A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Farm Bill versus CAP: The gamble on insurance programs

May 19, 2014


Preventing the destructive consequences of the price volatility of agricultural markets, confronting epizootic diseases and climate hazards––similarly to the consequences of El Nino and its expected severe toll––and ultimately insuring stable and gainful incomes: These are goals shared by farmers on both sides of the Atlantic.

Yet, the path and various means implemented to reach the objectives are diverse, with an indisputable success for the United States through the adoption of a new Farm Bill, whereas the new European CAP does not bring any solution that is up to the challenges to be met.

One of the Farm Bill’s key objectives is to guarantee a safety net to farmers, thus provide them with minimum sales revenues and a level of profit margin to safeguard the American agricultural competitiveness, both at home and abroad.

The counter-cyclical and insurance scope of the Farm Bill has been developed since 2002, and has been upheld by the increase of harvest/sales programs to forestall market instability and climate hazards.

Consequently, the 2014 Agriculture Act that has recently been adopted, and is currently being implemented, focuses on numerous, complex and counter-cyclical insurance programs. Shoring up support measures should, in theory, increase the AMS (Total Aggregate Measurement of Support) used by the WTO, that groups in a single figure all support measures by product, and others besides by product.

Yet, using the de minimis provisions other than by product is at the core of the American support system, since governmental support to the various insurance programs accounts for 96 percent of all support paid in the framework of the de minimis provision, other than by product ($8.9 billion out of $9.1 billion). Since the authorized maximum amount of support in the framework of de minimis support other than by product was set at $19 billion, there is in fact an actual leeway of $9.8 billion.

Consequently, the United States could double the amounts earmarked for insurance support without including them in the calculation of their AMS. An increase in budget expenditures in the Amber Box will therefore have no impact on their WTO position (quite the contrary).

As far as Europe is concerned, it has an actual leeway of €15.6 billion, for a four percent saturation of the de minimis level, an amount that could be earmarked to develop governmental support to insurance and counter-cyclical mechanisms. Assuming the same saturation ratio as in the United States (48 percent), the annual available appropriation would be €7.8 billion, against €0.7 billion today…

In the end, strengthening insurance mechanisms is a threefold winning strategy for the U.S. and could be so for the European Union:
    - Tightening of insurance coverage and protection mechanisms;
    - No negative consequence on WTO position;
    - Improvement of positioning regarding competition (especially EU) in the current negotiations (WTO and TTIP among others).



Page Header
Paris, 13 December 2018