Sustainable Agriculture as a Producer of Public Goods

1. Sustainable Agriculture as a Producer of Public Goods Louise O. Fresco

2. The Rapid Modernization of Agriculture (after 1945) • Threefold Increase in Human Population since 1960 • 25% more Calories per Person • Food Prices in steady Decline • Expansion of Trade in Food/Agriculture • Proportion of People working in Food/Agriculture in sharp Decline • New biological Technology to fine tune Crop and Animal Characteristics but unease about technology • Land saving due to yield increases but emissions and destruction of habitats

3. Objectives of sustainable agricultural policies • Increase productivity • Reasonable standard of living for farmers • Sufficient supply of food • Reasonable prices for consumers focus on quantity

4. New policy objectives: contributing to sustainability and prosperity • Not only by producing ‘food’ (incl. feed and raw materials) • But also by delivering ‘green services’: nature and landscape management • High standards of animal welfare, food safety • Rural development

5. Learning from past mistakes - No Doomsday scenario – • Avoiding past Mistakes: biological Control, Code of Conduct Pesticides • Food Safety: a Priority (CODEX + HACCP) • New ecological Services of Agriculture • Quality and niche Markets • Integrated Production Chains (from Farm to Fork)

6. Globalisation– unprecedented movements of humans, products and pathogens leading to uniformity - but renewed interest in ‘locality’

7. Ignorance and Nostalgia

8. Sequence of reforms: the example of the CAP/EU • Stimulate productivity increases (since 1962) • Stimulate non-production (since 1983) • Common rural development policy (since 2000) • Stimulate production of public services for which no market exists (after 2013, hopefully…)

10. Requirements for new agricultural policies: • Basically market-oriented • Better application of subsidiarity • Allow for diversity within the EU-27 • But keeping the internal market intact • Target specific incentives for ‘public services’ • Include incentives for innovation • WTO-proof while meeting the challenges of globalisation • fundamental reform towards targeted payments and towards rebalancing roles of EU / member states (subsidiarity)

11. Why financial aid to agriculture? • To compensate for substantial natural handicaps, if society prefers continuation of agricultural production in a certain region • To compensate for restrictions due to higher standards than in other countries • To pay for specific public services supplied by agriculture • To stimulate innovation towards sustainability (as in other sectors of the economy)

12. Public services • Not all social values require public services • Often regulating markets will suffice • Public services in case of complex externalities: public or semi-public goods • Not a ‘joint product’ of agricultural production: additional efforts needed • Products for which no market exist: rewards are dependent on collective action

13. From social value to public service Social Values waarden Public guarantee needed? Yes, private value No, private value Nee, private waarde Active role of government needed? Actieve overheidszorg gewenst? Yes, public interest No, guarantee will suffice Voldoende levering zon Sufficient supply without collective action Ja, marktordening volsta Nee,public levering Yes, market regulation No, public service

14. Public value, but public service too? • Not a public service (market regulation will suffice): food safety (international standards), animal welfare (no international standards) • Public service: supply requiring collective action: landscape management nature and biodiversity management

15. Nine Dimensions of Agriculture • Production, employment, land use • Food security • Food safety, human and animal health • Animal welfare • Biodiversity and nature conservation • Landscape and non agricultural land use • Environment and climate ‘management’ • Water management (blue services) • Rural development

16. Complex externalities in agriculture: negative and positive • Negative (harm to the natural environment, to public health etc.): the polluter pays principle • Positive (benefits to others): how to reward these in order to optimize the supply of e.g. attractive landscapes, breeding grounds for birds and water storage?

17. Large scale commercial farms… or…

18. ... marginal areas and local values

19. Farm typology for public support

20. New agricultural policies: the role of the state • Co-financing compensations and rewards • Ensuring competition and an effective internal market • External trade policies • Common rules and standards for food quality, animal welfare, the environment etc. • Basic market stabilisation (in case of emergencies)

21. New Roles for Agriculture • High potential areas as food baskets • New forms: industrial agriculture and aquaculture, integrated with urban areas • Low potential areas for landscape, water management, tourism, biological agriculture and local products

22. Long-term issues for reforming agriculture • Climate change or variability, CO2 storage and trade • Biobased economy and biofuels • Effects of high food prices • Growth in demand for food and feed • Animal welfare, fair trade and ethical issues • Biological agriculture

23. Ultimately, we need to restore the linkage between urban and rural areas, between farmers and consumers