On June 21, 2012, the Senate voted 64 to 35 the Agriculture Committee’s proposal to reform the Farm Bill.
Presented as one of the Farm Bill most sweeping reforms in recent decades, the legislation includes the end of decoupled direct payments to strengthen the crop insurance program, so that farmers’ revenues are better protected against adverse weather and excessive price fluctuations.
Admittedly, some experts believe that this insurance system will not shelter farmers in case of prolonged price slumps, but the House of Representatives, which must now work on the bill, will most likely confirm the direction taken by the Senate, while at the same time reinforce the system of safety nets for agricultural revenues. In addition, ad-hoc counter-cyclical mechanisms would, if needed, rapidly be implemented (we must remember the massive interventions to correct the Fair Act erring ways…).
On the other side of the Atlantic, the challenges and stakes involved are identical: high volatility of prices and of agricultural incomes, economic crisis and budgetary discipline… Yet, the draft of CAP reform presented by the European Commission on October 12, 2011 is moving in a totally different direction than the American Farm Bill. The European project seems more like an intermediary legislation in the continuation of previous reforms than a genuine reform, since the decoupling rationale is retained and strengthened, and no true safety net for agricultural revenues is recommended.
The ongoing reforms in the United States and in Europe thus provide a different vision of agriculture and the means to be implemented to meet the challenges it faces. The United States has indeed a strategic vision of agriculture by seeking to support farmers’ incomes as a matter of priority. This is not the case in Europe that mainly focuses on agricultural budget constraint without setting any financial framework to administer it.
Considering the scope of current issues, it is essential, however, to undertake a real CAP reform that provides farmers with the required visibility to meet current and future challenges.
The proposal recently presented by momagri shows that another CAP is possible, a CAP able to lastingly stabilize farmers’ incomes at remunerative levels, while abiding by the European Union budget imperatives1.
1 Please see momagri’s proposal at http://www.momagri.org/UK/editorials/Another-CAP-is-possible-momagri-proposes-countercyclical-tools-to-stabilize-farmers-revenues-and-fight-against-the-destructive-effects-of-price-volatility_1124.html