SUSTAINABLE AGRICULTURE: ECONOMIC DIMENSIONS IN A

GLOBAL CONTEXTA module of the Globalizing Agriculture Education

Project

Module Learning Outcomes

To be able to describe several critical economic issues related to agricultural sustainability

To be able to explain and apply these issues in a site-specific context using international examples, and compare and contrast with the US. International Case Study: Basque Farmers

in the French Pyrenees

The USDA definition of ''sustainable agriculture‘’, as defined in the 1990 Farm Bill

“An integrated system of plant and animal production practices having a site-specific application that will over the long-term: * Satisfy human food and fiber needs. * Enhance environmental quality and the natural resource base

upon which the agriculture economy depends. * Make the most efficient use of nonrenewable resources and on-

farm resources and integrate, where appropriate, natural biological cycles and controls.

* Sustain the economic viability of farm operations. * Enhance the quality of life for farmers and society as a whole.”

(U.S. Code Title 7, Section 3103)

What is “sustainable agriculture?”

Understanding ‘economic profitability’

Agricultural economies are

increasingly globalized – how

can we keep money in rural communities?

Input prices are increasing.

Agricultural lands are under

pressure from other land uses,

like development,

that affects farm land prices.

The high cost of becoming a farmer if you did not grow up in a

farming family.

Farm families often have at

least one member working off-farm to make

ends meet.

What are some of the economic

issues in our food and agriculture

system?

Can you think of more?

An ‘umbrella’ for programs & practices

“Sustainable agriculture” is a general term for programs and practices that pursue the goals of balancing economic profitability, environmental stewardship and social responsibility.

Sustainable Agriculture

Certifications or programs

Practices

USDA Organic

Certified Naturally

GrownBiodynamic

NRCS Conservation

programs

Rotation

Conservation tillageReducing

external inputs Integrated

Pest Management

& many others

Community-based food

systems

An interdisciplinary perspective

Sustainable Agriculture integrates economic, environmental and social goals.

Understanding ‘economic profitability’

Input costs are rising

It can be cost-prohibitive for

young people to enter farming if

they did not grow up in a

farming family.There is

increasing pressure on farm

lands for development and

other non-agricultural land uses, affecting

farm land prices.

Input costs are rising.

Farm families often have at

least one member working off-farm to make ends meet and acquire specific

benefits, like health

insurance.

What are some of the economic

issues in our food and

agriculture system?

Can you think of more?

Economic policies affect US agriculture

2008 Farm BillTitle I Commodities

Title II Conservation

Title III Trade

Title IV Nutrition

Title V Credit

Title VI Rural Development

Title VII Research & Related Matters

Title VIII Forestry

Title IX Energy

Title X Horticulture & Organic Agriculture

Title XI Livestock

Title XII Crop Insurance & Disaster

Title XIII Commodity Futures

Title XIV

Miscellaneous

Title XV Trade & Tax

US Ag Policy created in “Farm Bills” Omnibus legislation,

deals with bulk of USDA programs simultaneously

Renewed ~5 years Date back to 1973,

similar legislation to 1933

“Food, Conservation and Energy Act of 2008’ Governs through FY

2012

Exploring economic issues in US Agriculture

Agriculture is supported economically through the “commodity payment program” Direct and counter-

cyclical payment programAdministered by the

USDA Farm Service Agency

List which crops qualify…

Should we “subsidize” agriculture?

Picture of corn field.

Re-building community food systems. Some factoid about

money leaving rural areas.

How do we keep money from agriculture in communities where the food is produced?

Picture/logo of cooperatives or “food hub” type stuff.

Exploring economic issues in US Agriculture

Direct marketing More examples of on-

farm sales Capturing value Diversification. How can farmers

get more value out of their farms and agricultural products?

Picture of a farmer’s market or some kentucky cheese.

Exploring economic issues in US Agriculture

Economic viability: a global agricultural issue

These issues are not unique to US agriculture. The salience of each of these issues may vary by region of the world, but agricultural communities everywhere are facing these same issues.

By comparing and contrasting the ways communities deal with economic issues, we learn about these general concepts, and the ways communities share or diverge in their approaches to dealing with them.

Example: Basque Farmers in Soule, France.

Maybe pics from all the case studies?

Where/what is the European Union?

Today: Understanding the policy framework (and subsidies) in European Agriculture Common

Agricultural Policy (CAP)

Case study: How traditional European farmers are dealing with changes to their agricultural economies.

27 countries in 2005 (including Bulgaria &

Romania

European Union (EU) basics

1957 - Treaty of Rome creates EC6- France, West Germany, Italy, the Netherlands, Belgium, Luxembourg join Criteria for membership: country must be democratically

governed, geographically European, and economically viable, and accept all laws and rules that apply to EU members

1973- United Kingdom, Ireland, Denmark join

1981- Greece joins

1986- Spain and Portugal join

1989- East and West Germany unite

1995- Austria, Finland and Sweden join (EU15)

2004- Poland, Hungary, Czech Republic, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Cyprus, Malta join (EU 25)

2007- Bulgaria and Romania join (EU 27)

Average agricultural land use (percent)

European Union ~ 40%

United States ~ 46%

EU Agriculture: Economic Importance The EU generally accounts for about 15-20

percent of the world's agricultural exports and imports.

The EU-27 is one of the most important trading partners and competitors of the United States in world agricultural markets.

European agricultural policy has long had a major impact on world agricultural markets, and the EU is one of the key participants in World Trade Organization (WTO) negotiations on agricultural trade.

EU Agriculture: Overview

(USDA ERS data).

Major agricultural products Livestock products (including dairy),

grains, vegetables, wine, fruits, and sugar

Major exports Grains (wheat and barley), dairy

products, poultry, pork, fruit, vegetables, olive oil, and wine

Major imports Soybeans and soybean products,

cotton, tobacco, tropical products, off-season fruits and vegetables, coffee, cocoa, tea, and spices.

Average Farm Size (acres)

US (2007

)

EU -15

(2007)

EU – 27

(2008)

418 46.2 34.1

Farm Land by Size Class in EU-27

Utilized Agricultural Area in ha (%)

Total <5 5-<20

20-<50

50-<100

>=100

Agricultural area

100.0 4.9 14.2 15.4 16.9 48.5

Cereals 100.0 4.2 14.8 14.4 16.1 50.5

Pulses 100.0 2.9 11.2 12.4 14.9 58.5

Open field vegetables

100.0 12.4 22.1 14.9 15.5 35.1

Industrial crops 100.0 1.8 7.3 9.4 13.2 68.4

Fodder crops 100.0 2.9 12.3 20.2 24.7 39.9

Horticultural crops

100.0 26.2 26.5 16.6 11.9 18.8

Kitchen garden 100.0 52.0 33.5 7.9 3.6 3.1

Permanent grassland

100.0 2.6 12.4 16.1 17.2 51.6

Permanent crops

100.0 24.9 31.6 18.5 10.3 14.7

Fruit, berries, citrus

100.0 26.1 35.4 17.0 8.6 12.9

Olive trees 100.0 31.0 29.1 15.2 8.7 16.0

Vineyard 100.0 16.5 31.6 24.0 13.7 14.2

EU Common Agricultural Policy (CAP) CAP is the only sector of the EU with

common policy that is agreed upon by all member nations.

Proposed by the European Commission, agreed to by agricultural ministers in the member countries, and reviewed by European Parliament.

What is it? Farm policy aimed to promote:

Common prices Common financing Community preference

What is it? The primary objectives of CAP are to:

increase agricultural productivity; ensure a fair standard of living for farmers; stabilize markets; guarantee regular food supplies; and ensure reasonable prices to consumers.

Main policy instruments Agricultural price supports Direct payments to farmers Supply controls Border measures

EU Common Agricultural Policy (CAP)

www.bbc.co.uk

Significance of the CAP

The only common policy in EU

A large portion of EU spending 45% of EU spending in

2008 Down from 70% in 1980’s and

1990’s 55 billion euros in 2008

5 billion market support 37.2 billion direct payments

to farmers 12.6 billion going to rural

development Can cause tension within

member states, as member states pay in based on GDP, but receive payments based on ag sector (Ex. Germany vs. France)

http://capreform.eu

History of the CAP

Europe food insecure after WWII Memories of starvation in

Netherlands, Germany, UK Most member states

experiencing prolonged meat, fat and sugar shortages (except France)

An uneasy agricultural alliance between producing and consuming states

EU member states: France, West Germany, Italy, the Netherlands, Belgium, Luxembourg

History of the CAP

1957-1990’s A focus on surplus and food security Created large surpluses of sugar, grains, butter, etc.

Largely a price-support focus Council of Agriculture Ministers sets minimum prices for all

main foodstuffs. If prices fall below set prices, EC committed to buy products at that price (‘intervention price’). Overproduction of cereals, beef, butter, milk powder and wine in times of low commodity prices has led to massive government-owned surpluses and further drove down prices…an expensive cycle!

How was this maintained? Tariffs did not allow exports to flood EC/EU markets with commodities below internal market price

History of the CAP

1992 Reform Reduced support prices and shift to

direct payments Compensated farmers for lower prices

with direct payments based on historical yields (average of previous payments), production is not always required for farmers to receive payments

Introduced new supply control measures Affected the grain, oilseed, protein crop

(field peas and beans), beef, and sheep meat markets

To be eligible for payments, had to reduce acreage

EU Member states: EC6 + UK, Ireland, Denmark, Greece, Spain, Portugal, East Germany (via unification)

History of the CAP

Agenda 2000/2003 Reforms Reduction in intervention prices Direct payments to cover only ½ loss from price

support cuts Allowed for “agri-environmental payments”

Decoupled from production- called single farm payments

Based on 2000-2002 historical payments, but must comply with environmental, animal welfare, food quality and safety concerns

Establishes 2 pillars Pillar I spending- direct payments and price support

policies Pillar II spending- rural development policies

EU15 getting ready to expand to EU25

Impacts of the CAP

Has led to a heavily subsidized agriculture Payments average 25% of EU farmer

income, on average; 7% in US, on average Maintained rural livelihoods Expensive! Tensions between agricultural

community in new and old member states- will the lesser developed block eat the whole pie?

Case Study: Farmers in the Basque province of Soule,

France

Transhumance: A Pastoral Tradition

A traditional grazing system of moving animals to high mountain pastures in the summer months In Soule, animals move up in May,

down in September Traditionally animals led up on foot,

often a 10-12 mile walk. Now mostly transported in trucks, except in remote pasturage

System developed in the middle ages, and continues today, but area has shrunk dramatically

Mostly sheep, but increasingly more cows and horses

Transhumance: A Pastoral Tradition

Traditional grazing patterns in Soule Winter – in town on family farm lands Spring and fall – move to lands owned by

villages (the coteaux, or hills). Summer – move to regionally-managed

high pastures (estives), first to lower areas and then to high mountain areas; shepards stay in permanent cabins.

Why transhumance?- Farm sizes too

small to support grazing year round in lower valleys.

- Resource use changes based on land ownership and time of year.

The highlands of Soule.

Transhumance: A Pastoral Tradition

Changing economy, changing practices Prior to 2003, CAP funding was linked to

production Up to 66% of household farm income was from

CAP funding CAP funds, combined with high milk prices in

the 1980’s and 1990’s allowed and encouraged farmers to expand flocks. Flock size up ~40% between 1988 and 2000 1988: 90-100 ewes to 125-150 ewes

Decoupling of CAP funds with production in 2003 Move to “multifunctional agriculture” goals for

the EU, with less price support and quota systems

How are the farmers responding to potential reduction in EU-level support?

Changes to farming traditions Increasing competition, etc. Mechanization Diversification – cows and sheep Marketing – more direct marketing and

lobbying to develop an Appellation d’Origine Controlee for artisan cheeses.

Need for off-farm income with integration into EU economy and removal of price supports.

Increasing efficiency: mechanization

Increasing use of cows – why?

Adding value: “quality” labeling

In 2000, 438 of the 867 farms in Soule sold under a “sign of quality.” -37% percent of farms-29% of milk volume

(Appellation d’Origine Controllée)

Adding value: Cooperatives

CAP rural development funds (Pillar II) used to

build local cheesemaking cooperative run by local

farmers.

Adding value: On-farm sales

0

20

40

60

80

100

120

140

2001 2005

90

125

Farms engaging in direct sales in Ipparalde

Regional trends

Agritourism Websites devoted to eco-tourism

Sales of family farm homes as “summer homes”

Summary slide

Summary questions that tie to learning

outcomes/overall project goals.