When some form of compensation is not offered, the reform is almost certain to be defeated. Thus, the eco tax was had little chance of success, given that farmers were not offered any compensation in exchange for this new cost being imposed on them. In June 2014, the Hollande government unveiled the final version of the eco tax plan, now called “truck tolls”. The new plan applied only to trucks weighing 3.5 tons or more and included just 4,000 kilometers of road, as against 15,000 kilometers in the original plan. In addition, all proposed roads in Brittany, the epicenter of the protests, were exempted from the tolls. Trucks carrying agricultural goods, milk collection vehicles, and circus related-traffic were also exempted. As a result of the transportation exemptions and significantly smaller area of coverage, the toll is expected to generate only a third of the revenue of the original plan.The French eco tax example shares much in common with CAP reform, particularly in the area of environmental policy. Proposed environmental policies in the CAP often mean that new costs will be imposed on farmers who are forced to conform to stricter standards and modify their farming methods in some way. These attempted reforms are virtually always modified by farmers in one of two ways: by extracting a new or additional form of compensation for meeting these rules or by compelling reformers to adopt exemptions,hydroponic grow kit often so extensive that barely any farmers are subjected to new rules.
In the case of the French eco tax, farmers followed the latter course: when faced with a tax that would have imposed new financial burdens on producers, they successfully compelled the government to completely exempt agriculture. The victory is all the more significant since these exemptions cost the government badly needed tax revenue at a time of austerity. The successful campaign against the eco tax highlights some of the new sources of power that farmers have developed. Organizations were one important source of power. The FNSEA demonstrated the ability to coordinate its membership and to rely on regional branches to place pressure on both national and local politicians. In the fight against this tax, the FNSEA deployed multiple tactics to exert influence on the policy making process, mobilizing members for public demonstrations while simultaneously lobbying local and national political officials. The protesting French farmers also benefited from a sympathetic public that did not begrudge the massive disruptions and disturbances caused by demonstrations and blockades. While French farmers were able to use their powerful organizations to avoid a new, uncompensated tax, the same cannot be said of other groups. At virtually the same time farmers were thwarting a new tax, a series of austerity-driven pension reforms went ahead. Unlike the case of the eco tax, protests did nothing to stop the reforms, and the policy changes were adopted despite widespread civil unrest. In 2010, then-president Nicolas Sarkozy proposed a series of reforms to the French pension system. The reforms included raising the retirement age from 60 to 62 along with increasing the age at which one qualifies for a full pension from 65 to 67.
In addition, the number of years of required social security contributions increased from 40.5 to 41.5 years. In response to the proposed reforms, nearly 3 million people took to the streets, with plane and train travel severely disrupted and other sectors of the economy virtually shut down as the major unions called for strikes. Fuel shortages were a perpetual problem during the protests, as dock workers went on strike, leaving petrol stranded at ports. In addition, schools, ports, and airports were blockaded by demonstrators. In this case, however, coordinated protest was not able to compel the government to roll back reforms. Just a few years later, in 2014, Sarkozy’s successor, François Hollande enacted further reform to the French pension system. Contribution rates for both employers and employees were raised, a previously tax-exempt supplement for retirees who raised three or more children was made subject to taxation, and the number of years of required social security contributions was increased from 41.5 to 43 years. While France is generally viewed as farmer-friendly, the French case is not an outlier. Looking at other Western European countries, a similar pattern emerges. Pensions cuts were imposed, while national discretionary agricultural spending remained virtually untouched. Indeed, across Europe, pensions were significantly reformed in the wake of the 2008 financial crisis, placing new financial burdens on the average worker. This contrast between pension policies and agricultural expenditure is all the more glaring when the broader context is taken into account: less than two percent of the population benefits from agricultural support policies while all citizens are current or future pensioners. Current spending levels are not a good indicator of reform, since much pension spending is locked in by decisions made decades ago. In the case of pensions, cuts are best identified by increases in the minimum retirement age or downward cost of living adjustments. Such reforms occurred in each of the four country cases, as summarized in Table 7.1.Germany reformed its pensions in 2007, just before the onset of the financial crisis, raising the retirement age from 65 to 67. In the UK, reforms raised the retirement age from 66 to 67.
New reforms also increased the minimum number of years of contributions to qualify for a full pension from 30 to 35 years. A 2013 Dutch pension reform raised the minimum retirement age to 65 for workers currently under the age 55.While pensions were being cut across Europe, farmers were spared. At the EU level, in the first CAP reform after the financial crisis, spending on the CAP was not cut, and instead money was taken out of other areas in order to channel more support to farmers. Indeed, this reallocation of funds back into farming happened despite a stated objective of directing more money away from agriculture and into other objectives, like improving the provision of high speed internet. Spending on farmers was also preserved at the domestic level. European national governments spend some money on agriculture outside the CAP. National financing of agriculture comes via three main avenues: top-ups of Pillar 1 direct income payments; cofinancing of Pillar 2 programs ; and additional state aid payments to farmers by their national governments. Figure 7.1 tracks national agricultural expenditure as reported by the European Union in its annual statistical yearbook. Farmers in Japan have enjoyed great success in imposing their policy preferences due in part to their homogeneity and highly organized representative associations. Small farmers dominate the agricultural sector, which makes it easy for farmer associations to promulgate a single, coherent message. In addition, a strong union that is well organized nationally, regionally, and locally, represents Japanese farmers. Finally, unlike Europe and the United States, there is little if any pressure from sectoral organizations. The main farming organization in Japan is Japan Agriculture, referred to as JA or Nōkyō. The JA is a three-tiered organization, with national, prefectural, and local-level cooperative groups. The JA commands near universal membership of the Japanese farming community in large part due to the services and benefits it offers. It claims to have nearly 10 million members . Its main businesses are banking, insurance, hydroponic indoor growing system agricultural retail and wholesaling, and supply of farming materials. In addition to these benefits and services, which are not uncommon among agricultural cooperatives, the JA’s scope of business includes real estate, travel agencies, supermarkets, and even funeral homes . Essentially, “within the villages, the JA is a one-stop service. Farmers and everyone else in the village use JA services” . An LDP politician explained that the JA has far-reaching influence and is a cornerstone of rural society, with even non-farmers depending on the JA for services, “No other organizations in Japan are like the JA with so much local organization and influence. The JA is crucial in local community because of the infrastructure it provides. As a result, even non-farmers in rural areas need and depend upon the JA” . Ultimately, this wide range of services means that the JA can forge a relationship with farmers and the broader rural community that extends beyond just agriculture. Indeed, the JA can assist rural communities in all their needs, even those that come after death.
Along with high membership levels, much of the JA’s power derives from the fact that it has been in an official corporatist relationship with the state since it was formally created via legislation in 1947. This close relationship with the state has been quite beneficial for the JA, with the government at times heavily regulating and protecting the JA’s banking and insurance businesses, even going so far as to bail out JA banking multiple times, both after 1980s economic bubble burst and again in 2008. For example, Norin-Chukin a major agricultural cooperative bank had invested extensively in real estate during the 1980s boom. When the bubble burst and the real estate market collapsed, JA affiliated banks, Norin-Chukin chief among them, sustained heavy losses. As a result of political lobbying, the JA was able to reach an agreement where it was only responsible for ¥530 billion out of a total of ¥5.5 trillion in losses . The state has also granted the JA exceptional status in antitrust law, which has afforded the JA monopolies on the supply of agricultural inputs to farmers . Further exceptions are made for the insurance wing of the JA, “which is allowed to sell multiple kinds of insurance whereas other firms are traditionally limited to providing only one type of insurance” . As these examples suggest, farmers and the JA have been quite successful in their efforts to influence agricultural policy making. An important area of success for Japanese farmers has been in shaping Japan’s trade negotiations, pressing for protectionism even when other groups seek greater trade liberalization. In these negotiations, Japanese agriculture is able to impose its preferences despite pressure from the Japanese business lobby, Keidanren, which stands to gain far more from liberalization than agriculture would ever lose. These victories for Japanese farmers have come at both the GATT/WTO and in Japan’s bilateral trade agreements. The GATT Uruguay Round sought to reduce if not eliminate agricultural subsidies and remove tariffs and trade barriers in an effort to liberalize agricultural trade. In these negotiations, Japan’s position was largely defensive and was grounded in a desire to make as few concessions as possible. Its objectives were shaped primarily by the special position of rice producers and also by the overall high level of protection of agriculture. The LDP, whose political position was vulnerable at the time, promised farmers that no amount of foreign rice would be allowed to enter the domestic market . Fundamental incompatibility between GATT objectives and the policy preferences of major negotiating parties, including Japan and the European Community, resulted in the round grinding to a halt. In the end, although reducing tariffs was a major goal of the negotiations, a modification was negotiated specifically for Japan to allow it to delay tariffication of rice in exchange for accepting more imports of agricultural products, but only in sectors that were unimportant to Japanese agriculture such as dairy production. In addition, farmer subsidies were protected, despite the GATT UR goals of eliminating them. By the end of the GATT UR negotiations, Japanese farmers walked away with an agreement that protected their core commodities and allowed them to largely avoid the removal of tariffs for key products, while also maintaining a system of income support for farmers. Farmers have seen similar success in Japan’s bilateral trade negotiations. In September of 2003, Japan was in the final stages of a free trade agreement with Mexico, which had been delayed by agricultural opposition. Frustrated with the delays, Prime Minister Junichiro Koizumi ordered his trade negotiators to “get it done” . In the end, a tripartite coalition of agricultural representatives was able to extract considerable concessions for agriculture that finally allowed the agreement to move forward. The concessions included a reduction in the level of tariffs that had to be removed and special protection arrangements for “politically sensitive” commodities including pork, beef, chicken, oranges, and orange juice . Although this free trade agreement was concluded with Mexico, agriculture continued to block any progress on other free trade agreements Japanese officials desired at the time with the Philippines, Thailand, and South Korea.