Brussels, 20/06/2011 (Agence Europe) - According to figures published this Tuesday 21 June by the think tank momagri, Europeans have spent half as much as the United States on agriculture on average in recent years (2006-2009), if all forms of indirect support are also included, such as the impact of exchange rates, internal food aid or tax measures.
The agency momagri has published an indicator aiming to assess the reality of support granted to the agricultural sector by the various states, national or sub-regional public authorities of the world. This has been done by the creation of an international classification allowing “rational and indisputable” comparisons to be made. This indicator is known as Global Support to Agricultural Production (known under its French acronym SGPA).
When applied to the United States and the EU over the period 2006-2009, the results are unequivocal: support to the agricultural sector is higher and growing more rapidly in the United States than in Europe. Over the period 2004-2009, overall American agricultural support rose by 65%, from US$98.2 billion to US$162.3 billion. Over the same period, overall European agricultural support was up 21% (€81.1 billion in 2009 compared to €67 billion in 2004).
In Europe, the rise in overall agricultural support can be explained mostly by a rise in support to the standard of living of farmers, market organisation support and assistance in the development of sectors and support for investment and funding.
In the US, the main reasons behind the rise in overall funding are: - an increase in budgetary support, particularly public internal food aid (+US$36.194 billion); - a favourable monetary policy and exchange rate (which represented indirect support worth US$14.511 billion in 2009, or 12% of total support granted, see also EUROPE 10252 on the monetary and exchange rate imbalances fragmenting European agriculture).
In relation to the number of inhabitants, the SGPA was 2.4 times higher in the United States than in Europe in 2009 (on average 1.9 times higher over the period 2004-2009). And in relation to total agricultural production in value, it was 2.7 times higher in the United States in 2009 (1.9 times higher on average over the period 2004-2009).
American policy highly reactive to price fluctuations. The American policy is “much more reactive to international agricultural price fluctuations than the European policy”, says Jacques Carles, Executive Vice President of momagri and former agricultural budget administrator at the European Commission. In Europe, agricultural support consists mainly of direct support at the level of farmers' income (62% in 2009). The prevailing support logic, therefore, is resolutely targeted at producers, but in an uncontrolled way (with no link to the volumes produced), which makes the European system “totally inflexible” to changes in market conditions, the think tank argues.
In the United States, conversely, support for agriculture concerns both production (direct support coupled to production) and consumption (boosting domestic and external demand). This is the case with food aid, in particular, which represents more than 50% of all of agricultural support paid in the United States in 2009. The logic behind the American policy, therefore, aims to secure and boost the market for American agricultural products, from upstream (producers) to downstream (consumers) in a “contra-cyclical” way - in other words, giving consideration to the signals sent out by the markets, momagri explains.
As Pierre Pagesse, the founder and president of momagri, stresses: “the benefits and drawbacks of the American and European support systems are clearly shown and fundamentally question the WTO negotiation framework, in which the European Union is wrongly accused”.
The French Presidency of the G20, which is seeking international consensus on improving the regulation of the global agricultural markets, stresses a precondition: the transparency of information on the agricultural markets, physical and financial. According to momagri, this requirement should also apply to “all forms of direct and indirect support granted to agriculture and food with a view to tightening up the international cooperation France is calling for”. It was with this in mind that the think tank momagri published the initial results of its SGPA indicator, which is a unique frame of reference based on an international classification allowing for a comparison of the amounts and purposes of public, budgetary, extra-budgetary and financial support for agriculture.
momagri is planning to extend its work to the agricultural policies of Brazil, China, Australia, New Zealand and the other main producer countries, in order to continue its comparisons and arrive at an international classification of the main agricultural support policies in the world by 2012. The detailed SGPA study can be found at http://www.momagri.org. (L.C./transl.fl)