Sustainable Agriculture A natural part of the structural adjustment process ?

Sustainable Agriculture: balance three main goals Environmental health Environmental health Economic profitability Economic profitability Socio-economic equity Socio-economic equity

Commodity agriculture Agriculture is incorporated into an global and corporate-controlled food system Agriculture is incorporated into an global and corporate-controlled food system Driven by twin goals of productivity and efficiency Driven by twin goals of productivity and efficiency Maximizing profitability by balancing 1) land 2) labor 3) capital and 4) management Maximizing profitability by balancing 1) land 2) labor 3) capital and 4) management

Why the change Industrial Agriculture now creates multiple problems Industrial Agriculture now creates multiple problems - threat to the environment - threat to the environment - threat to natural resources - threat to natural resources - threat to the quality of life for - threat to the quality of life for farmers and rural communities - and the society as a hole farmers and rural communities - and the society as a hole

Approaches to change Government can regulate and set standards – code of best practice Government can regulate and set standards – code of best practice Let the invisible hand of the market do the job Let the invisible hand of the market do the job Post industrial approaches – people driven solutions Post industrial approaches – people driven solutions

The Dutch Manure Quota System Regulation and markets to achieve environmental outcomes and Sustain rural communities

The Dutch System of Manure Quota Over-application of manure effluent can result in runoff and ponding of water on the soil surface. Both activities can lead to surface and ground water contamination. Bacteria and nitrate are the two most dangerous pollutants in drinking water Impact on human health especially infants Also reduced vitality and increase stillbirth, low birth weight and slow weight gain in livestock

Holland: The Environmental Problem in Animal Agriculture: Between the early 1960s and the mid 1980s: Pigs increased by 10 million (450%) Pigs increased by 10 million (450%) Poultry increased by 50 million (125%) Poultry increased by 50 million (125%) Consequently, a manure surplus developed of + 19% Consequently, a manure surplus developed of + 19% The EU standard of 50mg of nitrate pr liter of groundwater was exceeded on 60% of agricultural land The EU standard of 50mg of nitrate pr liter of groundwater was exceeded on 60% of agricultural land First warning sounded in the 1970s First warning sounded in the 1970s

1 st Policy Action: A Moratorium the Interim Law for Restriction of Pig and Poultry Farms (November 1984). the Interim Law for Restriction of Pig and Poultry Farms (November 1984). No new farms in the worst affected areas No new farms in the worst affected areas Restrictions on expansions on existing farms (10%) Restrictions on expansions on existing farms (10%) It was not enough: the number of pigs went up with 7.5% per year from 1983 to 1987 the number of pigs went up with 7.5% per year from 1983 to 1987 Eutrophication of surface and ground water became of international concern (cut nutrients into North Sea by 50%) Eutrophication of surface and ground water became of international concern (cut nutrients into North Sea by 50%)

The 3 Phase Plan Phase I: 1987 – 1990 The Manure Law (Phosphate control) The Manure Law (Phosphate control) Manure quota and book-keeping systemManure quota and book-keeping system The Soil Protection Act The Soil Protection Act Application rates and timing of land applicationApplication rates and timing of land application Phase II: 1991 – 1994 The Environmental Management Act The Environmental Management Act Guidelines on ammonia and cattle farming under the Nuisance ActGuidelines on ammonia and cattle farming under the Nuisance Act Phase III: 1995 – 2000 Markets for manure quotas established Markets for manure quotas established

Overview of the Quota System Manure production rights limited to 125 kg of phosphate per hectare Manure production rights limited to 125 kg of phosphate per hectare Farmer grandfathered a ‘reference amount’ Farmer grandfathered a ‘reference amount’ Based on inventory of animals and standards for manure production for 3 animal categories Based on inventory of animals and standards for manure production for 3 animal categories 1.Cattle and turkey 2.Goat, sheep, fox, nutria and ducks 3.Swine and poultry Difference between phosphate intake through feed and output through meat, egg etc Difference between phosphate intake through feed and output through meat, egg etc Established phosphate deficit and surplus farms Established phosphate deficit and surplus farms Deficit farmers could continue to expand Deficit farmers could continue to expand Surplus farmers needed additional registered manure production rights for expansion Surplus farmers needed additional registered manure production rights for expansion

Trading in Manure Production Rights 1987 – 93 : transfer of manure production rights restricted to land transfers: transfer of manure production rights restricted to land transfers: Part of transfers of whole farmPart of transfers of whole farm With marriage and heritageWith marriage and heritage With annulment of lease contractWith annulment of lease contract Expansion only by buying land Expansion only by buying land However, If buying additional land the associated ‘reference amount’ would first fill the gap on existing land. However, If buying additional land the associated ‘reference amount’ would first fill the gap on existing land. Expansion of animal production therefore limited to new farms on cropping landExpansion of animal production therefore limited to new farms on cropping land

1994–97: Relaxed trading These restrictions limited investment These restrictions limited investment Manure production right renamed manure quotas 1) land based and 2) non-land based quotas Manure production right renamed manure quotas 1) land based and 2) non-land based quotas 1) 125 kg of phosphate per ha of land 2) diff. between land based quota and the animal based reference amount Both 1 and 2 made animal specific Both 1 and 2 made animal specific Only non-land based quotas were tradable Only non-land based quotas were tradable

1994–97: Relaxed trading Reference amount adjusted for improvement in feed quality Reference amount adjusted for improvement in feed quality The difference between reference amount and adjusted reference amount made non-tradable The difference between reference amount and adjusted reference amount made non-tradable Quota cut by 25% when traded Quota cut by 25% when traded Could only trade from animal category 3) to 2) to 1), not in reverse order – restrict expansion in swine production Could only trade from animal category 3) to 2) to 1), not in reverse order – restrict expansion in swine production

Trading in Manure Production Rights

1995: Nutrient Accounting System proposed In 1995 quotas for pork and poultry cut by 30% in response to the development of low- nutrient feed, In 1995 quotas for pork and poultry cut by 30% in response to the development of low- nutrient feed, 1997 further problems with swine fewer, policy move to reduce swine quotas by further 25% by farmer protest 1997 further problems with swine fewer, policy move to reduce swine quotas by further 25% by farmer protest 1 Jan 1998 NAS and building regulation introduced and the 30% abandoned 1 Jan 1998 NAS and building regulation introduced and the 30% abandoned 1 Sept 1998 pork quotas reduced to reflect 90% of herd as part of the aim to reduce herd by 25% by Sept 1998 pork quotas reduced to reflect 90% of herd as part of the aim to reduce herd by 25% by 2000 Quota buy-out program for the swine sector Quota buy-out program for the swine sector

1998 Nutrient Accounting System Farmers challenged 10% reduction in court. In 2000 the Court upheld decision but exempted the planned 15% reduction in 2000 Farmers challenged 10% reduction in court. In 2000 the Court upheld decision but exempted the planned 15% reduction in 2000 Nutrient accounting for phosphor and nitrate Nutrient accounting for phosphor and nitrate Nutrient surplus subject to a high tax to encourage farmers in surplus regions to truck manure and spread it on grain farms in deficit region Nutrient surplus subject to a high tax to encourage farmers in surplus regions to truck manure and spread it on grain farms in deficit region Building requirements for new buildings to reduce ammonia emissions Building requirements for new buildings to reduce ammonia emissions Condition for purchase of extra quota: improvement for buildings to reduce ammonia emission Condition for purchase of extra quota: improvement for buildings to reduce ammonia emission

Regional Differences and Geographical Restrictions on Trading Surplus: manure production in excess of 125 kg of P 2 O 5 /ha Surplus: manure production in excess of 125 kg of P 2 O 5 /ha Deficit: less than 125 kg Deficit: less than 125 kg Surplus region: small intensive farms Surplus region: small intensive farms Deficit region: larger farms with little experience in confined livestock production Deficit region: larger farms with little experience in confined livestock production Trade allowed within regions Trade allowed within regions And from surplus to deficit And from surplus to deficit In surplus regions expansion also required purchase of ammonium rights – these only tradable within counties In surplus regions expansion also required purchase of ammonium rights – these only tradable within counties Reduce willingness to expand in surplus regions Reduce willingness to expand in surplus regions

Evaluation: Price of quota: Great variation between regions, animal categories and over time Price of quota: Great variation between regions, animal categories and over time Volume of trade Volume of trade very low 1.5% of total quota the first year very low 1.5% of total quota the first year By 1997 accumulated to 8.1% and 9.5% for surplus and deficit regions respectively By 1997 accumulated to 8.1% and 9.5% for surplus and deficit regions respectively

Evaluation: Reasons for low trade: Reasons for low trade: Administrative procedures; buyers had to demonstrate adequate manure disposal plan. During first year 37% of plans rejected. Therefore high transaction costs (as much as 17% of price)Administrative procedures; buyers had to demonstrate adequate manure disposal plan. During first year 37% of plans rejected. Therefore high transaction costs (as much as 17% of price) Policy uncertaintyPolicy uncertainty Initially many had excess quotas (10-25%, gave high numbers for reference amount calculations). Impact on demand and priceInitially many had excess quotas (10-25%, gave high numbers for reference amount calculations). Impact on demand and price Restrictions between regions and categories impeded tradeRestrictions between regions and categories impeded trade The 25% retirement rule increased the willingness to acceptThe 25% retirement rule increased the willingness to accept

Evaluation Geographic pattern of trade Geographic pattern of trade Encouraged farmers in surplus region to sell land and quota and set up in deficit regionEncouraged farmers in surplus region to sell land and quota and set up in deficit region Encouraged exit adjustment Encouraged exit adjustment Environmental effectiveness Environmental effectiveness Animal numbers and nutrients emission have been reduced – but why and by how much?Animal numbers and nutrients emission have been reduced – but why and by how much? Especially pork farmers have not been convinced of the environmental benefitsEspecially pork farmers have not been convinced of the environmental benefits Dynamic Effects and Innovation Dynamic Effects and Innovation Incentive to development of methods to reduce emission. Especially nutritional development in the pork industryIncentive to development of methods to reduce emission. Especially nutritional development in the pork industry

Post-industrial approaches Less input intensive farming methods Focus on value and quality Civic agriculture Civic agriculture Organic farming Organic farming Alternative agriculture Alternative agriculture Biodynamic farming Biodynamic farming Ecologically grown Ecologically grown Local food systems Local food systems Community supported agriculture Community supported agriculture The Environmentally friendly producer and consumer - Eco-labeling Shade grown coffee Shade grown coffee Plantation timber Plantation timber Fair Trade not Free Trade

Low-till or no-till Slide from Southwestern Minnesota from

Higher Soil Organic Matter Nutrients for crop growthNutrients for crop growth Soil aggregation and porositySoil aggregation and porosity Stabilizes soil against erosionStabilizes soil against erosion Soil Resources Slide from Southwestern Minnesota from

Lower Soil Compaction Enhances water infiltration Enhances water infiltration Prevents rapid runoff and soil erosion Prevents rapid runoff and soil erosion Soil Resources Slide from Southwestern Minnesota from

Higher Soil Moisture (samples taken during grain-filling period – Aug./Sept.) Soil Resources Slide from Southwestern Minnesota from

Higher Soil Invertebrate Populations Contribute to Nutrient RecyclingContribute to Nutrient Recycling Maintain porous soil (burrowing)Maintain porous soil (burrowing) Control crop pestsControl crop pests Soil Resources Slide from Southwestern Minnesota from

Lower Runoff Volume Porous soil structures Porous soil structures Cover crops (crop rotation) Cover crops (crop rotation) Crop residue (no till) Crop residue (no till) } increase infiltration Water Resources Slide from Southwestern Minnesota from

Lower N Loss in Runoff Crop Rotation – deep roots of perennials take up nutrients Crop Rotation – deep roots of perennials take up nutrients No Till – low erosion prevents nutrient loss No Till – low erosion prevents nutrient loss Water Resources

Lower Fossil Fuel Use Decreased fertilizer and pesticide use Decreased fertilizer and pesticide use Decreased machinery and fuel use Decreased machinery and fuel use Energy Use

Higher Corn and Soybean Yields Higher soil fertility Higher soil fertility Higher soil moisture Higher soil moisture Economic Productivity

Environmentally friendly production Shade grown coffee

Environmentally friendly production Plantations - the alternative to native forest logging – sustainable production ‘seal of approval’ Plantations - the alternative to native forest logging – sustainable production ‘seal of approval’ Forest clearing project sponsored by the Indonesian government.

Fair trade – not free trade FairTrade Mark –Banana from Haiti an independent guarantee that disadvantaged producers in the developing world are getting a better deal

Civic Agriculture Smaller scale, locally oriented enterprises Direct marketing offers farmers the advantage of: High value products: organic grown, specialties grass fed grass fed free range free range Cut out of middle-level handlers pick-your-own, farm stands pick-your-own, farm stands growers marked, orders, consumer participation in production growers marked, orders, consumer participation in production Craft-style products Better land management practices Healthier soils and animals A community connection about food production

Trends in: Direct sales farmers in US mainland reported direct sales farmers in US mainland reported direct sales 1997 – farmers in US mainland reported direct sales 1997 – farmers in US mainland reported direct sales 5% of all farms with sales totaling US $ 500 million, but less than 1% of all agricultural sales 5% of all farms with sales totaling US $ 500 million, but less than 1% of all agricultural sales

Demographic characteristics Farmers in areas in and around metropolitan areas can benefit Farmers in areas in and around metropolitan areas can benefit Farmers in areas with a population of affluent, well-educated urban consumers Farmers in areas with a population of affluent, well-educated urban consumers 13% of all farms in Northeast 13% of all farms in Northeast 3.1% of all farms in the South 3.1% of all farms in the South 4% of all farms in the Midwest 4% of all farms in the Midwest

Water in Australia- another example

Historical context Policy legacy resulted in over allocation of water and development of unsustainable land Policy legacy resulted in over allocation of water and development of unsustainable land Mechanisms needed to Mechanisms needed to facilitate and encourage a reallocation of resources to more efficient and higher valued producers in more sustainable locationsfacilitate and encourage a reallocation of resources to more efficient and higher valued producers in more sustainable locations provide water for ecosystemsprovide water for ecosystems

Council of Australian Governments Following international trends in 1994 CoAG introduced a reform package: Pricing Pricing Water entitlements Water entitlements Water Trading Water Trading Formally recognizing the environment Formally recognizing the environment Institutional reforms Institutional reforms Consultation and public education Consultation and public education Part of an IGA on a National Competition Policy and related reforms

Council of Australian Governments 2003 review identified three shortcomings uncertainty over the long-term access to water was still hampering investment; uncertainty over the long-term access to water was still hampering investment; Current water market arrangements are preventing markets from reaching their full potential; Current water market arrangements are preventing markets from reaching their full potential; concern over the pace of securing adequate environmental flows and adaptive management systems. concern over the pace of securing adequate environmental flows and adaptive management systems.

2004 National Water Initiative Clear, secure and nationally-compatible characteristics for water access entitlements defined as a perpetual share of the consumptive pool Clear, secure and nationally-compatible characteristics for water access entitlements defined as a perpetual share of the consumptive pool a transparent, statutory-based water planning process defining the consumptive pool and the process of allocating water a transparent, statutory-based water planning process defining the consumptive pool and the process of allocating water statutory provisions for environmental and other public benefit outcomes statutory provisions for environmental and other public benefit outcomes

2004 National Water Initiative returning currently over allocated or overused systems to environmentally sustainable levels of extraction returning currently over allocated or overused systems to environmentally sustainable levels of extraction progressive removal of barriers to trade in water progressive removal of barriers to trade in water assignment of risk arising from future change in the availability of water for consumption assignment of risk arising from future change in the availability of water for consumption address future adjustment issues that may impact on water users and communities address future adjustment issues that may impact on water users and communities

The Murray Darling Basin 1996 Cap on water use at 93/94 level 1996 Cap on water use at 93/94 level 2002 Living Murray process 2002 Living Murray process 2004 IGA on addressing overallocation as the first step to provide 500 GL for six sites 2004 IGA on addressing overallocation as the first step to provide 500 GL for six sites Water Sharing Plans – NWI no guidelines as to how to share the cost of this Water Sharing Plans – NWI no guidelines as to how to share the cost of this

State legislation and policy South Australia 1997, NSW 2000, Queensland 2000 – New Water Acts: South Australia 1997, NSW 2000, Queensland 2000 – New Water Acts: Separation of land and waterSeparation of land and water Separation of ownership and use of waterSeparation of ownership and use of water Planning processesPlanning processes Water marketsWater markets Environmental issuesEnvironmental issues But absolutely inconsistent across states But absolutely inconsistent across states

State legislation and policy Victoria White Paper: Introduce the separation of land and water – max 10% of total entitlements of source Introduce the separation of land and water – max 10% of total entitlements of source Share based entitlement Share based entitlement Non-tradable site use licenses linked to land Non-tradable site use licenses linked to land Some channels need to be closed – compensation for loss of land value Some channels need to be closed – compensation for loss of land value New tradable low security license against 20% reduction in pool for the environment New tradable low security license against 20% reduction in pool for the environment

State legislation and policy Victorian White Paper continued: Channel capacity entitlement Channel capacity entitlement Separate capacity charge – better economic signals Separate capacity charge – better economic signals Government committed to provide the initial water for environmental flow Government committed to provide the initial water for environmental flow Promise to consider supporting communities suffering from export of water out of districts Promise to consider supporting communities suffering from export of water out of districts

State legislation and policy Generally changed allocation practice Generally changed allocation practice Transferred most risk management from water authorities to irrigators Transferred most risk management from water authorities to irrigators Water markets looked upon as one of the main instruments to alleviate impact of new policy paradigm by both Federal, State and Basin Water markets looked upon as one of the main instruments to alleviate impact of new policy paradigm by both Federal, State and Basin

Have markets achieved objectives Water moved to more efficient users Water moved to more efficient users Water moved to higher valued users Water moved to higher valued users Water consolidate into larger units Water consolidate into larger units

Conclusions Change in policy paradigm in Australia aggressive due to the extend of the impact of past policies Change in policy paradigm in Australia aggressive due to the extend of the impact of past policies Transferred most risk management to irrigators Transferred most risk management to irrigators Reductions in entitlement inevitable in most catchments Reductions in entitlement inevitable in most catchments Water markets relied upon to manage this process Water markets relied upon to manage this process

A sustainable Water Management Framework