On October 10th, the US Trade Representative Robert Portman put forward a proposal to re-allocate government payments and support for agriculture from “more trade distorting” instruments like loan deficiency payments and counter cyclical payments (amber box), to “less trade distorting” decoupled payments (green box). In exchange the U.S. is asking for a significant reduction in the domestic support and protection developed and developing countries provide their agricultural sectors.

In a nutshell, this re-allocation of government support is an empty offer on the part of the U.S., because it has no possibility of inducing any significant reduction in production. U.S. producers will react to these changes in policy by reallocating their land to the most profitable of the few choices available in their region (i.e. corn/soybeans in the Midwest, wheat/wheat in the Plains), but they will continue to fully utilize the land available to them. Even if some farmers go out of business, cropland will remain in agriculture as it has no significant alternative use, except for urban sprawl.
However, the most important contribution of this proposal is the discussion it has generated. The usual pro-trade and pro-corporate agribusiness conventional wisdom continues its almost religious
support for an export driven agricultural sector, with very little substance behind it but the idea that we can out compete everybody else, that is sell our agricultural products even cheaper. There is also a growing number of grassroots agricultural groups with a message centered on the structural issues surrounding agriculture: overproduction, concentration, and sustainability.

What caught my attention was a press release by the American Farmland Trust (AFT) , which praises Portman’s initiative, but does so in a broader context. The following text extracted from their October 10 press release summarizes that well: “this bold U.S. offer presents a once-in-a-generation opportunity to re-assess the purpose of public financial support to agriculture and to re-align that support with things that strengthen the future for farming and respond to taxpayers’ expectation of farmers to produce clean water, wildlife habitat, healthy foods, food security and energy independence.” To me this is a very significant statement, because reflects an attempt to put the proposal in question into a relevant context. The statement from AFT contains the elements necessary in the search for some common ground that could rescue agricultural policy from its current domination by corporate agribusiness.

In what follows I would like to provide a reality check on the situation in agriculture compared to the objectives implicit in the AFT statement. I will the use this reality check to identify some directions in which agriculture should be moving. The next issue then is to assess whether or not Portman’s proposal moves agriculture in the right direction.

From AFT’s statement it is clear that an important objective of agriculture is to ensure the availability of an ample supply of high quality food. Most people would agree that our current level of production ensures an ample supply of food. Not everyone, however, would agree that the food supply is a healthy as it can be. For example, some people would argue that the high use of antibiotics and the production methods used in the livestock industry present health threats. Others would also argue than the high use of chemicals in the production system – herbicides, pesticides, and fertilizers – is also affecting the quality of the food supply.

Because we have been able to expand production successively through land expansion and technology there are enough resources available to divert some of them to the production of energy. However, not every feedstock is created equal; a strategy based primarily on corn to ethanol, would deepen our reliance on mono-crop production practices. The use of agricultural residues as feedstock has to be closely examined, as residues are an important component in soil erosion control and as a carbon sequestration method. A third agricultural feedstock, bioenergy dedicated crops like switchgrass, offer the advantage of a perennial native grass, and production practices that are less input intensive. Hence, a sustainable energy strategy should consider these characteristics, and promote the use of these feedstocks.

However, agriculture is not only a source of energy, also it is a consumer of energy and has the responsibility to use energy resources efficiently. There is no question that the current dominant system of industrial agriculture – mono-cropping, machinery intensive, land extensive – is highly dependent on oil for power, fertilizer, and pest and weed control. This extraordinary reliance on oil-based products needs to be considered as one the challenges to food security, as well as for energy independence.

Agriculture is an ecosystem driven enterprise, and as such it directly affects the environment in which it occurs. At the same time the environment can limit or enhance agriculture’s productive capacity. Agriculture is not only expected to produce clean water, wildlife habitat, but also use soil and limited water resources in a way will not compromise the environment and future food security. In dealing with that expectation, one has to look more closely at current production methods for food, feed, and energy. An oil dependent agricultural system that is based on mono-cropping and the voracious use of fossil fuels can be questioned as to whether or not it is the best tool to deliver environmental sustainability.

Getting to the final element of AFT statement, the system has also to be socially sustainable. This implies that the social fabric – farmers, farm workers, agribusiness, rural communities – that supports the environmentally sustainable production of an ample supply of high quality food, needs to financially sustainable as well. Without financial sustainability the agricultura
system will not be economically viable.

I would like to add an additional element to our discussion – the extraterritorial responsibility of any domestic and trade policy. Domestic and trade policies need to be designed so that they do not to contribute to poverty in the developing world. The elimination of dumping and export subsidies needs to be a priority.

In summary, the above discussion opens the door as we strive to find a common ground for agricultural policy. The first step is the recognition that US agricultural production has reached levels well beyond, food security needs, thus allowing for the diversion of resources that can contribute to the goal of energy independence. In addition, the prevailing production model of industrial agriculture – highly dependent on mono-cropping and oil – has not deliver the quality of food desired by many consumers, and has come up short in environmental and social sustainability.

There is indeed a need to reassess the public financial support to agriculture. Since 1996 the public has supported a policy of full utilization of the production capacity of the agricultural sector. This has resulted in low prices which in turn have trigger government payments that despite their size barely keep farmers afloat All the while the real benefits from this policy ends up in the coffers of corporate agribusinesses. The current structure of support results in market prices that are below the cost of production, constituting a very aggressive trade instrument which has devastating consequences in the fight against poverty in developing countries. The question then is whether a proposal which is solely based on and motivated by the expansion of trade for corporate profit can deliver what is needed to move agriculture in the direction of food security, healthy foods, as well as environmental and social sustainability. DTU