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European and American Agricultural Policy Discussion
Kate Griswold: Life Sciences Communications, Senior
Lara Rubinyi: Masters of International Public Affairs, Second Year
Amanda Hoffman: Masters of Science in Agroecology, First Year
Scenario
The National Sustainable Agriculture Coalition (NSAC) believes that US agricultural policy (ie, the “Farm Bill”) may encourage farmers to maintain the status quo versus adopt more sustainable, “green practices” to a greater degree than policies in other states and nations. They have commissioned your team to explore policy alternatives to include in the farm bill that would increase the adoption of sustainable farming practices and recommend the best policy option for the US considering feasibility, efficiency, and effectiveness. They suggest that you specifically look at the EU’s Common Agricultural Policy (CAP), in addition to any other foreign or domestic policies you can uncover that have been particularly successful at promoting the adoption of these practices.
Abstract
There are many differences between EU-CAP policy and the American Farm Bill. Both pieces of legislation attempt to support farmers and national agricultural production, though CAP offers measures that promote environmental health, social equity and economic viability to agricultural production. Challenges in the Farm Bill include intensification resulting in ecosystem damage, equitable distribution of farm subsidies and a lack of economic support for all sizes of farmers.
By parsing out similarity and divergence in US and EU history and structure of policy instruments, and budgeting and targeting of resources, and sustainability efforts’ successes and challenges, EU’s CAP provides a model and generates recommendations for the US Farm Bill in improving efficacy of its sustainability efforts. We first examine the gaps in US farm policy by comparing the two systems, and look at US agricultural issues that could be addressed using EU-CAP methods. Following our analysis, we recommend adding required conservation programs, and increasing transparency. We find that EU-CAP places value on required conservation programs in which farmers are required to participate and are unlinked to production and support ecosystem health. These programs could be a valuable addition to the Farm Bill. Transparency in the allocation of funding is a key aspect of EU-CAP, and the Farm Bill should strive to provide a more fair approach to the allocation of funds.
Introduction
While the U.S. Farm Bill is nearly 100 years old, the overall sustainability of the bill has not been analyzed throughout it’s history. As a country, it is vital for researchers to look at other policies like the CAP EU agricultural policy and potentially implement improvements the the U.S. Farm Bill. To begin, we looked at the historical context of the U.S. Farm Bill and the reasons it came to be. We then analyzed both the CAP policy and U.S. Farm Bill and their effects on social, economic and environmental sustainability. In the end, we provided two recommendations to the U.S. policy based on our research of what works and what doesn’t with the EU policy. We will also discuss the implications and feasibility of a policy update and limitations to our research.
Hypothesis
The 2011 reform of CAP Conservation policy provides a model for the U.S. Farm Bill to approach sustainability, through increased access to subsidies and environmental sustainability programs.
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| Source: britannica.com |
Historical Context and Market Failure
Dating back to before the Great Depression, the American Farm Bill has a long and complex history. In the 1910s crop prices rose in America as a result of the disruptions in agriculture throughout Europe due to World War I, American farmers stepped up production and started using more advanced machinery and technology. After the war ended, prices plummeted and farmers started to have challenges even before the Great Depression. The Depression made the struggle even greater for farmers. As part of the New Deal, President Roosevelt wanted to help farmers by boosting crop prices, as a result, the first farm bill was passed in 1933. This bill aimed to raise agricultural prices by paying farmers to limit production. In 1938 Congress renewed the bill and voted to maintain it as a permanent program to be renewed every five years (10).
The history of the farm bill and impact on sustainability over time varies (9). At the time of it’s creation, the farm bill aimed at providing economic support to keep farmers afloat. Throughout history it has added on economic and social supports for people through food stamps and increased subsidies. Today, as the environment is continually degraded and more land and food are needed to feed the growing population, the environmental impacts of the farm bill are increasingly important. In fact, the 2014 Farm Bill has continued to improve on the conservation components putting more focus on CRP land, and cross compliance requirements to receive crop insurance premiums and subsidies (9). Although in the past the environmental impacts haven’t been at the forefront of the farm bill's purpose, conservation continues to evolve and be a greater part of the bill.
Methods
Definition of Sustainability
For the purpose of this analysis the definition of sustainable agriculture is meeting the needs (social, economic and environmental) of the present without compromising the ability of future generations to meet their own needs. This definition combines the United Nation’s definition stemming from the Brundtland Commission, and the three pillars of sustainability. Looking at long-term consequences to policy change while taking into account the intersectionality of sustainability will provide the best analysis.
Narrowing Scope to Conservation Policy
The first step in our analysis is to define what policies pertain to agricultural production sustainability. Because of the broad and wide-encompassing nature of farm policies in the US we have decided to exclude all reforms that do not pertain to agricultural production sustainability, such as food stamps. We do this because the focus of our analysis is primarily on what sustainability tools from EU-CAP could be used in the American context, and by taking out other aspects of US farm policy that deal with a wider range of issues the EU-CAP’s goals become more comparable.
Focus of the Literature Review
Our literature review will examine the US farm bill and the EU-CAP system and conduct a comparison of their respective effects on sustainability in order to identify shortcomings and possible solutions. The literature we selected to analyze was based on a multi-disciplinary approach to research question and included papers from multiple different sources, governmental websites and policy overviews. This analysis will be supplemented by international guest lecturer Josephine Peigne of France who provided an international perspective and in-country view of European agricultural policy.
US Farm Bill Overview
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| Source: Agri-News |
The 2014 farm bill, the most recent of the farm bill's includes many areas including energy, rural development, trade and nutrition, price and income support programs and crop insurance (5). Agricultural policy has not been static over time and each new Farm Bill produces shifts in an approach that generally includes payments to farmers in exchange for conservation actions on their farmland. Conservation programs rely heavily on a limited range of policy tools and shifts in policy in recent decades reflect larger trends in environmental policy within the U.S. (7). The farm bill divides the portfolio of programs into two approaches; land retirement and working land programs; which after the passage of the recent farm bills continues to trend in focus on working land programs. After the 2014 bill was passed 13 conservation programs are included, however 5 programs make up 95% of the spending. There are five existing large programs.
- Conservation Reserve Program:the largest of the conservation programs and pays farmers to retire land from agriculture and restore natural plant cover for a fixed period of time.
- Environmental Quality Incentives Program:provides cost-share payments and technical assistance for farmers who adopt conservation practices like modification to nutrient application, reducing tillage to maintain soil quality or installing filter strips on active agricultural land. These are usually short term payments from 1-3 years.
- Conservation Stewardship Program:provides annual payments for farmers under 5-year contracts for addressing resource concerns on the entire farm.
- Agricultural Conservation Easement Program:focuses on protecting and restoring wetlands and protecting farm and grazing land from development.
- Regional Conservation Partnership Program:provides funds to large-scale, regional projects which are identified through a competitive application process.
In addition to these voluntary financial incentive based conservation programs there are also compliance measures related to environmental protection farmers have to follow to receive farm payments and subsidies. These include an approved conservation plan aimed to prevent excess erosion. In addition, farmers who farm natural wetlands or native grasslands after 1985 are ineligible for any direct payments (7).
US Farm Bill Effect on sustainability
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| Source: WikiMedia |
The Farm Bill derives from specific origins, as discussed above, not intentionally grounded in conservation-focused agricultural practices and thus, not entirely sustainable. Policy and sustainability literature, along with analyzing Farm Bill measures and impacts alongside sustainability issues to which they pertain, reveal ways in which the Farm Bill falls short of the three sustainability goals. By prioritizing production, engaging uncritically with socially oppressive structures, and reproducing inequitable distribution of resources, the Farm Bill contributes to the undermining of sustainable agricultural outcomes.
Economic Sustainability: Unbalanced allocation of funding contributes to a less resilient nation-wide agricultural sector, vulnerable to forces that could render large farms unable to meet food security and environmental needs. More holes in farm support include a tendency of government farm payments to reach the Midwest, Great Plains, Mississippi River corridor, and the California Central Valley, even when accounting for distribution and density of farmland (2). Finally, Farm Bill insurance policies, like the Whole Farm Revenue Protection policy, remain inaccessible to beginning farmers that already face limited access to capital and credit and lack of transparency undermines socio-economic sustainability (8).
Environmental Sustainability: An example of a lack of environmental concern comes from ecological researchers in 2012 who inquired about the relationship between federal farm policy and surface water quality. Their findings identify that federal money influences crop choice and land use practices creating federal subsidies that correlate with lower crop diversity, higher inputs, and higher concentrations of nitrate contaminating surface waters (2). This research indicates that even when Farm Bill policy changes, its former impact may restructure commodity markets and agricultural practices, like corn monocultures, creating outcomes that reproduce in spite of new policy (2). Additionally, intensification remains when conservation programs offer only voluntary compliance (2, 7). Meanwhile, fluctuating commodity prices make participation in environmental programs less attractive (1). Such voluntary programs shrink their impact even further when their maximum fundable acreage is reduced, as with CRP’s reduction from covering 32 million acres to 24 million acres in 2014 (9).
Social Sustainability: Social equity has not been on the forefront of the farm bill’s goals, as subsidies generally go to the larger farmers and support is not provided for specialty crops, leading to a lack of social support. 2014’s reform established credit programs and research programs designated specifically for young farmers (3). Similar programs provide credit and research assistance earmarked for organic operations, specialty farmers of fruits and vegetables, and military veteran farmers. All allocated funds are kept private from the public and aren’t transparent for public views. This reduces social equity and sustainability and doesn’t allow taxpayers to see where their funds are going. Funds support the creation of research center to develop policy recommendations for socially disadvantaged farmers and ranchers (3). Rural viability receives support through rural development programs and local food production (3). This remains an area of improvement for the U.S. Farm Bill. Finally, the Farm Bill is divided into different areas of support, Commodity programs account for 5% of the total farm bill, crop insurance accounts for 9% of the farm bill and conservation accounts for 6% of the total farm bill.
In conclusion, increased prioritization of production and reproducing inequitable distribution of resources, the Farm Bill does not contribute to overall sustainable agricultural outcomes.
EU Farm Bill Overview
After World War II the European Union created the Common Agriculture Policy to incentivise the production of food in war-torn Europe. EU-CAP was successful, too much so and before long these incentives led to the overproduction of food. Since its initial implementation there have been many reforms of the program, most recently in 2013. From it’s inception, EU-CAP policy has evolved and now provides support to farms, communities, and environmental programs.
EU-CAP has two pillars. The first pillar is completely funded by the EU and includes payments for land area, young farmer support, and green payments. There are also incentives for small farmers. The second pillar is co-funded by both the EU and also an individual country or region (1). Countries or regions can opt into more or less EU support and regulation. The focus of the second pillar is rural development. This includes business development, producer group aid, and opt-in green payments. These two pillars in combination constitute a more “holistic and integrated” policy than the US (4).
EU Farm Bill Effect on sustainability
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| Source: UgandaExports |
The EU operates under a more inflexible legal structure than that of the US, due to negotiation between 27 Member States. Policies that arise from this context and undergo such negotiation produce a more targeted policy (1). CAP policies that promote sustainability achieve potency and success in strongly dis-incentivizing production and intensification, supporting small farms, and promoting place-specific environmental and social sustainability programs.
Economic Sustainability: Measures that support attention and care to ecosystem health include supporting small farms fall under economic support. Member States may allocate Pillar 2 payments on a first hectares basis, such that the first counted hectares of a farm receive higher payments per hectare than the rest of the farm (4). The UCS finds that when farmers have smaller farms, farmers better understand specific needs of different portions and aspects of their land (8). They explain that areas with more moderate-sized farms and a strong middle class offer more economic stability through minimized poverty and unemployment rates (8). Such measures serve to de-prioritize agricultural intensification and subsequent environmental degradation.
Environmental Sustainability: The 2005 CAP reform disconnected subsidy levels and farm production decisions, a measure aligned with hopes that policies would transition from commodity-based support toward ecosystem services (6). These Pillar 1 measures occur alongside the 2015 Pillar 1 Green Payment, which penalizes farms that do not engage in ecosystem support through permanent grassland and wildlife habitat maintenance (4).
Research on CAP indicates a similar conflict between conservation interests and productivity interests (6). CAP’s strongest actors do not prioritize conservation, causing subsidized conservation practices not to compete in profitability in comparison to intensive farming (6). CAP critics cite that EU’s voluntary compliance provides only limited monitoring of practices and outcomes. Finally, studies modeling the impacts of reduced CAP support find that ceasing CAP direct payments would decrease greenhouse gas emissions from agriculture, though pesticide use would increase (6). This modeled impact highlights farming practices that destabilize the climate, despite farms receiving funds to mitigate environmental damage. CAP mimics Farm Bill effects by promoting intensification through measures of uncritically awarding subsidies in a high input agricultural paradigm.
Social Sustainability: CAP measures address social equity and the needs of rural communities, and balancing economic viability with environmental protection. Yet policy analysis and comparison of measures with sustainability issues finds that budget restrictions, competing interests, and variation of Member State needs and resources challenge EU attempts at sustainability. Although Pillar 1 Green Payments are penalized when farms do not follow conservation measures, EU does not require participation in CAP subsidy programs. As world food supply becomes insecure, commodity prices increase. Thus, environmental subsidies must pay more to remain a competitive choice for farmers, putting a strain on CAP funds (6). Meanwhile, Pillar 2 measures toward social and environmental sustainability suffered due to economic crises in national budgets, further reducing available awards (1). Policy analysts conclude that CAP funds must be more efficiently delineated to make the most impact on social equity (4). Lastly, the 2013 CAP reform introduced a Transparency and Accountability measure, rendering information on CAP beneficiaries accessible to the public, increasing social sustainability (12).
Analysis
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| Source: Thwink.org |
Having evaluated policy challenges, and points of success, regarding environmental, social, and economic sustainability in the EU and the US, this paper seeks points of comparison to develop feasible recommendations. This section compares US policies that undermine sustainable outcomes with EU mechanisms for addressing those same problems successfully.
Evaluation of the Farm Bill’s inabilities to promote sustainable agricultural practices and outcomes find that subsidies largely encourage high-input farming operations, with low crop diversity, that contribute to environmental degradation (1). Awards supporting conservation measures and ecosystem care reach farmers on a competitive and voluntary basis. CAP policy successes include the universal accessibility of subsidies that provide support to farms regardless of their production levels. These subsidies require compliance with measures that protect biodiversity and sensitive ecosystems.
These CAP measures invite widespread participation in the EU. Yet CAP budget constraints invite critiques of conservation funding that lacks careful evaluation and monitoring of usefulness. Therefore, these programs may be considered difficult to budget in a targeted and efficient manner, and economically infeasible. Corporate interests may fight measures that will reduce production and thus raise prices of commodities that they seek to consolidate for processing and distribution. Yet research indicates that when information about environmental issues becomes available, people’s attitudes change, as do social priorities (9). Education about the damage of agricultural intensification increases the social feasibility and public acceptance of such measures. Such education could ripple to impact the political feasibility of such measures, were the public to hold their legislators accountable to these shifting social attitudes.
Recommendations
Our two recommendations for policy action are based on the above analysis of the sustainability of EU-CAP and the U.S. Farm Bill.
Increase Transparency of Subsidies in the US Farm Bill
The 2014 Farm Bill reform rendered the distribution of information about Farm Bill recipients inaccessible to the public. This lack of transparency undermines the socio-economic sustainability of the Farm Bill by disempowering the public whose taxes finance these subsidies, and who are impacted by the agricultural sector that develops from these subsidies. CAP’s 2013 reform implemented legislation that makes accessible information on distribution of agricultural subsidies. Can similar transparency legislation enter the Farm Bill?
Social feasibility may operate in the same fashion as noted above, with social opinion aligning with education as to the dangers of a non-transparent Farm Bill. The economic costs of this measure would not rise past the costs of administering and distributing this information, which the Environmental Working Group has engaged in previously (5). Corporate interests, again, will likely limit the political feasibility of transparency, as to obscure the inequitable distribution of subsidies to the small portion of producers who receive the bulk of the funding.
Initiate Additional Programs Supporting Small Farms and Rural Viability
In the US, small farms constitute most of the agricultural enterprises, and will most likely engage in conservation measures while supporting local vendors and rural viability. Yet inequitable distribution of funds put small farmers and beginning farmers at a disadvantage in competing with very large operations. EU’s CAP supports small producers, rural sustainability, and agricultural conservations holistically through Pillar 2 programs that encourage cooperation between producers, allocated according to Member State discretion.
Creating new programs or expanding on existing programs that support small farmers, rural viability, and conservation will be challenged by legislators and interest groups averse to significantly redirecting funding away from production. However, programs encouraging cooperation, connect material resources or knowledge resources from one farm to another, will enhance the Farm Bill. Reduced overhead costs may derive from administering programs by targeting many operations at once. Additionally, small farmers that contribute to rural viability would receive support from the rural communities to which they contribute. Trends in direct sales from small farms indicate social feasibility and support from the public for these measures.
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| Source: Crowdfundinsider.com |
Feasibility
Political Feasibility:The farm bill expires every five years and needs to be updated. It goes through a process where a new Farm Bill is proposed, debated and then passed by Congress and signed into law by the President. The most recent farm bill is titled The Agricultural Act of 2014 and was signed into law on February 7th, 2014 (11). The next Farm Bill will be signed into law in 2019. While anything could happen, it is extremely unlikely that both of these changes would increase funding within the next Farm Bill. It would likely take many years of proposals, debates and lobbying for these changes to be made.
Economic Feasibility:To implement the changes we have discussed would take proposals within the government, actions by representatives and financial support of our taxpayers and government. To increase transparency, create new programs and a lot more money to specific programs will cost money.
Social Feasibility:The question after laws are passed and implemented is whether the public will accept the new reforms. Further research on these topics is needed to determine whether farmers, consumers and the general population in the U.S. will accept this type of reform to the Farm Bill.
Limitations
This analysis is limited due to narrowing the scope, which was necessary to conduct this comparison. The U.S. farm bill encompasses a wide range of policies, and future analysis will be necessary to evaluate how these suggested policy changes may affect other aspects of the bill not discussed in this analysis. In addition, a formal cost-benefit analysis of implementing these recommendations will be necessary to more fully evaluate their feasibility. Despite these limitations, this analysis provides us with useful information on how EU and U.S. Farm policies differ, and the sustainability benefits of each. This analysis provides background to policy makers as they look to make changes to the farm bill.
Conclusion
CAP offers strategically directed and equitably administered measures promoting environmental health, social and rural resilience, and economic viability of agricultural enterprises and national sectors. These measures are relevant to the Farm Bill’s challenges of agricultural intensification ecosystem damage, socially unaccountable distribution of funds, and inequitable allocation of subsidies away from crucial small and midsized operations.
Universal inclusion of farmers in conservation programs, unlinked to a farm’s production, will invite widespread participation, and promote ecosystem health. A transparent allocation of Farm Bill funding will invite public scrutiny and approval or disapproval of Farm Bill beneficiaries. Education of the public as to the social and environmental consequences of agricultural intensification may be necessarily to garner social support for deprioritizing production, and to ensure that voters hold legislators accountable to protecting public goods. Specific subsidies for small and midsized farms, and for rural development, can initiate a cycle of farms supporting rural communities that in turn support those farm’s viability. Cooperation between farms, and between farms and a willing public, can contribute to the success of these programs.
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| Source: Hellenicleaders.com |
Bibliography
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12. European Union. Directorate-General Agriculture and Rural Development. 2013. Agricultural Policy Perspectives Brief, Overview of CAP Reform 2014-2020