A Road Map For European Agriculture

June 9, 2000

THE BridgeNews FORUM: Viewpoints on farming, farm policy and related agricultural issues.

CHURCHVILLE, Va.-A front-ranking German agricultural expert recently recommended a total redesign of the European Union's agricultural policy, to allow European farmers to be more competitive in world markets, and help meet the Third World's rapidly rising demand for meat, milk and grain.

During a May meeting at the German company BASF's headquarters in Ludwigshafen, P.M. Schmitz, dean of agriculture at Germany's University of Giessen, told the European farmers and feed industry representatives in attendance that European agriculture could look forward to a good future only if broke out of the EU's "fortress Europe" farm policy.

Other speakers noted the severe environmental and animal welfare regulations that are increasingly being imposed on EU farmers, in large part because the farmers are seen as producing surpluses rather than food demanded by the world market.

Schmitz noted world wheat imports are projected to increase from 15 million tons in 2000 to nearly 29 million tons in 2005. During this same time period, the EU's subsidized wheat exports will be cut back by about 7 million tons a year under an agreement with the World Trade Organization.

Meanwhile, Schmitz noted, the world's population is likely to reach 8 billion by the year 2020 (on its way to a peak of perhaps 9 billion), and Third World incomes are rising twice as fast as First World incomes.

The rise in incomes is expected to produce a radical increase in Third World meat consumption. Recent projections by the Washington-based International Food Policy Research Institute indicates developing countries will eat 188 million tons of meat by 2020, compared with an estimated 80 million tons in 1993.

Schmitz says this strong economic growth rates could drive Asian meat imports in 2020 to over 18 million tons per year. This represents a huge increase from 1990, when Asia imported virtually no meat.

Concurrently, world consumption of feedstuffs in 2020 is expected to be nearly 300 million tons higher than current levels. But Schmitz warned that under current WTO rules, EU farmers will be mostly barred from supplying either the additional meat or feedstuffs.

Farm trade, if encouraged, could create broad welfare gains both through increased export earnings of German farmers and the moderation of high food costs in Asian countries.

The German farming expert also cited the need for Asia to get much of its diet improvement through farm imports, saying, "The only food strategies likely to protect the world's remaining wildlife are further advances in sustainable crop and livestock yields and radically liberalized trade in farm products."

Schmitz warned the European model of agriculture is no longer workable and that the role of the state in EU agriculture policy has to be redefined.

A long-term subsidy policy destroys the farmers' ability to compete, creating a brain drain as farmers leave farming or migrate to more competitive farming sectors in places like Argentina. Schmitz called for liberalization and deregulation and "total renunciation of government intervention" in farm markets.

Expanding world markets should permit modern agriculture to use the advantages of the newest technologies, and cooperate with downstream partners in the food chain.

Schmitz said the EU must concentrate agricultural policies on the public good and test environmental policies for effectiveness. He also stated it was up to governments to ease the cost of structural change for farmers, perhaps through transition payments, such as the payments Sweden offered farmers when it was reforming its high-cost agricultural policies in the 1980s.

OPINION ARTICLES and letters to the editor are welcome. Send submissions to Sally Heinemann, editorial director, BridgeNews, 3 World Financial Center, 200 Vesey St., 28th Floor, New York, N.Y. 10281-1009. You may also call (212) 372-7510, fax (212) 372-2707 or send e-mail to opinion@bridge.com