Hyderabad: After facing two devastating World Wars, European countries came together in 1962 and evolved a common policy to support, mainly through subsidies, the farming sector with the objective of building self-sufficiency in terms of food supplies. This policy is called Common Agricultural Policy (CAP).
It was supposed to be a temporary measure. But it continued to be a long term policy support. By the 1980s, CAP accounted for over two-thirds of the entire EU budget. The present policy comes to an end by year 2020. While those (mostly very big farms) who get benefit under this policy want it to be renewed, a wide range of stakeholders – the intellectuals, environmental activists, taxpayers, and civil society analysts - are demanding that the CAP should be thoroughly reformed and the subsidy levels curtailed drastically.
The Criticism:
- The EU's farming subsidies are illiberal, hypocritical and protectionist.
- Only 5.4% of EU's population works on farms, and the farming sector is responsible for 1.6% of the GDP of the EU (2005). The number of European farmers is decreasing every year by 2%. Additionally, most Europeans live in cities, towns, suburbs, and not in rural areas. While farming makes up 6% of EU's GDP, this sector receives nearly 40% of the entire EU budget.
- About 250 large companies like Tate & Lyle, Nestle, etc corner most of the subsidies, leaving little to the smaller farms.
- Livestock farming in EU is unviable; more than 90% of what is called ‘profit’ comes from subsidies.
- The original goal of Common Agricultural Policy (CAP) was to enable farmers to feed Europe after decades of conflict, now it is Europe that is feeding farmers through its massive subsidies.
- The 2007-2008 world food price crisis renewed calls for farm subsidies to be removed in light of evidence that farm subsidies contribute to rocketing food prices, which has a particularly detrimental effect on developing countries.
- At 38% of the budget, European taxpayers send more than €58 billion to farmers each year – a shocking amount if one considers that farmers only make up 3% of the EU’s total population and are responsible for no more than 6% of its GDP.
If all of this sounds like protectionism and an illiberal economic policy it’s because that is exactly what it is.
Politicians across Europe are fond of telling the world that European farmers need “protection” from the scourge of cheap imports as if consumers’ interest in cheaper food were of no consequence at all.
Between 2003 and 2013, over 25% of farms in Europe went out of business. And indeed, it is mostly small farms that vanish, while bigger corporations get even bigger.
More than 30% of the direct payments (subsidies) go to only 2% of recipients and 80% goes to 20% of farm businesses. These are not even necessarily farmers, but include well-known, FTSE 250 listed companies like Tate & Lyle and the Nestle which have billions of revenues.
Farm subsidies have resulted in oversupplies
Today the EU farm subsidies have resulted in oversupplies. Excess European farm products - from milk to wheat – are sold to African countries for an extremely low price made possible by the subsidies. The prices are often so low that they make it impossible for African farmers to compete, driving those very farmers out of farming and destroying their already meagre incomes.
Of course, Europe is not alone in experiencing problems created by its government-sponsored programs. In the 1980s, New Zealand, which was largely dependent on its agricultural exports, had a farm industry in which 40% of incomes came from subsidies. Overproduction happened there too – in one year, some six million lambs were rendered down because no one wanted them.
In the European Union, farming subsidies have enriched those in power and created an 'agricultural mafia'
Europe's farm program is one of the largest subsidy programs in the world and pays out $65 billion to support farmers and rural communities. It's being taken advantage of by a group of powerful political patrons and oligarchs, the New York Times (Nov 4, 2019) reported.
Adverse Impact on the Environment
Mindless subsidies have prompted big agricultural companies to overuse fertilizers, pesticides, and other chemicals, resulting in huge scale of water, soil and air pollution, adversely affecting all kinds of living organisms. The pollution-related deaths in UK have forced the government to declare a public health emergency.
Counselling farmers to use less fertiliser is one way, but it is not expected to solve the problem. Over half (51%) of the farms examined in seven EU countries received CAP payments totalling €104 million in 2017, despite being the highest emitters of ammonia in their countries. The research compared CAP direct payments and the EU’s registers of pollution from industrial facilities.
Ammonia runoff from fertilizers or manure slurry leads to the rapid growth of algae in rivers, lakes and seas, choking plants and animals of oxygen.
Of the 2,374 livestock farms in these countries emitting high enough levels of ammonia to be included in the European Pollutant Release and Transfer Register in the last year reported, 1,209 received CAP payments totalling at least €104 million per year.
The presence of excess nitrogen and phosphorus in the Baltic Sea intensifies the growth of algae, whose blue and green blooms are so large that they can be seen from outer space.
Decomposing algae depletes the oxygen in the water by the seafloor. Huge swathes of the Baltic have become dead zones that can’t sustain life. Agriculture in many European countries is polluting the soil, water and air.
Disappearing birds
Today, highly subsidized farm-pollution is responsible to the disappearance of birds, butterflies, insects, and bees, threatening to unravel the food web that supports life.
The heavy use of fertilizer and pesticides has worsened soil contamination, leaving partridges and other birds without food.
European Union officials have known for nearly two decades about the dire consequences of agricultural policy on wildlife.
In 2004, scientists released two reports that blamed farm subsidies for a decline in bird populations and “severe adverse effects on farmland biodiversity.”
Since then, conservation efforts have repeatedly been watered down. In 2006, most European Union countries endorsed a soil bill that could have benefited wildlife. But Britain, France and Germany led a minority coalition to block it.
Greenhouse Gas Emissions
Farming accounts for about 10 percent of Europe’s greenhouse gas emissions. A significant share of the emissions comes from farm animals that digest their feed and burp out methane, a potent greenhouse gas. Fertilizers contribute by releasing nitrous oxide. And decaying manure releases methane and ammonia.
Some subsidies, like those that directly support livestock farming, are making things worse.
In France, every summer, algae-coats the Brittany beaches with bright green slime. As it decomposes, it gives off hydrogen sulfide, a toxic gas that can kill in seconds. Brittany produces more than half of France’s pork and a quarter of its dairy cattle. Livestock manure is spread onto the wheat and cornfields, which exist almost solely to feed the animals. That has left Brittany with France’s largest concentration of nitrogen.
Those nitrates are food for green algae: Runoff from regional farms contaminates seawater and contributes to ever bigger algal blooms.
For years, officials and farmers did not accept any link between agricultural practices and the green glop washing ashore. European environmental officials say that addressing nitrate pollution will probably require farmers to make new investments and accept lower production levels. Farmers have said they will not accept regulations that cut into their profits.
It may take nearly 200 years before parts of the Baltic Sea are restored to a healthy status, according to the European Environment Agency.
Last year, the Poland government declared the entire country a “nitrate-vulnerable” zone and acknowledged that farms were polluting Poland’s water.
A new directive limited how much fertilizers farmers can use and when they can use it. Farmers are now required to store manure and slurry in leak-proof silos for half the year.
The new policies have not impressed farmers in Greater Poland Province, which has a large number of livestock farms. Several criticized the requirements as bureaucratic intrusions from Brussels — and a plot to undermine Poland’s competitive advantage.
A majority of Europe’s rivers, lakes and estuaries are highly polluted with chemicals and other pollutants, a pan-European study has found. After evaluating 130,000 waterways in Europe between 2010 and 2015, using data collected from over 160 river basin management plans, it found that only 40 per cent of lakes, rivers, estuaries and coastal waters studied met ecological standards. Only 38 per cent of the water bodies met chemical pollution standards. Groundwater bodies, such as aquifers, fared much better with 74 per cent being rated as having good chemical pollution status and 89 per cent having good ecological status. It found that groundwater sites were mostly getting polluted due to nitrates from agricultural run-off, salt intrusion and hazardous chemical pollution from industrial sites, mining areas or waste storage.
Mercury was one of the most common pollutants, with common sources including mining, coal combustion and other industrial activities. On the other hand, surface water got polluted due to nutrient enrichment from agricultural activities, poor wastewater treatment and habitat degradation.
Central European countries, such as Germany, the Czech Republic and Hungary, were some of the worst-performing in the region, with more than 90 per cent of water bodies failing to meet standards. On the other hand, Scandinavian nations like Sweden and Finland were among the top performers.
In Britain, England saw similar results to countries in central Europe, with a large proportion of water bodies failing to reach the “good” status, while neighbouring Scotland was more similar to Scandinavia.
Farm subsidies in Developed countries adversely impact incomes of farmers in developing countries
The impact of agricultural subsidies in developed countries upon developing-country farmers and international development is well documented. Agricultural subsidies can help drive prices down to benefit consumers, but also mean that unsubsidised developing-country farmers have a more difficult time competing in the world market; and the effects on poverty are particularly negative when subsidies are provided for crops that are also grown in developing countries since developing-country farmers must then compete directly with subsidized developed-country farmers, for example in cotton and sugar.
The International Food Policy Research Institute (IFPRI) has estimated in 2003 that the impact of subsidies costs developing countries $24 billion in lost incomes going to agricultural and agro-industrial production, and more than $40Bn is displaced from net agricultural exports. Moreover, the same study found that the least developed countries have a higher proportion of GDP dependent upon agriculture, at around 36.7%, thus maybe even more vulnerable to the effects of subsidies. It has been argued that subsidized agriculture in the developed world is one of the greatest obstacles to economic growth in the developing world; which has an indirect impact on reducing the income available to invest in rural infrastructure such as health, safe water supplies and electricity for the rural poor. The total amount of subsidies that go towards agriculture in OECD countries far exceeds the amount that countries provide in development aid. In the case of Africa, it is estimated that a 1% increase in its total agricultural exports could lift its GDP by $70 billion, nearly five times what the region is provided in total foreign aid.
Many developing countries are highly dependent on agriculture. The Food and Agriculture Organization (FAO) finds that agriculture provides for the livelihood of 70% of the world's poorest people. As such, the subsidies in the CAP are charged with preventing developing countries from exporting agricultural produce to the EU on a level playing field. The World Trade Organisation (WTO) Doha Development Round, which intended to increase global development, has stalled due to the developed countries' refusal to remove agricultural subsidies.
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