Sustainable agriculture: Economic dimensions in a global context

1. Sustainable agriculture: Economic dimensions in a global context A module of the Globalizing Agriculture Education Project

2. Module Learning Outcomes • To be able to describe several critical economic issues related to agricultural sustainability • To be able to explain and apply these issues in a site-specific context using international examples, and compare and contrast with the US. • International Case Study: Basque Farmers in the French Pyrenees

3. What is “sustainable agriculture?” The USDA definition of ''sustainable agriculture‘’, as defined in the 1990 Farm Bill “An integrated system of plant and animal production practices having a site-specific application that will over the long-term: * Satisfy human food and fiber needs. * Enhance environmental quality and the natural resource base upon which the agriculture economy depends. * Make the most efficient use of nonrenewable resources and on-farm resources and integrate, where appropriate, natural biological cycles and controls. * Sustain the economic viability of farm operations. * Enhance the quality of life for farmers and society as a whole.” (U.S. Code Title 7, Section 3103)

4. Understanding ‘economic profitability’ The high cost of becoming a farmer if you did not grow up in a farming family. Agricultural economies are increasingly globalized – how can we keep money in rural communities? Can you think of more? What are some of the economic issues in our food and agriculture system? Agricultural lands are under pressure from other land uses, like development, that affects farm land prices. Farm families often have at least one member working off-farm to make ends meet. Input prices are increasing.

5. An ‘umbrella’ for programs & practices Sustainable Agriculture “Sustainable agriculture” is a general term for programs and practices that pursue the goals of balancing economic profitability, environmental stewardship and social responsibility. Certifications or programs Practices Conservation tillage Certified Naturally Grown USDA Organic Reducing external inputs Integrated Pest Management Biodynamic Rotation NRCS Conservation programs Community-based food systems & many others

6. An interdisciplinary perspective Sustainable Agriculture integrates economic, environmental and social goals.

7. Understanding ‘economic profitability’ It can be cost-prohibitive for young people to enter farming if they did not grow up in a farming family. Input costs are rising Can you think of more? What are some of the economic issues in our food and agriculture system? There is increasing pressure on farm lands for development and other non-agricultural land uses, affecting farm land prices. Farm families often have at least one member working off-farm to make ends meet and acquire specific benefits, like health insurance. Input costs are rising.

8. Economic policies affect US agriculture • US Ag Policy created in “Farm Bills” • Omnibus legislation, deals with bulk of USDA programs simultaneously • Renewed ~5 years • Date back to 1973, similar legislation to 1933 • “Food, Conservation and Energy Act of 2008’ • Governs through FY 2012

9. Exploring economic issues in US Agriculture • Agriculture is supported economically through the “commodity payment program” • Direct and counter-cyclical payment program Administered by the USDA Farm Service Agency • List which crops qualify… • Should we “subsidize” agriculture? • Picture of corn field.

10. Exploring economic issues in US Agriculture • Picture/logo of cooperatives or “food hub” type stuff. • Re-building community food systems. • Some factoid about money leaving rural areas. • How do we keep money from agriculture in communities where the food is produced?

11. Exploring economic issues in US Agriculture • Picture of a farmer’s market or some kentucky cheese. • Direct marketing • More examples of on-farm sales • Capturing value • Diversification. • How can farmers get more value out of their farms and agricultural products?

12. Economic viability: a global agricultural issue • These issues are not unique to US agriculture. The salience of each of these issues may vary by region of the world, but agricultural communities everywhere are facing these same issues. • By comparing and contrasting the ways communities deal with economic issues, we learn about these general concepts, and the ways communities share or diverge in their approaches to dealing with them. • Example: Basque Farmers in Soule, France. Maybe pics from all the case studies?

13. Where/what is the European Union? • Today: Understanding the policy framework (and subsidies) in European Agriculture • Common Agricultural Policy (CAP) • Case study: How traditional European farmers are dealing with changes to their agricultural economies. 27 countries in 2005 (including Bulgaria & Romania

14. European Union (EU) basics • 1957 - Treaty of Rome creates EC6- France, West Germany, Italy, the Netherlands, Belgium, Luxembourg join • Criteria for membership: country must be democratically governed, geographically European, and economically viable, and accept all laws and rules that apply to EU members • 1973- United Kingdom, Ireland, Denmark join • 1981- Greece joins • 1986- Spain and Portugal join • 1989- East and West Germany unite • 1995- Austria, Finland and Sweden join (EU15) • 2004- Poland, Hungary, Czech Republic, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Cyprus, Malta join (EU 25) • 2007- Bulgaria and Romania join (EU 27)

15. Average agricultural land use (percent) European Union ~ 40% United States ~ 46%

16. EU Agriculture: Economic Importance • The EU generally accounts for about 15-20 percent of the world's agricultural exports and imports. • The EU-27 is one of the most important trading partners and competitors of the United States in world agricultural markets. • European agricultural policy has long had a major impact on world agricultural markets, and the EU is one of the key participants in World Trade Organization (WTO) negotiations on agricultural trade.

17. EU Agriculture: Overview • Major agricultural products • Livestock products (including dairy), grains, vegetables, wine, fruits, and sugar • Major exports • Grains (wheat and barley), dairy products, poultry, pork, fruit, vegetables, olive oil, and wine • Major imports • Soybeans and soybean products, cotton, tobacco, tropical products, off-season fruits and vegetables, coffee, cocoa, tea, and spices. (USDA ERS data).

18. Farm Land by Size Class in EU-27

19. EU Common Agricultural Policy (CAP) • CAP is the only sector of the EU with common policy that is agreed upon by all member nations. • Proposed by the European Commission, agreed to by agricultural ministers in the member countries, and reviewed by European Parliament. • What is it? • Farm policy aimed to promote: • Common prices • Common financing • Community preference

20. EU Common Agricultural Policy (CAP) • What is it? • The primary objectives of CAP are to: • increase agricultural productivity; • ensure a fair standard of living for farmers; • stabilize markets; • guarantee regular food supplies; and • ensure reasonable prices to consumers. • Main policy instruments • Agricultural price supports • Direct payments to farmers • Supply controls • Border measures www.bbc.co.uk

21. Significance of the CAP • The only common policy in EU • A large portion of EU spending • 45% of EU spending in 2008 • Down from 70% in 1980’s and 1990’s • 55 billion euros in 2008 • 5 billion market support • 37.2 billion direct payments to farmers • 12.6 billion going to rural development • Can cause tension within member states, as member states pay in based on GDP, but receive payments based on ag sector (Ex. Germany vs. France) http://capreform.eu

22. History of the CAP • Europe food insecure after WWII • Memories of starvation in Netherlands, Germany, UK • Most member states experiencing prolonged meat, fat and sugar shortages (except France) • An uneasy agricultural alliance between producing and consuming states EU member states: France, West Germany, Italy, the Netherlands, Belgium, Luxembourg

23. History of the CAP • 1957-1990’s • A focus on surplus and food security • Created large surpluses of sugar, grains, butter, etc. • Largely a price-support focus • Council of Agriculture Ministers sets minimum prices for all main foodstuffs. If prices fall below set prices, EC committed to buy products at that price (‘intervention price’). Overproduction of cereals, beef, butter, milk powder and wine in times of low commodity prices has led to massive government-owned surpluses and further drove down prices…an expensive cycle! • How was this maintained? Tariffs did not allow exports to flood EC/EU markets with commodities below internal market price

24. History of the CAP • 1992 Reform • Reduced support prices and shift to direct payments • Compensated farmers for lower prices with direct payments based on historical yields (average of previous payments), production is not always required for farmers to receive payments • Introduced new supply control measures • Affected the grain, oilseed, protein crop (field peas and beans), beef, and sheep meat markets • To be eligible for payments, had to reduce acreage EU Member states: EC6 + UK, Ireland, Denmark, Greece, Spain, Portugal, East Germany (via unification)

25. History of the CAP • Agenda 2000/2003 Reforms • Reduction in intervention prices • Direct payments to cover only ½ loss from price support cuts • Allowed for “agri-environmental payments” • Decoupled from production- called single farm payments • Based on 2000-2002 historical payments, but must comply with environmental, animal welfare, food quality and safety concerns • Establishes 2 pillars • Pillar I spending- direct payments and price support policies • Pillar II spending- rural development policies EU15 getting ready to expand to EU25

26. Impacts of the CAP • Has led to a heavily subsidized agriculture • Payments average 25% of EU farmer income, on average; 7% in US, on average • Maintained rural livelihoods • Expensive! • Tensions between agricultural community in new and old member states- will the lesser developed block eat the whole pie?

27. Case Study: Farmers in the Basque province of Soule, France

28. Transhumance: A Pastoral Tradition • A traditional grazing system of moving animals to high mountain pastures in the summer months • In Soule, animals move up in May, down in September • Traditionally animals led up on foot, often a 10-12 mile walk. Now mostly transported in trucks, except in remote pasturage • System developed in the middle ages, and continues today, but area has shrunk dramatically • Mostly sheep, but increasingly more cowsand horses

29. Transhumance: A Pastoral Tradition Why transhumance? - Farm sizes too small to support grazing year round in lower valleys. - Resource use changes based on land ownership and time of year. • Traditional grazing patterns in Soule • Winter – in town on family farm lands • Spring and fall – move to lands owned by villages (the coteaux, or hills). • Summer – move to regionally-managed high pastures (estives), first to lower areas and then to high mountain areas; shepards stay in permanent cabins.

30. Transhumance: A Pastoral Tradition • The highlands of Soule.

31. Changing economy, changing practices • Prior to 2003, CAP funding was linked to production • Up to 66% of household farm income was from CAP funding • CAP funds, combined with high milk prices in the 1980’s and 1990’s allowed and encouraged farmers to expand flocks. • Flock size up ~40% between 1988 and 2000 • 1988: 90-100 ewes to 125-150 ewes • Decoupling of CAP funds with production in 2003 • Move to “multifunctional agriculture” goals for the EU, with less price support and quota systems How are the farmers responding to potential reduction in EU-level support?

32. Changes to farming traditions • Increasing competition, etc. • Mechanization • Diversification – cows and sheep • Marketing – more direct marketing and lobbying to develop an Appellation d’Origine Controlee for artisan cheeses. • Need for off-farm income with integration into EU economy and removal of price supports.

33. Increasing efficiency: mechanization Increasing use of cows – why?

34. Adding value: “quality” labeling In 2000, 438 of the 867 farms in Soule sold under a “sign of quality.” -37% percent of farms -29% of milk volume (Appellation d’OrigineControllée)

35. Adding value: Cooperatives CAP rural development funds (Pillar II) used to build local cheesemaking cooperative run by local farmers.

36. Adding value: On-farm sales

37. Regional trends • Agritourism • Websites devoted to eco-tourism • Sales of family farm homes as “summer homes”

38. Summary slide Summary questions that tie to learning outcomes/overall project goals.