By Terry Daynard, OCPA Policy Advisor

Representatives of the Agricultural Odyssey Group, formed by Ontario farm organizations in early 2001 to consider the future of Ontario agriculture, traveled to several European Union (EU) countries in October. I was part of the delegation, representing OCPA, and was present for meetings with farm organizations, government staff, Canadian embassy staff and other advisory groups in England, France, Belgium, the Netherlands and Germany. Odyssey representatives also visited Denmark and Austria; my comments on these countries are based on their reports and other written materials. The following is a brief personal summary. It does not represent conclusions of the Odyssey Group, which will be part of the group’s report to be completed in August 2002. My full report is on the OCPA web site at www.ontariocorn.org/eutrip.html.

What I Learned

1. The public image and political clout of farmers have plummeted in Europe. Reasons include a series of disasters such as BSE, foot and mouth disease, swine disease, dioxins in food and feed, etc., but farm-related pollution, declining bird numbers (UK), GMOs, worries about food quality, and huge EU farm subsidies have all had an effect. In response, governments have reduced the status of agriculture in ministry responsibilities in several countries, and governments are paying less attention to mainstream farm organizations, and more to social/environmental groups, in forming agricultural and food policies.

2. While EU subsidy support remains huge (about C$56 billion/year, or about half of the total EU budget), about 10% of this has or is being shifted away from direct farm income subsidies to so-called ‘Pillar 2’ programs. These programs, created as part of the ‘Agenda 2000' reform of the EU Common Agricultural Policy (CAP), fund environmental improvement, food safety, rural development and economic diversification. More money may be shifted to Pillar 2 following a ‘mid-term’ review of Agenda 2000 beginning in 2002. While mainstream farm groups are generally less than enthusiastic about the shift, they are cooperating as they see this new emphasis on ‘multi-functionality’ as the only alternative to losing the associated funds completely. And as a sweetener, the shift is being accompanied by an increase in overall agriculture-related spending. (Funds allocated to Pillar 2 by the EU must be matched by new funds from member countries.)

3. The loss in direct farm support is greater for larger farms. (‘Large’ may mean anything above about 100 tonnes of production for grain farmers.) Since 1992, the EU has progressively reduced domestic grain prices while increasing direct income support. But the compensation has been less than one-for-one for larger growers. And with Agenda 2000, further reductions in support are occurring for larger growers, with these differential reductions also being used to support Pillar 2 programs. A French grain farmer we visited estimates his loss in gross income since 1998 at about C$75,000 for his 370-acre farm, for equivalent crop acreages and crop yields. (He expected to receive about C$130/tonne for his corn delivered to an elevator this fall.) The reduction has been greater in Britain because payments are calculated in Euros and the Euro has dropped in value relative to the Pound Sterling. Though EU grain farmers generate little sympathy from Canadians because of their still-huge subsidy supports, there is no doubt that EU grain farmers are under stress because of the reductions - and the expectations of more to follow.

4. The situation is no better for livestock farmers because of losses (both financial, and in consumer confidence) created by BSE, foot and mouth disease, swine fever and changing food consumption patterns (lamb consumption is down in Britain, for example). Nutrient management problems caused by excessive rates of manure, or the combination of manure plus mineral fertilizer, are triggering strong corrective measures in some countries - the result of EU policies mandating maximum nutrient application rates. In the Netherlands, for example, the government is paying up to 6000 livestock farmers to quit, and fining other farmers about C$1 for every kg/ha of net N application (based on calculations of farm N inputs and outputs) above a nutrient cap. (In Denmark, the fine is about C$3/kg.) The right to spread manure is one of the top sources of income for some crop farmers; it’s cheaper to pay other farmers to accept the manure than it is to pay the fines.

5. There is major growth in horticulture in some countries, especially the Netherlands, and especially greenhouses. As a result, greenhouses are now identified as a major source of water pollution, triggering new rules on water recycling, etc.

6. Organic agriculture is being promoted by special subsidies as part of Pillar 2 spending. EU countries provide subsidies for a five-year transition period. Austria is said to provide support beyond this, though such extended support is apparently illegal under EU rules and may not be allowed to continue. As a result, organic production is growing (generally 1-3% of total food production in most countries except Austria, where it is 10%). Consumer demand is projected to increase to a maximum of about 3-5%, but no more as long as organic food is more expensive.
Although the German (‘Green Party’) minister responsible for agriculture has
set a goal of 20% organic by 2010, few of the folks I met seem to believe this reasonable because of consumer resistance to higher food prices and the fact that German states (which must implement the policy) are not supportive. There is major concern that EU subsidies could cause supply to exceed demand, and this has occurred in some cases (e.g., Denmark, where 30% of milk is organic and there is no price premium; indeed, most is simply pooled with non-organic milk). Austrian officials say both subsidies and price premiums are needed to maintain production. Some farmers are shifting back to conventional production - or plan to - after the five-year subsidy transitional period is over. EU farmers are adept at ‘farming’ EU subsidy policies.

7. Food quality is a major issue in Europe though it means different things in different countries. In northern Europe, it generally means the same as in Canada - freedom from pathogens and harmful chemicals, for example. But in France and south European countries, it more commonly means truthful regional identities: e.g., Roquefort cheese must come from Roquefort, France.

8. There are increasing efforts to ensure the regional or national identity of foods at retail. A ‘little red tractor’ logo attached to some British foods means they meet British standards and implies that they are grown in Britain, even though the standards could be readily matched by (and the logo applied to) foods grown in other EU countries. Austria has gone much further with a sophisticated system of testing and on-farm inspections (paid for by farmers) to ensure that Austrian-grown food can qualify for an Austrian quality standard. This has created a strong preference among Austrian consumers for Austrian-grown food, even if it costs more.

9. Farmers are emigrating from the EU - some to Canada, but many to eastern European countries, to take advantage of the eventual entry of these countries into the EU. (EU expansion will force further changes in the CAP to limit what will otherwise be an enormous increase in subsidy expenditures.)

10. Farmer and public anger about corporate control of agri-food is generally directed at food chain stores rather than agribusinesses as is the case in Canada. Cooperatives play a much larger role in European agriculture than in Ontario - with the exception of Britain.

11. Many European farmers seem to be as supportive of biotechnology as their Canadian cousins, but are blocked from its usage by government policies.

12. There is as much diversity across EU countries in the nature and role of farm organizations as there is in Canada. In Denmark, farmers operate the national agricultural extension service and pay 95% of the cost. Farm organizations play a major role in both extension and research in France. The Association Générale des Producteurs de Maïs (French corn producers’ association) manages (or co-manages, with other farm groups) five research stations, and employs eight area agronomists. This is funded through levies on both commercial corn sales and seed corn sales. (All seed corn companies, including Pioneer, cooperate.) Dutch farm groups also actively fund agricultural research. German and British farm groups seem far less active in extension or research, though they do offer other services (insurance, accounting, etc.).

13. There seemed to be no farm-organizational model in Europe which could be transported readily to Ontario, though the Fédération Nationale des Syndicats d' Exploitants Agricoles (FNSEA), with a balance between commodity-specific and regional representation (more of the former than the latter), and with a combination of regular, larger, delegate meetings and more frequent, smaller board meetings, might be the most appropriate. In most European countries, mainstream farm groups, no matter how well-organized and cohesive, are seeing their political influence diminish while other more socially or environmentally focused groups are gaining influence.

14. Despite the above, and the interest in ‘multi-functionality’ as a means of maintaining or increasing EU subsidy support, many agricultural leaders were concerned that Europe not lose competitiveness in food production. Despite the present shift in public and government attitudes, the EU has nearly 400 million consumers, with this figure to come closer to 500 million with EU expansion. Someone has to grow their food, and it won’t all come from niche farmers.

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