© Ronnie Horesh September 2002
This paper looks at the issues from the policy point of view. The first chapter paper looks briefly at the current extent and growth of organic agriculture. The second chapter focuses on sustainability and, in particular, whether it is useful from the policymaker’s viewpoint. Chapter 3 looks at the current effects of government policy on organic agriculture and on whether there is a case for government promotion of the sector. Chapter 4 suggests how policymakers can best approach organic agriculture. A brief epilogue concludes the paper.
There are many definitions of organic agriculture. At its simplest organically produced food is food that is produced without artificial fertiliser or pesticides. Organic farming uses only organic-based fertilisers, like manure and vegetable based compost, and natural pesticides, such as predator animal species. It uses antibiotics and other animal-health related products only to cure sick animals and not to enhance yields (Legg and Viatte 2001). Other definitions go much further. A statement of the aims and principles of organic farming given by the International Federation of Organic Agriculture Movements goes beyond biophysical aspects to encompass matters such as animal welfare, biodiversity and social justice (IFOAM 1998). IFOAM’s statement of aims includes that of processing organic products ‘using renewable resources’, and some organic standards, such as the Australian National Standard insist on animal feeds, for example, being 100% organic (May and Monk 2001). In brief, though, incorporating wider concerns than production methods into definitions of, and standards for, organic farming is highly problematic. “Standards are far more able to refer to prohibited inputs than to specify precise criteria for the assessment of whether producers and processors are acting in a manner that is ‘socially just’ or ‘ecologically responsible’” (Rigby and Cáceres 2001).
Different authorities are responsible for certifying organic farms in OECD countries, and in many countries both government and private sector bodies are involved in certification. By March 2002, 56 countries had implemented, finalised or initiated the drafting of organic regulations (Organic Standard 2002). In general, compulsory and voluntary standards are less prescriptive about how the necessary input supply, processing and transport of produce should be performed, than about the on-farm production. Organic status relies upon verification of the production method and, often, a post-production chain of custody: it cannot be established by testing produce whose history is unknown.
Conventional agriculture, as distinct from organic agriculture, employs a diverse set of technologies using available knowledge. Its ultimate goal can be said to be the safe, efficient provision of foods in abundance at lowest price.
Organic farming, while growing fast, accounts for only a small fraction of European agricultural output. Industry and government sources indicate that global organic production has increased 20 per cent annually over the past 10 years and the size of the global organic market doubled between 1997 and 2000. Australia, the European Union, and the United States are currently the largest global organic producers; however, interest in organic production is increasing worldwide. In Mexico, for instance, land dedicated to organic products increased 140 per cent from 1996 to 1998. Though this reflects land of only 55 000 hectares (as compared to 6.1 million hectares in Australia), Mexican production of organic goods has resulted in $70 million worth of exports in 1999 (USDA 2000). While organic food products provide only a small share of total food consumption in OECD countries, this share is higher in some countries, notably in Europe, and for certain products, such as fruit, vegetables and dairy products. But organic production still accounts for less than 2 per cent of the total OECD agricultural land area, and a similar share of total crop and livestock production.
The Brundtland Report defines sustainable development as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’ Another definition is ‘a development path along which the maximisation of human well-being for today’s generations does not lead to declines in future well-being.’ The difference between these two definitions highlights the inherent complexities: ‘needs’ contrasts with ‘well-being’ in that it implies that trade-offs cannot be made between its components. There are also inherent uncertainties in both definitions. Future generations’ needs are difficult to assess by current generations, and ignorance as to future technological change makes the assessment of the ability to meet those unknown needs subject to further uncertainty (OECD 1999a, para 3).
Definitional difficulties as fundamental as this are important for policymakers, because they unless they are resolved, it is impossible to define the nature of the policy problem in ways that can lead to its solution. The difficulties proliferate when we try to define ‘sustainable agriculture’ meaningfully. One reason is because agriculture uses inputs from other sectors. For example, no fungicide currently approved for use in the UK by the Soil Association is derived from a renewable source. All fungicides and insecticides require some processing prior to application, and this processing and subsequent transport uses energy and may depend on machines made from non-renewable resources (Edwards-Jones and Howells 2000). On some definitions of sustainability, an agriculture sector that relies on inputs from other sectors ceases to be sustainable. But it is also likely that, assuming an agreed definition of sustainability, an entire economy can itself be sustainable, though each of its sectors, because of their interdependence, is not.
The important point is that agriculture need not necessarily be sustainable itself in order to contribute to sustainable development, provided that trade-offs between its inputs and outputs can be effected. The key factor is the extent to which inputs and outputs are substitutable for each other. It may be that the unsustainability of particular sectors or subsectors is the price we pay for the specialisation of labour and the operation of comparative advantage. If so, sectoral sustainability could mean a lower standard of living for everybody – or a much lower world population.
The same reasoning applies to different countries in that it is possible to imagine a group of countries whose agriculture sector, taken as a whole, is sustainable, though each country’s agriculture sector, considered discretely, would not be – at least according to some definitions. Most policymaking is done at the country level, but there may be elements encompassed by the sustainability concept to whose spatial distribution we are indifferent. In such instances, perhaps the only intelligible unit whose sustainability is worthy of consideration is the entire world.
There is also the question of the time period over which sustainability is measured. Over how long should an agrosystem behave sustainably in order to be considered sustainable? Is a process sustainable, for example, if the productive capacity of land is run down over a period of decade, but is then fully restored? Such restoration may await the application of existing or new technology
The contribution of such technology to agriculture has already been impressive. In the fifteen years from 1986-2001 alone, agricultural output in the OECD countries rose by 15% on 1% less land and with 8% fewer workers. Over the same period, the price of food fell by around 1% annually (Legg and Viatte 2001). The rate of technology development will continue to influence the degree to which agriculture is sustainable. In broad terms, the application of new technology can substitute for reduced use of other inputs, such as labour or land area. Technology includes not only the development and use of nutrients, pest control products, crop cultivars, and farm equipment, genetically modified crops, but also the manipulation of natural pest control agents and the use of farm management techniques that focus on whole-farm productivity, not just yields per hectare. The use of computational technology, combined with geographical location devises and remote sensing advances, has the potential to change the way all crops will be managed. Known as ‘Precision Agriculture’, the underlying theme is integration of information to create management knowledge to achieve site-specific goals. As well as raising productivity, technology will be used to remediate land that has been overused, or misused, through poor agricultural practices (Hutchins 2000).
Judging whether a process is sustainable is therefore inherently difficult, unless quite limiting assumptions are made as to technological development. More generally, and crucially, farming practices that are not sustainable in some spatio-temporal contexts may be sustainable in others.
Edwards-Jones and Howells (2000) conclude that ‘neither conventional nor organic systems are absolutely sustainable…. Fundamentally, both systems are non-sustainable because they require inputs of non-renewable resources, and both systems impact on the natural environment in one way or another.’ The authors concede that the system that uses less or fewer resources or has the lest environmental impact, will in principle, continue longer than the other, but this will apply only in an absolute sense, where two similar-sized farms are started on the same day, each with access to a similar, finite, amount of non-renewable resources. And even then, such an analysis considers only inputs to the system. A more realistic analysis would also have to look at outputs of farming systems. ‘For example, if consumers were not prepared to buy the output of one of the systems, then its ability to continue would be seriously compromised, regardless of the use it made of non-renewable resources. However, not all outputs need be in terms of marketable food or fibre; environmental and social goods can also be deemed as outputs of farming systems” (ibid).
There are further difficulties when the sustainability concept is broadened to include economic and social dimensions. For example, would a more environmentally sustainable agriculture sector that generated more unemployment be more sustainable as whole? In another context the OECD says that ‘given the importance of the measurement problems, country reviews should not attempt to construct indicators of sustainable development…. (OECD 1999a).
For all these reasons it is easy to agree that a ‘precise operational definition of sustainable agriculture is extremely problematic’; that ‘the debate over how to achieve sustainability is plagued by fundamental disputes… over which elements of production are acceptable and which are not’, and that ‘[i]t is only in retrospect that sustainable techniques can be truly identified’ (Rigby and Cáceres 2001).
Putting definitional problems aside for the moment, and assuming that it were possible to measure the sustainability of agriculture and progress toward or away from it, there would be at least three, overlapping questions to ponder before considering intervention to promote sustainable agriculture.
The first is: should government efforts and funds be diverted into promoting sustainability in agriculture in preference to sustainability in other sectors? Perhaps more could be gained per unit outlay by promoting sustainability in, for example, transport, town planning, and industry, in preference to agriculture.
Second, and more important: agricultural policy aimed at changing farming systems, might not be the best way of achieving agricultural sustainability. Most definitions of sustainable agriculture stipulate that it should be productive and provide for society’s food needs. But farming systems are concerned with only the numerator of the food per capita ratio. At the 1994 International Conference on Population and Development (ICPD) in Cairo 180 governments agreed on a set of policies that would foster each person’s capacity to make major life decisions for herself or himself: decisions including the fundamental one of when or whether to have a child. But reproductive health services are still unavailable to many of the world’s poorest people. Nearly two out of every five pregnancies are unintended, and more than 150 million women who do not want to become pregnant are not using any form of contraception (Population Action 2001). If we take a broad view of what constitutes society, the most effective way that OECD countries could make agriculture sustainable might have nothing to do with farming systems. It could be to encourage all countries to fulfil their Cairo commitments to provide all women and men with access to family planning information and a range of high-quality contraceptive services.
Third, and most important of all, does sustainability necessarily correlate with welfare, and if not, shouldn’t policymakers try to target welfare rather than sustainability?
“…low-yield farming is only sustainable for people with high death rates…” (Borlaug 2002).
Borlaug here dramatises the possibility that there is no necessary relationship between sustainability and social welfare, and that they might even conflict. He advocates that African farms use the high-yield farming systems ‘that have made the First World’s food supply safe and secure, and kept its wild species from extinction: chemical fertilizers, improved seeds bred for local conditions, and integrated pest management (with pesticides)’.
There is no need here to question Borlaug’s assumption that sustainable agriculture is necessarily low yielding, in terms of productivity per hectare (Legg and Viatte (2001) and Ollila and Honkatukia (2001) have a contrary view). But policymakers ought to question whether sustainability, even supposing there were consensus over what it means, is a legitimate policy goal when it might conflict with social welfare. Many people, for instance, would choose to live longer in a way that may be ‘unsustainable’, than to have a short, but sustainable, life – especially when ‘sustainability’ appears to be a subjective concept that could anyway be reached by application of current or future technology. When there is no rigorous, agreed, definition of sustainability, there would seem little reason to advocate it as a policy goal. The danger is that policymakers might define and use a particular interpretation of the sustainability concept to promote their own views at the expense of wider society.
To summarise: sustainable agriculture may be neither a practical, nor a worthwhile, goal for policymakers because:
· sustainable practices will vary both temporally and spatially and can be identified only in retrospect;
· there is no necessary link between improved sustainability within agriculture, and increased sustainability in society as a whole – the only strictly valid unit of study is the entire world;
· there is no reason to believe that changes in farming systems are necessarily the best way of achieving meaningful, broadly–based increases in sustainability per unit outlay; and
· there is no necessary link between increased sustainability and social welfare;
While the notion of sustainability may be too subjective and amorphous a criterion to be of practical use to policymakers, the widespread and increasing use of the term is indicative of genuine concerns.
This chapter first looks briefly at the way government policy currently affects agriculture in general and organic agriculture in particular. It then looks at the relevant concerns behind the increasing interest in organic agriculture and organic food. A discussion of how policymakers can best approach organic agriculture is postponed to the next chapter.
Agriculture in the developed countries remains heavily supported. Support to producers in the OECD countries as measured by the percentage PSE is about 34%. Total support to agriculture amounted to $311 billion in the year 2001 (OECD 2002a). Gross farm receipts were on average 45% higher in 2001 than they would have been without any support (ibid). Most producer support continues to be given in the form of market price support and output payments. Some countries also still subsidise inputs, especially energy, water and credit: flat rate water-charging schemes, for example, are widely used in Spain, the US, Australia, Mexico and Canada (OECD 2001b). These forms of support insulate farmers from world markets and impose a burden on domestic consumers. They also have a larger impact than other forms of support on production and trade, both for OECD and developing countries.
Organic producers receive market premia for their products, but have to pay certification costs.
In most European countries the farm gate price for organically produced wheat has been 50-200% higher than for conventionally produced crops. Premia for livestock products are typically lower. Organically produced milk received premia of 8-36% in Europe (FAIR 2000).
In some countries organic farming receives special support. In the case of the EU, payment levels and eligibility conditions vary significantly between countries. Most EU countries support both conversion to, and continuation of, organic farming, but in France and the UK only conversion is (directly) supported. Payment levels for arable land in the first two years of conversion range from €100 per ha per year in the UK, to €470 per ha per year in Finland. This compares with more than €800 per ha per year in Switzerland.
Organic agriculture, along with conventional agriculture, benefits from the economic protection given by import restrictions. Minimum price guarantees also support organic agriculture, as consumers pay a premium over the normal retail price for organic products.
The dolorous roll call of problems created by agricultural support in the developed countries will be familiar to many. It has generated surplus production; it has led to misallocation of resources both between agriculture and other sectors, and within agriculture; it has raised food prices to consumers; it has meant that OECD countries have fewer funds for expenditure on health, education and social welfare; it has denied many poorer countries the possibility of developing by exporting agricultural products; and even now, in 2002, it continues to threaten the wider international trading system. It has also, as we shall see in Chapter 4, not actually helped small farmers in OECD countries very significantly.
But the most important point to make here is that, in economic theory, and on all the evidence, production-stimulating support will raise input prices and it will raise the price of the least elastically supplied input the most. In the OECD countries this is land, and it is fair to say that much of the support policies has been capitalised into land prices in the OECD countries. This heavily influences farming systems. If people pay more for farmland, they will need to generate more income from it: maximising yields per hectare will be their prime focus. Many of the negative effects of such maximising are the concerns that have led consumers and producers to organic agriculture.
One such concern is biodiversity. Stolze et al (2000), summarising the findings of their literature review of environmental impacts of organic farming in Europe, say that ‘organic farming clearly performs better than conventional farming in respect to floral and faunal biodiversity.’ A more recent paper (Stolton and Geier (2002)) tends to support this, but says that ‘organic farming systems are not always automatically sympathetic to biodiversity conservation’. But Borlaug (2002) says that there is a conflict between man-made biodiversity (“antique farmers’ varieties”) and the unique species characteristic of a wild forest that would, in Borlaug’s view, have to be chopped down if low-yield agriculture were to prevail. Trevawas (2001) says that mechanical weeding, done more frequently on organic than on conventional farms, can damage nesting birds, worms and invertebrates.
Through the use of crop rotations though, organic farming encourages landscape diversity, which does encourage a diversity of habitats that confers obvious benefits on local wildlife populations. It may help maintain traditional agricultural landscapes by promoting a smaller average field size, and retaining boundary features (Edwards-Jones and Howells 2000).
In relation to soil, Stolze et al conclude that ‘organic farming tends to conserve soil fertility … better than conventional farming systems’, but that there is no difference between the farming systems and soil structure. However, organic farming can see more use of ploughing than would be the case if herbicides were used. It has been argued that, on some soils, repeated ploughing compacts deep layers of soil and reduces yields. Water runs off compacted soils more easily, which increases erosion (New Scientist 2002, page 38). ‘No-till’ agriculture, which has led to less, or no, use of the plough on 35% of US farmland, largely depends on an increase in the use of maize and soybeans genetically modified to survive glyphosate, the herbicide sold as ‘Roundup’. Jules Pretty of Essex University, usually a strong advocate of sustainable farming methods believes that a single dose of glyphosate probably causes less environmental damage than ploughing (New Scientist 2002).
On water use, it is suggested that the higher levels of organic matter, and practices of minimum tillage in organic systems, increase the water percolation and retention ability of the soil, reducing irrigation needs (FAO 2002). On water quality, organic farming generally results in lower or similar nitrate leaching rates than conventional agriculture (DEFRA 1999). However, this is disputed by Trewavas (2001) who says that the ploughing in of legume crops (a necessary process on organic farms) and continued manure breakdown leads to nitrate leaching into aquifers and waterways at identical rates to conventional farms. Organic farming would most probably proscribe the use of genetically modified maize that produces protein more suited to livestock requirements. Such maize would both increase efficiency of conversion to grain-fed beef and generate manure containing less of the nutrients, including nitrogen, that pollute waterways (New Scientist 2002).
Generally, pesticides and fungicides permitted for use on organic farms are less hazardous than those used in conventional systems but there are exceptions (Edwards-Jones and Howells 2000). And there is some evidence suggesting that when toxicity and volume are considered in an overall pest management strategy, organic practices have greater environmental hazard than conventional ones (Edwards-Jones and Howells 2000), quoting work by Kovach et al (1992)). Another suggestion is that organic farming has respectable yields partly because it benefits from pesticides sprayed on neighbouring fields (Randerson 2002). A study of data collected by the US Government found pesticide residues on 23% of organic fruits and vegetables and on nearly 75% of conventionally grown produce, though in none of the samples did the residues even approach statutory limits (Brasher 2002). Surveying New Zealand data, Bourn and Prescott (2002, page 24) conclude that ‘it is likely that consumers of organically produced food would at the very least consume fewer types of residues. Whether this results in a health benefit for consumers remains controversial.’ (Emphasis added.)
Indeed, the benefits of reducing synthetic pesticides to the consumer can be overstated. Plants in the human diet contain thousands of natural pesticides that protect them from insects and other predators: of these 63 have been tested and 35 are rodent carcinogens. There is no convincing evidence that synthetic chemical pollutants are important causes of cancer in humans, for example. Regulations that try to eliminate minuscule levels of synthetic chemicals can be expensive: some have estimated that the median toxic control programme costs 146 times more per life year saved than the median medical intervention. Attempting to reduce tiny hypothetical risks has costs; for example, if reducing synthetic pesticides makes fruits and vegetables more expensive, thereby decreasing consumption, then cancer will be increased, particularly for the poor (NCPA 1998).
There is no evidence that, on balance, organically produced food is safer to eat than conventionally produced food. There is some anecdotal evidence of problems with the use of manure and food safety. For example, organic regulations recommend hay for animal feeding, but hay-fed animals infected with Escherichia coli 0157 incubate this dangerous organism longer than conventional animals fed with grain (Trewavas 2001). This is echoed by other prominent food scientists who say that organic food is actually riskier than food grown with chemicals because of the way it is fertilised. One prominent scientist agrees that organic food carries ‘quite a risk’ if farmers ‘use improperly composted manure’ (Berlau 1999). Another says that composted animal manure used without chemical sprays may infect the food with deadly bacteria that are carried in faeces (ibid). In 1996, according to data from the US Center for Disease Control, organic foods made up only 1 per cent of the food supply, but were implicated in 8 per cent of the deaths from the 0157 strain of E. coli bacteria (Bate 1999). A more recent report by a group of Danish veterinarians suggests that organic broiler chickens are three times as likely as conventionally-produced poultry to be contaminated with Campylobacter (Agbiotech Reporter, 2001). As fungicides are not permitted anywhere in the production and processing of organic foods, concerns have also been raised about contamination with mycotoxins due to moulds, but studies have not shown that consuming organic products leads to a greater risk of mycotoxin contamination (FAO 2000).
Why the premium?
Do consumers pay more for organic food because of the way in which it is produced or because it is free of artificial pesticides? A fascinating, and perhaps highly significant, development can help answer this question. This is the use of “landless farms”, which need no land, no sunshine and very little water. One company in this area, GrowTech, converts shipping containers into greenhouses with computer-controlled climatic conditions for growing vegetables. Inside the container, the vegetables are planted in stacked foam trays and fed with mineral and nutrient-enriched water. Sensors help a computer control air and water temperature, and the levels of minerals in the water. No pesticides are needed. The technology uses very little water – an important advantage in many environments. It is not clear whether the fertilisers [minerals] used would disqualify its products from classification as ‘organic’ on many definitions. But the vegetables and herbs produced are completely free of pesticide residues and from any form of insect contamination – so much so that they do not have to be washed before consumption. (Schwartz 2002). Despite being produced in a highly untraditional manner, the vegetables produced this way (mainly herbs and lettuces) from test sites have attracted very high premiums from buyers. This is still experimental technology, but it may indicate that it is the nature of the product, rather than the way it is grown, that accounts for its attractiveness to consumers.
Trewavas (2001) states that hundreds of rigorous tests have failed to show that organic foods taste better or have improved nutritional value and that there is some evidence that they have lower nitrate and protein content (Woese 1997). Bourn and Prescott (2002) would question this latter finding, but agree that, with the possible exception of nitrate content, there is no strong evidence of differences in nutritional value. The UK’s organic farming body, the Soil Association, in a recent report does admit that ‘the perception that organic food “is better for you” appears to have been largely based on intuition rather than conclusive evidence’ (Avery 2002).
Stolze et al find conclusions about the impacts on climate and air quality hard to draw because of a lack of data and the difference between calculations per unit of land as against per unit of output. Trewavas (2001) says that the greater use of mechanical weeding leads to greater use of fossil fuels, which greatly increases pollution from nitrogen oxides, and that ‘degradation of organic material from manure produces significant amounts of nitrous oxide and methane, the most potent greenhouse gases.’
What about the land area under agriculture? The Green Revolution has been criticised because the new rice varieties need high levels of chemical fertilisers to flourish. But the resulting high yields, according to Borlaug (2002), have had a dramatic conservation effect, saving large areas of land in the developing countries from being cleared for more low-yield crops. Borlaug, winner of the 1970 Nobel Peace Prize, estimates that “if the world were still achieving only the low crop and livestock yields of 1950 at least half of today’s 16 million square miles of global forest would already have been plowed down, and the rest would be scheduled for destruction in the next three decades.” Yields per hectare do generally appear to be lower on organic farms but this may be largely a result of the large public and private research expenditures that have been lavished on conventional farming. With similar funding, organic yields would undoubtedly rise. Legg and Viatte (2001) explain that part of the reason for lower yields is that farm sizes are smaller, and so do not permit economies of scale. But in many cases organic yields in developing countries can be higher than under traditional management practices (UNCTAD-UNEP 2002).
EU-funded research indicates that organic standards have a positive impact on animal welfare, though animal health on organic farms is not necessarily better than on conventional farms (EU 2002).
All fungicides and insecticides permitted by the UK’s Soil Association require some processing prior to application, and this processing and subsequent transport uses energy and may be dependent on machines made from non-renewable resources (Edwards-Jones and Howells 2000). If as Trewavas (2001) says, mechanical weeding substitutes for use of synthetic weedkillers, then organic farms will use more fossil fuels for that purpose at least. As demand for organic food grows so the international trade in organic products expands. The UK currently imports 70% of its organic fruit and vegetables, much of which is flown to the UK from eastern and southern Africa or elsewhere in the southern hemisphere. Agra Europe (2001) reports that in countries like Belgium, Germany, Italy, Netherlands, Spain, UK, Taiwan, Canada, 40% or more of organic food is imported. “Even if the practices used on-farm [are] exemplary, the implications in terms of energy use and emissions of global warming are extremely significant” (Rigby and Cáceres 2001).
The conclusion from this quick survey of a microscopic proportion of the available literature is that, with the possible exception of animal welfare on farms and water use, it is not unambiguously clear that organic farms necessarily or even generally, perform better in any single one of the dimensions discussed. Consumers, of course, do not consider these issues individually. Typically they will ‘value several, potentially conflicting, characteristics of a farming system, e.g. the provision of sufficient amounts of food, the provision of cheap food, the provision of high quality food, and the provision of a constant supply of food’ (Edwards-Jones and Howells 2000). ‘Society will also value the provision of employment on farms, and in the upstream and downstream activities, as well as the provision of ecological goods. At the global level there is a value associated with farming systems to provide food for a growing world population (ibid)’.
Some of these features, some of the time, are associated with each other, but not in all locations, and not necessarily in fixed or predictable ways. So even if we accepted that organic agriculture were unambiguously preferable to conventional agriculture over a significant geographical area as regards one feature (biodiversity, for example), there is no conceivable way such information could be practically extended to other features in a way suitable for making policy about farming systems. Should consumers concerned about the environment, for instance, buy organic imported air-freighted food in preference to the local, conventionally produced alternative? To this question Jules Pretty responds ‘[c]limate change is such an important issue that in general I think anything that can be grown or raised locally should be bought in preference to imports, even if the imports are organically produced’ (New Scientist (2002)). The phrase to which emphasis has been added says it all: there is no clear answer.
As Rigby and Cáceres (2001) put it: ‘units of measurement and the appropriate scales for measurement differ both within and across the commonly identified economic, biophysical and social dimensions of sustainability. For example, consideration of the effects of organic production on farm margins, soil fertility and rural employment are difficult to combine in an overall measure. Not so problematic if the effects are all in the same direction, but when one starts to consider trade-offs, as one indicator increases and another falls, across different dimensions then this factor becomes more significant. This is an issue which will not be solved simply by greater knowledge…’ (Emphasis and ellipsis added.)
For the policymaker whose remit covers any but the smallest geographical area this implies that some humility is necessary. Even if a single environmental feature, biodiversity, say, or non-renewable resources, is considered, it is not always the case that replacing conventional farming by organic farming, will be an improvement. When combinations of features are considered any calculation is going to be to be, as Rigby and Cáceres put it ‘difficult’, but as this author would put it ‘impractical’. ‘Organic agriculture’ may therefore be inadequate as a means of targeting several goals simultaneously. As a policy goal it may be as nebulous as ‘sustainability’.
This conclusion is far from saying that organic agriculture can never be important for OECD agriculture. It does, though, raise the possibility that the positive attributes to which organic farming’s growth attests might best be advanced by policymakers doing less, not more.
This chapter looks suggests how government policymakers might approach organic agriculture in the light of the above discussion. The growth of organic and other less intensive forms of farming, indicates a disenchantment, for many reasons, with conventional agriculture and its products. Organic agriculture, compared with conventional agriculture, represents in people’s minds, a wide and variable range of attributes, such as more biodiversity or safer food, that cannot be traded off against each other, and may indeed conflict with each other. Some of these attributes will be high priorities for some people; for others they will be luxury items, for still others they will be irrelevant. Their relative values will vary markedly from person to person, and they will change over time, as attitudes, incomes, and technology change, in ways that cannot be predicted.
The policymaker’s role cannot be to make these tradeoffs, which are simply not amenable to a top-down, one-size fits all, approach. Rather, government should create a policy environment within which producers and consumers can express their preferences for the wide array of features associated with non-conventional agriculture. Informed producers and consumers should be left as far as possible to make their own decisions, which are essentially about allocating scarce resources. And they can best do so using markets, the most efficient way yet discovered of allocating scarce resources, in a neutral policy environment. Of course, government should ensure that essential environmental, food safety and other standards are strictly maintained. They have a public good character, and government can usefully and legitimately intervene, provided it identifies explicitly what its goals are.
Exceeding these two briefs carries dangers, and not on narrowly ideological grounds. Take ‘recycling’, undertaken with enthusiasm, at least at first, by governments and local authorities in many OECD countries. In many cases recycling is helpful to the environment; but there are instances when it probably is not. One life cycle analysis estimated that the manufacture of paper cups consumed 36 times as much electricity and more than 500 times as much wastewater as the manufacture of much-derided polystyrene foam cups (Hocking 1991). Another study found that while disposable nappies (diapers) create around twice as much trash by volume as recyclable cloth nappies, they are probably more friendly to the environment, consuming less energy than, and half as much water as, cloth nappies. They also generate 40 per cent less air pollution, and 86 per cent less water pollution (Franklin Associates 1990). Other seemingly deserving causes such as ‘public transport’ are questionable on many grounds, not least that of distribution: research shows that the benefits of public transport funding go overwhelmingly to the middle class, who have more money to spend on travel, and more time in which to do so (Le Grand 1982).
What have nappies and rail subsidies to wealthy commuters to do with organic agriculture? Essentially this: policymakers saw ‘recycling’ and ‘spending on public transport’ as ends in themselves rather than means to ends. The results have been unfortunate, in terms of both efficiency and distribution. There are environmental problems that can be solved by recycling, and there are transport problems, such as those afflicting poor, carless, households, that can be solved by better public transport. But unfocussed programmes, applied across entire economies with no explicit, targeted, objectives, do not solve them.
Of course, there is no need to look beyond agricultural policy in the developed countries for examples of such policies. OECD research (OECD 1995) shows that more than half the sums paid out as support to ‘agriculture’ end up as extra expenditure on farm inputs, such as fertilisers, pesticides, animal feedstuffs, machinery and farm buildings. Farmers, because they are subsidised, buy more of these inputs, and the suppliers, knowing that farmers can afford to pay more, charge higher prices for them. There are also very high administrative costs, as farmers have to comply with a whole host of stipulations to qualify for their assistance, and the masses of forms they fill in have to be duly scrutinised, filed, archived or otherwise disposed of. Nevertheless, about 20-25 per cent of taxpayer and consumer support to ‘agriculture’ in the OECD countries does end up going to farmers. But because much assistance to the sector takes the form of subsidised prices for their production, most of it goes to the largest farmers. In the US, for instance, about 88 per cent of support goes to the largest 25 per cent of the farmers (in terms of gross sales) (OECD 1999). So the proportion of the billions of dollars for OECD agriculture that ends up with the smallest farmers is tiny: around three or five per cent. And the higher food prices that result from these policies bear most heavily on low-income consumers, for whom food constitutes a larger share of total household expenditure (OECD 2002a). The main beneficiaries of the complex array of agricultural support policies in the developed countries are: large landowners, many of whom were already very wealthy by any standards; agricultural input suppliers; food processors; and programme administrators. Criminals also gain (see Waugh (2002)). It is unlikely that these agricultural support policies would have been adopted with such enthusiasm if government had openly declared that their major beneficiaries would be the very rich, large agribusiness corporates, bureaucrats and fraudsters.
Any changes to these policies are stridently opposed by lobby groups – grown powerful on the very support that they seek to defend. And the unfortunate fact is that sudden removal of these programmes could create genuine hardship, especially for those who bought land on the expectation that support would continue. The implications of this for organic agriculture are twofold. First, government support for something as vaguely specified as ‘more organic agriculture’ is likely to be similarly misdirected. Second, reform of these policies, worth doing in its own right, can help create a policy environment in which agriculture becomes ‘more organic’ without government direction. The rest of this chapter looks at policy reform and complementary steps forward, which would almost certainly assuage many of the depredations to which organic agriculture is a response.
[T]he re-instrumentation of domestic agricultural policies … should be the first step when alleviating both economic welfare losses and environmental degradation relating to current agricultural policies (Lankoski 1997).
Agricultural support, or more precisely, the way in which agricultural support is delivered, has undoubtedly contributed to the intensification of farming. Support paid on output or input use is swiftly capitalised into land values, and the resulting high prices for land have exerted pressure to generate higher yields per hectare – this also encourages specialisation of production (OECD 2002b).
Recognising the problems, including environmental problems, that this support leads to, the OECD countries in 1987 committed themselves to:
A progressive and concerted reduction of agricultural support…; this will bring about a better allocation of resources which will benefit consumers and the economy in general. (OECD 1987).
There has been some reduction in agricultural support in the OECD countries, as measured by the Producer Support Estimate, in the succeeding fifteen years, from 38% to 31%. Total support, as measured by the Total Support Estimate, now amounts to US$311 billion (OECD 2002a). Market price support, output payments and input payments – the most output-stimulating measures and those that raise land values the most - have fallen from 91% of producer support in the mid 1980s to – a still hefty – 78% in recent years (OECD 2002a).
Reductions in output-based support and input-based subsidies would, in general, and in the long term, take the pressure off farmland. They would encourage a shift toward more extensive production systems. They may also lead to the cessation of farming on marginal land (OECD 2002b), as they did in New Zealand (Bell and Elliott (1993)). Obviously too, though seldom mentioned in the literature, such reductions would free up funds that consumers, taxpayers or government could use to buy, inter alia, goods and services including those associated with organic agriculture.
As outlined above, a significant proportion of the support intended for farmers is captured by suppliers of purchased inputs. Some of this is in the form of greater volumes used. A reduction in output-based support would see lesser, and more efficient, use of fertiliser and pesticides and greater use of Integrated Pest Management. It would also lessen the influence of the agrochemicals companies in agricultural policymaking. With less use of purchased inputs, the soil fertility and structure would become a higher proportion of the value of farmland, increasing incentives for farmers to maintain and improve it. Rational water charging would lead to less water pollution as a result of better application efficiency rates, more control of water flows in and out of the districts, and easier application of demand management strategies, including water exchanges (OECD 2001b). Support removal can cause hardships, but most of these can be mitigated through the use of careful implementation strategies, including the possibility of compensating those who might suffer as a result of the support removal (OECD 1998a).
OECD findings are that environmental benefits resulting from such policy reform:
· Can be maximised by ensuring that compensation payments are fully successful in severing the link between the support and environmentally harmful practices.
· Will often become apparent only after a relatively long time span. This will particularly be the case where past support has encouraged investment in long-lasting infrastructure, thus locking-in the use of certain inputs or processes for years to come.
·
· Are likely to be larger than estimates based on empirical evidence can predict, both because of the increasing benefits that accrue over longer time periods and because of the greater range of technological developments made possible by the support removal. Removal of production-stimulating support will encourage a broader scope of technical developments than if the support were to be continued (OECD 1998a).
A lowering existing barriers to trade
Lowering
existing tariff and non-tariff barriers to trade would complement agricultural
policy reform: trade barriers buttress the high support prices paid to farmers
in OECD countries. Tariffs on agricultural products are still far higher than
those for most other goods (OECD 2001c). Import tariffs alone cost developing
countries around $43bn a year (Anderson et al. 2001). The total
costs of all forms of trade barriers - including tariffs, non-tariff barriers,
anti-dumping measures, and product standards - are more than double this
amount, rising to over $100bn,or more than double the total sum of development
assistance (Oxfam 2002).
Developing countries have a comparative advantage in labour, an important input into organic farming, and trade liberalisation, as part of a general agricultural policy reform, could see more production moving to those countries that have this comparative advantage. In India, where there has been a long tradition of organic farming, 70% of the arable land has always been free of agro-chemicals (Hoffman et al). In Brazil, 10% of the total cultivated area is in 'alternative agriculture'. Labour demands are usually increased on organic farms, providing employment and higher returns on labour, therefore improving the viability of rural areas and reducing migration to cities FAO 2002).
Developing countries give little support to organic production. Some countries do give marginal support, but in Latin America, for example, the organic movement has grown almost entirely through its own efforts, aided by seed funding from international agencies. OECD agricultural support in general, and subsidies to promote organic agriculture in particular, obviously make organic products imported from developing countries less competitive (Hoffmann et al). When international markets can be accessed, organic agriculture improves food security by increasing income opportunities (FAO 2002).
Lower import barriers, especially when coupled with domestic policy reform, would make all food more affordable, including imported organic produce. A freer flow of agricultural imports would relieve some of the pressure on the environment in the OECD countries, and boost social welfare, both in developing countries and in the OECD area.
B Certification
Most health and safety standards genuinely aim to protect public health. However, the rules can be applied in ways that undermine the ability of developing countries to take advantage of export opportunities, and leave them locked out of important markets. As part of a trade reform package existing standards for all agricultural products could be made less discriminatory against imported products. Also, new standards for organic foods should not be unnecessarily exacting. Product standards cause difficulties for developing countries, because they often lack the capacity to comply. The legislation that governs standards can be complex and requires detailed legal and scientific knowledge to interpret it. Meeting standards is not cheap: the costs of complying with legislative requirements, including testing and certification, can be as high as ten per cent of the overall product cost for some agricultural goods (DFID 2001).
Codex Alimentarius and IFOAM have issued guidelines for organic agriculture, intended as minimum standards to guide governments and private certification bodies in standard setting. Governments can use these texts to develop national organic agriculture programmes that are often more detailed (FAO 2001). The danger is that a proliferation of public and private sector standards for organic food, as well as complex and cumbersome government regulations and import procedures, could create further problems for developing country exporters. Experts at a recent meeting (UNCTAD-UNEP 2002) emphasised the need for mutual recognition and equivalency, and suggested that developed countries should, inter alia:
· recognise group certification in the importing country's regulations of organic produce;
· have transparent and understandable rules and procedures governing imports; and
· not use official organic labels to discriminate between domestic and imported organic products.
Government can also help by encouraging private certification bodies to ensure that organic standards do not create unnecessary obstacles to trade (Hoffman et al). Some certification standards, for example, would say that organic farming, as practised in many developing countries, is not truly organic in that it does not return nutrients to the soil - it is, in effect, mining the soil. Consumers content to follow such standards would prefer to pay more for organic food that has been produced in ways that do not deplete the soil. Others, though, would care more that the food is pesticide-free, and might believe that their purchases are anyway in the long run interests of the exporting country. The role of policymakers is not to restrict such choices, but to facilitate their being made on an informed basis.
Certification is not only an international trade issue. In some countries, individual certification bodies produce their own voluntary standards, which can be more stringent than the national regulations. The government has a role in ensuring the integrity of these bodies and their processes, and in enforcing legal sanctions against deception.
It is not only consumers who should be well informed. Most farmers depend on the integrity of the ecosystem, including such ecological services as nutrient recycling by earthworms and soil micro-organisms, which gives them self-interest in environmental stewardship. Understanding and recognising this self-interest can help them overcome their resistance to change, and reduce the costs of monitoring and enforcing any environmental measures. For that to occur most efficiently, farmers need to have access to good information. ‘Essentially, the policy challenge [is] one of strengthening the links all along the chain between the creation of knowledge and its application (OECD 2001d). Government, of course, is not the only supplier of such information (ibid), but government can facilitate the creation of community-based, information- gathering and sharing groups, such as Landcare groups in Australia and New Zealand. An OECD study (OECD 1998b) shows that such groups seem ‘especially well-suited to addressing issues that are local in nature, but extend beyond the borders of a single farm.’ As the New Scientist (2002) puts it: ‘[a] one-size-fits-all approach to farming – whether the rigid application of organic standards or an insistence on large-scale, high-input cropping – is almost certainly a bad approach.’
As well as being more locally appropriate, and more adaptable, information and education can be more effective than subsidies. Indeed, payments for environmental benefits can sometimes supplant an existing intrinsic motivation to provide these benefits. Many farm organically for reasons that have nothing to do with profit maximisation. Government policy aimed at stimulating organic farming, especially when it provides financial incentives to do so, could ‘crowd out’ some of these less mercenary and more civic-minded motivations. Some farm organically as a positive reaction against what they see as the excessive government and corporate control of conventional agriculture. Again, more government intervention would obviously conflict with this ethic, and lower these farmers’ feelings of self-determination and self-esteem. (See Frey (1997) for a look at these issues, as applied to provision of environmental benefits.) Payments for conversion to organic agriculture, and for continuing organic farming, can undermine the cognitive outlook that sees organic agriculture as an undertaking worthwhile in its own right, rather than as a cost for which compensation and payments must be paid by taxpayers and consumers. As one German organic farmer put it ‘if too many go over [to organic farming] for purely financial reasons, we risk undermining confidence in the sector’ (Wassener 2001).
Adapting a conclusion reached by Mattsson and Kvarnbäch (2000) in relation to biodiversity in Sweden, Stolton and Geier (2002) say that “…it is crucial not to force the farmer to work with biodiversity, instead they should be made more aware and interested in the subject with increased information and advice.”
Meaningful agricultural policy and trade reform, coupled with education and information would mitigate many of the concerns to which organic agriculture is a response. They would also make any remaining concerns easier to address because they would:
· make clearer the causes of problems, often obscured by the number and complexity of support policies, and the ways they interact with each other; and
· liberate funds that can be spent on explicit outcomes.
Once
agriculture’s significant remaining negative externalities, and their sources,
had been identified, the next step would be to internalise them – that is to
make those who generate them, pay for the costs they impose on
others. To address other concerns, incentives may have to be provided for
stated outcomes. In many cases existing policies can be used or adapted. Some
OECD countries already make payments to farmers conditional on constraining or
using specific inputs, for example, or on the choice of production techniques
to reduce environmental damage, or simply to remunerate the provision of
environmental services. Such payments currently account for just 3% of the
total Producer Support Estimate (OECD 2002a).
The arguments in favour of such internalising tools as the Polluter Pays Principle, or payments for explicit outcomes, are not solely about efficiency and distribution: they are also about transparency. Many of the excesses of industrial agriculture can be traced back to government’s early failure to specify exactly their support policies were intended to achieve. Too often policy goals are unstated, uncosted or mutually conflicting. Consider the European Union’s Common Agricultural Policy. Its supposed objectives, as laid down in the Treaty of Rome (1957), are:
1 to increase agricultural productivity,
2 to ensure a fair standard of living for [farmers], and
3 to assure the availability of [food] supplies
4 ...at reasonable prices.
The challenge for policymakers is to avoid the misdirection of resources created by this sort of vagueness and confusion when they consider the issues that have made organic agriculture increasingly popular. Policymakers should not, in other words, see organic agriculture, as a convenient solution to a whole range of problems – many of which are the direct result of their taking exactly that approach in the past. They should instead create a policy environment that empowers people to make their own decisions about what is important to them. They should then identify any remaining significant negative externalities and address those by being explicit about what their policy goals actually are, and transparent about how they will achieve them and how much they will cost to achieve. In short, if they identify a need for more biodiversity, or cleaner water, or less depletion of non-renewable resources, then they should formulate transparent, targeted and costed policies that aim to achieve those goals.
“In her maiden speech to parliament, [German Agriculture Minister Renate] Künast proposed increasing organic farming … from 2.5% of agriculture to 20% in 10 years” (Wallace 2001).
The aspersions cast in this paper on the sustainability concept, and doubts raised about some aspects of organic agriculture, are not intended to denigrate organic farming or organic farmers. Rather, their aim is to discredit the hasty and overly prescriptive policymaking that would ‘favour’ organic agriculture for unspecified or vague reasons, in ways that probably would do little good for society in general, and organic farmers and consumers in particular.
The OECD countries’ agricultural policies, and the decades of lavish support for the sector, have made their agriculture sector very much like one of its own intensively reared crops or animals: fundamentally unhealthy, brimming with purchased inputs, and dependent on continuous intervention from outside the sector for survival. The sector’s fragility is apparent from the noisy, malodorous protests that seem to greet any serious attempt at reform.
The core ethos of organic farming is a total contrast. Organic farmers work with nature to create a healthy environment in which animals and plants are naturally viable and resilient. Organic farmers, and those who wish them well, would do best to shun the ‘support’ that has left conventional agriculture in the OECD countries a charge on the public purse to the tune of $311 billion every year. Their aim instead should be to replicate in the policy environment that which is found on organic farms: an environment free from the artificial stimulants and interventions that have cosseted conventional agriculture and protected it from fair competition by overseas would-be exporters.
Within such a sector, where informed farmers decide what to produce and informed consumers decide what to eat, the share of output that will be produced by organic farming and all the other forms of non-conventional agriculture, cannot be known in advance. Most likely, agricultural production in the OECD area would shift toward the organic end of the spectrum, but the magnitude of this shift cannot, and need not, be foreseen. What can be known for certain, however, is that the sector as a whole would, in contrast to today, be healthy, resilient and adaptable.
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