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.

All European countries need regulation mechanisms to support their agricultural activities

momagri Editorial Board

While negotiations on the “post-2013 CAP” are continuing (the talks regarding the EU financial outlook starting January 1, 2014 will be initiated during the second half of 2010 under the Belgian presidency), countries are reiterating their positions, without any notable change from the anti-CAP camp or that of the pro-regulation. At the latest informal meeting of the Council of Agriculture Ministers held in Merida, Spain, on June 1, 2010, London thus confirmed that it remains totally committed in favor of a radical reform of the CAP, to “lighten the burden of regulation”, according to the very words of Caroline Spelman1. the British Minister of Agriculture. The goal of the United Kingdom was always clear: To reduce spending tied to the CAP. Nordic countries, such as Sweden and Denmark, are supporting the British approach.

But a recent study published by the Netherlands Wageningen University in early June 2010, provides new arguments, which cast a shadow on the merit of such strategy2. Under the title “Farm Viability in the European Union”, the study assesses the impact of abolishing decoupled payments of direct subsidies (or 60 percent of subsidies paid in the framework of the CAP) on farming incomes in the EU-25. The results are surprising:
    1. The countries most affected by the abolition of decoupled payments of direct subsidies are Denmark, Sweden and the United Kingdom, that is to say the very same nations campaigning for a dismantling of the CAP. In these respective countries, 29 percent, 29.2 percent and 43 percent of farms would post negative incomes following the abolition of decoupled payments of direct subsidies and would experience serious financial difficulties that would threaten farm survival;

    2. Close to 65 percent of farms in the EU-25 would retain global positive incomes, but such revenues would be lower than the opportunity costs. Farming incomes would be sufficient to ensure the survival of farms, but the compensations for farmers’ labor would be below any the compensations they could claim in other economic sectors (provided the labor market could totally include them). Only less than 20 percent would generate positive incomes over the opportunity costs.
Assuming a situation where food security would be a secondary objective, where agriculture would not represent a strategic imperative, some analysts could come to the conclusion that agriculture not longer has a future. But what this study really shows is the fact that farming needs another type of public involvement that is not based on decoupled subsidies. If the already precarious and extremely unstable incomes of farmers no longer take economic realities into consideration, the abolition of all subsidies––the central hypothesis of the study––might result in the demise of a great majority of farmers. It thus demonstrates that the single payment scheme, decoupled to production, is a genuine threat, since by “manipulating” the level of these payments, we are condemning already weakened farmers. There is only one step between dependency and disappearance.

But if we recognize the strategic significance of food security in an increasingly unstable and disconnected world and, consequently, the fact that agriculture is an activity that must be preserved at all cost, the United Kingdom and the nations supporting its position in the negotiations on the CAP reform are in the wrong. Because European agriculture, and these countries’ agricultural activities IN THE FIRST PLACE, would be dangerously threatened by the abolition of current public subsidies, even though they do not represent the best type of public policy.

In addition, the Wageningen University study gets the credit for demonstrating that there is more convergence than it seems among the various European agricultures. All European Union countries need regulation and support mechanisms, so that farmers can make a living from their activities.

If some still think that the current CAP is costly, its amount is to be put in perspective. On one hand, it only represents 0.35 percent of the European Union GDP3, and on the other, it is highly probable that it is largely lower than the cost of an agricultural and food crisis, which will surely occur if markets are deregulated. And let’s not forget all what the CAP allows to protect: A vigorous agricultural sector for quality foods, social balance, as well as thriving and dynamic rural areas.

1 Please see momagri June 7, 2010 article “London stays the same liberal course regarding the CAP
2 http://www.lei.dlo.nl/publicaties/PDF/2010/2010-011.pdf
3 Or a maximum of €0.31 per European Union resident and per day, based on commitments of €57 billion for the 2010 CAP, divided by the 491 million people in the 27 nations of the European Union and by 365 days. We would reach an even lower figure if we based it on payments.
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Paris, 16 June 2019