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Cap CAP? Sustainable agri-policy

by A swedish kind of death Thu Mar 4th, 2010 at 04:00:33 AM EST

Thinking about alternative policy, I got to thinking about what a sustainable rural/agricultural  policy would look like in the EU.

Since markets are to support societal needs I think it might be wise to first list what such a policy should accomplish.

A sustainable agricultural and rural policy should strive for:

  • Longterm sustainable agriculture
  • Production of food stuffs that cover the needs of the population in the EU
  • A living countryside (among other things to avoid the negative effects of all out urbanization)

In addition a production of luxury/surplus agricultural products for trade is a good thing if it can compete with production elsewhere. So no real need for support for that, but should not be hindered either.

So how could this be accomplished?


What to be done?
The present Common Agricultural Policy supports the countryside, but also factory farming, insane fishing practices and surplus dumping in poor countries.

I think a first step would be to cap the amount any individual or company can receive. That would benefit small family farms and small producers at the expense of large landowners and corporations.

But we still have the problem with surplus dumping. Anyone got any ideas about how the agricultural sector can be supported without causing the current overproduction?

And what should be done with the fishing?

Display:
If I recall correctly, only 8% of CAP goes to so-called small farms.

Your last bullet - the living countryside - depends on the continued existence of these small farms. However small farms have little leverage in the bulk-buying price wars between supermarket chains. Driving supplier prices down (something that Ikea does at slash and burn intensity in another market) not only impacts small farms but it also pushes the limits of food safety regulation. Even major suppliers are cutting dangerous corners in thrall to the markets.

Two factors in the consumer mind - the invisibility of agri-Culture, and cheap food - combine to threaten the first two of your bullets.

In Finland, smaller producers are gravitating to organic farming and niche products because of the premium prices they can obtain. Good for them, but it will not solve bullet 2.

You can't be me, I'm taken

by Sven Triloqvist on Thu Mar 4th, 2010 at 05:22:53 AM EST
8% is not much. All the more reason for a cap.

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by A swedish kind of death on Thu Mar 4th, 2010 at 07:05:28 AM EST
[ Parent ]
Would not the proper response to this be more a stricter stance towards chain grocery stores?

If they break the food production/distribution chain, then they're not worth it.  Break them up.

by Zwackus on Thu Mar 4th, 2010 at 10:40:28 PM EST
[ Parent ]
In fact, a general de-centralization of ownership in the retail system is also a way to help promote and preserve the middle class, small shop-owners and managers and whatnot.  And as small stores are less efficient than the large ones, that will likely mean more people employed - most "efficiency" is doing without people, in one way or another.

With more people working, operating at a more local scale, it will perhaps be easier to build local networks between farms and stores based on cooperation between equals, as opposed to the lord/vassal relationship of the present.

by Zwackus on Thu Mar 4th, 2010 at 10:47:21 PM EST
[ Parent ]
It is a good point, that I would sort under urban policy. Planning cities on a human scale so you do not need a car promotes smaller businesses with customers within reasonable range.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Fri Mar 5th, 2010 at 07:09:36 AM EST
[ Parent ]
Yes, first of all an efficient cap (on individuals and companies). Subsidies should go to small farms.

However, there are so few of them left, as Sven says. So money needs to be invested in new creations of small farms. For instance, we have a local (and regional, and no doubt it goes much further) problem with the disappearance of market gardeners. They've just died out over the last twenty years (no subsidies, in France at least, for market gardening). Often they've been offered prices they'd be crazy to refuse for land that has been traditionally cultivated in this way, close to towns, and is now suburban built-up. So there has to be an active policy of setting up young market gardeners in further-out areas. Ironically, the training exists, and there are candidates. Suitable land is just really hard to come by against the competition of big farmers on the lookout for every hectare they can find. Local authorities and the Ch of Ag are, however, big enough to do something to help, and we (group of local associations) are trying to push them to do that.

For the CAP to help in this kind of problem, there would have to be a deliberate policy and some kind of incentive to stimulate Member States to apply it. Some of the money handed out to big cereal farmers, for example.

European Tribune - Comments - Cap CAP? Sustainable agri-policy

any ideas about how the agricultural sector can be supported without causing the current overproduction?

It's not an accident, it's policy-determined, at least for cereals and sugar. So first there has to be a central policy change. It should involve capping (making big-field cereals less attractive) and an end to direct subsidies on exports.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Mar 4th, 2010 at 10:27:34 AM EST
Better urban growth policies, to stop farmland from being converted to town, would also help.  It's not profitable if it's not legally possible.  On the other hand, sprawl is a self-supporting cycle that will never stop itself.
by Zwackus on Thu Mar 4th, 2010 at 10:41:53 PM EST
[ Parent ]
Sprawl's another huge problem it would be good to discuss (policy for stopping). Here, former market gardening (truck farming) land has pretty much all gone in the dual pressure of urban sprawl and competition for cereal-growing land.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Mar 5th, 2010 at 10:45:48 AM EST
[ Parent ]
But if payments were capped (and nothing else was done), there would still be no increase in total euro payments to smaller farmers.  Big farms would just become marginally less profitable than they would be anyway due to increasing the increasing returns to scale provided by mechanization and chemical inputs (even organic chemical inputs), but they would still be more profitably than small farms.  Instead, the CAP budget for direct payments to farmers, which, I think, is a very large part of the total EU bureaucracy, would simply be reduced by 92%.(!) And that could conceivably dry out a lot of the altruistic/self-interest glue that holds the EU together.    

In policy studies, a lot of the foundations for the governance and social welfare institutions that we have can be ultimately traced to implicit compacts made in the past with farmers and landowners.  This means that efforts to increase social equity at their expense - which is what a cap on CAP payments is -- can have much wider effects on social institutions than one might initially suspect. For example, without CAP payments, large farmers and their suppliers and downstream workers, may lose a lot of interest in supporting generous wage and welfare policies and possibly the whole EU project, and we may start to see the balance of power shift decisively to the right.

As a small scale illustration, the decline of the leftist governing coalition and the Kirchners in Argentina can be largely traced to her confrontation with farmers during the commodity boom of 2007-2008.  She won the confrontation ultimately, but she neglected to consider that large farmers, which are typically conservatives who nonetheless vote left for economic reasons in critical elections and conflicts, wield votes and political power much greater than their own small numbers suggest.

by santiago on Thu Mar 4th, 2010 at 10:38:22 AM EST
All good points. You're quite right that big farming would still head for increasing returns to scale (and that may apply to organic farming too). Nonetheless, the current system offers considerable rent in excess of big-farm profitability, and the first thing to do should be to cut back that rent.

The next, and this is the really tricky bit, is how to redistribute that money and through what policies. Unintended consequences of all kinds lurk in every corner. One that can be avoided is the first you suggest, the bureaucracy and the glue of self-interest, as long as there continued to be a CAP that channeled significant funds. (Btw, the actual direct grant distribution is national; each Member State sets its subsidies policy within EU guidelines, is drafted funds by the EU, then handles the distribution within its territory).

As to the second set of institutional hazards, you're right that a social compact with farmers/farmlandowners is not to be trifled with. And also that the group, traditionally solidly established with family and local networks, hits much higher in electoral and political terms than its numbers suggest. An attempt to reset the CAP in what would be perceived as a punitive manner would be a mistake. No doubt carrots need to be offered to encourage diversification from (quasi-)monocrop cereal production, and support for small farming carried out intelligently so local communities see the upside in terms of rural population, variety and quality of local products available, etc. (I know, I want a pony with that).

On the readiness to support generous wages, vote with the left, etc, that's not the case with French or British farmers, and I'm not aware that it is elsewhere in the EU. And probably (surely) the farming community, influential beyond its numbers though it may be, is not as important as in Argentina.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Mar 4th, 2010 at 11:19:48 AM EST
[ Parent ]
Quite a few Finnish farmers are in large cooperatives which makes it somewhat easier to battle the supermarket chains. But in dairy, even the cooperatives have had a hard time resisting downward pressure on the prices they receive.

Agriculture is an important topic - or rather the whole food chain is important and we don't cover it enough here at ET. Perhaps there are not many of us with enough practical knowledge (though I know afew is genned up on the subject)


You can't be me, I'm taken

by Sven Triloqvist on Thu Mar 4th, 2010 at 03:49:15 PM EST
[ Parent ]
From the French point of view, cooperatives, though prevalent, are less and less likely to defend most farmers' interests. There's an ongoing concentration movement that results in bigger and more remote structures that act mostly in the interests of a few big farmers on the Board and of management, in other words there's an agent-principal problem.

Yes, we need to discuss agriculture and I'd happily lead the way if I had the time... This index of past diaries on questions related to agriculture is not up to date, but it contains quite a lot.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Mar 5th, 2010 at 10:42:07 AM EST
[ Parent ]
Yes. Agreed. - I am not trying to force you into expounding your expertise, but I hope others can come to the fore here.

The disconnect between food (products) and and origins (farms) is so great that it it is an enormous threat to sustainability.

You can't be me, I'm taken

by Sven Triloqvist on Fri Mar 5th, 2010 at 06:23:35 PM EST
[ Parent ]
afew:
in other words there's an agent-principal problem.

It's inherent in the legal structures they use.

Co-operatives should be able to out-compete 'For rentier Profit' organisations but often get captured by managerial interests on the one hand and tied down by risk averse and inflexible governance on the other.

They've been held back for 150 years IMHO by the fact that they tend to use genetically modified versions of conventional capitalist forms.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Mar 6th, 2010 at 11:50:07 AM EST
[ Parent ]
they tend to use genetically modified versions of conventional capitalist forms.

Nice turn of the phrase, Chris!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Mar 6th, 2010 at 12:05:11 PM EST
[ Parent ]
Ah yes, I was uncertain of the mechanisms involved or the percentage of small farmers. I figured that most of the savings would be rerouted to small farmers. So capping and raising levels would be what I figured.

Good points on the politics of enacting policy.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri Mar 5th, 2010 at 07:17:14 AM EST
[ Parent ]
Note how the problems with CAP are associated with the problems of monopoly. Attacking monopolies and oligopolies effectively would inherently bring many of the benefits that would also flow from capping the CAP, perhaps with fewer of the side-effects set forth by santiago. Small family run agricultural operations might serve better as a symbol, where they have broad sympathy, than as a spear, where they are as doomed as spears against tanks.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Mar 5th, 2010 at 10:27:37 AM EST
There's a bit more to it than just monopolies. Big farms really aren't monopolies, for example, even if it can be shown that a few huge Swiss, Dutch, and American mega-businesses control most of the world's globally traded food.

At root is also the problem of compensating units of work.  Farmer, even big farmers, face a similar economic problem that lower skilled wage-laborers face in that, over time, a hectare of land likely cannot really produce any more real income even with productivity advances such a mechanization, chemical inputs, and, now, GMOs. (Higher productivity just leads to lower commodity prices, transferring all of the productivity gains from farmers to urban workers.)

In the US, where comprehensive data exists going back over a century, it can be shown that the real (inflation-adjusted) net income produced per hectare is about the same today as it was a century ago, and nothing in the shorter term EU data shows a much different situation in Europe:

While agricultural income in the EU-15 would show a very moderate development, it is foreseen to display a more pronounced picture in the EU-12 supported by the continuous increase in CAP payments.

(Meaning that increasing CAP payments are interpreted as the only way to make up the labor unit income gap caused by an inability to increase land-unit income, especially in the EU-12 countries which have the largest farms.)

This means that while urban workers can achieve higher real compensation per unit of work through education or other productivity (human capital) increases, farmers can typically achieve increasing income only by growing the size of their farms.

That is why in the early days of the EU project, the policy objective was once to actually to force most small farmers out of the countryside, leaving only a few, sustainably higher income large farmers to produce the all food for Europe. Unsurprisingly, it was a political stillbirth, but it is likely that the bulk of Europe's food supply comes from only the largest 10% or so of Europe's farms. (The same ones that apparently use up 92% of the CAP payments.)

by santiago on Fri Mar 5th, 2010 at 11:20:02 AM EST
[ Parent ]
There's a bit more to it than just monopolies.

Agreed, but this is not a reason to tolerate monopolies.
(Higher productivity just leads to lower commodity prices, transferring all of the productivity gains from farmers to urban workers.)

This was the goal of those supporting "free trade" in the Corn Law controversy in mid-19th century England, except they sought the increased productivity abroad, partly because their political opponents were largely those who owned the land in England.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Mar 5th, 2010 at 12:37:01 PM EST
[ Parent ]
Yes, and it is largely still the rationale behind the neo-liberal development prescription: for the Third World -- develop the cities at the expense of the countryside, because rural losers will then just migrate to the cities (or to 1st world countries) where they too can enjoy the benefits of cheap food.
by santiago on Fri Mar 5th, 2010 at 02:56:09 PM EST
[ Parent ]
Food that is only cheap so long as you can earn enough money to buy what you previously could grow with your own effort. But then if you are not part of the market economy you don't really exist.  I would guess many who make <$10/yr are probably better off than many who make >$100/yr. but globalization is busy attempting to succeed in getting to jump or throwing into the market system tree stumper those who still enjoy subsistence agriculture or hunter-gatherer lives.

The movie The Emrald Forest by John Boorman was a parable on that subject, or an object lesson for what Polanyi was talking about in The Great Transformation.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Mar 5th, 2010 at 11:21:04 PM EST
[ Parent ]
santiago:
That is why in the early days of the EU project, the policy objective was once to actually to force most small farmers out of the countryside, leaving only a few, sustainably higher income large farmers to produce the all food for Europe.

I think it's a fair point of view that that remained the objective, going underground in terms of communication. Much more politically palatable to say the goal is to defend the small farm, while in fact pursuing a relentless policy to do the opposite.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Mar 7th, 2010 at 11:39:26 AM EST
[ Parent ]
santiago:
but it is likely that the bulk of Europe's food supply comes from only the largest 10% or so of Europe's farms. (The same ones that apparently use up 92% of the CAP payments.)

I would love to see some numbers on production/area for different types of farms. Large scale has not always been that efficient.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun Mar 7th, 2010 at 02:04:57 PM EST
[ Parent ]
... to ecosystem husbandry.

Of course, if you disqualify participation to any producer that exceeds a certain level of waste discharge,  that would automatically exclude most factory farming operation. If somehow a large farming operation can show the same measurable improvement in ecosystem health as a smaller operation, they might qualify for a husbandry payment as well.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Fri Mar 5th, 2010 at 06:53:21 PM EST
There is a certain degree of this in the CAP, at least in the French implementation of it. There's a system somewhat like what you suggest for intensive livestock operations, and a cap on nitrate fertiliser, for instance. Every largescale farmer I've talked to objects to it on the grounds that they are not nature's gardeners and above all not functionaries. The notion that they should be remunerated by the State (or supranational organ) to do "cleaning work" goes right against the grain for these "successful entrepreneurs" who have managed to swim while weaker competitors around them drowned. They want to be free to sell on world markets.

The paradox, of course, is that, without subsidies, they are not competitive on world markets (except for brief overheated phases like 2007).

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Mar 7th, 2010 at 11:53:12 AM EST
[ Parent ]
Where my proposal is more radical is I did not say "start shifting", but rather 0% production subsidies, 100% husbandry payments.

For the farmers that are not "in the business of being nature's gardeners", fine. Quite understandable and within their rights to default to compliance with standard required to avoid throwing external costs on others.

Just if they are going to act like farming is just one more productive activity, then no public €€€€ in return for engaging in just another productive activity.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Mar 7th, 2010 at 09:31:13 PM EST
[ Parent ]
BruceMcF:
no public €€€€ in return for engaging in just another productive activity

Entirely in agreement with the principle. If they want the free market, they should get it.

Most of them, however, would be cleaned out by it, and be replaced by bigger structures. Win for the environment?

But in fact their free market wish is BS, they want the subsidies too. In view of their political weight (see santiago's comment and my response above), a policy of making subsidies conditional on environmental criteria has to be incremental, imo. They are in fact strongly opposed to those conditions. Perhaps the threat of no subsidies at all could be implied as a big stick, but mostly it would be a matter of offering well-placed carrots and wearing down opposition gradually.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Mar 8th, 2010 at 02:31:09 AM EST
[ Parent ]
If its to be gradual, here's gradual as hell: allocate 1% to a new program to provide ecosystem husbandry payments with payments per on-site producer capped, and grow it by 1% a year to 10%.

Assuming per-onsite-producer versus per-unit-output gives small producers 80% or more of the total, that would double the payments effectively going to small producers and scale the production subsidies down by 10%.

Oh, and purely voluntary ... sign up to be in line for the payment.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Mar 8th, 2010 at 01:23:29 PM EST
[ Parent ]


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