Reconciling Farm Support and Environmental Protection: Trends and Prospects Macdonald Campus; April 5, 2005 Denis Boutin, Agricultural Economist, M.Sc

Reconciling Farm Support and Reconciling Farm Support and Environmental Protection:Environmental Protection:

Trends and ProspectsTrends and Prospects Macdonald Campus; April 5, 2005Macdonald Campus; April 5, 2005

Denis Boutin, Agricultural Economist, M.Sc.Denis Boutin, Agricultural Economist, M.Sc.Direction des politiques en milieu terrestreDirection des politiques en milieu terrestre

Service agricoleService agricole

OutlineOutline

Evolution of agri-environmental policiesEvolution of agri-environmental policies

Farm support measures and sustainable Farm support measures and sustainable developmentdevelopment

Environmental impactsEnvironmental impacts

Effects on social equityEffects on social equity

Designing agricultural support policies from a Designing agricultural support policies from a sustainable development perspective sustainable development perspective

environmental integrity

social equity

Desired situation

economic profitability

The Challenge of Sustainable The Challenge of Sustainable Development in AgricultureDevelopment in Agriculture

social equity

environmental integrity

economic profitability

Current situation

sustainable development

zone

Reference : Adapted from Jacob, P. & B. Sadler, 1990 & MENV, 2004.

OutlineOutline





Designing agricultural support policies from a Designing agricultural support policies from a sustainable development perspectivesustainable development perspective

Highlights of QuébecHighlights of QuébecAgri-environmental PoliciesAgri-environmental Policies

1980

2005

2000

1995

1990

1985

RPPEEPA

Municipalities with a surplus

LPTAQ

1st pork moratorium

Plant protection strategy

Sust. Dev. Policy (MAPAQ)

RRPOA (AEFP) Bill 23

Bill 184RRAO (AEFP & P-budget)

Support capacity (RRAO) BAPE Orientations

PAIA CDAQ Pork agri-env planUPA agri-env strategy

Prime-VertIRDA Agriculture conference

Cross-compliance (FADQ)

Réseau-Rivières

Sustainable env. in agriculture

Water and soil conservation

Agri-env clubs

Environnement à valoriser

Pork pause BAPE Pig Commission Québec Water Policy

APFASP

Degraded soil inventory

PAAGF Concept of sustainable agriculture

Characteristics of QuébecCharacteristics of QuébecAgri-environmental PoliciesAgri-environmental Policies

Main lines of interventionsMain lines of interventions Regulatory measuresRegulatory measures

- Water protection; management of animal wasteWater protection; management of animal waste- Protection and development/planning of agricultural landProtection and development/planning of agricultural land

Accompaniment measuresAccompaniment measures- Enhanced knowledgeEnhanced knowledge- Technology transfer, education and trainingTechnology transfer, education and training- Financial support for farmsFinancial support for farms- ResearchResearch

Other measures in developmentOther measures in development Environmental certification (1999)Environmental certification (1999) Cross-compliance (2001)Cross-compliance (2001) Watershed management approach (2002)Watershed management approach (2002)

Trends in Agri-environmental PoliciesTrends in Agri-environmental Policiesin Hog Production (2003*)in Hog Production (2003*)

Country/Region Specific component(s) Production limitations

Denmark Cross-complianceCross-complianceTaxation/charges

Harmony clause(max. 1,4 animal unit/ha)

Catalonia Cross-complianceCross-compliance Livestock buyout

Brittany(France)

Mandatory Treatment Moratorium (2000)Livestock buyout

Netherlands Taxation/chargesCertification

Tradable rights

Livestock buyout

North Carolina Judiciary agreementswith enterprises

Moratorium (1997)

Iowa Master matrix none

Québec none Administrative requirements (2002)

* : measures already in place in 2003 Reference: Adapted from Debailleul & Boutin, 2004.

Major Trends inMajor Trends inAgri-environmental PoliciesAgri-environmental Policies

Reinforcement of regulationsReinforcement of regulations In intensive agricultural production areasIn intensive agricultural production areas

Production restrictionsProduction restrictions Measures to further extensification & low-intensity farming systemsMeasures to further extensification & low-intensity farming systems

Agri-environmental payments (3 % of support in OECD)Agri-environmental payments (3 % of support in OECD) Meeting regulatory requirementsMeeting regulatory requirements Farming systems with higher environmental performanceFarming systems with higher environmental performance Resources retirement (land or livestock)Resources retirement (land or livestock)

Uses of economic instrumentsUses of economic instruments(cross-compliance, taxes/charges, etc.)(cross-compliance, taxes/charges, etc.)

Others (certification, watershed management)Others (certification, watershed management)

Levels of Québec Public SupportLevels of Québec Public Supportin Agri-environmentin Agri-environment

70.2 million $ for Québec (2002-2003)70.2 million $ for Québec (2002-2003) 2/3 of the total support in Canada2/3 of the total support in Canada

Average close to 30 $/ha (1999-2001)Average close to 30 $/ha (1999-2001) Level of support comparable to that in the USLevel of support comparable to that in the US

Manure storage facilitiesManure storage facilities Québec : 70 to 90 % of the construction costsQuébec : 70 to 90 % of the construction costs Europe : Denmark 30 %; France 65 %Europe : Denmark 30 %; France 65 % USA : up to 75 %USA : up to 75 %

Costs of agri-environmental policiesCosts of agri-environmental policies Negligible : 1 to 2 % of production costs for pig raisingNegligible : 1 to 2 % of production costs for pig raising

“ “ To which extend agri-environmental To which extend agri-environmental policies are fixing problems created policies are fixing problems created

amongst other reasons by agricultural amongst other reasons by agricultural support policies ? ”support policies ? ”

OCDE, 2003

OutlineOutline



Environment impactsEnvironment impacts



Market price supportMarket price support Tariff barriers (Supply control)Tariff barriers (Supply control)

Payments based on output Payments based on output ASRAASRA (Québec Income stabilization insurance) (Québec Income stabilization insurance)

Payments based on input usePayments based on input use Refund of property taxesRefund of property taxes

Main support measuresMain support measuresfor Québec producersfor Québec producers

Payments based on cultivated area / animal number Crop insurances

Payments based on historical entitlements /overall farming income

CAIS program, CSRN, CSRA Payments based on inputs / resources constraints

None

Some Considerations on the Link between Some Considerations on the Link between Agricultural Support & EnvironmentAgricultural Support & Environment

Support that varies by production scale is more Support that varies by production scale is more damaging to the environmentdamaging to the environment

Support that uncouples payments from quantity Support that uncouples payments from quantity produced is less damagingproduced is less damaging

Decreasing market price support measures Decreasing market price support measures generates a less intensive agriculturegenerates a less intensive agriculture

Support will be more damaging if there is a “ lock-in ” Support will be more damaging if there is a “ lock-in ” effect :effect :

based on the use of specific inputs or the use of specific based on the use of specific inputs or the use of specific technologiestechnologies

offered only for specific productionsoffered only for specific productions

Ranking of Farm Support PoliciesRanking of Farm Support Policiesaccording to their Environmental Impactaccording to their Environmental Impact

Type of subsidiesType of subsidies% of support (PSE)*% of support (PSE)*

OECDOECD CanadaCanada

* : data 2001References : AAC, 2003b; Unisféra, 2003; Portugal, 2002.

Market price supportMarket price support

Payments based on outputPayments based on output69,169,1 53,653,6

Payments based on input usePayments based on input use 8,58,5 8,58,5

Payments based on cropped Payments based on cropped areas / animal numberareas / animal number

12,612,6 10,510,5

Payments based on Payments based on historical entitlements / historical entitlements / overall farming incomeoverall farming income

6,86,8 27,427,4

Payments based on input / Payments based on input / resource constraintsresource constraints

2,92,9 0

Most Most harmfulharmful

More More neutralneutral

BeneficialBeneficial

“ “ Filtering the Policies ”Filtering the Policies ”and Evaluation of Environmental Impactsand Evaluation of Environmental Impacts

Evaluate in conjunction with other elements of Evaluate in conjunction with other elements of agricultural policiesagricultural policies Market price support accompanied by measures that Market price support accompanied by measures that

limit production (e.g. dairy quotas)limit production (e.g. dairy quotas) ““ Lock-in effect ” if the control favours certain crops or Lock-in effect ” if the control favours certain crops or

particular technologies (e.g. crop insurance)particular technologies (e.g. crop insurance) Validation of the initial classification of the programs Validation of the initial classification of the programs

(e.g. refund of property taxes)(e.g. refund of property taxes) Other constraints resulting from agri-environmental Other constraints resulting from agri-environmental

policies and their applicationpolicies and their application

Classification of Agricultural Support Classification of Agricultural Support Programs in QuébecPrograms in Québec

Harmful Rather neutral Beneficial

ASRA

Supply control

Refund of property taxes

Crop insurance

CAIS

CSRN

CSRA

Prime-Vert

Report of the BAPE CommissionReport of the BAPE Commissionon Pig Productionon Pig Production

Recommendation 25Recommendation 25

“ “ The Committee recommends that, in the pork The Committee recommends that, in the pork production sector, the current agricultural income-production sector, the current agricultural income-

stabilization insurance program (ASRA) be replaced stabilization insurance program (ASRA) be replaced by a global revenue protection regime for agricultural by a global revenue protection regime for agricultural producers, that a maximum net revenue be protected producers, that a maximum net revenue be protected

and that this protection is applied regardless of and that this protection is applied regardless of volume, type or cost of production.” volume, type or cost of production.”

(translation)(translation)

OutlineOutline


Farm support measures and sustainable Farm support measures and sustainable development (SD)development (SD)




Equity of the DistributionEquity of the Distributionof Farm Supportof Farm Support

Social equity: one of the 3 aspects of SDSocial equity: one of the 3 aspects of SD

Agricultural policiesAgricultural policies Income support for farm householdsIncome support for farm households

A large part of the support does not reach A large part of the support does not reach farmers who need itfarmers who need it

Most often the largest farming operations Most often the largest farming operations benefit the most from the subsidiesbenefit the most from the subsidies

Lorenz Curve for Pork ProductionLorenz Curve for Pork Production

0

20

40

60

80

100

0 20 40 60 80 100

Absolute equality

Distribution of ASRA aid

cumulative % of number of farms raising hogs

Cu

mu

lati

ve %

of

the

nu

mb

er

of

insu

red

ho

gs

pro

du

ced

23 % of subsidies go to 0.8 % of farms

44% of subsidies go to 6.4% of farms

* Data 2002-2003

Recommendations of the BAPE Recommendations of the BAPE Commission on Pig ProductionCommission on Pig Production

“ “ The Commission recommends that all agricultural The Commission recommends that all agricultural income support programs …income support programs …

26. Target people who work in a family farm or a farm of 26. Target people who work in a family farm or a farm of human dimensions. ”human dimensions. ”

27. Be available only to individuals, even for people who 27. Be available only to individuals, even for people who exercise agricultural activities by intermediary of a exercise agricultural activities by intermediary of a corporation. ”corporation. ”


The Objectives ofThe Objectives ofQuébec Agricultural PolicyQuébec Agricultural Policy

1960s and 1970s1960s and 1970sSocio-economic progress of farm householdsSocio-economic progress of farm householdsand development of agricultureand development of agriculture

Early 1980 Early 1980 Nourrir le QuébecNourrir le Québec

1990s1990sÀ la conquête des marchésÀ la conquête des marchés

2000+2000+Inclusion of agriculture in sustainable Inclusion of agriculture in sustainable

developmentdevelopment

OutlineOutline






To Favour the Sustainable DevelopmentTo Favour the Sustainable Developmentof Agriculture…of Agriculture…

“ “ One of the most important challenges will be the direct One of the most important challenges will be the direct integration of the environmental aspect at the conception integration of the environmental aspect at the conception of the policies and programs. In agriculture, this involves of the policies and programs. In agriculture, this involves

eliminating or modifying agricultural policies that bring eliminating or modifying agricultural policies that bring about incentives to not respect our natural capital […] about incentives to not respect our natural capital […]

and to integrate the environmental dimension as and to integrate the environmental dimension as conditions to financing. ” conditions to financing. ”


Jacques Proulx, President of UPAJacques Proulx, President of UPA

Seminar on Sustainable Agriculture, 1990Seminar on Sustainable Agriculture, 1990

Few Challenges to MeetFew Challenges to Meet

Better understand the relation between the Better understand the relation between the environment and farm support policiesenvironment and farm support policies

Develop an integrated vision of policies Develop an integrated vision of policies influencing the agricultural sectorinfluencing the agricultural sector

“ “ The groups of farmers most favoured by the The groups of farmers most favoured by the current farm support measures are those who current farm support measures are those who most highly oppose their removal ” most highly oppose their removal ”

(OCDE, 2003)(OCDE, 2003)

To Favour the “ Sustainability ” To Favour the “ Sustainability ” of Agricultural Policiesof Agricultural Policies

Resort to several meansResort to several means Diversify measures Diversify measures BAPE Report : 58 recommendationsBAPE Report : 58 recommendations

Leaders must be proactiveLeaders must be proactive To mobilize the participantsTo mobilize the participants

Farm support reformFarm support reform Necessary to reduce environmental impactsNecessary to reduce environmental impacts

and improve social equityand improve social equity

Towards a “ Greening ”Towards a “ Greening ”of Agricultural Supportof Agricultural Support

Review of farm support programsReview of farm support programsby an environmental evaluation procedureby an environmental evaluation procedure

integration of the environmental aspectsintegration of the environmental aspectswhen designing policieswhen designing policies

Progressive re-orientationProgressive re-orientationof the most damaging support measuresof the most damaging support measures

towards less damaging support measurestowards less damaging support measures towards agri-environmental programstowards agri-environmental programs

Anticipated benefits :Anticipated benefits : efficiency of agri-environmental measuresefficiency of agri-environmental measures of costs to attain agri-environmental objectivesof costs to attain agri-environmental objectives

Thank you!Thank you!

Documents

Reconciling Farm Support and Environmental Protection: Trends and Prospects Macdonald Campus; April 5, 2005 Denis Boutin, Agricultural Economist, M.Sc