Global Food Forum: little ado about nothing?
Momagri Editorial Board
Farm Europe the “Multi-cultural Think Tank” whose aim is to “stimulate reflection on rural econo-mies” organized a conference on a farm near Milan on 14th and 15th October, to reflect on the evo-lution of the Common Agricultural Policy and European agriculture in general. Named “the Global Food Forum”, this event brought “some 250 participants together who represent major players in the European debate”, “willing to freely share” on 4 proposed themes: “the Common Agricultural Policy: in need of adaptation or overhaul?”, “EU climate objectives: what are the implications for food systems?” “From Food Waste to Nutrition: How to build a balanced and responsible food chain.”, “How to reconcile tradition and innovation.”
Working from the documents1 published on the Farm Europe website on 20th October, Momagri offers an analysis of the proposals following the conference.
Firstly, we noticed that debates and proposals focused mainly on Europe. Although it is regrettable that CAP debates do not include enough issues on the evolution of agricultural policies in other countries, we can not really blame Farm Europe, as this Euro-centric bias is frequent. That being said, this forum was called “global”, so we were expecting a little more, also, of the 23 participants2 listed in the conference announcement, there were no non-European members, not even a repre-sentative from an international organization capable of giving an external view of Europe’s agricul-tural policy.
Without wishing to overshadow the many qualities of those people who participated, it should also be noted that they were mainly politicians (ministers and deputies), heads of agricultural organiza-tions and, finally, European and national officials; with in all three cases a majority of French and Italian. In this type of exercise, in order to benefit from different points of view and sensitivity, it is often necessary to invite researchers (there was only one), opinion leaders, representatives of civil society and even other think tanks!
Let's get to the content. In addition to the introductory speech from the Forum’s President, the two published documents have the undeniable merit of being very concise, only 4 pages, which may nonetheless be somewhat limited for “detailed recommendations”. As for the issue given as the title of the first theme “the Common Agricultural Policy: in need of adaptation or overhaul?”, the transcript makes it clear that we are in the first option, adaptation. One would even be tempted to argue that the debates were more in favour of the implementation of the last reform than in the perspective of a future negotiation.
Resilience: the keyword?
Acting on the fact that farmers will have to cope with “increasing climate and market volatility”, it is consequently necessary to develop the risk management tools “required to achieve the resilience” of farms. Recommendations therefore should focus on the development of climate insurance and mutual funds as well as changes in tax regulations to encourage farmers to build up precautionary savings, which would act as a supplement to European funds (top-up). The most important innova-tive proposition concerned changing insurance funding parameters: the proposal was to increase the co-financing of insurance premiums up to 80% and in particular to reduce the trigger and fran-chise thresholds to 20% and 30% under the rules of the WTO3. In this way, public support for insur-ance would no longer be categorized as a green box but as an orange box, which is made possible by exploiting the margins of manoeuvre available to the EU, in particular via the de minimis rule4.
For Momagri, the use of the concept of resilience in the debate on agricultural policies is pernicious. Because even though we can only wish that every individual, company or society returns to its ini-tial state after a shock, we cannot be content with merely promoting agricultural policies that simp-ly reduce the consequences of crises without looking to act directly on preventing or mitigating them. And for good reason: risk management instruments reach their limits when risks are sys-temic and/or markets are dysfunctional. Moreover, cure is always more expensive than preven-tion. This criticism of the use of the concept of resilience is explained in the recent Karl Falkenberg5 report for the European Commission's internal think tank: it is necessary to distinguish the hazards that we cannot collectively control, such as extreme weather, and the risks for which governmental and institutional solutions should be implemented to avoid the worst.
Certainly, as any company boss, the farmer must manage usual risks himself and have recourse to private risk management solutions, but government intervention is still necessary to remedy mar-ket shortcomings and limit the scale of crises. It should be noted however that at no time does the Global Food Forum's transcript speak of the role of the government except for calling for a “pre-eminence of the CAP on the general rules of competition” and to discuss the role of the EFSA (Eu-ropean Food Safety Authority). This is all the more troubling as the last few weeks have been marked by the implementation of a mechanism to reduce milk production voluntarily to escape the post-quota crisis.
The illusion of income insurance
In the end, it must be acknowledged that insurance is mainly encouraged, rightly so, for climatic and health risks, which are insurable. For economic risks, it is specified that insurance for turnover, margin or income should be subject to “in-depth studies” to quantify cost, benefits and efficiency. This seems indeed essential, as sometimes this type of insurance is presented as a miracle tool. Remember, if it permits taking advantage of price variations, economic insurance is of no use when prices are permanently depressed or markets are not functioning well. It should be pointed out that in France it has been since at least the year 2000 and the Babusiaux6 report that income insur-ance is considered by the anti-PAC brigade as the way to combat agricultural market price volatility. The lack of development of this type of tool, 16 years later, shows that this is no longer a case of launching new studies, but that an overall approach for the prevention/management of risk and crises must be developed, such instruments might have a place but only on the condition that gov-ernment authorities take on their role as regulators through counter-cyclical aid and tools to bal-ance supply and demand when the market does not do so by itself.
While the role of authorities in the prevention of market crises is not addressed and revenue insur-ance is a matter for further study, the issue of price formation and the sharing of added value also appears in the form of a proposal which deviates from the overall philosophy. Indeed it is pro-posed: “In order to encourage cooperation between farmers and processors, a sector approach to negotiating volumes and prices should be explicitly allowed to ensure better distribution of value when prices are both rising and falling”. Paradoxically, cooperatives that are, in fact, the means to coordinating producers and rebalancing bargaining power within the sectors are not mentioned. And even if we consider that agricultural policies can prevail over competition law, this type of “sec-tor approach” seems in the least not very euro-compatible and above all inconceivable beyond the control of the authorities.
In conclusion, though Momagri shares the view of renewing “the CAP’s economic dimension”, it can only be achieved on the basis of a break from the principle of decoupling aid which is only pur-sued by Europe. To this end, public authorities must be encouraged to take on their responsibili-ties as regulators, as in the other agricultural powers, and not letting farmers dream of income in-surance when markets are permanently depressed or dysfunctional. Finally, the initial ambition of this forum as a force for proposals and training for future CAP reforms has instead turned into an after-sales service for the current CAP.
1 The press release is available from
«Recommendations : how to improve the resilience of the EU Agriculture »
2 Announcement of the conference and of its main main participants :
3 It will be noted that this is an extension of the Commission's proposal under the draft Omnibus regulation on mutual funds.
4 For a detailed explanation of the margins of manoeuvre, see the White Paper of Momagri "a new strategic course for the CAP" from pages 75 to 83. You can download the White Paper by visiting the Momagri’s website www.momagri.org