There was an elephant in the room during the recent conflict between French dairy farmers and giant dairy conglomerate Lactalis, and at the European Union agriculture ministers' meeting at Chambord in the Loire Valley on September 2nd: the effect of agriculture and European subsidies on the environment.
Yet given the business model they have chosen, farmers themselves must be familiar with the subject. Europe's Common Agricultural Policy (CAP) has what is called a 'second pillar' with a specific budget for agro-environmental subsidies. And protecting the environment is one of the main arguments EU member states use to justify paying out more than 50 billion euros a year – over 40% of the total EU budget – in direct aid to farmers.
Indeed, agricultural pollution, greenhouse gas emissions and water consumption are increasingly on the agenda for Europe's politicians. This can be seen in the disagreement between Brussels and Paris over plans for a second Nantes airport at Notre-Dame-des Landes in west France and the Sivens dam project in south-west France, as well as French resistance to European rules curbing the use of nitrate-based fertiliser. Even so, direct European aid for environmental protection represents only 20% of total farm aid, well below that earmarked for boosting competitiveness and farmers' revenues.
This context prompted Alessandra Kirsch, a doctoral student at the French Institute for Agricultural Research in Dijon, in east France, to investigate whether direct EU subsidies to farmers fulfilled their environmental aims. Her thesis has not yet been published, but an initial release came out last year. Her findings are relevant beyond the dairy sector, as grain farmers also face a drastic fall in prices for their produce. They are also very striking.
For the research reveals a fundamental flaw in EU policy: farmers who have the worst environmental impact on average receive the most subsidies. In her study, Kirsch looked at subsidies across all farming sectors, by hectare, by head of cattle and by farmer. She compared the level of subsidy received by farms per hectare of useful agricultural area to the farms' ranking for “environmental sustainability”. The result showed that the highest amounts of aid per hectare went to those who caused the most environmental damage.
Enlargement : Illustration 1
This baffling result is due to the way CAP subsidies are calculated, which reflect a given farm's productive history. Before 1992, aid was linked to yields. Since yields rose with the use of chemical fertilisers and pesticides, the most productive farms, also the most polluting, received the most in subsidies. The reforms that followed did not remove this bias. Fixed amounts of aid are attributed in relation to surface area, granting premiums to zones where yields have historically been the highest.
This does not mean such farms pollute more because they receive higher subsidies, Kirsch said. Simply, farmers who care least about the impact of their business on the ecosystem have benefited historically from more support than others. So European agricultural aid acts in a contradictory way.
How is an environmentally-friendly farm defined? This is not easy to determine, since impacts on water, soils, air and biodiversity all have to be taken into account, and they are not always exactly in synch. A farmer may have a good level of natural meadow (biodiversity) but use his tractor more than others, using a lot of fossil-fuel-based energy.
French agriculture is also very diverse. Oilseed and protein-rich crops, representing 16% of farms, have a very different environmental profile from cattle rearing. And within each sector, each farm has its own positive and negative points.
The most recent CAP reform in 2013 tried to even out the bias towards the most historically productive farms by harmonising subsidies regardless of the farm's history. But this has not created a greener CAP, according to a reportreleased this year by France Nature Environnement (FNE), which criticised the exceptions to several environmental measures.
The organisation's agriculture network coordinator, Marie-Catherine Schulz-Vannaxay, cites two examples to illustrate the reality behind the greenwashing of CAP: “The authorisation to spread pesticides over 5% of areas set aside for biodiversity on farms, while the obligation to diversify cultures to reduce the use of pesticides or fertilisers has been scrapped for the main monoculture, maize.”
Yet amid this disappointing diagnosis there is nevertheless some good news. Kirsch's study showed that farmers who pollute less do not have poorer financial results than the others. Another major finding is that although less-polluting farms produce less milk, meat, wheat, maize or other produce, they manage their other production costs better. That means those who make the most effort to reduce their environmental impact have revenues at least comparable to the rest. For farmers who choose moderate production goals also use smaller quantities of inputs such as fertiliser, pesticide and weed killer. They therefore achieve comparable or higher profit margins than those who produce more but spend more to maximise production. This conclusion also holds good for the largest farms.
Kirsch notes that business considerations are not a handicap for large-scale farmers when it comes to developing more favourable environmental practices. So, in the current context of an imbalance between supply and demand for milk, the strategy of producing ever more quantity is clearly not the right one.
Her empirical analysis of the distribution of CAP revenues shows how contradictory EU political injunctions on agriculture can be. And this does not help small or large-scale farmers adapt to the new economic reality, like the ending of milk quotas on 31st March, 2015.
Members from several farmers' unions demonstrated on 2nd September outside Chambord, the Loire château where EU agriculture ministers were meeting to frame an agreement on CAP for 2020. “Our agriculture is on its knees,” said Bernard Lannes, who heads one such union, La Coordination Rurale. At the same time nearly 120 militants from La Confédération Paysanne, which represents many smaller-scale producers, demonstrated in nearby Blois in favour of European regulations to help troubled farmers.
Direct subsidies form an essential part of European farmers' revenues. This is particularly so for grain and cattle farmers, who would show a net accounting loss without them, according to the Agriculture Ministry's statistical service, the Reseaux d’Information Comptable Agricole (RICA). At the same time, the economic situation for farming is so difficult that the sector has difficulty imagining an alternative business model, and is divided within itself against a backdrop of dramatic social crisis.
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- The French version of this article can be found here.
English version by Sue Landau