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February 2022

The World Bank has just published a study, with the International Food Policy Research Institute (IFPRI), entitled “REPURPOSING AGRICULTURAL POLICIES AND SUPPORT”.

In the study different scenarios were analysed. From a business-as-usual scenario, to modelling the impact of restructuring support (maintaining support for agriculture at the current levels but restructuring it either by moving to uniform rates of assistance for all products, or by favoring low-emission products), or introducing conditionality (making support conditional on reducing emissions), or repurposing for green innovation(which would redirect a part of domestic support toward targeted investments in technologies that are both productivity-enhancing and emissions-reducing).

Some of the reports key findings speak for themselves:

The report finds that greenhouse gas emissions would increase substantially in the future if current policies are untouched. Simply rearranging or even removing current support would not bring about the changes needed for sustainability.”Given a ‘business-as-usual’ scenario of unchanged support, GHG emissions from agriculture would increase by 58 percent, and 56 million hectares would be converted to agricultural land between now and 2040”. 

Ending current support would not be a good option either: “The current farm-support regimes were not designed to reduce poverty or to improve diets, but their abolition would likely increase food prices, contributing to more poverty (albeit marginally) and raising the cost of healthy diets”. 

“Policy conditionality tying support to the adoption of environment friendly but lower-yielding farm practices could potentially reduce emissions, but would entail tradeoffs for people, nature, and economic prosperity with lower agricultural production, higher poverty, higher agricultural land use and an increase in the cost of healthy diets”. 

“Both changes in incentives and investments in innovations that simultaneously pursue productivity enhancements and greenhouse gas emission reductions are needed in order to deliver broad and long-standing wins”. “Simulation results suggest that investments in innovations designed to lower emissions and raise productivity by 30 percent could reduce emissions from agriculture and land use by more than 40 percent, returning 105 million hectares of agricultural land to natural habitats, while delivering substantial gains in poverty reduction, nutrition, and the overall economy.” 

“The repurposing option, which would redirect a part of domestic support toward targeted investments in technologies that are both productivity-enhancing and emissions-reducing, appears to hold the potential to deliver “triple wins” for a healthy planet, economy, and people. Productivity-driven growth reduces poverty and makes nutritionally adequate diets more affordable. In this scenario, global extreme poverty would fall by 1 percent, while the cost of a healthy diet would drop by a substantial 18 percent.”

This report from a well-known and respected international organization lends additional clout to those reports and analyses that show that the Commission F2F and Biodiversity approach – the “conditionality” scenario in the World Bank/IFPRI report – would be detrimental to agricultural production, poverty, and healthy diets, and likely lead to increased deforestation.

The preferred scenario according to the report is “repurposing for green innovation”. The key policy change in this scenario is a re-allocation of support to investments that lower emissions and raise productivity at the same time. Or, as Farm Europe has phrased it, dual-purpose investments.

The World Bank/IFPRI report extensively uses modelling, and a number of assumptions, which can always be questioned; and the quantified outcomes are a function of these assumptions and the model used. For instance the report assumes “…an international consensus, under which all governments would repurpose support toward common global objectives”, which can be overly optimistic.

Having said that, the issue at stake is not so much the magnitude of the results, but their direction – and the report is crystal clear that shrinking agriculture production is not the right path, on the contrary.

The proposed shift of public resources to dual-purpose investments, to foster sustainable productivity growth, comes well in line with the current USDA thinking, as expressed by the US Secretary of Agriculture. This shows that the Commission approach finds little resonance outside the EU, and on the contrary is giving rise to a building body of criticism and alternative proposals.