I was recently invited to present testimony as part of an economics panel assembled by the Committee for “Twenty-First Century Systems Agriculture”. This committee was created by the Board on Agriculture and Natural Resources (BANR), a program unit of the National Research Council (NRC). The NRC functions under the auspices of the National Academies of Science and Engineering and the Institute of Medicine. The purpose of this Committee was presented in my most recent Daily Kos posting, drawing from the BANR website in early March. The Committee asked me to address four areas when it met in Kansas City on March 27th. I summarized the major points of my testimony in one area in my ‘Part 1’ Daily Kos posting. Here, in ‘Part 2’ I summarize my testimony about policy lessons and models from Europe.
European Union reforms based on ‘multifunctionality’
Agricultural policy dialogue in the European Union (EU) has for some time now rested on a multifunctionality view of agriculture. This is the view that agriculture does more than just provide food, fiber, energy, and timber. It has many functions and purposes, thereby potentially producing a wide range of outputs or services. Agriculture that depletes organic matter or erodes soil externalizes costs that others in society must bear. But agriculture can also serve positive functions, such as sequestering carbon, enhancing wildlife, providing valued landscapes, preserving wetlands that reduce flooding, enhancing biodiversity, and providing rural employment.
The 1992 MacSharry reforms of the EU’s Common Agricultural Policy (CAP) began to weaken the links between farm payments and production of agricultural commodities, by introducing a system of direct payments to farmers and moving away from market support as a way of securing farm incomes. To qualify for these payments, farmers had to comply with a range of specific controls that were intended to restrain production. Agenda 2000 reforms of the CAP officially added rural development (including enhancement of the environment), or Pillar II, as a major policy objective to the original CAP objective (Pillar I) of enhancing food security and farm incomes. Pillar II represented the ascendancy of multifunctionality to the center of ongoing CAP policy dialogue.
The Agenda 2000 reforms were followed by the comprehensive mid-term CAP review in 2003, with payments to farmers, in principle, being decoupled from production in the Pillar I (production) category and more funds being shifted to the Pillar II (rural development and environmental) category. Most Pillar I payments to individual farms were to be combined in the new Single Payment System, though EU member states were given some flexibility in the implementation of this system. More comprehensive environmental cross-compliance provisions also are being imposed as part of the 2003 reforms.
At the present time, implementation of the 2003 reforms is under review as part of a comprehensive CAP ‘Health Check’, which is to lay the groundwork for further reforms after 2013, but also may lead to some additional reforms even before then.
Application of ‘multifunctionality’ in England
Individual EU countries continue to devised their own systems of implementation of most agri-environmental schemes. Concurrent with the consolidation of payments under Pillar I of the CAP, major changes are being made in England’s agri-environmental schemes under Pillar II. (Within the United Kingdom, England, Scotland, Wales, and Northern Ireland do not all employ exactly the same agri-environmental policies.) The 2003 mid-term review of the CAP has been implemented in England with the establishment of three new stewardship payment schemes, starting in 2005: Entry Level Stewardship, Organic Entry Level Stewardship, and Higher Level Stewardship. With the introduction of these schemes, the Environmentally Sensitive Areas and Countryside Stewardship Schemes—for the past 15-20 years the core programs, along with support of organic agriculture, of agri-environmental policy in England—are being phased out. [See the recently published Dobbs and Pretty article in Volume 65, Issue 4 of Ecological Economics, titled "Case study of agri-environmental payments: The United Kingdom".]
The aim of the Entry Level Stewardship (ELS) scheme, which is open to all farmers, is to encourage farmers to deliver simple environmental management in addition to cross-compliance requirements. This management focuses on improved water quality and reduced soil erosion, improved conditions for wildlife, maintenance and enhancement of landscape, and protection of historic features. Farmers have to complete a plan of the farm showing the main environmental features, called the Farm Environmental Record, and select options from a menu. ELS contracts are for 5-year terms.
The Organic Entry Level Stewardship (OELS) scheme is similar to the ELS, except the applicants must have at least part of their land registered with an organic inspection body as organic or in conversion before application. The objectives and basic measures under the ELS apply equally to the OELS, with only the detailed management guidance and award system differing.
The Higher Level Stewardship (HLS) scheme has been designed to be the most demanding scheme. Applicants must have entered one of the ELS schemes, and so all the basic requirements of those apply. HLS contracts are for 10 years, though occasionally they can be extended to 20 years. The aims are wildlife conservation, maintenance and enhancement of landscape quality and character, natural resource protection, historic environment protection, and promotion of public access to and understanding of the countryside. Unlike the entry-level schemes, the HLS is competitive and is judged on environmental benefit per unit of expenditure.
Lessons for the U.S.
Are there lessons for the U.S. in what has been underway with the EU’s CAP reforms? In my view, first and foremost, we also should adopt a multifunctionality perspective of agriculture as the basis for our policy dialogue. Accepting a multifunctionality outlook has not, by any means, resolved all of the policy and budget conflicts about agriculture within the EU. There are on-going political battles within the EU, both collectively and within individual member states, about how much funding to switch from Pillar I to Pillar II. But the very fact that Pillar II (rural development and the environment) is on equal conceptual footing with Pillar I casts the dialogue and debates in quite different terms than we observe in our halls of Congress and the White House. Outside the U.S. ‘agricultural establishment’ and the House and Senate Agricultural Committees, we are having a very European style dialogue in the U.S. Many of the groups advocating reforms in the U.S. in recent years have been, in effect, carrying on a Pillar I vs. Pillar II debate. However, that broader perspective has not yet permeated the wider U.S. body politic. Until it does, when the final reconciliation battles are fought on each new U.S. farm bill, funding for commodity programs will continue to squeeze out adequate funding for agri-environmental and rural development programs (recall that this testimony was presented on March 27th).
More specific lessons to be drawn from the recent EU experience include:
• Move rapidly and more comprehensively on ‘decoupling’, as has the EU’s CAP with its Single Payment System.
• Enact a national organic transition program, patterned after ones that have been in effect for many years in the EU. Both House and Senate versions of the yet-to-be settled (at the time of my March 27th testimony) new farm bill contain provisions for such a program (though with different mechanisms).
• Integrate some of our major Federal ‘working lands’ environmental programs, based on whole-farm plans, as has England. The Senate version of our pending (as of March 27th) farm bill does integrate the EQIP and the CSP under a new Comprehensive Stewardship Incentives Program.