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)
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?
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.
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.
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”
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