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Sustainable Agriculture as a Producer of Public Goods Louise O. Fresco.

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Presentation on theme: "Sustainable Agriculture as a Producer of Public Goods Louise O. Fresco."— Presentation transcript:

1 Sustainable Agriculture as a Producer of Public Goods Louise O. Fresco

2 Threefold Increase in Human Population since 1960 Threefold Increase in Human Population since % more Calories per Person 25% more Calories per Person Food Prices in steady Decline Food Prices in steady Decline Expansion of Trade in Food/Agriculture Expansion of Trade in Food/Agriculture Proportion of People working in Food/Agriculture in sharp Decline Proportion of People working in Food/Agriculture in sharp Decline New biological Technology to fine tune Crop and Animal Characteristics but unease about technology New biological Technology to fine tune Crop and Animal Characteristics but unease about technology Land saving due to yield increases but emissions and destruction of habitats Land saving due to yield increases but emissions and destruction of habitats The Rapid Modernization of Agriculture (after 1945)

3 Objectives of sustainable agricultural policies Increase productivity Increase productivity Reasonable standard of living for farmers Reasonable standard of living for farmers Sufficient supply of food Sufficient supply of food Reasonable prices for consumers Reasonable prices for consumers focus on quantity

4 New policy objectives: contributing to sustainability and prosperity Not only by producing food (incl. feed and raw materials) Not only by producing food (incl. feed and raw materials) But also by delivering green services: nature and landscape management But also by delivering green services: nature and landscape management High standards of animal welfare, food safety High standards of animal welfare, food safety Rural development Rural development

5 Avoiding past Mistakes: biological Control, Code of Conduct Pesticides Avoiding past Mistakes: biological Control, Code of Conduct Pesticides Food Safety: a Priority (CODEX + HACCP) Food Safety: a Priority (CODEX + HACCP) New ecological Services of Agriculture New ecological Services of Agriculture Quality and niche Markets Quality and niche Markets Integrated Production Chains (from Farm to Fork) Integrated Production Chains (from Farm to Fork) Learning from past mistakes - No Doomsday scenario –

6 Globalisation – unprecedented movements of humans, products and pathogens leading to uniformity - but renewed interest in locality

7 Ignorance and Nostalgia

8 Sequence of reforms: the example of the CAP/EU Stimulate productivity increases (since 1962) Stimulate productivity increases (since 1962) Stimulate non-production (since 1983) Stimulate non-production (since 1983) Common rural development policy (since 2000) Common rural development policy (since 2000) Stimulate production of public services for which no market exists (after 2013, hopefully…) Stimulate production of public services for which no market exists (after 2013, hopefully…)

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10 Requirements for new agricultural policies: Basically market-oriented Basically market-oriented Better application of subsidiarity Better application of subsidiarity Allow for diversity within the EU-27 Allow for diversity within the EU-27 But keeping the internal market intact But keeping the internal market intact Target specific incentives for public services Target specific incentives for public services Include incentives for innovation Include incentives for innovation WTO-proof while meeting the challenges of globalisation WTO-proof while meeting the challenges of globalisation fundamental reform towards targeted payments and towards rebalancing roles of EU / member states (subsidiarity) fundamental reform towards targeted payments and towards rebalancing roles of EU / member states (subsidiarity)

11 Why financial aid to agriculture? To compensate for substantial natural handicaps, if society prefers continuation of agricultural production in a certain region To compensate for substantial natural handicaps, if society prefers continuation of agricultural production in a certain region To compensate for restrictions due to higher standards than in other countries To compensate for restrictions due to higher standards than in other countries To pay for specific public services supplied by agriculture To pay for specific public services supplied by agriculture To stimulate innovation towards sustainability (as in other sectors of the economy) To stimulate innovation towards sustainability (as in other sectors of the economy)

12 Public services Not all social values require public services Not all social values require public services Often regulating markets will suffice Often regulating markets will suffice Public services in case of complex externalities: public or semi-public goods Public services in case of complex externalities: public or semi-public goods Not a joint product of agricultural production: additional efforts needed Not a joint product of agricultural production: additional efforts needed Products for which no market exist: rewards are dependent on collective action Products for which no market exist: rewards are dependent on collective action

13 From social value to public service waarden Actieve overheidszorg gewenst? Nee, private waarde Voldoende levering zon Ja, marktordening volstaNee,public levering Social Values Public guarantee needed? Active role of government needed? No, private value Yes, public interestNo, guarantee will suffice Sufficient supply without collective action Yes, market regulationNo, public service Yes, private value

14 Public value, but public service too? Not a public service (market regulation will suffice): Not a public service (market regulation will suffice): food safety (international standards), animal welfare (no international standards) animal welfare (no international standards) Public service: supply requiring collective action: Public service: supply requiring collective action: landscape management nature and biodiversity management

15 Nine Dimensions of Agriculture Production, employment, land use Production, employment, land use Food security Food security Food safety, human and animal health Food safety, human and animal health Animal welfare Animal welfare Biodiversity and nature conservation Biodiversity and nature conservation Landscape and non agricultural land use Landscape and non agricultural land use Environment and climate management Environment and climate management Water management (blue services) Water management (blue services) Rural development Rural development

16 Complex externalities in agriculture: negative and positive Negative (harm to the natural environment, to public health etc.): Negative (harm to the natural environment, to public health etc.): the polluter pays principle Positive (benefits to others): how to reward these in order to optimize the supply of e.g. attractive landscapes, breeding grounds for birds and water storage? Positive (benefits to others): how to reward these in order to optimize the supply of e.g. attractive landscapes, breeding grounds for birds and water storage?

17 Large scale commercial farms… or…

18 ... marginal areas and local values... marginal areas and local values

19 Farm typology for public support Farms that … … produce in normal regions … produce in handicapped regions … produce only food (feed etc.) 1. After transition: only support for innovation 2. flat rate plus sharpened cross- compliance … also supply green services 3. targeted reward 4. combination of 2. and 3.

20 New agricultural policies: the role of the state Co-financing compensations and rewards Co-financing compensations and rewards Ensuring competition and an effective internal market Ensuring competition and an effective internal market External trade policies External trade policies Common rules and standards for food quality, animal welfare, the environment etc. Common rules and standards for food quality, animal welfare, the environment etc. Basic market stabilisation (in case of emergencies) Basic market stabilisation (in case of emergencies)

21 New Roles for Agriculture High potential areas as food baskets High potential areas as food baskets New forms: industrial agriculture and aquaculture, integrated with urban areas New forms: industrial agriculture and aquaculture, integrated with urban areas Low potential areas for landscape, water management, tourism, biological agriculture and local products Low potential areas for landscape, water management, tourism, biological agriculture and local products

22 Long-term issues for reforming agriculture Climate change or variability, CO2 storage and trade Climate change or variability, CO2 storage and trade Biobased economy and biofuels Biobased economy and biofuels Effects of high food prices Effects of high food prices Growth in demand for food and feed Growth in demand for food and feed Animal welfare, fair trade and ethical issues Animal welfare, fair trade and ethical issues Biological agriculture Biological agriculture

23 Ultimately, we need to restore the linkage between urban and rural areas, between farmers and consumers


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