Allister asks if EU should learn lessons from USA on agri support
01 April 2009
“As we head towards further CAP reform and as the US Farm Bill 2008 stirs renewed interest in the American approach, it is an opportune time to look at the striking differences in how the EU and America handles their agricultural industries.
Some facts are expected, others surprising:-
• The size of the average US farm is 169ha, against 13ha in the EU 27;
• Productivity in the US has grown at an impressive 1.9% pa, despite energy price shocks and environmental restraints, while in the EU production is in decline. US farm exports are rising, the EU is now a net importer of food;
• The average farm income in the USA is 130% of the average American household income, whereas in Europe, though no parallel statistics are kept, the shared perception is that farm incomes lag significantly below average household incomes, and in many cases are propped up substantially by the Single Farm Payment;
• Average farm incomes in the US are much more stable because of the provision of a real safety net, provided by direct payments, countercyclical payments and marketing loans;
• Since 1992 the EU has moved towards decoupled, fixed payments while the US has rejected decoupling;
• The US Government promotes ambitious crop insurance and disaster payments to cope with risk, under a permanent disaster programme (SURE);
• The focus of the American system on domestic food programmes is a striking difference to the CAP. The US operates a food stamp system for poorer consumers, which helps sustain production. There is substantial funding for fresh fruit and vegetables in schools, something the EU is only beginning to think about;
• US foreign food aid programmes are based on shipping out US produce, sustaining home production, while the EU tends to provide financial aid and promote local purchases;
• On rural development the US focus is unapologetically farm based, whereas in Europe priority is given to Axis 3 spend;
• The enthusiasm in the US for GMOs contrasts sharply with the reticence of Europe, producing dearer feed prices here;
• Animal welfare regulations are less stringent than in the EU, yet there is no evidence of lesser standards, just lower associated costs;
• The EU constantly cites the need to comply with WTO obligations as justification for its policy and support mechanism shifts, yet the USA gets far less excited, but generally withstands WTO restraints.
As we go forward to look at further CAP reform for 2013, I believe the US model bears scrutiny. It both challenges the EU’s embedded conceptions and may have elements from which we could usefully borrow ideas.
Certainly, when you compare US farm income levels, stability and commodity exports with our falling farm incomes, instability and decline into a net importer of food, it suggests they are getting more right than we are.”
