By James Ochieng
The United Nations (UN) is calling for repurposing of USD 470 billion of agricultural support that distorts prices and steer us away from environment and social goals. This is after a series of research carried out showed that the measures being undertaken through the support is harmful to health and nature in the long run.
Agriculture is the main contributor to climate change through greenhouse emission from different sources including manure on pastureland, synthetic fertilizers, rice cultivation, burning plant residue and monoculture. Continuing the usual support will worsen the triple planetary crisis and eventually harm human well-being, according to the recently released UN report titled A multi-billion-dollar opportunity; Repurposing agricultural support to transform food systems.
It has been approximated that by 2030, the support being directed towards agriculture is expected to soar up three times bringing the figure to around USD 1.759 trillion.
The report launched by Food and Agriculture Organization (FAO), United Nation development Program (UNDP) and United Nation Environment Program (UNEP) finds that the support consists mostly 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 and distort prices, degrade people’s health, the environment and are often inequitable putting big agricultural business ahead of small scale agricultural producers, a large share who are women.
Whereas the majority of agricultural support today has a negative impact, the report notes that about USD 110 billion has been set aside to support infrastructure, research and development and benefit the general food and agricultural sector.
According to the report, repurposing is the reduction in agricultural producer support measures that are inefficient, unsustainable and/or inequitable, in order to replace them with support measures that are the opposite.
Reconfiguring agricultural producers’ support than eliminating the fund completely will help eradicate poverty, hunger, achieve food security, improve nutrition, promote sustainable agriculture and foster sustainable consumption and production, mitigate the climate crisis, restore nature, limit pollution and reduce inequalities, the report says noting that governments have an opportunity now to transform agriculture for the betterment of human beings.
The repurposing process is not entirely a new concept as it is already being implemented in several countries. In 2006, China adopted new agricultural policies that advocated for decreased use of mineral fertilizers, chemical pesticides; the single payment scheme in the United Kingdom that removed subsidies in agreement with the National Farmers Union. The European Union has incentivized crop diversification through reform of the Common Agricultural Policy (CAP) and the Senegalese Program 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.
Estimate the support provided
The first step is to estimate the support currently provided to the agriculture sector, including the type of support provided, the economic actor(s) receiving the support and the monetary amount transferred. It therefore includes tasks related to mapping the support provided, identifying all key actors involved in the definition of the existing support strategy and the amount of support they receive.
The estimation of agricultural producer support may include data collection and calculation. Specifically, the use of modeled estimates may be required when support is provided in a variety of forms, e.g. via direct transfers, conditional incentives, or as foregone revenue (e.g. tax reductions).
Identify and estimate the impact of the support provided
The second step is the identification and quantification of the impacts generated by the support provided – using historical data or simulation models. A systemic approach is required to generate information on the desirable and undesirable outcomes of agricultural producer support, and how different economic actors and population groups are being currently impacted.
This information is needed to design a repurposing strategy that exploits positive synergies and ensures policy coherence. Several toolkits are available to support the estimation of the many outcomes of agricultural producer support, some of which are focused on specific types of support, such as fiscal subsidies.
Design the approach for repurposing agricultural producer support
Having identified the amount of support provided and its impacts on social, economic and environmental indicators, the approach for repurposing support can be formulated. Several intervention options may be required to create an effective strategy for improving the sustainability.
Creating a repurposing strategy comprises three main phases: identify the changes required to existing policies, identify new policies to be implemented and determine the structural and institutional change that is required to generate a paradigm shift for the agriculture sector.
This characterization of the design of a repurposing strategy highlights the different processes that need to be affected. While first-order change may be possible without changes in legislation or even budget, second-order changes would require new institutions and laws, and third-order change requires a sector- and/or government-wide reorientation towards multidimensional cross-sectorial sustainability. Here, needed reforms to policies, legislation and institutions are identified of the agriculture sector.
Estimate the future impact of repurposing strategies
Though similar to the second step, historical data are not available on the expected (future) policy impact, only causal pathway exercises and simulation models can be used to forecast the likely outcomes of implementing the newly developed repurposing agricultural producer support strategy. It is important in this context that scenarios for the modeling exercise are co-formulated with all relevant stakeholders, possibly using group model building exercises, and that all results are shared, reviewed and validated with the same stakeholders.
As in the case of the second step, the following dynamics and indicators should be considered: impacts across sectors on production, employment and value addition (with a focus on agriculture but also considering other sectors such as water, forests, energy and health); economic actors (e.g. private and public sector, considering both smallholder farmers and cash farmers, and various population groups, including women and youth); and dimensions of development (i.e. social, economic and environmental). The analysis should also assess how these outcomes change over time (e.g. in the short, medium and longer term) and spatially (e.g. for different locations and geographical scales), and how political economy dynamics may change.
Review and refine the repurposing and reform strategy, prior to implementation
This step consists of a systemic review of the proposed strategy and all its provisions, based on stated goals, expected outcomes and consultations with all relevant stakeholders and population groups.
The finalization of the strategy has to take into account possible policy resistance (e.g. certain stakeholder groups may oppose policy reform) as well as synergies that could be created across sectors and economic actors (e.g. between the agriculture, health and finance ministries, but also for women and youth, which could increase the efficiency and the effectiveness of support).
The implementation of the strategy has to take into account the needed reforms to policies, legislation and institutions identified in the third step.
The review should result in a refined repurposing strategy, and is carried out before implementation. It builds on the food systems and development planning goals and the modeling results (Step 4), as well as on additional considerations that typically are not included in modeling exercises (e.g. political economy considerations, and institutional capacity to effectively implement the provisions and strategy) that are gathered through the first three steps.
Once the review is complete, the repurposing strategy should be approved, turned into law and implemented. This may require modifications to institutions to ensure that the repurposing strategy is implemented effectively, based on implementation arrangements that define roles and responsibilities. Finally, effective implementation cannot occur without strategic communication plan and a strategy to address vested interest.
Monitor the outcomes of the new agricultural producer support
The final step is to monitor and evaluate the performance of the agricultural producer support strategy after its implementation and to identify potential areas for improvement. Regular monitoring is needed given the constantly changing landscape for the sector, due to the growing impacts of climate change as well as to international dynamics such as COVID-19.
The monitoring indicators align with the indicators in Step 5 in relation to the assessment of the strategy and its implementation arrangements. This allows the development of a consistent and coherent set of indicators to support each step of the agricultural support repurposing process.
In addition, the impact on government finances should be assessed, including determining the extent of savings in public expenditure on account of the agricultural producer support reform and the amount of expenditure that is redirected or in some cases increased as part of the repurposing process, including to other sectors and systems (e.g. health, relief expenditure for climate disasters, or water supply), from which synergies for food systems are very important.
Finally, it is important to estimate, as mentioned earlier, the extent to which the measured outcomes of the new agricultural producer support create synergies with other development planning processes and related investments.
Through this, over 500 million households and smallholder farmers worldwide, many of them women, will benefit as their will be a level playing field thus improving both productivity and environmental outcomes.
By optimizing support for the agricultural sector using a transparent, customized and evidence-based approach, our planet will benefit from a healthier, more sustainable, equitable and efficient global agro-food system.