Student Blogging Competition
FFA blogging competition -just for students!
This year, to launch the debates on the upcoming CAP reform and challenges facing the agricultural sector and rural areas ahead of the 4th Forum for the Future of Agriculture, the RISE Foundation, together with the ELO and Syngenta, initiated a student blogging competition inviting students to contribute their ideas in key areas. These included how to reform the CAP and contribute to world food security and how to finance ecosystem services which are currently underprovided by the market. Below, you can read the winning entries chosen by a jury composed of: Corrado Pirzio-Biroli (Vice Chairman of the RISE Foundation), Bernard Graciet (Senior Public Affairs Advisor, Syngenta), Ladislav Miko, (Deputy-Director General for the food chain, DG SANCO, European Commission) and Tassos Haniotis (Director, Directorate for Economic Analysis, Perspectives and Evaluations, DG AGRI, European Commission).
The winners were presented with their prizes by Franz Fischler and Ladislav Miko during the Forum for the Future of Agriculture on March 15th in front of the audience of delegates present. They have won 500€, a signed book from FFA speakers, an expenses-paid visit to the FFA conference and a visit to Syngenta's leaf demonstration farm in Berkshire.
Through this competition the RISE Foundation wanted to create a bridge between policymakers and civil society, especially rural stakeholders and communities, to ensure that their views are represented and taken into account when important decisions affecting their futures are being made. The Future of the agriculture belongs to the younger generation so we must make sure their voices are heard! We would like to congratulate and thank all who took part - the competition willl be back next year so get thinking already!
Here are the winning entries:
Category B ‘What should be the role of the CAP in combating domestic and world food security challenges?’
Entry by Richard Bliault
The role of the CAP should be to confront the Elephant in the room – to directly address the likely need for expanded agricultural production in the near future and the need for that expansion to be on sustainable terms. Very little CAP policy actually tackles this, while some actively works directly against it, for example the indiscriminate funding of organic farming systems, which reduces production levels.
What are the current and likely future challenges to global food security? They are primarily to meet an increasing demand for food lead by a growing population. Growing demand will need to be satisfied through higher production in what is predicted to be an increasingly climatically unstable world. Climatic instability and increased demand in turn has already led to and is likely to lead to more frequent spikes in global food prices. Added to this we face declining agricultural productivity in many parts of the world, unless soil nutrient imbalances are addressed. One recent report for example has suggested that up to 75% of African farmland is affected by nutrient mining and could now be considered degraded.
European agriculture, meanwhile, is relatively robust, with its soils showing a balanced nutrient profile and the domestic European market largely self-sufficient. Dependence on imports is limited to products that cannot be produced within the EU like soy, or inorganic inputs such as supplies of phosphates. This robustness gives Europe the opportunity to experiment with means of expanding agricultural production without damaging its own food security before expansion in production becomes not simply a desire but a necessity.
Recent CAP policy publications acknowledge food security as important but few actually address it. In the future the EU may want to maintain a position of strength by using an agricultural surplus to combat global food insecurity and secure its own food security through trading for commodities not available within the region.
How should the CAP then take on this role of stimulating production? I would argue it should do this by scrapping the single payment and breaking its finance structure into four pillars from its current two:
Pillar One, would be payments into an income insurance scheme for farmers guaranteeing a minimum income. Payments should be withheld at times when they are not needed, for example during 2010 wheat harvest when prices were high within the global market due to the failure of the Russian wheat crop. Provision could be built into this system to allow for added support to small farms, based on employment criteria and a weighting based on cost of living to balance out the value of payments so that producers in areas with a higher cost of living were not struggling while those in lower cost areas would not find themselves with surplus income.
Pillar Two would be a reintroduction of production linked subsidies, but graduated in their payments upon a sustainability rating attached to farm practice. Re-introduction of production linked subsidies is radical but something that should be considered. The subsidy grading could be set based on soil carbon content, soil organic matter content and water use per ton of produce as well as other criteria which could be adapted to developing scientific thinking. Linking production subsidy to sustainability criteria would provide a market incentive to develop more sustainable models of farming and achieve the maximum return for a crop. It would also stimulate production.
Production linked subsidies are a blunt instrument but we are facing a blunt problem and they have been shown to be effective in driving production as demonstrated in the increase across the 1960’s-1980’s. While that period resulted in massive surpluses, this is less likely in the current context as demand is now expanding rapidly, evidenced by increasing food prices and the sustainability graduated payments should also help to mitigate over-production. I would also suggest that the short term economic pain suffered if surpluses were to be produced would ultimately be outweighed by the benefits of more sustainable models of production that would be developed in the process.
The increased level of payment to some farmers would also be outweighed under this model by the reduced payment to landowners who are not using their land productively and who, under the current single payment scheme, still receive support.
Evidence shows that production subsidies cause less distortion of the market than the ongoing tariff barriers imposed by both the EU and many other markets. In this sense the introduction of a production subsidy is likely to have a lesser impact on global food production than would raising standards imposed on imports to the comply with those being put forward in the ongoing greening of pillar one payments.
These measures would necessarily take the CAP model out of the WTO’s Green box but I think that so long as this is in the short to mid term it would not be a negative move. The majority of the world’s major agricultural producers remain within the Amber box as it is.
Ultimately however, I would see the imposition of production subsidies to be considered a temporary measure and only a means by which more sustainable systems could be developed through this market driven mechanism. Once developed, they could be transferred to statutory obligations on EU farmers and the subsidy payments gradually removed. Leading to a more market orientated system than the existing one which allows large numbers of cultivators to obtain a major part of their income from a single payment which has no reactive capacity as regards the market.
Pillar Three would be a maintenance of the current rural and environmental investment policies in the current pillar two.
Pillar Four would be funding set aside explicitly for research and development, which could in turn be linked into the pillar two subsidy I have suggested. Registered involvement by farmers in systems of research and development would result in increased sustainability grading and subsidy payment. I think the explicit addressing of a need to move agricultural development forward is a key role that the CAP should take on in tackling global food security issues. Europe has the scientific and academic capacity at present to do this, but as funding at a national level is increasingly cut that capacity is being lost. One answer is direct funding through the CAP.
The role I envisage for the CAP in tackling Global Food Security issues is radical. It pushes Europe towards increasing production within a sustainable framework to address likely food shortages elsewhere in the world, using subsidy. To do this I have suggested a major overhaul of the CAP payment mechanisms and how we reward farmers but I believe this fits within the current desires of the Commissioner for Agriculture who has stressed the CAP’s need to be responsive not only to farmers but to all European citizens. I would suggest that European citizens on the whole wish to see farmers rewarded for their production and for the means in which it is produced rather than seeing them given a single payment effectively for just owning land. I would put it forward that many farmers would also rather be rewarded in this way and ultimately within a market framework, than being seen as receiving handouts.
The CAP then needs to meet global food security issues head on, that means driving forward increased sustainable production. A return to a production linked subsidy mechanism graded by sustainability is one means of doing this.
By Richard Bliault
Category B: Environment - "Ecosystem services: who should pay and how?"
By Lorenzo Casullo
At the end of the 1980s, 37 farms in the catchment area of the Vittel water springs, in north-eastern France, produced maize under an intensive agricultural regime. However, this caused severe nitrate contamination for the aquifers of Vittel, located downstream. The Vittel water company’s business success relied on the good quality of that very same spring water. If the level of nitrate concentration had gone above 4.5mg per litre, Vittel would not have been able to label its water as ‘natural mineral water’ according to French law, potentially seeing its business of 1 billion water bottles sold every year vanishing .
The story of the negotiation process that took place in Vittel, leading to technological modernisation of farming techniques and a complete reconversion of the agricultural landscapes, is essentially a story about Payments for Ecosystem Services. Having explored all the available options to reduce the business risk connected to water contamination, Vittel Waters concluded that the best way to secure long-term water quality was to provide an incentive-based mechanism through individual payments to farmers, coupled with technical assistance. Negotiations led to a successful outcome in the mid-1990s .
Following the definition of PES by Wunder (2005), this is the case of “a voluntary transaction where a well-defined environmental service (or a land-use likely to secure that service) is being 'bought' by a buyer (Vittel Waters) from an environmental service provider (Vittel farmers) if the provider secures provision of ecosystem services” . In Vittel, the conditionality of the agreement relies on farmers switching from maize to pasture and implementing technologies to prevent water contamination.
Voluntary agreements aimed at creating market mechanisms that assign value to ecosystem services are taking place all over the world. They range from Public-Private-Partnerships to secure sustainable land management in the SCaMP project in North-West England , to governments paying landowners to preserve forest biodiversity in Costa Rica , to international markets for carbon credits under a Kyoto-style mechanism. Every PES agreement addresses the cause of under-provision of ecosystem services: these services are rarely compensated through a price mechanism, thus there is little incentive to provide them, despite the benefits accruing from them .
Farmers and forest managers are often identified as the main providers of ecosystem services. Agro-ecosystems offer regulating services such as flood control, water quality, pollination, and carbon storage . PES can play a fundamental role in rewarding farmers for such services. Likewise, incentives can be given to farmers so that agricultural practices do not compromise ecosystem resilience, for instance through nutrient runoff and greenhouse gases emissions. A similar rationale applies to forest owners. The additional effect of PES is hence to turn farmers and foresters into ecosystem managers, by offering the appropriate monetary rewards and diffusing the knowledge of best practices.
A more difficult question to answer is: who should be paying for ecosystem services, and how? The first step to answer this question is to identify the beneficiaries of different ecosystem services. The second step is to estimate an economic value for the services in question. The third step requires finding a payment method which is not only offering an efficient incentive to providers, but also takes equity and sustainability considerations into account.
Identifying beneficiaries is challenging, due to the ‘public nature’ of ecosystem services. In Vittel, the commercial benefit for the water company was an essential driver for the direct beneficiary to seek a voluntary agreement. In other cases, however, benefits accrue to several stakeholders and to society as a whole either at the local or global level. PES is also slowed down by the lack of clear ownership. In these instances, indirect users such as local or national governments often pay for ecosystem services through the revenues collected by general taxation.
The Sustainable Catchment Management Programme (SCaMP) in North-West England is an example of a partnership between private companies (United Utilities), a charity (RSPB) and the national government (DEFRA) to improve the provision of ecosystem services by farmers (watershed managements, reduced runoff, tree-planting). The SCaMP is hence funded both by direct users – the utility companies – and by indirect users in the form of philanthropic donations and public grants. Does the SCaMP promote an efficient allocation of payments among different beneficiaries?
The question boils down to a valuation issue – this is where research in the field of environmental accounting is helpful . In Vittel, the value of alternative farming practices was captured by the improved level of profitability of bottled water. In the SCaMP, the beneficiaries can be divided into two groups. For the utility companies interested in water streams, values reflect the costs of water management and the potential revenue losses. The British society as a whole represents a second group. For them, other option values (the value of sustainable rural management for future users) and non-use values (the aesthetic and recreational benefits of a beautiful countryside) are also important . Thus the different financial contributions in the SCaMP mirror the benefits to direct and local users as well as to indirect ones.
The third step, finding an efficient and equitable payment method, relies both on a correct identification of beneficiaries and a proper valuation of ecosystem services. Each payment should reach the individual or group responsible for either a specific action (e.g. land use change) or a specific outcome (e.g. reduction in carbon emissions). Payments also need to be tailored to the correct time horizon, ensuring that sellers are willing to participate when their additional costs are compensated and that ecosystem services are sustained over time. Besides, PES can be coupled with efforts to improve rural livelihoods and diversify farmers’ incomes .
Some additional costs could arise as PES agreements are implemented. Transaction costs between buyers and sellers will often be high, especially if resource ownership and use is highly fragmented. Even when private companies are willing to pay, they may pass part of the costs onto consumers through higher prices. This in turn may take the form of eco-labelling, whereby customers self-select themselves depending on the environmental premium they are willing to pay . Thus whichever the normative approach taken in defining PES schemes, the end payment may come from people who were not originally included in the agreement.
At a time of ecosystem depletion, growing world population, high and volatile food prices and anthropogenic climate change, different stakeholders should come together to implement PES schemes. A partnership between farmers and foresters, research institutes and NGOs, policy-makers and corporations to protect European ecosystems would be a positive contribution for the development of agricultural policy in the EU.
By Lorenzo Casullo.
