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Will EU subsidy reforms be enough to encourage greener farming?

Carolyn Lebel

15th October, 2012

Nearly 50% of the EU budget goes into European agriculture. But climate change, soil erosion and other environmental pressures call for radical changes in farming practices. Carolyn Lebel reports on the urgent need for greener subsidies.

modern agriculture has become a menace to itself

In 2011, food prices reached an all-time high, pushing millions more people into poverty worldwide and playing a part in the revolts that spread across the Arab world. The United States meanwhile was grappling with a record number of extreme weather events, including severe flooding in New York and Pennsylvania caused by Tropical Storm Lee. Two strings of events united by a common figure. 

Fifty-five billion. 

In dollars, this is how much Arab Spring is estimated to have cost countries like Libya, Syria, Egypt, Tunisia, Bahrain and Yemen, according to the International Monetary Fund, (IMF). It is also the tally of damages caused by a record number of billion-dollar weather disasters that struck the US last year. But these events are also a sign of times to come. Climate change is fated to bring more severe storms and extreme weather, according to the Intergovernmental Panel on Climate Change (IPCC), causing disruptions on the global food market and exacerbating the forces that already leave 900 million people hungry around the world.  

Founders of the European Union learnt half a century ago what it meant to govern the hungry. Emerging from over a decade of severe food shortages with farmlands ravaged from the war, six countries - Belgium, France, Germany, Italy, Luxembourg and the Netherlands - came together to create the Common Agricultural Policy (CAP), an ambitious campaign to modernise farms, increase food production, protect the livelihoods of farmers and ultimately secure its own provisions. 

Today, the policy carries it’s own hefty €55 billion price tag - a budget that consumes more than 40% of the EU total. But compared with the fallout from food riots or extreme weather disasters, it could be argued a worthwhile investment - providing it was designed to help European farmers tackle the immense challenges on the horizon.

With its fertile lands and EU subsidies, France was able to secure its status as an agricultural powerhouse over the last half century, emerging among the world’s leading producers on an increasingly globalised food market. There are about 500,000 farms in France, covering more than half of the country’s territory. Anywhere there is not a city or village, factory or forest, in other words, there is farmland. The vineyards of the Haut Vaucluse, the cornfields of Brittany, the vast cereal plains that stretch before you as you exit Paris to the south - these landscapes shape the countryside, deeply defining the DNA of each territory. But one needn’t visit France to get a taste of its regions. Bordeaux’s and Champagne’s have become icons of the country’s finest. 

But in France as elsewhere, farmlands largely make up what we call the environment, and intensive farming practices spurred by the CAP have exacted their own costs -- beyond the billions handed out every year. Over the past three decades, Europe has lost about half of its farmland birds, while in England species such as the grey partridge have all but disappeared. Pesticides and monocultures are meanwhile, among a host of factors linked with the alarming decline of bees, putting in peril about a third of our food crops. And as French farmers worried over the severe droughts that were drying up aquifers this past winter, the country was being sanctioned by the European Court for insufficient efforts in the battle against water pollution caused by industrial farming. By depleting the very foundations upon which it depends - water, soil and pollinators - modern agriculture has become a menace to itself. 

The EU’s attempt to redress the worst of these impacts is contained within what is referred to as the second pillar of CAP - a subsidy that rewards farmers around important drinking water catchment areas for adopting greener farming practices, or for leaving their land fallow. But of the €9 billion of CAP aid received by France, these incentives represent only a small fraction.

The next reform on the table for 2013 would push these kinds of eco-friendly farming practices into the first pillar of CAP. Currently, this first pillar makes up 80% of the total budget, and essentially pays a fixed annual sum to farmers and landowners for little more than owning farmland. This greening of CAP, as it’s referred to, would bind 30% of a farmer’s annual payment to three basic environmental criteria - the diversification of crops, the maintenance of permanent pastures and the introduction of “green infrastructures” such as trees, hedges or fallow land.

“There are a number of problems with the policy that we are trying to address with this reform,” said a representative from the European Commission. “We want more equity in the distribution of income support to farmers. We also want to promote a long-term approach in the use of natural resources. The greening measures are intended to discourage monocultures and encourage more extensive animal rearing on pastures. We are really trying to bring forward an agricultural policy oriented towards long term competitiveness, based on quality products.” 

Despite good intentions however, the CAP is far from a nimble process able to respond to a pressing need for change. Between farmers and consumers are powerful companies all along the food chain with a vested interest in a piece of the pie. The three top recipients in France for example, netted between them 500 million euros from 2004 and 2009. They include two sugar companies and a poultry exporter called Doux. 

These subsidies are the remains of a policy that aimed to rid the EU of its surplus production - the notorious mountains of butter and lakes of milk - through subsidies for export. And while they are currently being phased out, it’s hard to imagine a time when it seemed a good idea to use public funds, to the order of €55 million euros per year, to help a company export battery-farmed chicken nuggets to countries like Saudi Arabia, Qatar and the United Arab Emirates, Doux’s primary export markets. 

“This kind of subsidy is part of the old CAP that is steadily disappearing,” said a representative from the European Union. “It represents less than one percent of the budget today.”

Such residual cases however have become emblematic of a policy that’s long been perceived to tip in favour of those who need it less. It is estimated that 80% of subsidies are handed out to just 20% of recipients. And at a time when high wheat prices helped spark food riots around the world, farmers in some of France’s grainbelts for example, received an average of €50,000 in subsidies - twice the national average. 

“The ones currently getting the most money from the CAP, are also getting a better price for their output,” says Arnaud Gauffier of the WWF, (World Wide Fund for Nature). “It’ll be jackpot for cereal producers this year.” 

Some of the biggest payments meanwhile are given to wealthy landowners whose farming credentials are unlikely to extend beyond a hose and the kitchen garden. Most famously, the Queen has received at least €8.1 million in farm subsidies since 2004, according to data compiled by independent watchdog Farmsubsidy. In France, other improbable recipients include a few golf courses and airports. 

But elsewhere, many of Europe’s farmers are struggling to survive.

Live Better, Live Cheaper

“Can you really be low cost and responsible?” asks one supermarket chain in big bold letters in a full-page newspaper advertisement that signs off with the mantra, “Live better. Live cheaper.”

No business would survive for very long if it consistently sold its products below what they cost to produce. Yet with the exception of wheat producers in recent years, this is the reality for many European farmers. 

According to Samuel Ferret, who coordinates an alliance of environmental groups interested in the reform of the CAP, French farmers rely on CAP subsidies for about 40% of their total income. For beef producers, the proportion is higher, with 90% of revenues coming from the EU, according to Ferret. Many farms would simply fold without subsidies, and still others don’t make it. France loses a farm every 25 minutes, and the rate of suicide in the sector is significant. The financial vulnerably  of our food growers is largely cloaked behind the neatly stocked shelves of our supermarkets.

“There are 500,000 farms, 10,000 agrofood companies and five centralized purchasers in France,” highlights Patrick Ferrère, Director General of the FNSEA, France’s most powerful agricultural union. “You see the concentration? A single factory or farm doesn’t carry much weight. Today, the owner’s of France’s largest supermarket chains are among the richest people in the country. They are the ones who dictate prices,” he said.

For critics though, the FNSEA is hardly thought to be a champion of across-the-board “égalité”. During the last CAP reform, which saw the introduction of single payments tied to a farm’s size, France opted to base its payments on what farmers already received, at a time when the EU supported only a limited number of staples such as milk, wheat, butter and sugar. Critics say that this approach - based on so-called historic references - has only perpetuated stark inequalities across farming sectors.

“Converging [the value of a hectare across all farms] must be done over a long period in order to recover on the market what is lost in subsidies,” says Ferrère about the timetable set by the European Union for phasing out historic references. France has already stated it would like to see the deadline for this phasing out pushed back. 

But these latest discords are simply the perpetuating, unintended consequences of a 50-year-old, post-war attempt by the EU to secure its most basic staples. “It was pernicious. But right from the start,” Ferrère acknowledges.

That so much money went into stimulating the production of the same staples year after year has also had unintended consequences on the environment. And the European Commission’s proposal that would compel farmers to diversify crops and maintain permanent pastures - the greening measures on the table for the next reform - attempt to redress the worst environmental impacts of monocultures and factory farms. 

One of the more notorious examples of these two practices combined is found in Brittany, where monoculture corn plantations are used to supply factory pig farms. For Marc Dufumier, an agronomist with AgroParisTech Institute, it’s rather what is not present in the farmlands of Brittany that has become emblematic of the CAP’s failure. 

“Incentives were given to produce cereals, sugar and milk powder, which means that farmers were dissuaded from producing plant proteins,” explains the agronomist. “France and Europe import three-quarters of their soya from Brazil. We import soya to feed animals in concentrated feedlots. The excess nitrogen that fertilises green algae off Brittany’s shores - we went looking for it in Brazil!” he said.

From tides of the green algae that spoil some of the prettiest beaches in Brittany, to the financial vulnerability of farmers - these hidden costs of our food system are what economists refer to as externalities. Put otherwise, what consumers are not paying for at the checkout counter, they are paying for further down the line in the form of higher taxes - used to fund CAP subsidies aimed at supplementing a farmer’s income, but also to clean up the shores of Brittany. To cover the rising cost of tap water, as new treatment facilities must be installed, or as wells must be dug deeper and deeper to source untainted water from aquifers. Or still, to remedy the uncertain long term effects of the pesticide exposure on health, from infertility and birth defects to nerve damage and cancer. 

Greening Economics

Of the country’s half million farmers, Quentin Delachapelle would be considered one of the fortunate minority. His 150,000-hectare farm in Champagne-Ardenne sits in a fertile grainbelt, a region that receives the most in CAP aid in France. 

But despite the relatively comfortable financial position of farmers here, the Champagne-Ardenne’s largely rural population has been steadily shrinking. Characterised by weak fertility rates and an ageing population, the region has become, over the past 20 years, the least populated in France. Delachapelle does not evoke this massive rural exodus when he speaks of his hesitation to take over the family farm a few years ago. 

“I wanted to show that things could be done differently,” says the farmer, trained in environmental sciences. “Even here.” 

The job has become for Delachapelle, a massive field experiment. In just three years, he’s reduced pesticide use by half. He’s done so by introducing new crops in rotations, reducing synthetic fertilisers that leave crops more vulnerable to disease, and introducing the famous nitrogen-binding legumes - the so-called green fertilisers. “Five is the minimum,” he says, referring the European Commission’s crop diversification measure that sets the bar at three per farm - but not in rotation. “In my area, the measure won’t change a thing. On 80% of the territory in France, farms have already introduced three crops,” he says. 

The Champagne-Ardenne region borders Brussels to the east, and Delachapelle has just returned from a meeting at the European Commission. The farmer wants Brussels to know that his methods are bearing fruit. The findings turn conventional farming economics on its head. Yields have dropped slightly, but the farm earns about €150 per hectare more now than when he took it over a few years ago.

The possibilities of cutting down pesticide use, such as on Delachapelle’s farm, have been highlighted in the past by the French National Institute for Agricultural Research. In 2010, the Institute released a study suggesting that a reduction of pesticides by 30% countrywide was possible, but only with substantial changes in practices. For France’s grain producers, who use the most pesticides, the study concluded that profits would be little affected based on the lower 2006 prices, while yields would drop by about 6%.

Delachapelle’s experiments haven’t been without their risks though. And self-doubt. The days when he sees his neighbours set out to spray their fields and wonders whether he’s not making a serious mistake. “I’m forced to do things progressively because there’s no support available for this kind of transition. What I’m doing isn’t recognised by the EU,” says the farmer, who would like to go organic but simply can’t afford to hire the extra help that an organic farm would require. 

Brussels

With it’s aptly named streets and squares - Rue des bouchers (Butchers Street), Rue du marché aux porcs (Pork Market Street), Place du nouveau marché au grains (The New Grain Market Square) - Brussels is the nerve centre for food and farms across Europe. Here, countless lobbyists from industries all along the food chain have taken root, from animal feed and agrofuel companies to biotech start-ups and pesticide producers. As they make their rounds through the European Commission’s advisory committees and panels, at informal lunches and over a game of golf, they will have prepared a compelling story backed with convincing numbers. Much like Delachapelle, but finessed with the art of influence. This is a billion-euro business in Brussels, according to the Corporate Europe Observatory. 

At the foot of the European Commission’s Agriculture and Rural Development building, Rue de la Loi, two vagrants are camped before a massive poster that reads “Agriculture, je t’aime.” The interests of farmers and consumers are being brokered just beyond, inside.

This article has been edited by its author, who is a freelance journalist.

 

 

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