ELO’s initial contribution to the strategic dialogue on the future of agriculture in the EU

Following the kick-off meeting of the “Strategic Dialogue on the future of Agriculture”, this article is summarising the paper offering an initial consideration over the “starting point” with regards to the transition towards a more sustainable and resilient food system and an introduction to a potential “vision” for a future EU food system. 

The starting point

Climate change is the main challenge

While geopolitical challenges have been increasingly noticeable, climate change is the main challenge we face. Climate change is altering and adding uncertainty to our complex natural systems. Leading to increasingly unpredictable extreme weather events, faster desertification of vast parts of the world, megafires and biodiversity loss, which contribute to a self-reinforcing feedback loop of climate change. It translates into prolonged droughts, more erratic precipitation, and more frequent extreme events of storms, floods, frosts, hail, pests and disease and their effects on animal welfare, ecosystems, and natural processes and cycles. The availability of water, its management and storage and its quality are already of deep concern to agriculture in many parts of the EU. Uncontrolled climate change intensifies these challenges, making it more urgent to focus on mitigating the impacts of such occurrences in a strategic way and preparing for the new normal, which includes dealing with the increased vulnerability of our food systems.

Need to increase food resilience

Geopolitical tensions increase the risk of food insecurity as they impact both the availability and affordability of food but also of inputs necessary for the production of food. Recent events have shown the necessity of having a high level of access to European affordable food production. At the same time, keeping our leading position in global agro-food trade becomes increasingly important, as trade cushions the effect of events that disrupt agricultural production and food availability, particularly when in multi-polar trade systems. In fact, recent years have shown us the importance of not being too dependent on just a few actors, that it is important to consider that food security is linked to broader security considerations, and that it allows for the pushing for sustainable actions globally.

What is unsustainable cannot be sustained

Population and economic growth pressures, within an economic model that does not properly account for externalities, have meant that our natural resources of soil, water, clean air, and habitats have been misused over a long period. Climate change heightens this challenge. Our consumption and production systems are environmentally unsustainable and a transition to a new system is necessary. However, while our land-based sectors are being asked to shoulder most of the efforts, it is crucial to see the challenges and solutions in a more integrated approach, which includes the European food system but is broader than it. There is a tendency to attempt to fix the current lack of externalities account in our global economies only in the EU agricultural sector, by depleting the CAP for that purpose rather than attempting to create markets outside that mobilise other sectors and can go beyond the EU’s borders.

Integrating externalities accounting over our economic models is a good start, and several steps are being attempted in that direction. Also, faster action should be expected from more linear processes, such as tackling the widespread food waste and phasing out fossil fuels from our production chains. Dealing with nature-based processes, that rely on the healthy functioning of ecosystem processes (water cycle, nutrient cycle…), where we cannot understand the problem by just looking at its parts, is more complex.

Poor integration of environment and economics 

It is customarily stated that system sustainability requires balanced attention to economic, environmental, and social considerations. Yet, for our sector, different stakeholders invariably focus on one or other of these aspects. Environmentalists say that the food system’s impacts on climate, biodiversity loss, and pollution are the greatest threat to long-run food security.

Farmers say that the biggest threat to food security is marginal and unprofitable farming, leading to dependence on public subsidy, the disinterest of future generations in the sector and difficulties in integrating environmental concerns in their business decisions. Both views have a point and are related. However, correcting pervasive market failures and market imperfections of our economic models that do not reward public goods provision is not easy. Several issues need to be addressed to get a better grasp of the interplay between economy and environment.

There is no consensus on how to integrate externalities in the different value chains, namely in the food chain, and how to account for the real price of what we consume. Not only models, nut also data needs to improve. In most analytical work based on the food systems approach, the economy is either absent or grossly assumed and environmental data are in need of collection and harmonisation. Biophysical models need to get the economy in their structure and economic models to better prioritise the environment. Also, while there is much basic data to assess the farm supply side, the rest of the food chain remains a black box. This contributes to a polarised and poorly structured debate.

Anti-productivity sentiment

A lot of the current policy proposals arising from the Farm to Fork and biodiversity strategies push for both production de-intensification and land use change by taking land out of production, with little regard to the consequences of the combined pressure. A lot of thinking behind it implies the acceptance of higher food prices by consumers and the transfer of value to those asked to do more for the environment, which is highly optimistic. 

Also, in recent years, agricultural productivity has increased at a slower pace than in other OECD countries, while the environmental sustainability performance of the sector has not improved in line with expectations. Productivity growth is essentially driven by the outflow of labour, and less by research or innovation. This is particularly problematic when in comparison with major competitors. The potential for increasing productivity sustainably should not be dismissed, and plenty of best practices demonstrate it.

Structural limitations

Europe is a highly urbanised continent with a long history that has implications in its rural landscapes and farm structures, making it much different from other parts of the world, including their main western counterparts. The latest agriculture census confirms that almost two thirds of the EU’s farms were less than five hectares in size, with very many semi-subsistence farms. Also, the food supply chains are complex and farmers see themselves squeezed among much bigger players, who are not so regulated and subsidy dependent, and thus less susceptible to direct political interference and regulations. All these aspects contribute to the continued low profitability in agriculture compared to other sectors. While there is a social and cultural aspect that cannot be ignored, we must pay more attention to the viability of the sector when designing policies.

Also, even if the farmland area has been relatively stable, the demands over land are set to increase, as well as its degradation pressures. Therefore, having a multifunctional perspective of land use in Europe is crucial.

Polarisation of debate

There is general acceptance that there is no single or simple correction that can put things right quickly. Still, it is fashionable to suggest that the system must undergo a transition which may take two or three decades to work out and stabilise. Unfortunately, whilst there is sufficient evidence on the need to act for a system change towards sustainability, there are strong disagreements about the main elements and directions of the required transition.

Also, the language surrounding the failings of the current food system is entirely negative and can be deeply dispiriting to those struggling to make a living from land – which is generally a risky, low margin business.

The fallout from the Green Deal: While the broad aims of decarbonisation and green growth agenda of the Green Deal are commendable, for the EU’s agriculture and other land-based sectors, the deal implicitly supported the move towards a less intensive agriculture and more land being taken out of production, particularly through its farm to fork and biodiversity strategies. These followed an approach of target setting (on organic area, pesticides cuts, fertilisers, protected areas, areas for restoration…) without much thought over its implementation and global consequences, as the lack of convincing impact analyses and general reactions demonstrated.

The present European Commission neglected real stakeholder participation towards many of the stakeholder groups in the European countryside: farmers, foresters, landowners, … Only after the negative vote on the Nature Restoration Law in the European Parliament policy makers realised the need to talk with other stakeholders directly involved. Suddenly all those stakeholder groups were invited by Commissioner Timmermans who was listening but without having the will to really discuss the problems accusing stakeholder groups of not willing to look at the scientific evidence. Throughout this period the frustrations by many stakeholders in the countryside was growing.

The complexity of the CAP: Even if the newly reformed CAP only entered into force last year, general debate over the CAP is constant, normally negative, and with a vast number of different voices, different interests, and different involvement. This is an understandable condition, due to the vast history of a major policy that directly regulates the farming sector in all the EU countries, with all their challenges and differences, defining rules that need to fit all types of agriculture, producing methods, ecosystems, rural dynamics and expectations being introduced over time. Also, its funds are still a big part of a small budget, generating “subsidy envy” among other EU policies, even if the agricultural sector remains the only economic sector to be fully regulated at EU level. Still, despite its problems, the CAP remains the best tool available for farmers.

The “vision” for a future EU food system: highlights

● We achieved carbon neutrality;

● We are part of a functioning international rules-based order that integrates externalities accounting in their economic models and legislation. We live under our planetary boundaries;

● Despite increased production variability, consumer needs and expectations are fulfilled. Expectations are centred around balanced and healthy diets;

● The EU is able to produce a greater part of the necessary affordable and high-quality food needed for its population;

● The EU continues to be in a leading trade position within a multi-polar trade system and trade agreements have a respected environmental chapter;

● The EU has been able to integrate advanced innovations in the agriculture production process: water management, genetics, bio control, robotics, monitoring…

● Knowledge and technological innovation are readily available to farmers and land managers that have autonomy and capacity to be innovative;

● The bioeconomy is much more developed, due to the phasing out of fossil fuels. Land-based sectors provide food and raw materials due to better use of land, productivity increases, and better integration in other value chains;

● No more waste. All by-products of one sector are used in others;

● Value chains are more equitable and transparent;

● We have much more knowledge and control over our natural cycles. The knowledge is available for land managers, including for preparedness actions that are adequately recognised. Land degradation is reducing;

● Markets for public goods / ecosystem services are much more developed;

● Private collaborative approaches for adaptation to climate change are facilitated and supported;

● Rural businesses have the capacity to be resilient, adaptive and attractive to others. Regulatory stability and the respect for property rights play an important role in their viability.