A perfect moment for developing a coherent EU policy in agriculture (CAP), external trade, employment, energy and climate change
In 2008 important decisions are expected about the Common Agricultural Policy (CAP), during the so called Health Check and about the milk quota system. It seems that the European Commission will go on liberalising trade, while the negative effects of this policy become more evident everyday. The current proposals (November 2007) of the European Commission are another missed chance, moreover because the WTO negotiations to complete the Doha-round are in crisis. So in this statement the European Platform for Food Sovereignty will propose an alternative at this crucial time in history.
A number of problems and potential crises in the EU could be solved, at least partially, with an appropriate reform of the CAP. It would mean a radical shift from the EU’s current corporate-driven agenda, in areas such as international trade, energy security, agriculture, innovation, employment and prspip.php ?page=event&id_article=ing climate change. The good news is that we don’t need a bigger budget ; we only need to spend the current budget more effectively in order to improve the wellbeing of all EU citizens. More jobs could be created, farmers would not be forced to leave their land, food safety would increase, the food and energy supply would be more secure, nature inside and outside the EU could be protected, and the EU would set an example to the developed world in tackling climate change and less use of fossil fuels. Moreover we would protect and support small and family farmers in the North and in the South to supply their own markets based on their natural resources and biodiversity and their own food cultures.
Analysis of current situation
The following trends and problems are becoming evident today :
Current trade agreements and negotiations
The WTO negotiations have stalled ; the EU doesn’t want to decrease import tariffs and trade-distorting agricultural income subsidies, and the US doesn’t want to decrease such subsidies either. Developing countries rightly oppose more liberalisation in industrial goods and services, and want to protect their agriculture and food security. With these proposals on the table it would be preferable that the current negotiations fail. This gives an opportunity for a transparent and democratic debate with international society. With the goal of agreements inside or outside the WTO which are indeed social, environmental and economically sustainable.
ACP countries (mainly former colonies of the EU) oppose the current negotiations which will lead to Economic Partnership Agreements (EPAs) from January 2008 onwards. In October 2007, the ECOWAS ministers have already decided not to sign at the end of 2007, and ask the EU to introduce a demand to the WTO for a new dispensation. But the EU wants full market access for agricultural goods to these countries, while imposing a ‘WTO-plus’ agenda encompassing regulations on investment, government procurement and competition.
The whole WTO, bilateral and regional trade agenda is dominated by (mostly transnational) corporations who fight for a larger share of the world market, access to cheap raw materials and products, and freedom to invest in developing countries. Corporations and their lobby groups often provide useful information for the understaffed and disconnected Commission bureaucracy. They act as a replacement for the citizen-based constituency which the Commission lacks.
In current international economic policy economic growth and profits for a minority prevail over the supply of basic needs and the well-being of all living beings. The effects of the current policies of liberalisation, privatisation and deregulation and the priority to exports on the world market are :
a. local economies and markets are weakened and sometimes destroyed ; b. small and medium enterprises lose out, while TNCs profit ; c. natural resources in the South are exhausted ; d. food security and job security are under threat ; e. nature and biodiversity are under very severe pressure.
The disadvantages of the past CAP reforms
The CAP-reforms since 1992 which made the corporate-driven WTO-agreement possible, have led to a crisis among EU-farmers ; arable, dairy and beef farmers are forced to produce below production costs, and are forced to leave the countryside in huge numbers. Instead of the fair prices they used to get, they now get low prices partly compensated by direct payments. The small farmers loose out first, because they have less access to these subsidies. In Eastern Europe the situation is even worse, for example the smallest farmers didn’t have access to the SAPARD-budget. Also after accession to the EU, small farmers can’t comply to corporate driven hygienic standards, to supply their own local and national market.
The EU keeps on saying to the public that these reforms are beneficial for the environment, landscape and nature. But farmers who get a lower income are unable to improve their green services to society. The opposite occurs : because farmers have to reduce costs landscape and nature are less well attended to. Small farmers whose work resulted in an attractive and sustainable countryside are the first to move out of business.
The significantly increased agricultural budget after the first reforms in 1992, is mainly used to maintain Europe’s market share on markets in other countries which were at one time supplied by local farmers. The (increased !) EU-budget was used to replace remunerative prices and export subsidies by direct payments. So dumping goes on, because these payments make trade below the cost of production possible. Moreover the EU refuses to implement effective supply management to prspip.php ?page=event&id_article= over production.
The multinationals (TNCs) in food processing, retail and trade are profiting because they buy products at very low prices. Because of the huge concentration in the food chain, it are not the consumers who profit from lower prices but these companies, who force producers to decrease prices even further. There is still no effective EU policy to stop this concentration in food industry and retail sector.
Many small producers in developing countries and Eastern Europe are unable to deliver according to uniform and hygienic standards applied by the EU and TNCs. So in Eastern Europe they are pushed off the local market which they supplied for centuries. Instead these previously sustainable farmers have to stop farming, or grow bigger and implement a western style agriculture, which depends heavily on fossil fuels and capital. Also farmers from Western Europe who move to Eastern Europe put a pressure on the available land and compete with small Eastern European farmers.
The current high prices for agricultural products are no reason to go on with liberalisation. First the current price increase doesn’t still make up for the decreases in the last decades. Also it is not sure this situation will last for a long time. The increase of prices in the sspip.php ?page=event&id_article=ies was followed by a price decline after. So there is no guarantee at all that on a liberalized world market, agricultural prices stay high enough to cover costs to farmers. The contrary can even well happen. At the other side it’s possible that prices will increase too much for consumers. So it’s useful to keep the basic tools tat can be used in order to regulate the strategic food markets, for instance supply management and storage capacities (see proposals below).
Energy, climate change and agriculture : rethink the Western industrialized agricultural model based on world trade
Among others Gore, Stern and the IPCC showed the western world that we need to go far beyond Kyoto, and reduce green house gases by 60 to 80%. Otherwise we will have to bear enormous economic costs and it will have disastrous effects on agriculture, food security, nature and biodiversity all over the world. It is also becoming more and more clear that the EU strongly needs to reduce its dependency on fossil fuels from abroad.
In July 2007 the International Energy Agency predicted possible problems in oil supply after 2009 because oil demands rises more quickly than supply. This is in line with the prediction that around 2011 the peak in global oil production will be reached. With this in mind the Western style industrialised agricultural model uses on average two to ten times more (fossil fuel) energy than it produces, due to transport, production and processing, and the use of chemicals (pesticides, herbicides) and fertilizers. In comparison organic farming consumes at most one third of this energy, and traditional agriculture in Asia even supplies up 50 to 65 times more energy than it needs. Nevertheless the current trend is to replace this form of agriculture which is beneficial for humans and the environment by a western style agriculture as part of ‘development’.
The EU is dependent for its animal feed on soy beans from Latin America. Increasingly this genetically modified soy, while the European consumer doesn’t want Genetically Modified Organism (GMO’s) in his food. At an alarming rate the EU is also becoming dependent on palm oil from Asia and Latin America and on sugar cane from Latin America for its biomass and agrifuels. These imports are very harmful to food security, nature and the livelihood of indigenous people in the countries of origin.
One of the drivers of this dependency is the EU directive that in 2010 5,75 % and in 2020 10% of all fuels should be produced from bio mass. This will have a devastating impact on the South. It will increase our dependence on scarce natural resources in the South even more. It is also because of its energy inefficiency absolutely a false answer to Kyoto protocol demands. Moreover trans-national seed companies use this directive to push GMO’s into European agriculture.
A thorough revision of the Common Agricultural Policy and more coherence is needed
For all the reasons mentioned above we oppose the current policy and provide an alternative. Farmers’ movements, consumers and environmental organisations, development NGOs and trade unions could unite in this opposition. They represent the majority of the EU citizens and see that current EU policy runs against their interests. The next years provide an excellent opportunity for this alternative because :
In 2007 and 2008 there will be a Health Check of the CAP. Some member states, for instance the UK, have already said that the current agricultural budget needs to decrease. It is becoming more and more difficult to legitimize the current CAP to the public, when we look to the problems mentioned before.
In 2008 it will also be decided whether the system of milk quota will be continued after 2015. The indications are that the European Commission and the majority of the member states would like to abolish this system. Due to the CAP-reform of 2003 the guaranteed prices paid to dairy farmers have been decreased so much that the EU’s previously rather effective policy is becoming untenable and vulnerable to criticism. Again it shows that the EU is listening to corporations who want a bigger share of the world market for dairy products, rather than to people pleading for a sustainable dairy production, cows in the field and a fair income for dairy farmers in the North and the South.
The following proposals are an effective and efficient alternative for the current policy :
In line with the original goals of the CAP
Reform the CAP in line with the goals of the treaty of Rome (1957), signed by the six founding fathers of the European Union which is the base of the original CAP ;
stabilise agricultural markets,
ensure a fair income to farmers,
food security for all European citizens,
a fair price for consumers.
The main instruments to reach these goals were :
a minimum price floor for arable, dairy and beef products,
the EU intervened in the market if prices fell too low, for example by storage,
import tariffs on products from abroad, so that these products were more expensive to food industry and trading companies.
Later, when the growth of the EU production leaded to over production, other tools were used, such as production quotas (for sugar and milk). However the quota still left room for subsidised export.
But learn from mistakes made, especially after 1992
This policy was successful in achieving sufficient food autonomy for Europe and until 1992 in reaching fair incomes for arable and dairy farmers. But it still led to devastating environmental impact, less food safety for consumers and a progressive social desertification in the rural areas with a constant loss of farmers. It also led to overproduction and consequently dumping in other countries, including developing countries, with the help of export subsidies. This harmed these countries’ agriculture. The EU decided to solve these problems only partially, and by taking the wrong measures. Instead of effectively managing supply, Europe decided to lower guaranteed prices and replace export subsidies by direct payments, in order to maintain its export position on the world market. They did this in cooperation with the US, as a part of the Agreement on Agriculture in the WTO. So this agreement was mainly developed to serve the interests of agribusiness that needed new markets for this overproduction. Meanwhile the direct payments to EU-farmers only partly compensated for the reduction of guaranteed prices. The authorities tried to legitimise this support by so called ´decoupling from production´, and coupling it with demands in the field of the landscape, environment and animal welfare. In fact these reforms led to lower farmers’ incomes, prolonged dumping, and negative effects on the environment, landscape, nature and animal welfare. And it led also to lower prices paid by companies in the agribusiness and trade. So let’s now correct the mistakes that were made, and let’s make the CAP more effective. . The health check of the CAP is a good moment to add new elements that society demands from agriculture. A new and coherent CAP should be in place as soon as possible. We don’t have to wait until 2013.
Measurers within the CAP
The much-needed change is only possible when EU farmers get a fair price for a product that meets all requirements from society in the field of the environment, fair labour conditions, nature and landscape. And this fair price is only possible by re-imposing import tariffs and supply management on all arable, dairy and beef products (including food, feed and small scale bio mass). This managed trade is especially necessary for those products which up to this day are exported with direct or disguised trade-distorting subsidies because of over production. Would this be against international regulations ? Not against the original international regulations ! The GATT (forerunner of the current WTO) made it possible for each country to protect its own food production by means of import tariffs as long as it didn’t harm the livelihood of farmers in other countries by means of subsidised exports.
In exchange for this fair price, all trade distorting direct payments and export subsidies can be abolished (not before the fair price has been introduced !). In contrast to what the general public thinks farmers don’t need subsidies, they need a fair and stable remuneration for their work if it provide provide society with safe food and feed, conservation of nature, an attractive landscape and sustainable energy. To meet with society’s expectations, this means also that this fair price should be high enough to cover the costs of higher standards regarding the environment, labour and animal welfare.
Because this fair price will not be paid by subsidies but by the consumers, the current agricultural budget could be used much more effectively. No more money is necessary for export subsidies and trade distorting direct payments. So more budget is available for sustainable agriculture by family farmers, conserving landscape and nature, and job creation in rural areas. This includes paying those farmers who provide their services to society and the environment, services which exceed the normal standards or are necessary in particular situations. Green services which should be paid for are nature and landscape conservation, sustainable energy production, solar and wind power and small-scale bio energy production and organic food production. Moreover farmers in less favoured areas should be paid from this budget, so their livelihood is secured and the landscape is protected. Fair labour conditions must be at the base of this reform and all future subsidies must be linked to social requirements such as the number of workers employed and worker security commitments. Member states could co-finance these activities. The EPFS emphasis that budget for rural development should not be used for raising competitiveness and efficiency to be ready for the world market.
Measures outside the Common Agricultural Policy ; coherence between policies on agriculture, employment, energy, climate change and environmental protection
The CAP is no longer about agriculture only. The issues outlined at the beginning of this text should also be addressed. So we need more coherence between the CAP and other policy areas. The EU should aim for sustainable food production by European farmers based on European natural resources, fair labour conditions, nature conservation and an attractive landscape, recognizing the farmers multifunctional role and his wider role in a sustainable, fair and innovative model of production. It should be recognized that sustainable family farming and food production plays a crucial role in society. We should resort to effective policies to provide an answer to the current crises in agriculture. Moreover this could encompass policies to provide energy security and to counter climate change.
With the measures mentioned before we want a CAP which policy focuses mainly on production for the EU market ; in relation not only with food but also with all feed, and with part of the sustainable energy (which needs to replace fossil fuels in the next decade). This policy needs to be combined with coherent policy in other areas :
Effective policy on saving energy and renewal energy, both in and outside agriculture. That in itself might contribute to the EU becoming less dependent on energy supply from outside the EU. But because of the threat of climate change the EU – and European agriculture – should also drastically decrease its addiction to fossil fuels. This is possible by a replacement of fossil fuels by solar power, wind power and small scale bio energy, for example from manure, waste and green algae. But it should not be fulfilled by means of large scale imports of biomass from the South. So we reject the EU-directive which imposes that in 2010 5.75% and in 2020 10% of all fuels should be replaced by agrifuels.
The EU and member states should tax fossil fuels instead of labour. Within the EU this will lead to reduction of food miles, localisation of food production and reduction of fertilizers and chemicals use. In this way sustainable agriculture models like organic farming will be enhanced.
European and national subsidies should be removed from infrastructure projects that favour trans-national corporations (roads, harbours and airports) and stimulate use of fossil fuels. By financing these projects the government creates unfair competition to small and medium enterprises which produce for local markets, and use much less fossil fuels.
Put much more emphasis on prspip.php ?page=event&id_article=ing concentration in the food chain by trans-national companies (involved in supplying inputs to farmers, processing, international trade and retail) by a more effective EU competition policy. By linking food production and processing to the local markets, farmers, small scale processor and traders can create more added value.
Results and strategy
This reform will lead to a fair income for farmers, no more dumping, more instead of less employment in the countryside also for family farmers, a more localised food production and energy system, great savings in use of fossil fuels especially because of less transport, an effectively used EU budget, fair prices for consumers, more food safety, less greenhouse gases, and last but not least : a drastically decreased demand on scarce natural resources in developing countries for consumption in the North. In this way it’s perfectly possible to legitimize the maintenance of an agricultural budget in a reformed Common Agricultural Policy to the public.
Developing countries would support this reform in the WTO negotiations, because the majority of their farmers and small and medium enterprises also lose out on a liberalised world market, not only in agriculture but also in industry and services. So hopefully alliances between trade unions, farmers’ movements, small and medium enterprises, consumers, development and environmental organisations will support this alternative. Many civil society organisations are already pushing for similar changes. Agricultural scientists have proved in their research that our European agriculture, could be preserved along the lines described above and that we would all thrive by it.
Edited by Guus Geurts Member of the Dutch Platform
Comments are included from the EPFS-meeting in September 2007 and from Gert Engelen (Dutch speaking Belgium Platform), Marileyne Cailleux (French Platform), Greet Goverde (Dutch Platform), Nora McKeon (Italian Platform), Andrea Ferrante (Italian Platform), Daniel van der Steen (French speaking Belgium Platform) and Stephen Thornhill (EDA Ireland).