy. Many small and medium sized plants are expected to be mothballed until profit margins improve. Many of the larger plants are working at less than full capacity.

Adding to the woes is the high price of diesel, making hauling grain long distances prohibitively expensive, while grain drying is also adding to the costs of some farmers.

In 2008, therefore, US ethanol production will probably not reach its government mandated target of 9 billion gallons. Production overall will not increase much if at all this year. As a result, commentators expect some farmers to cut back acreage under production next season.

This is an odd situation. One would expect higher the higher prices of gasoline to drive ethanol production, and for farmers to be getting rich on the proceeds, but this isn't happening. In this game, as elsewhere, input costs are the decisive factor.

COMMENT THREAD

What's in a word?

When are biofuels not biofuels? Well, it seems, when they are in a proposal for an EU directive.

While I was having fun at Waddington Air Show, watching "carbon footprints" so huge as to make the Greenies shriek in agony, the energy ministers of the EU member states were having an "informal" meeting, whence they decided they had been labouring for 18 months under the false impression that an EU plan to fight global warming included an obligation to develop biofuels.

That the commission intended that biofuels should comprise 10 percent of all transport fuel is beyond doubt. But when it came to the draft directive, a certain amount of ambiguity has crept in, with the formal reference being made not specifically to biofuels but to "renewable energy".

With biofuels now about as popular as a Vulcan bomber fly-past at a climate change conference, ministers – led Jean-Louis Borloo, the French environment and energy minister, had leapt upon the commission's ambiguity. He and his "colleagues" are now convinced that other alternatives can be chosen, with Borloo, in particular, fastening on hydrogen-based technology.

The beauty of this is that, to be produced in the sort of quantities needed, the only feasible option would be high-temperature electrolysis, using electricity generated by nuclear power – of which France has an abundance.

It would be such fun to see the French – and the others – take up this option, which would be entirely within the letter, but certainly not within the spirit of the commission's proposed law. Even more fun would be the fury of the Greenies who would have to suffer the prospect of their environmentally friendly cars being reliant on nuclear power.

For that, it would almost be worth going "green" and driving one of the ridiculous things pictured at the top of this post.

COMMENT THREAD

A beneficial (food) crisis

Like vultures waiting for the dying man to expire, the great and the good of the tranzie world have been gathering in Rome today under the auspices of the chief tranzi kingdom, the United Nations, prop. Sec Gen Ban Ki-moon (pictured).

And, true to form, the UN's Food and Agriculture Organisation (FAO) immediately launched an appeal for $30 billion a year to "re-launch agriculture and avert future threats of conflicts over food".

This came from FAO Director-General Jacques Diouf, opening the beanfest summit on the "world food crisis", who wanted his budget increased tenfold so that his munificent organisation could "buy poor rural farmers the seeds, fertilisers, animal feed, infrastructure and irrigation they need to feed themselves, their communities and their countries."

There followed a discussion on the factors which had caused the crisis, amongst which were cited low stocks and a weak dollar, soaring energy prices, a hunger for richer foods and the thirst for biofuels – and, of course, global warming.

Inevitably, the United States took a hit for its biofuels policy, unsurprising given the FAO's previous pronouncements.

As the day developed, this developed into something of an anti-American rant, with US subsidies for biofuel – estimated at $11-12bn for corn ethanol – roundly condemned by Diouf, who said they were depriving people of food.

But the most fatuous comments of the day, relayed by the BBC were from Joachim van Braun, of the Washington-based agricultural think-tank the International Food Policy Research Institute (IFPRI).

He complains about the lack of a "single, efficient mechanism" to deal with the challenges of a volatile international commodities system remains an unresolved problem, criticising the current "global governance architecture for agriculture" which, he says, "is not what the world needs".

There, writ large, is the tranzie agenda – global governance on the coat-tails of the global food crisis, with the UN at the centre in its "coordination" role, masterminding the "single, efficient mechanism" to deal with the crisis.

The problem though, is that there is not so much one crises, as many different crises. And, as we have pointed out, while in many cases, local food shortages are the proximate cause of the episodes of unrest currently being exploited by the tranzies, often these are the symptoms of wider problems, usually related to poor economic management and structural problems.

Equally to the point, while nations with food supply problems often have similar problems, it is most often the combination of different failures or inadequacies which do the damage and, in each country, the particular combinations are unique.

Progressively, we have looked at some of those countries, specifically Colombia, Afghanistan, Egypt and Malawi, and what comes over is precisely the phenomenon upon which we remark – that each country is unique. Each, therefore, must be treated differently and needs a different range of solutions. The idea of a "single, efficient mechanism" to deal with the complexity and variety of problems encountered is so unrealistic as to be laughable.

Adding further to our thesis, we have been looking at the interesting situation developing in Thailand, where farmers are protesting about the low prices they are getting for their rice.

Here, the government's support system is to set a minimum price which the millers must pay farmers. But, not only do the farmers complain that this is set too low to cover rising input costs – not least of fuel and fertiliser – they are finding that millers are refusing to buy at the "guaranteed" price and are offering considerably less.

To add to the farmers' discontent, a government "crop mortgage scheme" has also been abandoned – a system where farmers can borrow against the coming harvest, in order to finance their production. This is having the effect of forcing farmers sell their crops to millers early, who are able to drive down prices still further.

However, the government is responding to farmers' demands to raise the guaranteed price, raising it to £220 per ton - compared with £100 in 2004/2005 – to allow financing of increasing input costs. However, as an added twist, this is leading to fears that this could lead to "additional government financial burdens to offset loss to state-owned banks" who lend money to farmers.

This is because an expected fall in rice market price caused by an inventory release by Japan and US in the near future could lead farmers to default on their loans.

As we wrote when we discussed this "inventory release", if market mechanisms are allowed to work, agriculture is well able to feed the current world population, and accommodate population growth for the foreseeable future. The only thing standing in the way of that are the politicians. We do not have a food crisis – we have a political crisis.

In fact, we have political crises - and the tranzies are not even on the same planet when it comes to understanding – much less dealing with – their complexities. But then, solving problems was never really on the agenda.

COMMENT THREAD

Tinkering at the margins

It would be nice to get away from agriculture for a while, but it is impossible to ignore yesterday's publication of the commission's proposals for further reforms of the CAP.

These are euphemistically called the "CAP Health Check", to avoid using the r-word. Their purpose, declares Mariann Fischer Boel - who seems to have acquired the title, "commissioner for agriculture and rural development" – is to "…modernise the CAP and free farmers to respond to growing demand".

The commission also makes the explicit claim in a separate communication, that the "Heath Check" is part of a package of measures that forms the "European response to mitigate effects of rising global food prices".

Interestingly though, barring one, the changes proposed are exactly those which have been planned for some years, long before "global food crisis" became a fashionable catch-phrase. With that exception – the permanent abolition of set-aside – they are a continuation of the process set in train by Ray MacSharry in 1992.

Then, MacSharry was addressing the problem of over-production – and the "Health Check" is more of the same. One of the key provisions is the extension of modulation, shifting an increased proportion of direct payments into "rural development" – up from five percent to 13 by 2012. Farms receiving more than €100,000 a year have an extra three percent deducted, those getting more than €200,000 have a another six percent cut and those receiving more than €300,000 have an additional nine percent deducted.

This actually takes money out of the farming system altogether, so it effectively amounts to a significant reduction in overall subsidies, despite still being characterised as part of the CAP. Much of the money is spent on projects such as this, which have little relevance to agriculture.

Still less do they address any notional food shortages or encourage production and, perversely, they actually increase the net "take" from the taxpayer. Most of these schemes are co-funded, EU payments requiring up to 50 percent matched funding from member states.

It is not at all an exaggeration to say, therefore, that the commission, in making the claims that it does, is being essentially dishonest (now, there's a surprise). But it has at least achieved the near impossible, in dragging The Daily Telegraph into the fray, with a factual piece about agriculture (although its report does not seem to have made it into the print edition).

Needless to say, the piece is framed in terms of conflict, the headline reading: "Battle looms over CAP Health Check", the text telling us that France and Britain "have squared up for a battle over the future of Europe's farming policy".

The IHT takes a similar line, with the headline: "EU farm proposal set to trigger U.K.-France tussle", although, as we know, Germany is also in the frame. No doubt, other member states will join the fray, in opposition to the British government – which wants direct payments scrapped altogether.

That line also puts the UK in direct conflict with the commission, its current proposals amounting to a direct and personal rebuff to Darling - and to Gordon Brown, who asked the EU it reconsider (i.e., abandon) its biofuels policy.

Although the commission intends to maintain the 10 percent quota, it is however, proposing to phase out the current £36 (€45) per acre biofuels subsidy, which means that there will be no direct incentive for growers to plant energy crops.

Further, the abolition of set-aside – which will be devoted to food production as long as grain prices remain buoyant – will drastically reduce the amount of land available for energy crops. The commission had assumed that the bulk of the biofuels production in Europe was going to come from set-aside and, if this land is to be devoted to food, there is a gaping hole in the energy policy.

The one positive step the commission could make is to fund the intervention system, allowing it to buy in stocks to bolster depleted reserves, providing a strategic margin against the possibility of real shortages.

In times of surplus, it is that system which has led to stocks being dumped on the world market, undermining third world agriculture. But, where shortages are possible, the same system provides a buffer which ensures that we do not run out of food. Yet, as part of the "Health Check", the commission has largely abandoned intervention, abolishing it for a wide range of products.

Generally, therefore, the totality of the "reforms" proposed are such that they will have relatively little, if any, effect on improving food stocks – or on the fate of third world populations. And, as long as global prices for commodities remain high, the market rather than the EU will be the driver of increased production.

One gets the feeling though that the commission's proposals are merely a "starter for ten". The French are making bellicose noises about increasing agricultural spending and, as France holds the presidency from 1 July, we can expect to see much manoeuvring before November when the Agriculture Council meets to decide on the final shape of the "reforms".

By then, we will have some idea of the state of the global harvest for this year and will know whether the commission will need to rethink its proposals completely or whether it can get away with what is, in effect, tinkering at the margins. And then, there are the French …

Tractor pic by North Jr.

COMMENT THREAD

Understanding, not grandstanding

In common with the EU, the United Nations likes nothing better than a crisis, the dynamic of the "beneficial crisis" creating ideal opportunities for increasing power, influence and cash.

It should come as no surprise, therefore, that The Daily Telegraph should be reporting: "World food price crisis 'here to stay'", conveying the views of Sir John Holmes, Britain's former ambassador to Paris who now serves as the UN's under-secretary for humanitarian affairs.

Holmes concedes that, "It is possible that in the next two or three years prices will come down a bit from the peaks we've seen in the last few months …" but he does not think they will revert to previous levels. As a result, he says, the world needs a "green revolution" to feed its rising population.

His argues that the emergence of hundreds of millions of middle class consumers in China and India has increased demand for food, high oil prices have made transporting it more expensive and the supply of grain has been hit by bad weather and the transfer of land to grow biofuels instead of food crops.

However, Sir John clearly has not caught up with the latest developments in the rice market, where prices are plummeting, or with the recent price history of wheat, where it has dropped from its record February level of $13 to around $9 a bushel.

Given reasonable weather over the next few months (in both hemispheres), wheat prices are likely to remain stable over the short-term, while rice has a way to fall yet. Thus, prices are already falling from their record peaks and, with the volatility of the commodity market, next year's prices are anyone's guess.

The great uncertainty is the price of energy. Here, while some are looking to the $200 barrel of oil, others are still maintaining that the current price level cannot be sustained and, sooner rather than later, the bubble will burst.

Either way, the big driver of food commodity prices will be the diversion of land to biofuel production, in which case, it is not so much a "green revolution" that is required, but a "common sense revolution". That, unfortunately, is the less likely of the two events – especially when the spectre of food shortages offers such good opportunities for exploiting the crisis.

It would also help if the media and the collected pundits learnt some economics and, for want of such knowledge, desisted from indulging in economically illiterate drivel.

Such an injunction should apply to The Daily Telegraph which, on top of a emotive piece on Haiti, calculated to tug at the heart strings, then goes on to publish an editorial of stunning vapidity.

Its prescription for "curing" the food crisis is "to stop imposing restrictions on genetic manipulation" and to scrap the EU's Common Agricultural Policy, substituting direct payments made by each state.

The former, of course, would only have a marginal impact - if any. Many of the GM seeds, in fact, require high inputs and intesive cultivation to deliver any benefits, which makes them inappropriate for many developing country agricultural systems. Much more helpful would be a sensible approach to pesticides and other argo-chemicals, in a bid to deal with the massive losses arising from pest attack and plant disease.

As to the CAP, the writer of the piece has cotton-wool for brains. At a time when grain prices are at a record high, and arable farmers are actually making money, what on earth is the point of intoducing a system of "direct payments" to farmers? The market, at this time, is perfectly capable of addressing commodity shortages.

Above all, though, the paper - like Sir John Holmes - needs to recognise that there are no "magic wands" which will deal with what, in fact, are multifarious problems. There needs to be a recognition that the problems in Egypt and not the same as those in Malawi, which are not the same as those in Haiti or the Philippines.

Crucially, most often, local food shortages stem from economic mismanagement - which is certainly the case in Haiti - or stem from structural problems relating to land ownership and the availability of cheap credit at local level, and are exacerbated by trade distortions arising from protectionism.

In a grown-up newspaper, some of these issues might actually be addressed. Instead, this particular paper simply contents itself with a puerile pay-off line: "The time has come to scrap the CAP", which does not even begin to demonstrate and understanding of the issues. Like Sir John's input, it smells more of grandstanding than understanding.

What we need is definitely less of the former and more of the latter.

COMMENT THREAD

"Europe" writ large

The elephant continues to skulk, unseen, no more so than in the lead editorial in today's The Daily Telegraph, which complains that, "Business needs less, not more, red tape".

The proximate cause of its complaints is the government's new legislative programme which, it says, "will make life tougher for small firms on two fronts". One is the plan to extend the right to request flexible working hours to four-and-a-half-million parents of children aged up to 16, and the other is a plans to "give" new employment rights (not than many want them) to agency workers.

Nowhere, in the litany of grievances that follows, however, is there any hint of that elephant, the EU, yet both these measures have "EU" written all over them.

The paper, however, does have one small excuse in that neither of these issues is covered directly by existing EU directive. There is no obvious "smoking gun" to which we can point and say, unequivocally, this is an EU requirement, as such.

If there is an excuse, though, it is indeed a small one. What The Telegraph neglects – along with most of the population of the UK and almost all our provincial politicians – is the subtle but highly significant shift in the way that the EU is run.

The traditional paradigm is the legal route, whereby the commission proposes a new law, the Council of Ministers (and the EU parliament, where co-decision applies) approves it, and then member states implement it.

What is now happening though is that the EU is employing more of a political route in getting its measures introduced. The commission still makes the running, in tabling a series of proposals, but it does no go directly to the lawmaking stage. Instead, its ideas are presented first to the European Council, from which is obtained a political commitment to the ideas presented.

What happens then is that (some of) the member states start implementing the proposals, in anticipation of formal EU law, smoothing its path and, to an extent, neutralising objections when the law in finally introduced. This procedure also allows member state governments to foster the illusion that they are still in charge.

This mechanism was very much in evidence in the Spring European Council last year, when the member states apparently raised and then agreed the disastrous 20 percent quota on renewal fuels, and the ten percent biofuels quota.

In fact, what the members were actually doing was reacting to a formal commission proposal, namely COM(2006) 845 final, under the anodyne title of the "Biofuels Progress Report". And now the commission has its political "direction", the way is clear for it to move to the legislative state – in which it is currently engaged.

So it is with the so-called "flexi-working" and the "new employment rights for agency workers". The latter is already in the system as the "Temporary Workers Directive", progress on which is being help up pending the ratification of the constitutional Lisbon treaty. The government is simply paving the way for this directive.

As to "flexi-working", the agenda was agreed in principle at the 2002 Barcelona Council and the need for flexi-working was identified as an EU priority by the commission on 1 March 2006 in COM(2006) 0092 final, under the title, "A roadmap for equality between women and men 2006–2010". That was then approved by the European Council on 23–24 March 2006, when it approved a "European Pact for gender equality" which encouraged "action at Member State and EU level".

From that point on, the UK was under a political rather than legal obligation to implement flex-working and, in its pre-legislative programme, it is simply "honouring" that commitment. In due course, EU legislation will follow, with the commission already having kicked off the process, on the back of yet a further report.

One of the reasons why the Telegraph is completely unaware of this dynamic – apart from the idleness of the hacks - is that, like all the of British MSM, it fails to understand the true role and significance of the European Council, still – like many – calling its meetings "summits".

Not only do we have an invisible elephant in the room, therefore, it has the ability to change shape so that, even if it appeared, its form has become unrecognisable.

COMMENT THREAD

Theatre and practice

No, not a misprint – we did not mean to write "theory and practice" only to have the automatic spell-checker substitute a different word, as it sometimes does, with unfortunate effect.

Watching the political scene from our lofty heights, we observe two different phenomena. One is the reality, the practice, of government – the nuts and bolts of the management of this country (insofar as it is managed at all) and the other is the theatre. The latter is the froth, the jousting over PMQs and the "scorecards" over who did better, or the performance of Brown on the Today programme; etc., etc., etc…

The great danger – if it is that – is that the political commentators (or theatre critics, as we prefer to call them) get so wrapped up in reporting their bits of the soap opera that, like some watchers of the TV genre, they begin to believe they are dealing with the real thing.

Hence, as do you get TV viewers writing quite genuine letters of condolence when one of their favourite characters "dies" on screen, so you get the theatre critics believing their own fantasies, projecting them into the media as if they had genuine substance.

Meanwhile, the business of government goes on, entirely unaffected and unobserved, the effect of which is of far more importance – and of greater lasting impact than the ephemera that dominates the headlines.

One of those bits of "business" that are going to have a profound effect is the ongoing exchange between the chancellor of our provincial government, Alistair Darling and the EU commission, over the immediate management of our food (aka agricultural) policy, and its shape in times to come.

As we left it, last Monday, Darling had written to his counterparts in the EU member states, pleading with them to support the continuation of the import tariff waivers on grains, and to re-think the biofuels policy. In the longer term, he also wanted an end to direct subsidy payments to farmers.

All this is in the context of spiralling food prices, which now have considerable political resonance, yet the move went almost entirely unremarked by the theatre critics in the MSM.

Nevertheless, as you might expect, Darling's action did not escape the attention of the farmers, with the result that the Farmers Guardian now reports: "Darling under fire for CAP attack in EU treasury letter".

Rarely do we ever find ourselves in agreement with the NFU (the initials of which we usually take to mean No F*****g Use), but it is hard to disagree with the words of NFU president Peter Kendall, who condemns Darling's letter as "badly timed and tactically inept". Although we might have different reasons for agreeing, we would also accept Kendall’s view that:

All the indications are that this letter will irritate others in Europe and be counter-productive to the Government's wish to see constructive progress on agriculture and trade.

NFU Scotland president, Jim McLaren, also pitches in. He adds:

I find it remarkable that as we're about to enter negotiations on reform of the CAP the UK Treasury would undermine the UK Government's credibility by making suggestions for reform which are so far out of touch with reality. Going into important negotiations, such statements make the UK look like a voice in the wilderness.

Again, he is right – and The Scotsman - which is still in touch with its agricultural roots – has more. Whatever one might think of the CAP, the fact is that what Darling is suggesting is totally at odds with the direction being taken by France and Germany that his pleas were almost guaranteed to fall on deaf ears.

The worst of it is that Darling does need to get some action. In EU agriculture commissioner Mariann Fischer Boel, we possibly have the worst agriculture minister (and yes, she is our agriculture minister) in living memory, a report in The Guardian confirming that she is living in the land of the fairies.

The paper is retailing a Reuters story which tells us that Boel is about to publish details of how she wants to build on the "radical 2003 reform of the CAP", with plans "change agricultural subsidies in a reform blueprint that would divert more cash from larger holdings into projects for enhancing the countryside."

This is a continuation of previous thinking, still predicated on controlling excess production, putting more money into environmental schemes, through a process known as " modulation". Yet this is at a time when pressure on farming has never been greater, with set-aside land released for food production to order to re-build depleted grain stocks.

Boel still has not come to terms with the idea that we are looking at structural changes in the global food supply, exacerbated by the rush to biofuels, and is still locked in the "over-production" paradigm that has driven the CAP ever since its inception.

Intriguingly, Reuters observes of this opening round in what are to be protracted negotiations: "So far most countries have played their cards closely." It adds: "However, the real debate is only just beginning and no deal is likely until at least November when France, by far the largest beneficiary of CAP spending, will be EU president."

And, as we observed at the end of last month, the debate goes on without us – unaffected by Darling's "tactically inept" intervention.

COMMENT THREAD

The ultimate humiliation?

No one could claim that Alistair Darling is an impressive figure, but the post he holds is one of the great offices of state, in a nation that once ruled half the world and is still a significant economic power.

Not least of his duties as Chancellor of the Exchequer is to maintain a grip on the nation’s finances in such a way that he limits – as far as is possible – the scourge of inflation, of which recently food price increases have formed a significant component.

What therefore should we make of the latest news from Reuters via The Guardian that the holder of the second-most important political office of the nation (described by Reuters as the "British finance minister") is having to go cap in hand to the EU to ask – pretty please – for action "to counter food inflation".

Darling, it appears, has written to his EU member state counterparts to "urge" them to extend the suspension of import tariffs on grains - lifted in December when the commission finally realised that there was a "food crisis" in progress – and to re-think the biofuels policy "to help ease soaring food prices in the 27-nation bloc."

Incapable of taking action on his own account, - "impotent" might be a better word – Darling is reduced to pleading with the "colleagues", telling them that: "The EU has a clear responsibility to play a full role in the international community's collective efforts to address the consequences of spiralling food prices by tackling the causes."

He then adds: "It is unacceptable that at a time of significant food price inflation the EU continues to apply very high import tariffs on many agricultural commodities."

Without even the means to vary agricultural policy – this being an exclusive competence of the EU – he also pleads for an end to direct payments to EU farmers and the phasing out of all elements of the Common Agriculture Policy that are designed to keep agricultural prices in the region above world market levels.

"Barriers and distortions in the global food market increase volatility and stifle the incentives to increase supply to match demand," he writes – although he might just as well have written it on toilet paper and flushed it down the loo, for all the effect it will have on France and Germany.

The worst of it all is that the spectacle of the Chancellor of the Exchequer having to write grovelling letters to the EU, asking them to consider action - which, a few decades ago, his predecessors would have taken without even thinking about it – is so unremarkable that it just gets routine coverage in a "feed article" generated by a news agency.

Meanwhile, as Bruno Waterfield informs us, the real business of government goes on, in the couloirs of Brussels, away from the prying eyes of the democratic process.

How the mighty have fallen.

COMMENT THREAD

A lesson from Afghanistan

In February, we posted a story on the effects of the severe winter in Afghanistan. We used the story to illustrate the extent of the bad weather in the northern hemisphere – in the context of our more general points about global warming – and have not revisited it since.

However, if possible, the advent of the "global food crisis" has made the situation even worse, creating problems which exacerbate existing stresses in this war-torn country and which defy easy (or immediate) solution.

Remarkably, though, many of those problems are exactly the same as face more developed countries like the UK. We thus thought it might be interesting and instructive to explore some of the issues currently affecting Afghanistan, and to draw broader inferences from them.

Bringing us up-to-date, we first turn to a report from the FAO published in early April, which tells us that, "The aftermath of war, two severe droughts (from 2001-2 and 2006), and an ongoing insurgency have increased food insecurity throughout Afghanistan."

It then tells us that the "current food shortage" has been intensified by the soaring price of wheat (Afghanistan's staple food), which rose by 70 percent in the past year. So, we learn: "The brutally cold winter has therefore plunged Afghanistan into a humanitarian crisis."

This crisis has been intensified by the action of neighbouring Pakistan, which has banned the private export of wheat to Afghanistan and imposed a 35 percent duty on official wheat and wheat products exports.

This – as one might expect - has led to an outbreak of cross-border smuggling, driven by the price differential in the two countries. The price of wheat flour is equivalent to about 30 rupees (48 US cents) a kilogram in Afghanistan, compared with 20 rupees in Pakistan.

As to the forthcoming season, early indications are that the 2008 wheat crop will benefit from the heavy snowfall in January. Output may, therefore, improve on the estimated 4.6 million tons from the 2007 harvest, and well above the relatively poor harvest of 2006 (3.9 million tons).

This, however, does not make Afghanistan self-sufficient in wheat and it will still need to import an estimated half a million tons, which – at the current high prices – will create yet more stresses.

For the poorer segments of society, who spend up to 70 percent of their incomes on food, high prices put basic necessities out of their reach. Thus, the UN and Kabul government have appealed for $79 million to assist an estimated 2.5 million Afghans out of the 33 million population who have difficulty affording enough food.

The high prices, though, are also having a beneficial effect, remarked upon by the Telegraph's Con Coughlin in his blog. Profits from wheat are now such that is more cost-effective to grow this crop instead of opium poppies and, as a result, farmers are shifting their cropping patterns. Opium production, currently, is on the decline.

The problem though, is that this situation is highly unstable and is unlikely to last. In 2005, there were expectations of a bumper harvest and analysts were then concerned that local surpluses would trigger a precipitous fall in wheat prices – below break-even point. The result, it was feared, would be that, the following season, farmers would move out of wheat and into alternative crops such as opium poppy.

This is precisely the dynamic which affects more developed markets. Commodities such as wheat are notoriously sensitive to fluctuations in supply. Relatively small surpluses lead to disproportionate drops in price, the reverse happening when supplies are short – as we are seeing at the moment. When the price drops, farmers move to different crops (or cease production altogether) and when prices are high, they increase production, leading to never-ending "boom and bust".

To deal with this, governments traditionally implement price stabilisation policies, adopting either of two approaches. The first is the deficiency payment scheme, which guarantees a basic minimum price to farmers for their crops: if the market price drops below that minimum, the government makes up the difference. This was the scheme adopted by the UK, prior to its entry to the EEC.

The other approach – which forms the basis of the EU's intervention scheme – is for the government to buy up grain in times of surplus and to store it, taking it out of the market and thus applying upward pressure on prices. It then releases the product back onto the market in times of shortage.

In the event, although this latter policy was mooted for Afghanistan, it was noted that the government did not have the storage facilities to accommodate such a policy action. Neither, incidentally, did it have the sophisticated market measurement tools or the capability to administer a complex agricultural payment scheme that would be required if the other approach was adopted.

The point here – of more universal importance – is that, although free-market imperatives require minimum intervention, the peculiarities of the food commodity market, and the vital need to keep populations fed – invariably require government action to smooth out the worst excesses in price fluctuations. Without that, you end up with a situation that is facing Afghanistan, swinging from the "boom to bust" and back again, with significant adverse consequences.

That notwithstanding, there are other issues holding back agricultural production in Afghanistan, one of which is pointed up in comments to a post on Barnett Rubin's remarkable Informed comment: global affairs blog.

The problem with any rural development policy in Afghanistan, the commenter wrote, is that nobody has an accurate idea of the current land tenure arrangements. Most of the recipients, it seems, are sharecroppers. Their "contract" with their landlord specifies that the inputs had to be provided by the landlord. He continued:

Most bodies involved in the aid business are not interested in delving further as this would complicate their task. It is easier indeed to report the distribution of xx tonnes of agricultural inputs to so many "poor farmers" than to actually figure out who you are really helping. The actual agricultural production arrangements in Afghanistan can be very complex and varied from one area to another, or even within one area. So it is very tempting to just ignore them.

This was further amplified on another blog who learned that opium traffickers often loan farmers the money to plant and fertilise the opium harvest for the coming year. On the other hand, there are no programmes in place to provide loan support for farmers who want to grow alternative crops. If you're an Afghan farmer who wants to grow wheat or strawberries instead of opium poppies, you're largely on your own.

Such input points up the extraordinary complexities involved in devising assistance for developing countries, and the observation that it is "very tempting to just ignore them" is very apt. Thus do we see president Bush this week proposing to spend an additional $770 million in emergency food aid - bringing US funding to $2.6 billion for the forthcoming year – but this may be exactly the opposite of what is needed.

Food aid, more often than not, acts has a hidden farm subsidy for the donor country. Small wonder, Senator Richard Durbin of Illinois spoke favourably of the increase in spending.

But flooding an under-developed country with free food simply undermines the local agricultural economy. It drives down prices (who will pay for food when they can get it for free?) and thus deters farmers from growing crops – or pushes them into more profitable crops … like opium poppies.

To add to the already fiendish complexity, Rubin offers another posting, which points to unemployment as one driver of the insurgency – a view disputed by one of his commenters, who argues that distortions in aid payments are as problematic.

To be fair to the Americans, they are doing far more than simply donating food, evidenced by this site, which sets out some of the programmes they are undertaking. The British have similar programmes, albeit on a smaller scale.

However – cutting to the chase, so to speak – whatever the complexities of offering assistance and, in this case, attempting to reconstruct war-torn country, on one thing most sources seem to agree. Massive global price instability in commodity foodstuffs creates huge stresses and intensifies existing problems.

The lesson from that is clear. Developed countries which pursue policies – such as the promotion of biofuels – not only disadvantage their own economies. They create problems for developing countries, which are likely to suffer far more than the comfortable originators of those policies.

In short, we have to think not only for ourselves but for others – and assess the effects of our policies on those less fortunate than ourselves.

COMMENT THREAD

The debate goes on without us

An interesting comment on the Margot Wallström blog refers to the formation of a new Dutch movement, "Proud of The Netherlands" (or TON in Dutch), capitalising on the general, if unfocused dissatisfaction with the political classes.

But, if the Dutch voters are not happy, observes the commenter, "the European Union has very little to do with that, since Europe as a subject of political debate seems to have gone back to pre-referendum obscurity."

That, of course, was the objective of operation apathy and, of all the policies the EU ever dreamed up, it is perhaps the only one which has ever succeeded – an one which the British media have embraced with gusto. Rarely has there been so little written about the EU in the British press and that which finds it way into the newspapers is largely of such banal triviality that even Margo is having a field day.

The huge danger though is that the debate goes on without us, most notably centred around the headline issue of the "global food crisis". This has the makings of the perfect beneficial crisis - for the whole of the tranzie class. For the EU, it offers the ideal platform for its next major power grab, led by France and Germany, setting the shape of the EU budget for 2013, when the current funding regime runs out, and thus the shape of the EU itself.

These two countries, performing their classic roles as the "motor of European integration" are already manoeuvring for position in the forthcoming negotiations over the EU budget, the British rebate and the next steps (not) in CAP "reform" – held over until the constitutional Lisbon treaty ratification is in the bag.

Make no mistake, these issues will determine for the next decade or more the continuation of what is still one of the EU's main (and most expensive) policy areas, the CAP. And, since the agricultural policy dominates the EU budget, the resolution will also decide, amongst other things, who gets the lion's share of EU funds (France) and who pays the bills (the UK).

Already, we have seen some ranging shots, first from France and then from Germany.

Then, yesterday, through Deutsche Welle, the commission pitched in, fronting Michael Mann, spokesman for the EU agriculture office in Brussels. Almost gratuitously, he informed the waiting world that, "There is no connection between EU agricultural subsidies and the rise in food prices or the food shortage in developing countries," thereby denying something that no serious commentator had thought to be the case.

Clearly, though, there is method in the madness: up pops
Michael Barnier (pictured) a former French foreign minister, ex-EU commissioner and member of the French governing centre-right UMP party. He launches into a pean in support of the CAP (major beneficiary France).

Barnier rails against "critics of the CAP" who are prepared to use surging food prices and threats of shortages to seek freer trade in agriculture, and then declares that the developing world should draw inspiration from Europe and form self-sufficient regional agricultural blocs funded with a redirection of development aid.

"I think [the CAP] is a good model," he says. "It is a policy that allows us to produce to feed ourselves. We pool our resources to support production. West Africa, East Africa, Latin America and the southern shore of the Mediterranean all need regional common agricultural policies."

He then tells us that "he would not allow" (note the "he") Europe's system of subsidies and barriers to trade to take the blame for "disorder" surrounding the commodities spike in prices and associated unrest in some countries.

"What we are now witnessing in the world is the consequence of too much free-market liberalism," he pronounces. "We can't leave feeding people to the mercy of the market. We need a public policy, a means of intervention and stabilisation."

For those inane (translate: brain-dead) British politicians who have over the decades soberly assured us that, "Europe is going our way", here is the wake-up call. This is state intervention and protectionism all rolled up into one. And with France in the driving seat - holding the EU presidency from 1 July – that thinking is going to be driving the agenda.

The worst of it is that Barnier, like so many others of his ilk, have lost sight of the CAP is really for. In fact, with its origins lost in the mists of time, there are few in either the commission or the member state capitals who understand it. After decades of misplaced and entirely false EU propaganda, they have come to believe that it truly is an instrument for promoting agricultural production and avoiding food shortages.

In fact, as we have pointed out, the policy was not designed to deal with shortages. It was constructed to deal with over-production and surpluses and to mitigate their financial and political consequences. However, at the moment, we are moving from a situation of global food surpluses to one of structural shortages (brought upon largely by the biofuels and renewable energy policies of developed nations - of which more in a later post).

Thus, we find that the EU is promoting a policy designed to deal with agricultural surpluses as the primary tool for dealing with expected food shortages. This is akin to turning on a fire hose to deal with a flooded cellar or, if you prefer, dousing a fire with petrol in order to put it out.

This cannot work – it will not work. It is the wrong tool for the job. At best, it will have no effect (but cost us a great deal of money). At worst, it make things inestimably worse. (I will publish an analysis of the mechanics, when I can get to it, but things are crowding in at the moment.)

The worst of it all though is that, while these are vital policy issues which are going to shape our lives and determine our prosperity, our own political classes and media have taken a vacation. They are avoiding grown-up issues. And, with the debate going on without us, we are about to get shafted (again). We going to be serious losers as a result.

COMMENT THREAD

The real crisis has yet to come (Part 2)

Part 2 is now up on EU Referendum 2. This looks at the effect of the EU's biofuels quota on the global food supply, with the conclusion that it is unrealisable, without creating massive food shortages and worse.

This piece has taken me the best part of today to write – read it or you die! And, while you are about it, buy the Mail on Sunday tomorrow (with your Sunday Telegraph of course).

COMMENT THREAD

The real crisis has yet to come (Part 1)

I started last night writing a quick round-up of the "food crisis", only to find that, like topsy, it just growed. I have, therefore, published it on EU Referendum 2.

Reviewing the piece and doing more work on it this morning, I have decided to break it into two parts, withdrawing part of the original which I intend to re-publish later as a stand-alone Part 2.

The first part deals with the current "food crisis", which concludes that, with additional planting and the expectation of a record wheat harvest for this coming year, the worst is over, in the short-term. Wheat futures have already dropped 40 percent from their February peak, in anticipation of a healthy surplus, and the decline may continue.

In the second part, however, I deal with the medium to long-term, looking in detail at the biofuel issues. Here, it beomes apparent that the rush to green fuels - if allowed to continue - will outstrip the capacity of the global agricultural system, and precipitate massive price-hikes and food shortages.

Worst still, the EU's case for biofuels seems to rely on back-of-the-envelope calculations, and accounting which has more in common with Enron than anything that might be considered worthy of a government. Given the probable effect of its 10 percent biofuels quota, this could prove - despite the competition - one of the worst policy blunders the EU has ever made.

COMMENT THREAD

A new era of incompetence

What really offends about the way our hybrid system of government works (not) is the casual way policy is now formulated, most often it seems on the hoof, without any idea of the implications and consequences.

It was that which characterised the March 2007 European Council in Brussels, where Tony Blair – in one of his last acts as prime minister – so blithely committed the UK to the EU biofuel and renewable energy quotas, all as part of some mad bidding process to allow the EU leaders to appear "greener than thou".

Only later did we get confirmation that the government had already been warned that the renewable energy quota was "unachievable" (not that we needed it), while the biofuels target, from the very start, was obviously a non-starter.

The obvious problem with the biofuels quota was to meet the demand using wheat (the preferred crop) would require more land than is currently available in the UK, on which basis it must have been (or should have been) evident to our policy-makers that a goodly proportion of our biofuels requirement would have to be imported.

Now, even though this might seem to be blindingly obvious, it appears that our gifted policy-makers – and certainly not the grandstanding Mr Blair – ever gave it a thought.

Courtesy of The Guardian, we discover that not only is Britain is facing a big shortage of specialist ships needed to carry biofuels, shipping companies are unwilling to invest in the extra 400 suitable vessels needed, "unless politicians give clear guidelines about the future of renewable fuels."

This comes from Richard Sadler, chief executive of Lloyd's Register, who says, "There is so much uncertainty that makes it very difficult for a shipowner to invest in a sector with so much political risk."

Furthermore, this is not just a local problem. Sadler is saying that the world fleet might be "unable to cope" unless there is a 20 percent increase in the number of ships.

This sort of uncertainty is by no means confined to this sector, witness the debacle over MRI scanners, where the EU produced totally unrealistic legislation, only to have to delay its implementation while they had second thoughts about the consequences of their actions.

So it is with biofuels, and much else, in this instance with energy minister Malcome Wicks voicing open reservations about the policy, saying, "It would be ridiculous if we fill up our cars with 5-10 percent biofuels if the consequences are that somewhere else in the world people are not being fed … We need to have a second look [at the EU's biofuels target]. I think we will."

In the dim and distant, rose-tinted past, we used to have Royal Commissions and other learned bodies which deliberated, sometimes for years, on specific issues and the implications of action, before issuing weighty recommendations which then formed the basis of legislation.

All this seems to have gone by the board, leaving one with the impression (certainty?) that our leaders do not have the first idea of what they are doing. And, while our politicians are only caught out so comprehensively only rarely, so badly is the legislative process tainted that there can be very little confidence left in their capabilities.

At a time when we have such great need of good government, we seem to moving into new era of incompetence.

COMMENT THREAD

A bureaucracy that will kill us by the millions

With food shortages, inflation and the dire effect of the biofuels policy very much in the news, the EU is in the process of taking another massive step which will, over time, exacerbate the food shortages which are plaguing the global economy.

This is the framework directive on the sustainable use of pesticides, replacing and adding to the existing pesticide law, Directive 91/414/EEC, to which we have not given anything like enough attention (or any).

The regulatory onslaught about to hit European (and other) nations as a result of this new law will have a devastating effect on food production, and magnify the enormous losses already sustained from pest damage, plant disease and weeds.

What brings this into sharp focus is a report from Reuters today which has a "group of European Union scientists" warning against a planned reduction in the number of pesticides allowed in the EU – which is the necessary and intended consequence of the new law.

They are claiming this could increase resistance of pests and make crop cultivation uncompetitive. "The scientists from seven countries fear that reducing the available range of pesticides could lower their efficiency as it is likely that it will increase resistance," they said in a statement sent to Reuters and to Slovenia's Agriculture Minister Iztok Jarc, holder of the six-month rotating presidency of the EU.

They say the increased risk of developing resistance to the few remaining substances could make cultivation of many crops, including grapes, wheat, barley, cotton, fruit, potatoes and vegetables in Europe, uncompetitive.

"In order to safeguard the production of food at affordable prices, it is essential to provide farmers with access to sufficient diversity of crop protection solutions," the scientists' spokesman Ian Denholm from the UK's Rothamsted Research institute, said in the statement. "This is essential to prevent or delay the development of resistant pests, and to maintain the efficacy of remaining crop protection products," he added.

The point is that, under the earlier directive promulgated in 1991, something like half of all the then existing active substances had been withdrawn from the market in 2003. Many niche substances had disappeared and many more – some extremely safe and intended to replace hazardous products – never reached the market because of the enormous costs of gaining official approval – or "market authorisation" as it is called.

Yet, after the EU commission started the process of revising its pesticide laws in 2006, and the EU parliament added still further restrictions, it was anticipated that between 70 - 85 percent of the remaining 250 pesticides could be lost – with further and continued difficulties in bringing new products to the market.

For sure, there is no argument that pesticides and related products do need regulation, although the current regulatory model adopted by the EU is more than a little suspect. But, while the EU concentrates entirely on the harm done to humans, flora, fauna and the environment, there is another side to the coin.

Few people actually realise the extent to which the economy - and our survival - is dependent on modern agri-chemicals. Already, at a conservative estimate global annual pre-harvest losses of all crops as a result of inspect pests, plant diseases and weeds run to 34.9 percent of potential production.

Another estimate puts the loss at 42 percent, with an additional 10 percent post-harvest loss, bringing the total to 52 percent – more than half the world's food supply. Without the already widespread use of agri-chemicals, the losses would be that much greater, all in the context where, currently, even a few percentage shortfall in existing production is causing a global crisis.

This is actually the measure of the dire, claustrophobic and safety-obsessed approach of the EU regulatory machine, which cannot see the bigger picture and cares little for the unintentional consequences of its actions.

Those action, despite the European focus of the legislation, are likely to be global. On the one hand, without the European market to sustain production, many otherwise valuable pesticides will no longer be available. On the other, through export controls and other mechanisms, the imperial EU tends to impose its law on other countries, particularly in the developing world.

This we saw with the wholly irrational DDT ban, where the effects have been devastating and persistent. In this new directive, we are getting more of the same, and – on current form – we are looking to a situation where our EU bureaucracy will become the most important and direct cause of global hunger (with a little help from our American friends and their EPA).

Back in Washington last week, we achieved a great measure of agreement with members of many of the leading US think-tanks that one of the defining – if largely unacknowledged - issues of this century was the need to devise a means of controlling and limiting our bureaucracies, before the destroyed the societies on which they have become parasitic.

This is an example of where the battle lines must be drawn for, with this and the many other measures pouring out of Brussels, the bureaucrats will eventually kill us by the millions and drive the survivors into poverty and starvation.

COMMENT THREAD