FARM POLICY NEWS

Australian and international farm policy news

United States farm bill

Every few years, the United States (US) Congress passes a farm bill, which sets policy guidelines for the next five years. These guidelines consider issues such as environmental conservation, biofuels, agricultural research, rural economic development, international foreign aid, as well as farm subsidies and food stamps.

It was at the end of June 2013 that the Senate voted to end the debate on the nearly US$100 billion Agriculture Reform, Food and Jobs Act of 2013 (farm bill) which ended in a 66–27 vote.

Under this farm bill, both the Senate and House are attempting to cut overall spending with their versions of the bill, by looking to cut funding to farm subsidies and food stamps. The Senate bill aims to reduce the deficit annually by US$2.4 billion and the House bill by approximately US$4 billion.

In the 2013 Farm Bill farm subsidies will be cut at a cost to farmers of approximately US$5 billion a year. Some of these savings, however, will go into new farm subsidies and expand crop insurance.

Attention has also been on proposed cuts to food stamps. The Supplemental Nutrition Assistance Program (SNAP), known as the Food Stamp Program, provides assistance to millions of low-income individuals and families and approximately 46.6 million people use this program. The Senate version of the farm bill would cut about US$400 million a year from SNAP, and the House bill goes much further, slashing US$20 billion in food stamps over the next decade and eliminating food assistance to nearly 2 million low-income people.

Common Agricultural Policy finalised

A political deal has finally been agreed upon after two years' of negotiations for the Common Agricultural Policy 2013 (CAP). It will now go before the full European Parliament for a final agreement. Each country is allowed a degree of flexibility in implementing many of the measures under the restructured scheme. Many of the proposals are designed to improve fairness and make the CAP environmentally friendly.

Farmers in some European countries such as the United Kingdom (UK) are worried that the government will move more money away from direct payments to rural developments, putting some nations at a competitive disadvantage when it comes to producing food. Across Europe each farmer will receive 60% of the average national direct payment by 2019, and those farmers running fewer hectares of land could qualify for an additional payment of up to €1250 per year.

With regards to greening measures, the proposed CAP will exempt farms under 15 hectares of land from the new requirement to create ecological focus areas, which is land to be set aside for biodiversity and run-off purposes. Environmentalists are concerned that the new CAP will exempt more than one-third of all farmland and 89% of farmers from the rules. The new CAP will also free one-third of EU farms from new crop diversification rules that aim to improve soil quality. Farmers with 10 to 30 hectares would be required to plant two crops, while those who run over 30 hectares would be required to plant three.

The CAP now awaits a final agreement on the EU’s €960 billion budget for 2014–20. The budget for agriculture and rural development will be around €380 billion, with approximately €280 billion set aside for direct payments and around €80 billion for rural development.

Up north

The Coalition recently promised it would produce a white paper within 12 months of the election to set out how Australia can develop large-scale agricultural developments on pastoral land, build dams to capture rainfall and review the region’s land tenure arrangements so that miners and farmers have greater access.

The document titled, The Coalition’s 2030 Vision for Developing Northern Australia, will focus on Western Australia, the Northern Territory and Queensland, and the ways in which these states and the Federal Government can work together to double agricultural output, as well as benefit other industries.

The Coalition estimates that northern Australia could drive economic growth by developing a food bowl in the region, and would consider relocating relevant parts of Federal Government departments and agencies such as CSIRO and AQIS, to urban zones in northern Australia. The plan also includes an upgrade of the Bruce Highway from Brisbane to Cairns.

Carbon Tax

Kevin Rudd recently proposed approximately $4 billion worth of cuts to government spending, with the fixed carbon price of $24.15 a tonne being removed in favour of a floating price, which is estimated to be between $6 and $10 a tonne. This program is scheduled to be implemented from 1 July 2014.

Under this change, it is estimated that approximately $356 million in funding will be cut from the Biodiversity Fund and Carbon Farming Futures, among other programs which directly impact Australia’s farming sector.

The Carbon Farming Futures program delivers science and extension to help farmers manage their land and reduce emissions, so that there is improved productivity and sustainability. The Biodiversity Fund helps farmers store carbon, and enhance biodiversity. It’s said that this program’s funding will be cut by close to a quarter.

Australian farmers have actually led the nation in reducing emissions, by a massive 40% between 1990 and 2006. It is unclear as to whether the earlier move to the emissions trading scheme will result in a better deal for the farm sector, and if the reduced cost burden outweighs the benefit that farmers would have received under these two programs, without these changes.

Keep up-to-date with discussion on current issues in Australian and international agriculture policy via the Ag Forum on the Institute website.

Images:  Jimmy Harris, Tim Swinson, USDA

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