Yesterday, TOP and the All Party Parliamentary Group on Agriculture and Food for Development co-hosted a panel of experts to discuss the topic “Farming Subsidies and Food Security”. In recognition of 2014 as the African Union Year of Agriculture and Food Security, we took the opportunity to discuss the development impact of CAP and other export subsidy systems and what the EU and other developed countries can do to address imbalances, alleviate the effects of subsidies on developing countries, and make trade policy work for development.
- 842 million people, around 1 in 8, are estimated to be suffering from chronic hunger
- In 2012, support to farmers across the OECD amounted to $259bn, more than double the $125.6bn they provided in development assistance
- It is estimated that the Common Agricultural Policy will cost the EU €363bn between 2014 and 2020 and that the US farm bill will spend $950 billion in the next decade.
John Clarke, Director of International Affairs at the European Commission Directorate for Agriculture and Rural Development emphasised that food security is one of the biggest developmental and political issues facing the world today. The politics must not be ignored – as food price hikes helped to trigger the Arab Spring, it is clear that this must be dealt with at the highest political levels.
In the developing world, food losses equate to enough to feed 2 billion people and food production will need to more than double by 2050 to meet the demand of the world’s growing population. The EU is already one of the world’s biggest aid donors (focussing on Su Sub-Saharan Africa, which has the potential not only to feed itself, but to be a net exporter of food) but there is an urgent need to improve governance in recipient countries.
Regarding the Common Agricultural Policy (CAP), John said that the reformed policy that came into force this year does not affect food security and no longer includes any trade-distorting subsidies. The EU does not provide export subsidies for any agricultural products anywhere in the world as of a year ago and export subsidies will not feature in any FTA negotiations with ACP countries.
Within the structure of the WTO, food security and subsidies remain a major topic. The outcome of the Bali Ministerial last December states that developing countries may spend up to 10% of agricultural production to subsidise their farmers to stockpile food for food security purposes. However, all subsidy programmes must be transparent and only apply to staple crops, and any food purchased for food security purposes cannot be dumped onto a developing country market.
Dr Adesina Iluyemi, an Executive Board member of the NEPAD Council (New Partnership for African Development) then spoke about Africa’s perception of EU agricultural policies. CAP certainly used to be a challenge to Africa, but it is becoming increasingly irrelevant. The issue now is predominantly about African countries being ill-equipped to deal with global trade markets. The African agricultural market has no economy of scale and is not globally competitive.
While the EU does provide generous market access provisions to LDCs, this is not enough while African countries still struggle to meet rules of origin, sanitary/phyto-sanitary measures etc – capacity building to help build standard enforcement capabilities should be a priority in the post-2015 framework, using Aid for Trade.
Despite CAP’s recent reforms, however, the direct income support given to EU farmers is still viewed as a protectionist measure – subsidies by another name – and cotton and sugar remain very contentious markets. This theme was then taken up by Martin Nesbit, Former DEFRA Director responsible for EU and international issues, who lead on the most recent set of CAP reform negotiations.
Martin agreed that de-coupled subsidies (income support) do still have some malign impacts, mostly through keeping less efficient producers in business. Cotton and sugar remain serious issues, but there are political difficulties with tackling them – for instance, cotton subsidies are written into Greece’s accession treaty to the EU. Martin spoke of the need to control food price volatility, which puts the most pressure on the poorest families and could be better controlled by developed countries. There is also much more that could be done in terms of research into productivity, especially regarding crops specific to Africa.
Many see CAP as a policy that doesn’t achieve very much in return for a vast amount of EU taxpayer money. The funds could be better spent elsewhere on innovation and development – this may seem like wishful thinking, but the funds and the potential are there.
In the general discussion it was noted that since the Maputo Agreement 2003, in which African governments committed to spending 10% of their budgets on agriculture, only 12 countries have so far achieved this goal. Agriculture and agricultural trade are clearly lacking prioritisation from both donor and recipient countries. In response to the Duke of Montrose asking how the EU could better prioritise its aid budget to deal with issues such as standards, land tenure, agricultural innovation and diversification, the panel spoke of the vital need for the post-2015 framework to set out areas for both developed and developing countries to better target aid.