Current farm subsidies adversely affect food prices, health, environment

UN report calls for repurposing of USD 470 billion of agricultural support that distorts prices and steer us away from environment and social goals

Nairobi/Rome/New York: Global support to producers in the agricultural sector amounts to USD 540 billion per year, making up 15 per cent of total agricultural production value. By 2030, this is projected to soar up more than three times to USD 1.759 trillion. Yet 87 per cent of this support, approximately USD 470 billion, is price distorting and environmentally and harmful to nature and health. These are findings of a new UN report calling for repurposing damaging incentives to help transform food system, achieve more of the 2030 Sustainable Development Goals and realize the UN Decade of Ecosystem Restoration.

The report, A multi-billion-dollar opportunity: Repurposing agricultural support to transform food systems, launched by the Food and Agriculture Organisation (FAO), the UN Development Programme (UNDP) and the UN Environment Programme (UNEP),  calls for governments to rethink the way agriculture is subsidized and supported.

The report finds that current support to producers mostly consists of price incentives, such as import tariffs and export subsidies, as well as fiscal subsidies which are tied to the production of a specific commodity or input. These are inefficient, distort food prices, hurt people’s health, degrade the environment, and are often inequitable, putting big agri-business ahead of smallholder farmers, a large share of whom are women.

In 2020, up to 811 million people in the world faced chronic hunger and nearly one in three people in the world (2.37 billion) did not have year-round access to adequate food. In 2019, around three billion people, in every region of the world, could not afford a healthy diet.

While the majority of agricultural support today has negative effects, about USD 110 billion supports infrastructure, research and development, and benefits the general food and agriculture sector. Reconfiguring agricultural producer support, rather than eliminating it, will help end poverty, eradicate hunger, achieve food security, improve nutrition, promote sustainable agriculture, foster sustainable consumption and production, mitigate the climate crisis, restore nature, limit pollution, and reduce inequalities.

The Director-General of FAO, Qu Dongyu, said: “This report, released on the eve of the UN Food Systems Summit, is a wake-up call for governments around the world to rethink agricultural support schemes to make them fit for purpose to transform our agri-food systems and contribute to the Four Betters: Better nutrition, better production, better environment and a better life.”

Agriculture is one of the main contributors to climate change through greenhouse gas emissions from different sources, including manure on pastureland, synthetic fertilizers, rice cultivation, burning crop residue, and land-use change. At the same time, agricultural producers are particularly vulnerable to impacts of the climate crisis, such as extreme heat, rising sea levels, drought, floods, and locust attacks.

Continuing with support-as-usual will worsen the triple planetary crisis and ultimately harm human well-being. Meeting the goals of the Paris Agreement requires shifting support especially in high-income countries for an outsized meat and dairy industry, which accounts for 14.5 per cent of global greenhouse gas emissions. In lower-income countries, governments should consider repurposing their support for toxic pesticides and fertilizers or the growth of monocultures.

“Governments have an opportunity now to transform agriculture into a major driver of human well-being, and into a solution for the imminent threats of climate change, nature loss, and pollution,” said Inger Andersen, Executive Director of UNEP. “By shifting to more nature-positive, equitable and efficient agricultural support, we can improve livelihoods, and at the same time cut emissions, protect and restore ecosystems, and reduce the use of agrochemicals.”

The report highlights cases where such a process began: the Indian state of Andhra Pradesh that adopted a policy of Zero Budget Natural Farming; the 2006 reform of agricultural policies in China that supports decreased use of mineral fertilizers and chemical pesticides; the Single Payment Scheme in the United Kingdom that removed subsidies in agreement with the National Farmers’ Union; the European Union, where crop diversification has been incentivized through reform of the Common Agricultural Policy (CAP) and the Senegalese programme PRACAS to incentivize farmers to cultivate more diverse crops.

Although there is no one-size-fits-all strategy for repurposing agricultural producer support, the report recommends a broad six-step approach for governments:

• measuring the support provided;
• understanding its positive and negative impacts;
• identifying repurposing options;
• forecasting their impacts;
• refining the proposed strategy and detailing its implementation plan; 
• finally, monitoring the implemented strategy.

“Repurposing agricultural support to shift our agri-food systems in a greener, more sustainable direction — including by rewarding good practices such as sustainable farming and climate-smart approaches — can improve both productivity and environmental outcomes,” said UNDP Administrator, Achim Steiner. “It will also boost the livelihoods of the 500 million smallholder farmers worldwide — many of them women — by ensuring a more level playing field.”

By optimizing support for the agricultural sector using a transparent, customised and evidence-based approach, theplanet will benefit from a healthier, more sustainable, equitable and efficient global agri-food system. The report is launched ahead of the 2021 Food Systems Summit (September), COP15 on biodiversity (October) and COP26 on climate change (November). These events will allow governments to make multilateral commitments to rethink outdated agricultural subsidies, build forward better for the post-COVID-19 era, to commit to such a strategy and to coordinate and monitor its implementation. 

– global bihari bureau