왜 농업보조금이 늘 의도된 결과를 낳지 못하는가

Agricultural handouts can lead to environmental degradation and often fail to achieve social and economic objectives

A tractor works the land near Soham, Cambridgeshire. Photograph: Andrew Parsons/PA

Solving the eurozone financial crisis is top of the agenda by some distance in Europe, but it is not the only fundamental issue currently challenging EU policymakers. Reform of the common agricultural policy(CAP) could be even more important for the sustainability of the region.

The CAP consumes two-fifths of the EU budget, handing out roughly €50bn (£40bn) a year to Europe's farmers, helping food to lead the global subsidy league table.

Subsidies given to farmers as part of the CAP are blamed for encouraging intensive farming that degrades land, water and habitats. Similarly, rich-world subsidies, like the CAP, make life even tougher for poor farmers in developing countries. With reforms due to be finalised next year, the battle is on, not just to trim the subsidy bill but also to make the scheme work for, rather than against, the environment and international development.

The CAP is changing. The EU proposes that almost a third of the main payments will depend on three environmental measures: crop diversification, retention of permanent pasture and the creation of "ecological focus areas".

This is not enough for the critics. Some want the main subsidy payments to be dependent on farmers signing up for what are currently voluntary environmental improvement schemes to enhance biodiversity, protect water courses and mitigate climate change. The European parliament environment committee wants a maximum period during which land can be left bare, to prevent soil erosion. Friends of the Earth wants radical changes to encourage a move away from intensive meat and dairy production.

Ultimately, agriculture needs to conserve energy and water, reduce dependence on chemicals and other external inputs and move to producing foods which are less resource intensive. A truly green subsidy system would accelerate this transition.

The new CAP will not go far in that direction. Nor will it seriously support international development, although it is aiming to tackle the complex question of sugar quotas.

The trade aspects of subsidies are enmeshed in the stalled Doha round of negotiations. Under World Trade Organisation rules, some kinds of support are allowed. Even so, proposals on the table would require the EU to cut trade-distorting subsidies by 80% to approximately €22bn. The US would have to cut by 70% and Japan by 75% – but there is no immediate prospect of agreement.

Developed world subsidies depress world prices, make it difficult for developing countries to compete and invest. Export subsidies can result in "dumping" excess production, further undermining developing country agriculture. Cotton subsidies have been particularly damaging, andOxfam has chronicled the effects on central and west African countries, as well as highlighting how such countries struggle to invest in their own agriculture in the face of subsidised imports.

Haiti too provides an extreme example, with US subsidies wreaking havoc even before the dreadful earthquake added to the country's misery. After slashing tariffs, its domestic rice production could not compete. From being virtually self-sufficient, Haiti now imports 80% of its rice. Domestic production and jobs in rice farming have plummeted.

US subsidies are embroiled in similar political horse-trading as in Europe, with the $500bn farm bill currently working its way through Congress. Green voices struggle to be heard as politicians and lobbyists fight for their share of the pork barrel and put blind faith in biofuels.

Environmentalists argue that a tussle between southern rice and sugar growers and northern corn or soybean farmers is beside the point – the point being that the proposed changes to farm subsidies will do little to stop intensive overproduction of these crops. Some proposed cuts are even hitting conservation programmes that protect soil, water and wildlife.

Support for agriculture is not just about handing out cash. For example, farmers in the US and elsewhere benefit from water and fuel subsidies. Also, crop insurance is a key element of US farm subsidies, with the government paying 60% of premiums. Insurance is important for small farmers anywhere, who could be wiped out by a failed crop. But subsidised insurance can encourage environmentally harmful behaviour such as cultivation of marginal land.

Nor is this just a developed world problem. Support for fertilisers is common in many countries attempting to boost agricultural production, but excessive use results in nitrous oxide emissions, contributing to climate change.

Reforming such subsidies is tough because farmers' livelihoods and food prices are politically sensitive all over the world. But the costs are huge and the current economic conditions could force countries to find more effective ways of achieving their social objectives.

Subsidy programmes usually aim to support the poor or poverty-stricken, whether farmers or consumers. But much of the money that governments hand out doesn't go to the needy. In the US, the top 10% of recipients took almost two-thirds of commodity subsidies in 2010 according to theEnvironmental Working Group. Egypt spends billions every year to keep bread prices low for everyone, regardless of their income. A World Bank study on fertiliser subsidies in Indonesia found that larger farmers benefitted disproportionately, confirming conclusions elsewhere that such policies tend to be regressive.

It's a similar story to subsidies for other resources. All too often, unintended consequences include environmental degradation as well as failure to achieve social and economic objectives.

Roger Cowe is a writer and consultant on corporate aspects of sustainability

http://www.guardian.co.uk/sustainable-business/farm-subsidies-unintended-consequences?newsfeed=true