Coherence in food policies needed to move ahead
December 16, 2010
by Morton Sosland
Anyone dealing with the European Union’s Common Agricultural Policy (CAP) becomes quickly aware of the great complexity of this program in supporting agricultural producers across the length and breadth of the E.U. From its founding by the 1957 Treaty of Rome, when the CAP mainly affected farming in France, Germany and Italy, to its present broad coverage, the program’s evolution has impacted the direction of farm supports around the world. While it may be wrong to assert that either Washington or Brussels alone account for the way crop programs have changed during the past half century, it would be downright foolish to disregard major shifts in direction. Both America and the E.U. face the urgent need to make decisions about the future of farm supports due to the approaching expiration of current programs. Keeping a close watch on these deliberations is hugely important to the global grain industry.
Largely because of present-day bitterness and divides in American politics, efforts to address issues affecting agricultural programs have been muted. That is not the case in the E.U., where public and intergovernmental hearings have been conducted in hoping to arrive at decisions on future orientation of the CAP. It is almost assumed in Europe that the share of the E.U.’s total budget devoted to agricultural programs will be reduced, to perhaps as low as 25% from 40% as present and the high above 80% that ruled in many earlier years. Comparable U.S. figures are not available, although the Organization for Economic Cooperation and Development (OECD) estimates that farm program payments account for 10% of U.S. agricultural income, contrasted with 24% in the E.U. and 22% as average for all 31 member countries of the OECD.
Awareness of the budgetary debates raging in Washington leaves no doubt but that curtailing spending will also have the upper hand in the future of U.S. agricultural programs. Instructive, though, is the way that the food industry of Europe, represented by the Confederation of the Food and Drink Industries of the E.U. (CIAA) has emphasized maintaining crops at a level sufficient to protect food security. That means not just crops large enough to supply domestic needs but adequate for response to global demand. The CIAA also points out something that is not often heeded, that crop production must meet not only demand totals, but should match “domestic quality criteria and be competitively priced.”
In calling for adequate production of the right quality and price, European food manufacturers should not be seen as pressing only their own advantage. One key in their platform is a concept that should be welcomed by the worldwide grain industry. This is the call the CIAA makes for “improved coherence across policies affecting supply.” This rather convoluted title simply means the food industry recognizes that crop, and thus food, production is affected as much by regulations having to do with food safety, new technologies, trade development, environment, consumer and social policies as by what is written into agricultural support programs. Unless care is taken to assure that these policies are carried out with the same caution as given food supports, consequences could be awful.
The coherence that the CIAA stresses applies not just across the way these relatively new policies affect the food supply, but also how their unwise application could cause disruption in vertical coherence. Better functioning of the food supply chain ought to be one of the major goals of the new CAP, the CIAA declares, while pointing out how regulations in other areas may interfere with the efficiency of the supply chain within a single part of the food business. Along with the urgency of adopting agricultural programs that encourage farmers to make decisions based on market-driven demand, the idea of an expanding role for market orientation assigns precedence to avoiding programs and policies that stand in the way of the grain industry’s progress.