Seed money: How much do farmers get from government?

In 2008, farmer Jeremy T. James of Blackburn got 32 pence (around $0.45) from the EU’s Common Agriculture Policy (CAP). That’s not much, but it’s still over 30 times more than his Blackburn neighbours A&KM Barnes, who only got a penny. Queen Elizabeth II on the other hand got nearly £500 000 (around $700 000), and she wasn’t the only royal to benefit. Prince Albert II of Monaco got over half a million euros, as did the Duke of Westminster.

The industrial aristocracy didn’t do too badly either, with food giants Nestlé and Tate&Lyle getting around a million pounds each. The biggest UK  payout, over £6.7 million, went to Czarnikow Group Limited of London, a “professional services company in the sugar market” according to their website. In France, the biggest sum from the CAP was the 62.8 million euros going to Groupe Doux, a multinational present in 130 countries, that presents itself as “Europe’s number one producer of poultry and poultry-based processed products”.

Other OECD countries could show a similar pattern for farm subsidies – the rich getting more than their less well-off colleagues.

More what, though? There are problems with vocabulary in such a sensitive area. For some people, we’re talking about handouts or the less pejorative “aid” or “assistance”. Others prefer the dynamism of “incentives”, or the neutral-sounding “transfers”. The OECD term “support” describes the various ways in which governments intervene in the business of agriculture, including subsidies, grants, tax breaks and other policies that boost revenues.

Whatever the terms used, agricultural support costs a lot of money – $252 billion in 2009 for OECD countries according to the newly-published Agricultural Policies in OECD Countries.

Support as % of gross farm receipts, 2007-09 average

That sum represents 22% of total farm receipts in OECD countries, the same as in 2007, but up a percentage point from 2008, when support was less after agricultural commodity prices hit record highs. As the graph shows, the level of support varies enormously, from 1% in New Zealand to 61% in Norway.  

Support to agriculture is often criticised for going to the wrong people (a catering company supplying cruise ships got 148,000 euros in subsidies in 2008 for the sugar and milk powder it “exported” in passengers’ stomachs) or for encouraging harmful practices.

The report argues that with public budgets under pressure in the wake of the economic crisis, governments need to reassess and adapt their farm support policies to meet specific economic, social and environmental objectives, rather than simply encouraging famers to produce as much as they can.

This kind of conditional support in pursuit of broader objectives, such as preservation of the environment, conservation of natural resources or animal welfare, represented only 4% of the OECD aggregate support in 1986-88, but now represents a third. The EU, US and Switzerland provided the highest shares (around 50%) of their total support with some constraints.

Useful links

OECD work on agriculture

OECD agricultural support database includes information by country provides data on who receives EU subsidies

Cashing in on cows

cow picture
“Cows are amongst the gentlest of breathing creatures; none show more passionate tenderness to their young when deprived of them; and, in short, I am not ashamed to profess a deep love for these quiet creatures.” Thomas de Quincey

“Nowhere is the cow so feeble, and her yield so little as in India. Nowhere is she so badly treated as she is today in India by the Hindus.” So said Mahatma Gandhi in 1925, in a speech to the All-India Cow-Protection Conference.

Being holy comes with more duties than privileges. Hindus don’t kill or eat their cows, but Gandhi’s speech underlines the fact that apart from milk, a live cow can provide fertilizer, fuel and building material from its dung, as well as traction power and maybe even another cow. And it can do this by eating grass and parts of plants that are of no use to humans.

It also provides an ultimate safety net when times are really hard, but killing a cow provides only a one-off benefit that may prove disastrous to a poor family in the long run. As Marvin Harris points out in Cows, pigs, wars and witches,  a taboo against killing cows can have practical benefits beyond its religious and moral meanings.

Today, there are more cows in the world than Indians, and the livestock sector is one of the fastest growing parts of the agricultural economy. According to the FAO’s latest State of Food and Agriculture report,  livestock accounts for 40% of the global value of agricultural production and supports the livelihoods and food security of almost a billion people. Worldwide, livestock contributes 15% of total food energy and 25% of dietary protein. Products from livestock provide essential micronutrients that are not easily obtained from other plant food products.

Rising incomes, population growth and urbanisation are pushing up demand for meat products in developing countries. Global annual meat production is expected to expand from 228 million tonnes at present to 463 million tonnes by 2050, with the cattle population estimated to grow from 1.5 billion to 2.6 billion and that of goats and sheep from 1.7 billion to 2.7 billion.

All these animals need food and drink too. To produce a kilo of boneless beef takes about 6.5 kg of grain, 36 kg of roughages, and 155 litres of water for drinking and servicing. Producing the feed requires about 15300 litres of water on average.

We look at the “water footprint” of everyday products in the Insights on Sustainable Development, while food production and environmental questions are among the issues discussed in the forthcoming Insights on food and agriculture.

Useful links

Agriculture ministers from OECD and non-OECD countries will be meeting at the OECD on 25-26 February. On this page you’ll find information about the meeting as well as a series of background notes covering the issues ministers will be discussing.

We’ll also be discussing some of these issues in a series of posts next week.