Agricultural policies: The European Union drops out

… As revealed by results from the SGPA (Global Support to Agricultural Production) indicator for the world’s four major agricultural powerhouses (Brazil, China, United States and European Union)*

Between 2005 and 2010, the per capita global support to agricultural production (SGPA)1 has significantly increased in China, Brazil and the United States––by 130, 60 and 40 percent respectively––while it barely maintained its 20052 level in the European Union.

In spite of statements on maintaining the current CAP budget, these results thus are showing that Europe has, since 2005, been taking a direction that is in conflict with that taken by other world’s major powers, which invest massively to safeguard the food security of their people.

In absolute terms, the 2010 SGPA indicator ranks the United States first with $163 billion, followed by China with $154 billion, the European Union with $101 billion and Brazil with $38 billion. Expressed as a percentage of the agricultural production value, the United States again ranked first, with agricultural support representing 48 percent, against 24 percent for the European Union and for Brazil, and 20 percent for China.

But numbers aside, a policy analysis indicates similarities between Brazil and the United States, which implement policies to support competitiveness and domestic demand stimulus. This is the reason why farmers in these countries benefit from regulatory tools through:

As far as China is concerned, the government is conducting a policy of interventionism and safeguarding agricultural production that includes guaranteed minimal prices ($258/ton for wheat and $291/ton for rice in 2010), direct income support, social protection programs as well as tax relief…

Conversely, only the European Union turns its support system decoupled from production, in addition to greening criteria, into the cornerstone of its agricultural policy.

The verdict is final: Both the lower support and its unsuitability are causing the European Union to drop out, a situation all the more troubling that it would be worsened by the planned CAP reform.

momagri is drawing the attention of all European political leaders. It is not an issue of asking for more subsidies, but of adopting European price regulation mechanisms. This is the case of counter-cyclical systems, as advocated by momagri in its “Another CAP is possible” strategy.

The SGPA, an indicator providing transparency to agricultural policies and contributing to global agricultural governance

The SGPA indicator maps out all public, budgetary, extra-budgetary support to all agricultural activities within a nomenclature broken down in ten categories, from direct support coupled to production to support of a strategic nature.

Consequently, the SGPA results for the 2005 to 2010 years show a CAP significantly dropping out, compared to the Brazilian, Chinese and American agricultural policies.

Chart 1: Per capita SGPA comparison: EU, USA, Brazil, China, 2005-2010, in national currencies.

Chart 2: SGPA comparison: EU, USA, Brazil, China, 2005-2010, in $billions.

Chart 3: SGPA comparison of national agricultural production, EU, USA, Brazil, China, 2005-2010, in %.

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Dominique Lasserre
dominique.lasserre@momagri.org