Tag: garden pots ideas

Mandatory cross-compliance could also attenuate the image of the farmer as a polluter

As with Fischler’s strategy in articulating agricultural policy reform, keeping the proposals secret allows the reformers to conduct research and compile data and evidence to justify the proposed changes. These data, on issues such as expected savings, distribution of benefits across groups, or overall change in total support, allowed reformers to support their proposals with evidence, while those who oppose the initiatives are caught flatfooted. Finally, secrecy prevents welfare state beneficiaries from marshalling opposition to reform before the proposals can be fully presented and explained.The plan developed by Fischler and his associates contained three core elements: decoupling of income payments, modulation, and cross-compliance. The first element called for the full decoupling of direct supports to farmers. Payments are coupled when the amount of money a farmer receives depends on how much he or she produces. Coupled payments were the original backbone of the CAP. When the CAP was created, Europe was struggling through its post-war recovery and food shortages were still a concern. Incentivizing production was essential for overcoming these challenges. Over time, production-based payments got out of hand, resulting in the milk lakes and butter mountains that plagued the CAP in the late 1980s and early 1990s. As previous chapters explain, Ray MacSharry was able to take major steps toward managing the surplus problem by implementing, among other reforms, a partial decoupling of payments from production. In the 2003 reform, Fischler sought to complete the work that MacSharry had started, and completely decouple payments from production. Full decoupling was also a crucial and necessary step towards strengthening the EU’s bargaining position in the next round of WTO discussions. Coupled payments are market distorting and thus an object of particular ire within the WTO. In addition,drainage pot for plants coupled payments were exacerbating problems that Fischler feared would diminish public support for the CAP.

Production-based payments incentivized farmers to produce at all costs, with no concern for resulting damage to the land. Production-based payments also skewed the distribution of support. The largest farmers were able to produce the most, ensuring that they got the most money. Finally, production-based subsidies, particularly in times of surplus, were wasteful and increasingly costly. Prices remained high for the consumer, yet expensive, massive stockpiles existed that the EU had to spend a considerable amount of money to buy, store, and dump. By fully decoupling the payment scheme, Fischler would be able to address two of the biggest challenges facing the CAP: compliance with WTO rules and the persistence of unequal and environmentally harmful CAP policies. Decoupling would allow CAP payments to be classified as in the WTO’s green box. The EU would thus be able to offer a key concession of sorts in the Doha Round negotiations by moving its agricultural subsidies into the box that is least trade distorting. As a result, the EU would be in position to press its interests across all sectors, as opposed to being targeted by other counties for having an agricultural policy that did not comply with WTO rules and regulations. Decoupling would also reduce the gap in support across the farming community, and diminish incentives for environmentally damaging farming practices. Payments tied to production had resulted in a dramatic disparity in how income support funds were distributed, with less than one fifth of farmers receiving fourth fifths of the support. The largest farmers continued to produce more and more, widening the gap between themselves and smaller or less productive farmers. Moreover, production-based payments incentivize farmers to produce as much as possible, no matter the costs or consequences for the environment. When these payments are decoupled, the income gap between the most productive and the rest can be contained, and the environment is spared the harmful effects of farmers who attempt to grow as much as possible. Most farmers would not stand to lose much in this change from coupled to decoupled payments.

The Single Farm Payment , calculated with reference to size of holding and historical yields, would replace the coupled payment system. Specifically, the amount of aid received between 2000-2002 would be divided by the number of hectares actively farmed during that reference period. The resulting figure would be the farmers’ new income payment under the SFP. Under this system, farmers would also gain “complete farming flexibility”, allowing them to grow any crop they desired . Receipt of the full SFP would be subject to meeting stringent environmental, food safety, and animal welfare standards . In the end, decoupling was a way of paying farmers the same money, but from a new pot. This outcome is consistent with one of my core claims, that it is difficult if not impossible to cut support for farmers. The second component of the proposal was dynamic modulation. Modulation is a mechanism employed by the European Union whereby income payments are gradually reduced and the funds collected are distributed to support other initiatives. In other words, this program “modulates” or modifies and controls the flow of funds to farmers and uses the savings to increase spending on other programs or member states. The program was called dynamic because the redeployment of funds was not fixed but instead could respond to those areas most in need of additional financial support. The policy entailed not only a gradual reduction of income payments, but also the redeployment and distribution of the funds collected under the program. Most of the revenue collected would be retained by member states, but earmarked for rural development programs. The rest was to be redistributed to other member states in an effort to reduce existing disparities in the allocation of CAP support. Fischler’s dynamic modulation proposal entailed a progressive reduction in direct income payments, beginning with 3% in 2005 and increasing in 3% increments annually, until it reached 20%. Exemptions were to be made for farms that received less than €5,000 annually. Farms that were labor intensive, thus providing jobs in the local community, could have up to €8,000 exempted from dynamic modulation, at the member state’s discretion.

Though this program seemed to be cutting overall levels of spending, the money garnished from farmer income payments was not leaving the CAP but rather being redirected into other CAP programs. Member states would keep a portion of the money for rural development and environmental programs, while the rest would be re-distributed among member states “on the basis of agricultural area, agricultural employment, and prosperity criteria to target specific rural needs” . Through this system of redistribution, and by garnishing the payments of the farmers who earned the most, dynamic modulation would contribute to achieving the twin goals of reducing the disparity in payments between large and smaller farmers and improving the distribution across member states. Dynamic modulation is an example of using the welfare state tactic of turning vice into virtue in the context of agricultural policy reform. Specifically, the dynamic modulation reform revised an existing program , reorienting this CAP program to operate more equitability. As with vice into virtue in the world of the social welfare state, an existing program that was operating inefficiently and inequitably was corrected through reform, rather than eliminating the policy entirely and attempting to replace it. Payments for all farmers above a certain threshold would be reduced, and collected funds would be redeployed to other areas of need. This objective of reducing the disparity in payment levels within and across countries was taken increasingly seriously,garden pots ideas as inequality in the operation of CAP support payments was beginning to garner attention beyond EU technocrats. The Commission noted that dynamic modulation would “allow some redistribution from intensive cereal and livestock producing countries to poorer and more extensive/mountainous countries, bringing positive environmental and cohesion effects” . The redirection of funds from income payments to rural development programs was also a tangible way for EU officials to signal a stronger commitment to the CAP’s social and environmental objectives. These social and environmental objectives had been identified by the public via Eurobarometer surveys as both the most important objectives of the CAP and areas where the CAP was failing to meet existing expectations. Also included in the dynamic modulation package was a proposal to cap the amount of direct aid any individual farmer could receive at €300,000 a year. This proposal was motivated by the desire to prevent large farms from receiving what many considered to be exorbitant sums of money. Specifically, it would address public concerns over the inequality in the operation of CAP payments. The payment cap was also intended to help correct the problem of an inequitable distribution of support within and across countries. This limit would reduce the overall gap between the largest and smallest recipients. In addition, it would begin to correct for payment imbalances among member states, as most of the farmers who would be subjected to the income cap were concentrated in a few member states. The inclusion of a cap on income payments is another example of CAP reformers employing the vice into virtue technique, which has been similarly used by welfare state reformers to correct welfare programs that are operating inefficiently or producing unequal outcomes. The third and final reform was mandatory crosscompliance. In Agenda 2000, cross compliance was adopted only in voluntary form. In the MTR, Fischler sought to make this program compulsory. Under cross-compliance, direct payments could be made conditional on achieving certain environmental goals. The income payment could, for example, be reduced if a farmer failed to comply with a given environmental rule.

Farmers who met the standards would receive the full amount of direct payments for which they were eligible, but would not receive a bonus for full compliance. Farmers who received direct payments would be required to maintain all of their land in good agricultural and environmental condition; if not, payment reductions were to be applied as a sanction . The inclusion of cross-compliance in Agenda 2000 positioned Fischler to make further reforms in the MTR, because he had already softened the ground in the previous agreement. As Fischler noted, “all the components of cross compliance [in the MTR proposal] were things that were already in place since Agenda 2000, but the member states had been responsible for implementing them. However, most members didn’t do it, or did a lousy job of implementing them” . Leading Commission officials argued that the member states had already approved and accepted the concept of cross compliance, so there was no reason that it should be rejected during the MTR. In reality, the vast majority of member states had chosen not to implement any of the standards or rules because cross compliance was an optional program. Still, Fischler was able to put them on the defensive for “failing” to implement Agenda 2000. As Fischler explained, “farmer ministers were put in a hard spot because now they had to account for failure to implement all of these measures in the past. They couldn’t oppose the concept of cross-compliance because they had already agreed to it, so they made the usual complaint that it would hurt farmers, but that’s always their line” . Fischler saw cross compliance as a legitimacy-boosting technique because it tied eligibility for support to compliance with environmental conditions and standards . Cross-compliance would help address public criticism of the CAP by strengthening the greening component and further developing the image of the farmer as a provider of not just food, but broader public goods and services.Fischler’s proposal for the MTR was sent to the College of Commissioners for formal discussion, revision, and approval. The proposal was well received by the Commission overall. Fischler was respected within the Commission as an agricultural expert and a reformer . The way for his proposal was further smoothed, thanks to an October 2002 agreement engineered by Chirac and Schröder at the Brussels European Council meeting, which guaranteed that the agricultural budget for direct-market supports would not be cut before 2013, when a new budget would be drafted . Even though Commission President Romano Prodi had previously expressed a desire to cut the CAP by up to 30%, the ChiracSchröder deal prevented him from doing so, despite the fact that he was supported by other Commissioners who hoped to use these CAP cuts to direct more support into their own portfolios.

California agricultural interests receive a large portion of the federal MAP funds

Specifically, the 2002 Farm Bill allows export subsidies to offset “a trade restriction or commercial requirement that adversely affects a new technology .” As Hudson points out, this may open up EEP to many new agriculture products not covered in earlier years. The DEIP subsidizes exports of milk powder, cheese, and butter. These dairy products, unlike the products that are eligible for the EEP, are subject to federal dairy price support, creating a gap between domestic prices and world market prices. The price support is administered by the Commodity Credit Corporation, which pays “bonuses” to exporters to compensate these firms for the differential between prevailing international market prices and artificially high domestic prices. The stated intention of the program is to develop export markets for U.S. dairy producers in markets where dairy is subsidized. In 2001, so-called bonuses of $1.76 million were awarded for U.S. cheese exports and $6.8 million was paid to U.S. non-fat dry milk exporters . These low figures, far below WTO ceilings, reflect the fact that relatively little of the dairy output from most U.S. producers is actually exported. Perhaps 5 percent of volume is exported, with most going to Mexico . Butter and butter oil lost DEIP funding in 2001 and 2002 due to high domestic prices and a fragile butter market, while similar market conditions eliminated support for whole milk powder those same years . As shown in table 2, DEIP awards to California producers vary widely from year-to year, depending on world market prices,garden pots ideas though the bulk of export subsidy payments consistently goes to non-fat dry milk .Table 3 lists California companies and trade associations receiving recent MAP assistance, including national or regional trade associations of which California producers are members.

While all $28 million shown in Table 5 does not flow solely to California producers and their trade associations, at least $15 million does benefit California producers through the MAP program.4 This amount alone is approximately 15 percent of the entire MAP budget in 2001 , meaning that California receives more than 15 percent of the MAP budget. Since California accounts for about 15 percent of U.S. agricultural export revenues but receives more than 15 percent of the MAP budget, it benefits disproportionately from MAP funds. FMD differs from MAP in that FMD’s stated goal is to target long-term development of overseas markets for generic commodities through trade associations rather than the promotion of individual brand products by companies. According to FAS/USDA, FMD gives preference to non-profit U.S. agricultural and trade groups that represent an entire industry or have a nationwide scope and is intended to support the export of value-added products to emerging markets . The FMD is also supposed to support a wider variety of marketing activities than MAP, allowing applicants to submit a marketing plan describing the world market for the given commodity, a marketing budget, and those promotional activities the trade association will undertake. In the latest Farm Bill, Congress increased annual funding for this program from $27.5 million to $34.5 million annually . Trade associations pertinent to California agriculture that received FMD funding in 2001 are listed in Table 4 . However, because FMD targets trade associations of a national scope, only one trade association included in the table represents solely California producers.The new TASC program is targeted at specialty crops, which are important to California. The program, funded at $2 million per year through 2007, is intended to subsidize the cost of activities such as seminars, field surveys, pest and disease research, and pre-clearance programs that may lower phytosanitary and technical barriers to trade for specialty crops .

Peanuts, sugar, and tobacco are not eligible for support. Like the MAP, this program is open to private firms as well as non-profit trade associations, suggesting that it will be vulnerable to the same criticism that MAP has faced. Table 5 lists California organizations that will receive TASC funding in 2002.Export subsidy programs like EEP and DEIP are constrained by current WTO commitments, and the California Farm Bureau Federation has taken the position that they should be phased out entirely as part of on-going WTO negotiations . However, the CFBF’s position with respect to the MAP and FMD programs is vastly different. There seems to remain a consensus in California agriculture that these programs deserve further and increased funding . Despite political support in California for export promotion programs, whether MAP and FMD actually benefit California’s international competativeness remains unclear. FAS claims benefits from these programs using a methodology that the General Accounting Office has called faulty and inconsistent with Office of Management and Budget guidelines . A 1997 study of agricultural export programs sponsored by the GAO finds that there is no conclusive evidence that these programs benefit the aggregate economy . Agricultural export programs “reallocate production, employment, and income between sectors” rather than increasing total economic activity . The original justification for these programs was to support the export of government grain stocks created by domestic subsidy programs which have since been reformed. Another stated purpose, to counter agricultural subsidies in competitor countries, remains an objective of MAP. However, the GAO finds that it is difficult to effectively target MAP funds to achieve this goal because foreign subsidies are not readily identifiable. Perhaps the most problematic element of MAP, and potentially of the TASC, is that even if it successfully increases exports of assisted commodities to targeted markets there is evidence that this is often to the detriment of unassisted products.

For example, proponents of MAP point to a projected increase of $5.30 over 40 years in walnut exports to Japan for every $1.00 spent on walnut promotion. However, another study found that while every dollar spent on walnut promotion increased walnut exports by $1.42, it actually reduced the exports of eight other horticultural products by $3.57 per dollar spent, resulting in a net reduction in U.S. agricultural exports for every dollar spent by $2.15 . Studies on meat exports to Japan are also mixed, with some concluding positive findings for beef promotion with no positive effects for pork or poultry, while others only find statistically significant increases for U.S. exports of beef offal. While the targeted overseas markets may purchase more of the targeted commodity, agricultural export programs merely benefit certain U.S. exports by displacing others and do little to increase the American share of the world agricultural market . Halliburton and Henneberry also conclude that there is little economic evidence that export promotion programs are effective. Economic theory predicts that programs like the MAP are not cost-effective uses of public budgets, and thus it is not surprising that it is difficult to find economic evidence in favor of the MAP. If the private benefits of marketing efforts exceed their cost, then firms should find it profitable to undertake these efforts without government assistance. Government assistance uses taxpayers’ money to underwrite marketing efforts with high costs relative to benefits. While well-known arguments are made for government support for investments that have “externalities” associated with them, that is,30 litre plant pots benefits that accrue to many groups whether they pay the cost of the investment or not. However, the marketing of name-brand agricultural products is not likely to be such an investment.In the 2002 Farm Bill, Congress mandated country-of-origin-labeling for fresh and frozen food commodities such as meats, fish, fruits and vegetables, and peanuts.5 The new law is an amendment to the Agricultural Marketing Act of 1946 and will impose new traceability responsibilities of uncertain magnitude on suppliers at all stages of the food marketing chain. As a result, COOL has been met with heated reactions within the food and agriculture industry, and its implementation has recently been delayed by several years. In this section we describe the COOL legislation, and suggest that current practices in the meat-packing industry will make implementation difficult. We also discuss the economics of COOL and the conditions under which this regulation could increase the profits of domestic producers. This outcome is by no means assured. Benefits to society as a whole from COOL are even less likely. As we discuss, the logic of revealed preference predicts that if consumers were prepared to pay for country-of origin information amounts in excess of the cost of providing this information, voluntary labeling schemes would be adopted.

After discussing the economics of COOL, we turn to political economy issues and review various interest groups’ lobbying positions at the time the 2002 Farm Bill legislation was passed. We next consider the international trade implications of COOL which is likely to act as a non-tariff trade barrier. Whether the rule would, if implamented, be challenged in the World Trade Organization remains unclear.The commodities that COOL applies to include muscle cuts of beef, lamb, and pork, ground beef, lamb, and pork, wild and farm-raised fish and shellfish, fresh and frozen perishable agricultural commodities , and peanuts. Under previous law, there were country-of-origin labeling requirements, but these mostly applied at the wholesale level . Shrink-wrapped packages of apples had to convey country of origin to the customer at the supermarket, while a crate of imported pears only had to indicate its country of origin to the retailer receiving the package, who by placing the pears in a bin, had no obligation to inform his/her customers of the pears’ origin. Similarly, imported meat that underwent processing in the U.S. was not required to be labeled for retail sale unless that meat was received in the exact form in which it would be sold to the consumer. The new regulation covers both domestic and imported food commodities and requires that retailers inform retail consumers of country of origin for the covered commodities. Thus, the number of businesses that must comply with COOL . Public comment was solicited during development of the program, and the Secretary was to release mandatory labeling requirements by September 30, 2004. However, as of December 2003, a House-Senate conference committee delayed mandatory compliance with COOL for all products except farm-raised and wild fish until September 2006. Strong opposition to COOL by producers and retailers is largely responsible for the postponement of this regulation. A review of the voluntary guidelines released in October reveals the complexity of the situation. According to Federal Register 67-198, to qualify for a “United States Country of Origin” label, beef, lamb, or pork must come from an animal exclusively born, raised, and slaughtered in the United States. For beef, an animal may be born and raised in Alaska or Hawaii and transported through Canada for up to 60 days before slaughter in the United States to merit a U.S. origin label. Fish and shellfish labeled as U.S. origin must come from farmed product hatched, raised, harvested, and processed in the United States or from wild seafood harvested in U.S. waters or aboard a U.S. flagged vessel and processed either on said vessel or in the United States. Seafood labels must also indicate whether the product is farmed or wild. Peanuts and perishable agricultural commodities must be exclusively produced in the United States for U.S. origin distinction. The exception made for beef from Alaska and Hawaii demonstrates some of the complications inherent in characterizing meat as the product of one country or another. Before slaughter and sale, an animal may pass through multiple countries and therefore cannot be labeled as the product of a single country. In Federal Register 67- 198, AMS addresses the problem of multiple origins, but an abundance of fine distinctions that a producer or retailer must consider indicates a potential for difficult and inconsistent labeling. For example, ground beef normally contains meat from more than one animal and thus could include beef from both the U.S. and another country. The new law will require the processor to verify the origin of each animal and determine the proportion used of each so that the label can reflect country of origin by prominence of weight. Thus, a label reading “From Country X, Slaughtered in the United States; Product of Country Y; and United States Product” would classify a product primarily from cattle born and raised in Country X but slaughtered in the U.S. followed by imported Country Y beef trimmings and beef trimmings of U.S. origin .