Building Sustainable Agriculture and Food Systems in Europe and globally –

A critical review of the Common Agriculture Policy

and proposals for change

Alexandra Strickner, astrickner@iatp.org

Overview

• Importance of Agriculture and challenges today

• Role of the CAP and trade liberalization policy in today’s situation

• Food Sovereignty as an alternative

Why is agriculture an important issue?

• Food (and water) are basis for human survival

• Social dimension: – approx. 3 billion people live of farming – large part

in developing countries– 850 million people are undernourished– 30 million people each year die of hunger

• Ecological dimension: without sustainable agriculture – basis for food production erodes

Today’s reality in agriculture• Industrialization of agricultural production

– less family farmers, larger farms, aweful labor conditions

– Negative impact on natural resources (water, biodiversity, soil erosion etc.) and food quality

– today 15 mio hectar of farmed land for production of soy beans as feed for animals (= 50% of all farmed land)

• Corporate concentration along the whole food chain

• Trade liberalization: many developing countries today net food importers

• Price Volatility and Instability for farmers and consumers

Ag markets as an hourglass

Farmers

Processors / retailers

consumers

Market concentration: Facts and figures

• 50% of the world’s commercial seeds sales are controlled by 10 multinationals

• 3 leading agrochemical companies (Bayer, Syngenta, BASF) control 50% of the market

• 75% of cereals trade is controlled by 2 companies (Cargill and ADM) (Vorley)

• 40% of coffee trade is controlled by 4 companies (Vorley)

• 69% of the retail market in Europe is controlled by the 30 top retail firms

OECD – FAO Outlook for world crop prices by 2015

Today’s challenges agriculture

• Increased demand for food– Growing world population– Changing diets in emerging economies

• Climate Change – impacts on resources

• Energy Security – New demand on agriculture –

agrofuels!

The role of the Common Agriculture Policy and Trade Liberalization

• CAP than and today• The role of trade liberalization

– EU’s External Trade Agenda– WTO

European Common Agriculture Policy - History

• Aims and Principles (introduced in 1957)– Achieving Food Security – Single market, unified price policy, communitarian

preference, parity aim– Structural policy to reduce regional inequalities– Common funding

• Common market organizations for grains, sugar, dairy and beef– These would indirectly support the prices of other products– Intervention, tariffs, export subsidies, and sugar quotas– Supplementary CMOs for some products

European Common Agriculture Policy – developments

• Industrialization of farming in EU – productivist model– negative environmental impacts– decrease of number of farmers

• Lack of control of production

overproduction (diary, grains, beef, sugar)

• EU strategy to get rid of overproduction– Dumping into developing countries markets by using

export subsidies (grains, dairy, beef)– Violaton of GATT rules (protection of farmers allowed if

production and export controls applied)

European Common Agriculture Policy – Solution of these problems

• Farmer solution: production controls – 1984 : milk quotas

• Agribusiness solution:

– reduction of internal price support to make dumping cheaper

– Introduction of direct payments to compensate farmers income loss

The direct payments game(MacSharry reform 1992 Agenda 2000 Mid-term review)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

millio

n E

uro

s

export

direct payments

oils stor

ot

Evolution of EU expenses for arable agriculture, 1980-2002

The direct payments game(MacSharry reform Agenda 2000 Mid-term review)

World market World marketInternal EU market

World price World price

EU price

Intervention price

Import tariff Export subsidy

The direct payments game(MacSharry reform Agenda 2000 Mid-term review)

Direct payments

World market World marketInternal EU market

World price

World price

EU price

Intervention price

Import tariffExport subsidy

World price

ROLE OF INTERNATIONAL TRADE AGREEMENTS

• WTO Agreement on Agriculture• Bilateral/Biregional Free Trade Agreements

in 2000 - 86 , 159 in 2007 (UNCTAD)

• EU: Global Europe – Competing in the World– Economic Partnership Agreements with ACP countries– Negotiations for FTAs started with Central America,

Andean Pact, India, ASEAN etc. – Objectives: Global competitiveness of EU corporations– Demands: abolishment of tariffs, quotas etc.

Trade and Development?• More trade does not equal with development

– see expierences of most developing countries• Peasant and Family Farming cannot

compete with highly industrialized agriculture

• Carnegie Endowment study on WTO/Doha: all developing countries but few would be losers

• All developed nations used high protection to build domestic markets and « competitive comapnies

Winners and losers of this CAP and free trade agreements?

Winners• Agriculture & Food Industry – cheaper input prices• Larger Farmers in EU – continuous concentration

Losers• Family farmers in EU – diminishing in number• Peasents and Family Farmers in the Global South• Environment and natural resources – North and

South• Consumers – less healthy and safe food

CONCLUSIONS

Context today:• Agricultural model in crisis - CAP reform starting• Free Trade Model in crisis – WTO Doha Deadlock

Challenges:• Need and opportunity to develop alternative

proposals• Debate on sustainable model of agriculture more

than ever important!• Need to address market power issue