Agricultural Policies: The European Union Drops Out

PARIS, November 19, 2012 /PRNewswire/ --

… As revealed by results from the SGPA (Global Support to Agricultural Production) indicator for the world's four major agricultural powerhouses (Brazil, China, United States and European Union)*

Between 2005 and 2010, the per capita global support to agricultural production (SGPA)^[1] has significantly increased in China, Brazil and the United States-–by 130, 60 and 40 percent respectively-–while it barely maintained its 2005^[2] level in the European Union.

To view the Multimedia News Release with the charts, please click:

http://www.multivu.com/mnr/58650-momagri

In spite of statements on maintaining the current CAP budget, these results thus are showing that Europe has, since 2005, been taking a direction that is in conflict with that taken by other world's major powers, which invest massively to safeguard the food security of their people.

In absolute terms, the 2010 SGPA indicator ranks the United States first with $163 billion, followed by China with $154 billion, the European Union with $101 billion and Brazil with $38 billion.  Expressed as a percentage of the agricultural production value, the United States again ranked first, with agricultural support representing 48 percent, against 24 percent for the European Union and for Brazil, and 20 percent for China.

But numbers aside, a policy analysis indicates similarities between Brazil and the United States, which implement policies to support competitiveness and domestic demand stimulus:

• In Brazil, direct market interventions, reserve policies and incentives to develop biofuels (42 percent of the Brazilian SGPA);
• In the United States, direct payments, countercyclical payments supplemented by insurance mechanisms and a sizeable system of domestic food aid.

As far as China is concerned, the government is conducting a policy of interventionism and safeguarding agricultural production that includes guaranteed minimal prices ($258/ton for wheat and $291/ton for rice in 2010), direct income support, social protection programs as well as tax relief…

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1. In national currencies.

2. At constant euros, global support to agricultural production declined by 3 percent in the EU.

Conversely, only the European Union turns its support system decoupled from production, in addition to greening criteria, into the cornerstone of its agricultural policy.

The verdict is final:  Both the lower support and its unsuitability are causing the European Union to drop out, a situation all the more troubling that it would be worsened by the planned CAP reform.

Chart 1: Per capita SGPA comparison: UE, USA, Brazil, China, 2005-2010, in national currencies.

Chart 2: SGPA comparison: UE, USA, Brazil, China, 2005-2010, in $billions.

Chart 3: SGPA comparison of national agricultural production, UE, USA, Brazil, China, 2005-2010, in %.

All charts can be found at  http://www.multivu.com/mnr/58650-momagri 

Video: http://www.multivu.com/mnr/58650-momagri

SOURCE Momagri