Subsidizing Agribusiness: Friend or Foe of Sustainable Agriculture and Development

Nicholas Schaefer, Robert M. La Follette School of Public Affairs - International Trade and Development
Irena Knetlová, Joint Programming Initiative on Agriculture, Food Security and Climate Change - Česko
Chris Caldwell, UW Nelson Institute, Environment and Resource


Scenario | Abstract | Introduction Hypotheses | Methodologies | Defining the Scale | Localized Impacts | Results | Recommendations | Limitations | Conclusions | Citations | Acknowledgements | About the Authors


Scenario 

ClimateChange

The constantly increasing threat of climate change on a global scale requires the development of multidisciplinary projects with the intent of better understanding its social, economic and ecological impacts. For this reason, the UW-Madison College of Agricultural & Life Sciences (CALS) announced a unique opportunity for student research teams to submit proposals to secure a UW-Madison letter of intent to apply for grant funding under the 2019 the United States Agriculture and Food Research Initiative (AFRI) housed under the US Department of Agriculture (USDA) National Institute of Food and Agriculture (NIFA).

This team had the great opportunity to accept the letter of intent from UW-Madison and eventually won the USDA NIFA funding. As a result, the team conducted the study to better analyze the social, economic, and environmental impacts of international agricultural subsidy policy. This study provides preliminary answers to the following questions:

  1. Who determines which international agricultural policies are implemented?
  2. Which international policies have dominated the global economy and food system?
  3. What are the localized social, economic, and ecological impacts of these policies?

In light of this study, the US Congress has invited the researchers to a joint Congressional session on Tuesday, April 23, 2019 to present the results and consult on future policy changes.

The finalized website will be shared with all members of Congress by close of business, Monday, April 22, 2019.


Abstract

The trend of climate change has, in large part, been caused by agriculture. Now, agriculture practices will likely need to be altered in order to adequately feed an ever growing world population. Historically, subsidies have been used to improve food security and ensure stability and prosperity for farmers and consumers alike. However, over recent decade, agribusiness lobbying interests have monopolized the conversation regarding agricultural subsidies, have shifted the goal of crop production toward gaining political and economic leverage, and have shifted agricultural emphasis to just a select few commodity crops. As a result, economic progress has occurred. However, progress does not come free. In fact, even in relatively economically stable and successful developed communities, social, economic, and ecological impacts have been troublesome. This study focuses on three unique case studies, the United States at large, the European Union and the Czech Republic, and the “Indian Country,” in order to determine the social, economic, and ecological consequences of recent policy trends regarding agricultural subsidies. The results of this study provide evidence of equity concerns affecting farmers and consumers in the developed world. Therefore, this study informs relevant policymakers of potential shortcomings of recent subsidy policies and recommends that additional funding be allocated to gather more information about the unintended consequences of subsides and to determine new ways to mitigate the failures of subsidies while maintaining economic progress. Relevant policymakers, with awareness of this study, will have the needed information to truly prioritize socially, economically, and ecologically sustainable agriculture.


1 - Introduction

In the Fifth Assessment of the United Nations (UN) Intergovernmental Panel on Climate Change (IPCC), the report describes the observed impacts of human influence on the climate system and in turn the resulting impacts to human and natural systems. Over the past 261 years, the anthropogenic accumulation of greenhouse gas (GHG) emissions has yielded 2040 ± 310 GtCO2, with 40% staying in the atmosphere and the rest being sequestered on land and in the ocean (IPCC 2014, p.4). The impacts introduced because of this change in climate trends ranges across a number of physical, biological and human managed systems. These impacted systems include food production, and livelihoods, health and/or economics (IPCC 2014, p.7).

While the climate should be an important priority, recent history has indicated that action will only be taken once business or the economy is threatened. However, as of late, the World Economic Forum has identified environmental factors to be the most likely and costly for the economy, as seen here.

WEForum

Unfortunately, subsidies, a market-based tool, may have contributed to climate change. Subsidies have repeatedly been used to address concerns of undersupply, especially among necessities, such as food. The logic behind these subsidies is simple: if government payments are provided to food suppliers, production will increase and a greater percentage of the population, especially among those with less access to necessities, will be better fed. On the surface, this logic seems intuitive, at least in theory; however, upon closer inspection, the creation of these policies is complicated, often being substantially directed by powerful institutions. Furthermore, less advantaged communities are rarely, if ever, included in these policymaking discussions. This may further call into question the effectiveness of currently implementing Westernized food production, dietary, and developmental preferences in vastly different communities. All in all, these concerns call for a more in-depth analysis of the social, economic, and ecological effects of recent trends regarding agricultural subsidy policy.


2 - Hypotheses

Due to the inherent intersectionality of climate, agriculture, and policy development, there are many ways to consider the complex interaction of the three at an international, domestic, and local level. However, this study examines current policy trends and their localized impacts, especially regarding social, economic, and ecological considerations. At the present moment, these policies may not be effective in reaching multidimensional sustainable development.

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3 - Methodologies

To better understand the institutions, policies, and overall impacts of those policies, this study conducted an intensive literature review to identify key ideas and concepts related to the international agricultural subsidies framework. These dominant trends will guide the three individual case studies, which concentrate on the following:

  1. The United States, at large
  2. The European Union, with an emphasis on the Czech Republic
  3. “Indian Country”, nations within a nation

In each of the case studies, the research aimed to identify and emphasize any similarities or differences based on a sustainable development framework, which consists of social, economic, and ecological sustainability. These case studies will also be framed within the context of climate change to determine and define the overall influence of agriculture on climate change. As a result, the analysis will result in detailed answers to three important questions:

  1. Who determines which international agricultural policies are implemented?
  2. Which international policies have dominated the global economy and food system?
  3. What are the localized impacts of these policies, both economic and environmental?


4 - Defining the Scale

This analysis began by answering three important question to provide context for the case studies:

  1. Who is at the table when discussing agricultural crop subsidies?
  2. What is the goal of subsidized crop production?
  3. Which crops have thrived under subsidy programs?

4.1 - Who is at the table when discussing agricultural subsidy policies?

Generally speaking, there has been a trend in favor of larger agribusiness interests and food producers and against smallholder representation. Historically, the “Iron Triangle” of Congress, the USDA, and farmers’ interest groups directed policy discussion. Thus, relevant decision makers were directly responsible for representing the interests of the public and farmers. However, since the 1950s, the creation of agricultural lobbying shifted power in favor of private and commercial interests (Brasier). Similarly, other developed nation also proceeded to adopt these market-oriented policies.

For example, during the creation of the 1995 Farm Bill, the Coalition for a Competitive Food and Agricultural System was established by 126 agribusinesses, food processors, and marketers; as a result, lobbying interests predominantly argued for less protectionist and more market-oriented programs in farming. The consequent market-oriented policies certainly led to the commercial growth of the food production industry, but small and average size farms did not benefit from the growth; in fact, more often than not, these smallholders have been unable to compete not only for food demand, but also for government subsidies.

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4.2 - What is the goal of subsidized crop production?

Directly caused by the increased levels of agribusiness lobbying, the goals of food production in the developed nations with significant amounts of arable land quickly shifted. The food and oil crises of the 1970s called into question to global trade status quo (Toumi). For good reason, countries became concerned about their ability to provide necessities to its citizens and became more protectionist when designing policies. In particular, developed nations felt pressure to create a sense of economic independence and self-reliance for important and expensive resources. Developed nations and emerging economies with high food production capacity began to produce food to the maximum possible level, with the intent of making developing nation and countries with poor land dependent on these countries for food.

Due to the cultural shift toward protectionism, agribusiness had the perfect opportunity to capitalize economically by drastically increasing food production, and maintaining similarly high prices after successfully lobbying for governmental subsidies for commodity crop production. Therefore, the United States, Canada, Argentina, and Australia, the largest exporters of wheat and coarse grains, have become major beneficiaries from “food power, which has been leveraged in their political and economic interests. At the present moment, the United States and Canada control a greater share of exportable grains than the Middle East’s share of oil (Toumi). Overall, the goal production shifted from first providing adequate nutrition for citizens to predominantly exporting to reliant countries. The whole system had to shift to achieve this goal.

importexport

4.3 - Which crops have thrived under subsidy programs?

Traditionally, crops have been produced predominantly to meet consumer demand. However, due to substantial subsidization of commodity crops, farmers have been largely focus on produces sturdy crops with high yields, especially corn. Oftentimes, though, most of the produced corn is no longer used for food consumption, but instead for animal feed or ethanol production (Urry). Furthermore, the agribusiness community, in light of massive amounts of corn production, have created and marketed new uses for corn. For example, in Iowa, the Iowa Corn Promotion Board (ICPB) has a specific page on its website explaining in detail ways in which the ICPB can further the commercial use of corn produced in the Midwest (“New Uses”). Clearly, if current market forces are struggling to find adequate uses for the quantity of corn produced, it is worth questioning if the subsidies have led to oversupply of certain commodity crops.

In addition to corn, the overwhelming majority of remaining subsidies have been for soybeans, wheat, cotton, and rice (Edwards). The overall production distribution has narrowed as time has progresses; in other words, the diversification of crop production has been steadily decreasing. While globalization has spurred significant growth and progress, it has also served to create a uniform and less diverse global diet. In order to maximize payouts from subsidies, farmers face increasing pressure to increase yields. This intense pressure for maximizing yields causes homogeneity in the global food supply and the genetic makeup of commodity crops (Khoury). Overall, this overreliance on a select few crops has been a direct result of subsidization policies. More importantly, the oversaturation of these select markets cause reason for concern due to less diversified risk both economically and genetically.

usagexports


5 - Localized Impacts: The Case for Case Studies

This study has designed a framework to frame further examination of policy impacts specifically related to agricultural subsidies on a local level. As noted earlier, the overarching investigation has been designed to examine how international agricultural subsidy policy actual impacts the communities and populations in developed nations. It is important to distinguish that although of of these case studies analyze the population of farmers and consumers in the developed world, that does not necessarily indicate that said farmers and consumers were involved in the decision- making process. In fact, the exact opposite is usually true; farmers and consumers have been largely cut out of the conversation, and this has had drastic effects. This study primarily focuses on a qualitative and quantitative assessment of the social, economic, and environmental effects of international policy trends. By researching primarily at the local level, the study aims to identify specific causes for concern. While policies may be well-designed to achieve global priorities, impacts can vary drastically at a local level. Through the case study framework, similarities between populations will provide insight into specific failures of subsidy policy.


5.1 - Case Study #1: United States Agricultural Policy

The United States exports the largest value of food of all countries in the world. In fact, at nearly $73 billion of food exports in 2016, the United States exports over twice as much as the second highest exporting country, Germany (Dillinger). Without question, agribusiness interests in the United States had a lot to gain economically from the trend toward increased subsidization, prioritization of exporting power, and highly concentrated commodity crop production. Despite the growth in the food industry, there have been adverse effects for its farmers and consumers.

5.1.1 - Social Impacts

Due to recent merging and consolidation by large corporations such as Dow, Dupont, Syngenta, ChemChina, and Bayer, the market has become highly concentrated. From 1977 to 2011, the four largest soybean purchasing companies increased their market control from 54 to 79 percent. As a result, small-scale farmers have faced the consequences, since their voices have largely been unconsidered in Farm Bill cycle conversation (Schwartz). While small-scale farms account for nearly 90 percent of the industry, they only receive a quarter of commodity payments and less than a fifth of crop insurance indemnities (Bakst). On the other hand, the largest 10% of farms received three quarters of commodity payments and over 80% of crop insurance indemnities. Certainly, this calls into question the equity concerns of these subsidies.

On top of the equity concerns to farmers, consumers have reasons to be alarmed. Compared to people who eat low amounts of subsidized foods, people who eat more of these crops are 30-40 percent more likely to be obese, have increased fat, have elevated inflammation, and have abnormal cholesterol (Oaklander). These health problems predominantly affect the lowest in the income distribution, specifically through chronic diseases (“The Food Gap…”).

usfarm

5.1.2 - Economic Impacts

Certainly, subsidies shift the profitability of certain crops. For example, due to recent subsidization, the shares of corn and soybeans in total acreage has been constantly increasing (Pitt). This demonstrates that farming practices and behavior have been heavily shifted and distorted by these practices. Market interventions that distort supply can create more inefficiency than they resolve. For example, the US, Canada, Australia, and New Zealand, where food is produced in large quantities, have been able to leverage these distortions toward commodity crops in their political favor and with other trade deals. Oftentimes, these pose even larger problems for international economic development (Toumi). This influence has been noticed by leading economists, who have identified that the US and other large exporting countries have controlled the food supply, making other countries dependent.

As major exporters have benefited from food power, the United States and other exporting countries have exposed themselves to risk, as they have become dependent on the importing countries for demand (Boissoneault). When 25 percent of the nation’s farm income is expected to come from federal crop insurance subsidies and payout, this obviously begs an important question: how have these artificially created levels of supply and prices threatened the stability of the US economy? In a recent study of subsidies and their effectiveness, it was determined that 207 out of 376 analyzed agricultural subsidies created perverse effects, meaning that the global market was distorted to an extent that crops are no longer being produced in the countries where production is most efficient (Kjellingbro). This inevitably has led to wasted resources.

Furthermore, as mentioned before, Americans have generally been plagued with poor health. As the American diet has shifted more towards subsidized foods, rates of chronic disease have dramatically increased. $69 billion of annual productivity is lost due to the effects of diabetes. As of now, two in every three of American adults and one in every three of children are either obese or overweight, which greatly affects the economic mobility of individuals and overall economic output (“The Food Gap…”). These individuals who are obese or overweight are far less likely to have economic or geographic access to a healthy diet, which furthers the problematic cycle.

chronic

5.1.3 - Ecological Impacts

As mentioned above, these subsidies heavily focus on commodity crops, such as corn and soybeans. Even as prices plummet for commodity crops, farmers are encouraged to continually grow these same low performing crops. Farmers can continue to grow crops with low demand, as they can rely on government payments to remain in operation. Thus, each year, an overwhelming surplus of commodity crops are grown. For obvious reasons, the intensive practice of agriculture is one of the most significant contributors to global greenhouse emissions and climate change. Therefore, these subsidies have been linked to increasing the already harmful effects of agriculture on the environment.

The aforementioned perverse subsidies also were found to cause excessive environmental harm. For instance, famers, needing to maximize yields, apply fertilizers liberally and frequently, which results in excess downstream water pollution from fertilizer runoff (“Subsidizing Waste…”). Furthermore, due to the subsidization, farmers have had no choice but to plant commodity crops; however, due to excess supply, prices have been so low in recent years. This adds even further pressure to increase the share of the highest earning crops being planted and limits crop diversity (Keiffer). In general, excessive and inefficient production have placed significant strains on the Earth altogether (Kjellingbro). When 30 to 40 percent of the Earth’s food supply is already being wasted, most of which at the consumers hands, this calls into the question if the world can afford additional waste due to recent excessive and inefficient production (“OCE…”).

foodprice


5.2 - Case Study #2: European Union Common Agricultural Policy and Czech Agriculture

Agriculture of the Czech Republic is unique due to the historical evolution of the country, specifically due to the crucial changes that occurred following World War II. During the 1950s, most private farms were collectivized into greater units, owned by the state and subordinated by the national policy of the Czechoslovakia. After the reestablishment of democratic principles in the country in 1989, those collectivized properties were returned to its original owners. Historical collectivization has led to the current status, where a great proportion of farms are large. In fact, the average size of farm is 133 ha, relative to 16.1 in the other European Union countries. In 2004, the Czech Republic became a member state of the EU and thus committed to the Common Agricultural Policy ( “The CAP in Your Country.”) , which was created as a response to undeveloped agriculture relative to the United States and general concerns of food insecurity. CAP aims to develop socially, economically and environmentally sustainable agricultural policy and to also provide financial support in the form of subsides. This case study aims to investigate the relationship between CAP and the status of ever-changing Czech agriculture (Zagata).

5.2.1 - Social Impacts

The social impact of the subsidizing policy are both negative and positive. While CAP aims to support farming in rural areas, it also aims to support relatively younger farmers, as most current farmers are old. CAP incentivizes younger citizens to fam by providing 25% aid supplement for the first five years to young farmers ( “The CAP in Your Country.”). Additionally, food security has been a concern, as Czech agriculture is highly focused on biofuels. The “yellowification” of the landscape has been caused by the increasing levels of the oil seed, rape. Thus, food supply is relatively low, leading to high prices for the crops grown for human food consumption (Frantál).

youngfarm

5.2.2 - Economic Impacts

One of the aims of CAP for future years is to encourage the competitiveness of Czech agriculture not just with the European market, but with in the globalized world as well. Although the vast majority of the agriculture production of Czech farms is by medium sized or large scale farms, CAP and the United Nations attempts to support small scale and family farms, to ensure the economic development in rural area. Still though, the smaller farms are far less common. In order to be competitive, smaller farms tend to have a higher share of unpaid labor compared to larger businesses. From 2014 to 2020, CAP implemented both financial subsidies, through an operational and investment dimension, and nonfinancial support instrument as well. The small scale farms in the Czech Republic are lagging behind. This gap in performance cannot be easily resolved, as it is likely caused by the insufficient technical equipment and inequity of subsidy schemes of CAP throughout the European Union.

Opatrný 2018 has examined the impact of joining CAP in 2004 and the resulting direct payments. By comparing the Czech outcomes to that of Bulgarian agriculture, which joined CAP in 2007, Opatrný found that joining CAP had an negative impact on the food production index in the Czech Republic. It seems that Bulgarian agriculture performed better than Czech agriculture. Both Bulgaria and Czech Republic received almost the same amount of subsidies per hectare, with 218 EUR/ha in Bulgaria and 258 EUR/ha in the Czech Republic; however, the GDP per capita in the Czech Republic is almost twice as higher. Thus, the subsidies for Bulgarian farmers played a more important role and the Bulgarian farmers, unlike the Czech farmers, switched to lower value crops, such as cereals, while still enjoying relatively high incomes. Opatrný admits that the direct payments were successful increased farmers’ living standard.

According to Doucha, joining CAP in 2004 helped Czech agriculture significantly relative to outcomes in 2003. However, it is important to realize that Czech agriculture was performing poorly and that European trade was very competitive at this time. Thus, Czech agriculture was not able to compete with import from other European countries. In 2006, costs on labor, land and capital, increased by nearly 60% due to these subsidies. According to Doucha it is evident, that the European Union has been advantageous for larger farms, “profits generated by higher direct payments and the LFA payments (payments for less favoured area) have been absorbed especially by coops and companies” (Doucha).

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5.2.3 - Environmental Impacts

CAP aims to establish green policy to help deal with environmental issues as decreasing biodiversity, soil quality loss, and climate change. Since 2013, “30% of all Direct Payment paid per hectare is linked to three environmentally-friendly farming practices: crop diversification, maintaining permanent grassland and conserving 5% of areas of ecological interest or measures considered to have at least equivalent environmental benefits” ( “The CAP in Your Country.”).

CAP Subsidies are also linked the growth of biofuel crops. Farmers must decide whether to simply grow traditional food or whether to also grow biofuel crops for renewable energy. According to the Frantál 2016 study, which examined the production of biofuel crops renewable energy sources, the expansion of biomass crop production is positively correlated with the size of the company and area of cultivated land and negatively correlated with “the degree of focus on livestock production.” This shift toward biofuel production is encouraged by European Union subsidies and caused many environmental and social conflicts. First of all, the change in land use and the landscape, specifically through the cultivation of rape causes soil erosion, due to its high need for pesticides, herbicides and crop unification. This involvement in the agro-energy business is caused by “relative high subsidies and tax exemption for biofuels, compared to relatively low subsidies in agriculture” (Frantál).

bioenergy


5.3 - Case Study #3: “Indian Country” Agricultural Policy

In the United States, there are currently 567 federally recognized Tribes (Tribal nations). Each is distinct and unique in its socio-cultural and political make up. Yet, due to the “one-size-fits-all” of the United States government approach to Tribal nation relationships, these nations often have similar issues with contemporary social, economic, and ecological issues. In this case study, the term “Indian Country” is used to assess Agricultural policy at a national “Indian Country” level, which in many instances is tied to U.S. national agricultural policy (Hipp et.al, 2018) [1] .

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5.3.1 - Social Impacts

For Tribal nations, the ability to determine how their people are fed is a large part of Tribal sovereignty (inherent authority to govern). This inherent sovereignty of Tribes existed long before the United States government interacted with the Tribes on a nation-to-nation basis by establishing treaties. Within the treaties, agreements were made that often including Tribes ceding tracts of land to the U.S. in return for goods, services and recognition of Tribal presence on remaining unceded territory (Wilkinson and Miklas, 2004). Throughout this history until present time, the goods and services originally promised through treaties have now taken the form of federally funded government programs for necessities such as education, housing, economic development, and food.

The long history of removing access to ancestral food systems by the U.S. government created an Indian Country population that depended on rations and the provision of food commodities by the federal government. This removal was either due to elimination of culturally based ways of obtaining food and/or removal of the people from the lands that had sustained them for millennia. This abrupt change in food systems created numerous impacts on cultural relationships as well as individual and community health issues like diabetes, high blood pressure, and heart disease. Much of the health-related impacts came from rationed foods that came with little to no nutritional value (Echo Hawk, et.al., 2015).

Over the years, Tribal nations and intertribal consortia have worked with federal agencies to redefine the types of foods provided (as part of treaty obligations) to Tribal nations/native communities. Although the vision of many Tribes is to return back to traditional food systems prior to colonization, the reality of either lost knowledge and/or loss of land requires continued dependence on U.S. government food programs. Current programs specifically used by Tribes include: Supplemental Nutrition Assistance Program (SNAP); the Food Distribution Program on Indian Reservations (FDPIR), Special Supplemental Nutrition Program for Woman, Infants, and Children (WIC) to name a few of the primary programs. These programs are congressional authorized under the US Farm Bill (Echo Hawk, et.al., 2015).

Given the importance of USDA programs found within the US Farm Bill and the responsibility of the US federal government through treaties, it would be an important step were more Tribal nations engaged in these programs. Yet, as Hipp and Colby (2015) note “...most USDA programs haven’t even begun to be seriously utilized by tribes because, for the most part, we are invisible in those relevant Farm Bill sections authorizing the programs.”

tribalhealth

5.3.2 - Economic Impacts

Indian Country accesses similar food markets in terms of commodity crops and their use in the food commodity programs. Through this program an estimated $2 billion worth of commodities is developed by Tribal producers (Seeds of Native Health, 2018). In 2012, it was reported that 71,947 American Indian/Native Alaskan producers had yielded $3.3 billion in crops and livestock and poultry ($1.4 billion and 1.8 billion collectively) across 57 million acres of Indian Country. Yet, even these numbers are not the full productive capacity of Indian Country as many of the USDA programs that track these numbers are not accessed or are not available to Tribal producers. In some cases the issue of economics for Tribal producers is also connected to land and sovereignty issues. The majority of Tribal lands for federally recognized Tribal nations are held in trust by the U.S. federal government. In many instances, this limits access to financing options from banks for Tribal producers.

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5.3.3 - Ecological Impacts

One of the greater impacts on Indian Country agriculture, besides lack of access to subsidies, is climate impacts. One of the keys messages for Tribes and Indigenous peoples in the 4th National Climate Assessment (NCA) focused on the adverse impacts already observed including “...changing patterns of flooding, drought, dust storms, and rising temperatures…” and also future impacts, which may include “...increased soil erosion and irrigation water demand and decreased crop quality and animal herd sizes (Jantarasami, L. C., et al., 2018).” The physical and biological impacts are in addition to the political sovereignty issues that Tribes deal with on a regular basis, including increased presence in contemporary federal policy like the U.S. national agricultural policy.

The ecological importance of the U.S. Farm Bill in relation to Indian Country can be found in several of the 12 titles within the bill, but specifically come into focus when considering that approximately 33% of the 57 million acres of Indian Country lands held in trust by the federal government are designated forests or woodlands. Within these acres there is a mx of ancestral and contemporary land management practices in place. Oftentimes, the ancestral knowledge of each specific Tribal nation guides the application of contemporary or western science tools and concepts as tribes consider appropriate and necessary. In doing this the management often has less ecological impacts than similar areas in mainstream America (Hipp and Colby, 2017, Dockry and Hoagland, 2017). However, in some of the U.S. Farm Bill titles while efforts focus on creating equity for Tribal managers and producers, the application of equity can cross over into potentially detrimental policies. The insistence that Crop Insurance and Subsidies for Livestock Production are calls for equity with industries that contribute to the global greenhouse gas totals which impact climate change.

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[1] Throughout this case study and the rest of this paper, the term “Indian Country” is used in the context described by Hipp, Echohawk, and Pipestem, and as described by Grinde, specifically as a socio-political and legal term. Additionally, the approach of using Indian Country as a cumulative term should not be considered as condoning the federal government’s approach, but rather an effort to align issues before seeking to separate each Tribal nations specific issues and best interests for their own nations and communities within.


6 - Results

By analyzing the findings of each of the case studies and finding commonalities among the analyses, this study can identify some key concerns resulting from the three trends in agricultural subsidy policy. In particular, these concerns seem directly related the three questions enumerated when conducting the subsidy policy analysis. Due to the numerous common concerns shared by farmers and consumers in all three populations, there is reason to question the effectiveness of current agricultural subsidy policy. Hopefully, these findings will create political will and motivation to further research the social, economic, and ecological impacts of dominant policies.

6.1 - Social Impacts

Without question, the social impacts have been affected by the changing answer to question #1: Who is at the table when discussing agricultural subsidy policies? Historically, farmers via interest groups at the grassroots level and consumers via Congressional representation were a part of the conversation to determine agricultural priorities. As of late, this process has become convoluted as agribusiness has not only joined the table, but has become the major moderator of the discussion. As a result, smallholders and average-size farm have struggled to compete in the market, as their relatively small yields are largely a result of limited technological capacity. When a majority of subsidies benefit larger farms, this widens the yield gap. While the industry as a whole has grown, the average farmer has not seen any benefits from the economic progress.

Furthermore, consumers have consistently faced an increasingly monolithic food supply. Each of the three case studies found a correlation between increasing shares of subsidized food in the food supply and worsening health outcomes and higher rates of chronic diseases, especially among the relatively poor. These commonalities indicate the inequity resulting from subsides.

6.2 - Economic Impacts

Without question, the economies of developed nations have seen continued growth due to technological advancements in all sectors of the market, including agriculture. The previously mentioned yield gap between large and small farms and developed and developing farmers have greatly benefited agribusiness in powerful exporting nations. Obviously, a large farm with better technological abilities, access to cheaper labor and inputs, and better connectedness to purchasers have thrived under the current system. Meanwhile, smaller farmers are strained by labor costs, which are relatively higher due to less labor access and a greater need of labor hours due to limited technology. Furthermore, it is more challenging for smaller or even average farmers to receive government subsidies. In addition to the equity concerns of how subsidies are distributed, there are many political factors at play that cause further complications, such as disputes when negotiating international trade and disputes regarding the sovereignty or rights of certain citizens.

6.3 - Ecological Impacts

While the social and economic ramifications are difficult to measure, perhaps the most clear of all the impacts pertains to the environment. Mass production of food in developed nations has certainly resulted in higher greenhouse gas emissions. Moreover, since food is traveling further distances, this increases the overall carbon footprint of the food supply. Farmers, through subsidy incentives, are encouraged to use higher amounts of fertilizers, that in turn runoff into freshwater. Deforestation is a necessary step in producing more land, which results in agriculture being responsible for a vast majority of overall land on Earth. While the intent of producing more food is noble, deforestation removes the few remaining carbon vacuums in existence, resulting in even more harmful levels of emissions. Additionally, food production is already fifty percent greater than what is necessary to feed all people on Earth, which leads to inevitable food waste at the consumers’ table, but this waste is increasing at all levels of the food supply. Without question, subsidization has caused heightened strain on Earth’s resources and has threatened farmers’ future ability to implement more sustainable practices and trends in food production.


7 - Recommendations

By no means does this study claim that subsidies altogether should not exist. On the contrary, this study noted benefits of current trends, such as adequate food production and overall economic growth, among many others. However, based on the case studies, more work can be done to mitigate the negative social, economic, and ecological consequences of current subsidy policy trends. Thus, this study recommends further research to support these findings and to suggest new and counteractive policy trends to resolve equity concerns.


8 - Limitations

One of the biggest limitations was trying to develop a framework with which to assess three cases studies as a means to investigate impacts from agriculture subsidies consistently across the three sustainability pillars: social, ecological, and economical. Additionally, this study struggled to determine the proper scope to interpret the overall global impact of subsidies. For this reason, a general review of trends was necessary, which by no means is comprehensive or all-inclusive. This did, though, provide a foundation on which to begin the true work, the three case studies.

Adequate information was available regarding the US and EU case studies. However, the Indian Country case study was intended to provide an outside of the norm case study as a means to evaluate subsidies. There were a number of reports that were helpful, but the peer-reviewed literature or research on this issues was scant. However, it could be argued the reports were in fact peer-reviewed literature as they were developed by inter-tribal consortia with the aid and engagement of Tribal nations and producers.


9 - Conclusions

Initial findings of our research indicate a dual complexity of natural systems impacted by market systems, which greatly impact the natural systems, while now being greatly impacted in return by changes in the natural systems. This feedback loop seems to be moving heavily one way, as the market greatly impacts the natural landscape. This indication of human-environmental relationships at a global scale creates the need for a new way of understanding sustainable subsidy policies. While historically subsidies simply aimed to increase food supply, institutional power and lobbying on behalf of agribusiness interests have greatly changed the discussion. Thus, developed nations have shifted towards being willing to overproduce commodity crops for the sake of political and economic leverage. As a result of agribusiness involvement, large farmers have seen significant benefits, while small and average farmers have struggled to compete, which raises equity concerns in the market. Additionally, consumers also are an important stakeholder, who unfortunately have seen worsening health outcomes from recent subsidy trends and have also witnessed the deterioration of the overall environment. While economic progress has been achieved through subsidies, economic complications have also arrised, through increasing risk and global system complexity. For all these reasons, this study found that further research fundings is crucially necessary to evaluate whether or not subsidies are currently achieving their objectives. While aggregate outcomes and improvements are obvious, policymakers would benefit from investigating the equity effects of the subsidies and question how agricultural policies can be better designed to mitigate the harmful social, economic, and ecological impacts resulting from future Farm Bill and CAP legislation.


Citations

"About AAEA." AAEA . N.p., n.d. Web.

https://www.aaea.org/membership/government-relations-update/june-2016.

Bakst, Daren. “What You Should Know About Who Receives Farm Subsidies.” The Heritage Foundation .

www.heritage.org/agriculture/report/what-you-should-know-about-who-receives-farm-subsidies.

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Acknowledgements

The authors gratefully acknowledge the guidance of Dr. Michel Wattiaux and Bailey Fritsch in the Inter-AG 471 course and the UW-Madison Department of Dairy Science for this opportunity. We also thank the United States Department of Agriculture (USDA) National Institute for Food and Agriculture (NIFA) for funding this project (Award #GF2001934).


About the Authors

Nicholas Schaefer - Nick is a third-year student at UW-Madison studying Economics, MHR-Entrepreneurship, and Public Affairs.

Irena Knetlová - Irena is a student from Prague in the Czech Republic and is at UW-Madison for the Spring 2019 semester.

Chris Caldwell - Chris is a doctoral student from the Nelson Institute at UW-Madison and member of the Menominee Tribe.

All three researchers gained interest in this topic through their engagement in the Inter-AG 471 course, through the inspiration of Michel Wattiaux, and through their diverse identity backgrounds. Each researcher focused on an element representative of their background to synthesize the total results. Consider their individual fields, each researcher has been actively involved in issues of climate change throughout their academic lives.




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