“The correlation between poverty and obesity can be traced to agricultural policies and subsidies.” — Michael Pollan, award-winning U.S. writer and intellectual.
It is the ultimate modern paradox. On the one hand, agricultural subsidy stabilizes food supply, has fuelled green revolutions the world over, and has delivered sustainable farming systems.
But on the other, it has created massive distortions in global markets and political gridlock in world trade talks. It has bankrolled large corporations in developed countries while Third World subsistence farming suffers.
But the political will to retain it remains as strong as ever — while it may have evolved over the last 30 years, neither the U.S. nor the EU have done much to reduce the billions paid to their farmers.
This support appears to be buoyed up by public opinion — less than a quarter of those polled recently in Canada’s leading paper The Globe and Mail said support should be dropped. A discussion on farm subsidies in the New York Times revealed plenty of suggestions to fix a broken system, but few wished to scrap it altogether.
But what about the world’s farmers? As Europe prepares for another round of CAP reform and the US Congress reviews the country’s Farm Bill, the timing could not be better to gauge the feelings of farmers the world over.
That’s why Farmers Weekly, the U.K.’s best-selling farming title, is conducting a poll of the world’s farmers. We’re partnering with Canada’s Country Guide and four other leading farming titles around the world in one of the most ambitious online projects the global agricultural community has seen. Almost a million farmers are being asked for their views on the future of agricultural subsidy.
Taking part is easy – all you need to do is visit the Global Poll page, where you’ll find four choices for the future purpose of agricultural subsidy. Just indicate which one you agree with most. They are:
- Protecting national/regional food supply
- Stabilizing consumer prices
- Protecting the environment
- I don’t think agriculture should be subsidized
Farmers Weekly is also running a forum where you can contribute further to the debate.
So how do farmers feel about agricultural subsidy? The feelings of a New Zealand sheep farmer, in a country where subsidy was scaled back to zero in less than a year, would be remarkably different to those of a Welsh hill farmer. A corn grower in the U.S. Midwest, enjoying prices buoyed by ethanol subsidy, would disagree with Canadian beef producers struggling with high feed prices.
And as Asian, Indian and Russian markets show massive potential for exports, which of the globe’s biggest producers will steal the march? Few are better placed to comment on farmers’ concerns and aspirations than the editors of the world’s leading farming publications.
With agriculture currently the darling of an otherwise despondent American economy, radical reform of the U.S. Farm Bill when it is reviewed in 2012 looks unlikely. Commodity prices are high, exports are buoyant and the U.S. is aggressively seeking to seize what global market share it can.
“There’s less money to work with, but the conservative view is that subsidy is a question of national security, and that’s gaining a lot of support,” notes Dan Looker, business editor of Successful
Farming, the nation’s largest-circulation farming publication. “Most commodity growers also seek the status quo.”
Currently U.S. farmers receive around US$5.4 billion in direct payments, which averages to around US$25/acre. Income-loss payments, substantial in the past, have dropped on the back of rising world prices — dairy farmers are expected to receive US$90 million in forthcoming years, against US$1 billion in 2009.
It is the ethanol subsidy — US45 cents per gallon, amounting to $5.8 billion — that proves to be the most controversial. “This has had the effect of supporting corn prices at much higher levels than we’ve seen in the past. No one is going to starve as a result, but it has contributed to a modest rise in food prices and a significant effect on feed. It’s hit the meat and dairy sectors hard.”
New Zealand’s agriculture has been through the pain of losing all subsidy. But what has evolved since the mid-1980s is strong and thriving industry, especially in the dairy and lamb sectors.
“New Zealand farmers see themselves as leading suppliers of protein to the world,” claims Tim Fulton, editor of New Zealand Farmers Weekly.
“They’re very close to the market and have grown accustomed to the wild currency swings that influence returns for their products. The best part of what they do is efficiency of production — in lamb and milk they are the among the lowest cost producers in the developed world.”
The grass-based system puts producers in a particularly strong position when others are struggling with high feed prices. The IFCN (International Farm Comparison Network) puts the average NZ 350-cow dairy herd on a cost-comparison level with the world’s most efficient subsistence farmers.
“The government is pushing hard for freer trade. In the Pacific and Asian markets this is looking more positive, so producers are able to circumvent the world trade deadlock.”
Producing 27.5 per cent of the world’s dairy trade, 95 per cent of New Zealand’s production is exported. The country benefits from free-trade agreements with China and many others in the Pacific, while lucrative new markets are opening up, such as India.
“Farmers here don’t resent the highly subsidised European farming. Increasingly they feel their approach has little in common with it. If freer trade with Europe comes, it’ll be good, but they’re not relying on it.”
In Canada, your eligibility for subsidy depends on what you grow, and to some extent where.
With 75-80 per cent of wheat exported, crop and livestock farmers sell at North American or international market prices. A national program, AgriStability, pays out to those farmers that are generally profitable, but are hit by market price dips or crop failure.
A substantial part of the country’s C$8 billion of farm support is supply management, that protects Canadian dairy and poultry producers. Consumer prices are put at a level that gives farmers a reasonable profit, keeping milk in Canadian shops currently about C60 cents per litre above U.S. prices.
While Canadian processors often complain about the higher prices, consumers don’t usually object says John Morriss, editorial director of Country Guide, Canada’s largest national farming magazine. “No government would dare touch (supply management). It’s sacrosanct,” says Morriss.
But it comes under fire in world trade talks. “It’s fine for our friends in Australia and New Zealand to throw nasty comments about our closed market. They don’t share 5,000 kilometres of border with the world’s largest subsidized agricultural economy.”
Sharing that border has its ups and downs. Recently, cattle and pig producers have had to face sharp discounts due to U.S. country-of-origin-labelling (COOL) laws, which require both animals and meat to be segregated when sent to the U.S.
As if an unsupported market wasn’t enough, Australian farmers have to deal with one of the world’s unkindest climates.
“Farmers here have just come through 12 years of bad drought, and now there are floods ruining crops in Victoria,” says Ed Gannon, editor of the country’s biggest rural paper The Weekly Times. “When the weather is that much of a challenge, subsidy is the least of your worries.”
The last of the floor prices, that used to support commodity markets, fell away in the early 1990s. But there’s a thriving export market that the resilient Australian farmers have been keen to supply.
“Beef has been selling into Korea extremely well since foot and mouth hit in 2003. Japan has also been an important market. China has been buying a lot of live heifers.”
Around half the national beef production is exported, while 900,000 head of live cattle and four million live sheep leave the country every year. Forty per cent of the barley and 62 per cent of wheat is also exported.
“Dairy is the biggest issue we have with Europe and the U.S. Overproduction and talk of price support hit producers here hard,” Gannon continues.
“Their view is that European farmers are an overprotected bunch that need to operate in the cold, harsh reality of the unprotected world. We operate in a freer environment, but really get caught up in other countries’ protectionism.”
South African farmers are among the least supported in the world. But it’s not the lack of subsidy that holds them back.
“Africa is the last place on the planet that still hasn’t tapped its great potential for agricultural development,” notes Chris Burgess, editor of South Africa Farmers Weekly. “If we could sort out the political situation it would come on in leaps and bounds.”
Preferential trading agreements with the EU mean South Africa has a good trade in wine, fruit and wool, while import tariffs protect red meat and wheat. But international aid to the continent is seen as richer economies dumping unwanted produce, and this stymies efforts by individual countries to build a better agricultural economy.
“In South Africa there’s a difference between white, commercial larger farmers and new black entrants, who receive start-up support. Since recent price hikes, commercial farmers have become more valued. They don’t want subsidy. They want better infrastructure and less interference from first-world countries who seem to write the rule book.”
To class the rest of African agriculture as subsistence is short-sighted, he adds. “Many nations have made huge strides towards self-sufficiency, and some of our best farmers have been poached. There’s embezzlement and corruption to deal with, but there is great potential.”
A whopping 57 billion euros (C$75.5 billion) of subsidy pumps through the veins of European agriculture, with 4.2 billion euros coming to U.K. farmers.
Seldom popular, the pressure to reduce the payments made under the Common Agricultural Policy (CAP) has never been greater as European finance ministers grapple with colossal budget deficits.
“Since subsidy was decoupled from production, there’s now more emphasis on farmers being paid for the eco-system services they provide – from care for soils and water to retaining biodiversity and the social fabric of rural life,” notes the editor of UK Farmers Weekly, Jane King.
“It’s difficult to imagine the 27 EU countries involved will agree to change the CAP much when it is reviewed in 2012. But farmers will be scrutinized more closely for the value they deliver.”
There’s talk of greening the CAP further, to ensure payments benefit the wider environment. But many seek more emphasis on food production, to protect supplies for the world’s wealthiest continent of 500 million consumers.
“In austere times you have to be realistic about what the CAP can achieve. But if U.K. farmers are to meet the global challenges that lie ahead, it must ensure U.K. agriculture remains productive and competitive.”
— Tom Allen-Stevens is a contributing writer to Farmers Weekly and operates Wicklesham Farm near Faringdon in Oxfordshire, England.