Agriculture Trade and the Environment The Arable Crops Sector Summary in Englis h HIGHLI GHTS Policy concerns over the environm enta l effects of a able crop far ing grains rice and oilseeds have inc
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Agriculture Trade and the Environment The Arable Crops Sector Summary in Englis h HIGHLI GHTS Policy concerns over the environm enta l effects of a able crop far ing grains rice and oilseeds have inc

The main environm ental issues associated with the producti on of arable crops include soil erosion trients waterlogging an d salinisation water use and polluti on air qualit reenhouse gas emissions landscape and biodiversit uch as pasture convers

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Agriculture Trade and the Environment The Arable Crops Sector Summary in Englis h HIGHLI GHTS Policy concerns over the environm enta l effects of a able crop far ing grains rice and oilseeds have inc

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Presentation on theme: "Agriculture Trade and the Environment The Arable Crops Sector Summary in Englis h HIGHLI GHTS Policy concerns over the environm enta l effects of a able crop far ing grains rice and oilseeds have inc"— Presentation transcript:

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Agriculture, Trade and the Environment The Arable Crops Sector Summary in Englis h HIGHLI GHTS Policy concerns over the environm enta l effects of a able crop far ing (grains, rice and oilseeds) have increa d over the la st two decade , due largely to re inte nsive use of land; and a rise in the value placed on m ny environm ental services pro ide by agriculture . The main environm ental issues associated with the producti on of arable crops include: soil (erosion, trients, waterlogging an d salinisation); water (use and polluti on); air qualit ( reenhouse gas emissions);

landscape and biodiversit ( uch as pasture conversion to cropl and or land a andonm ent). Environm ental im pacts vary across countries and regions, depen ing on the s ecific resource base and on prevailing farm in g pr actices and policies. Significant proble ms occur in many regi ons, b their scope and sev erity vary and tend to be greater wher production pr essure is concentrated a nd natural resources ar e vulnerable. Agri-environmental indicators related to arable crops present a xed picture of im provem nts and degrada tion i differe nt c ountries. Soil erosion i the United States has

decrea se d, while water-use issues conti nue to be a cause of serious concern in parts of Australia, the United States and so EU countries. Lack of crop biod iv ersity is a concern in certain countries, alt hough som have diversified and prod uce a greater variet y of crops. A able crop farming is a less im portant ca use of air pollution than livestock prod uction, accounting f r onl y 6% o greenhouse gas em issions from agriculture. A plethora of po lic ap proaches has been ado d, reflecting the diversity of agri-environ ental conditions in OECD count ries. Most agri-environm ental measures

are not targe ed at a part icular arable crop sector or at a spe ific environmental outcom , but focus stly on contro ling the qual ity an d quan tit of pro tion inputs, as exem plified by t porary or perm anent land retirement. Pay ents based on: (i) fa rm fixed assets; (ii) resource retiremen t; and (iii) fa rm ing practices curr ently have the largest potentia l to influe nce production and trade, based on the level of support afforded to t e arable crop sectors, although i certain cases so regulati ons also exert significant effects. AGRICULTURE, TRADE AND THE ENVIRONMENT – THE ARABL CROPS

SECT OR -92-64 -00996 5 © OECD 2005
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Support f r arable crops is high relative to other agricultural sectors, varies greatly between countries and crops, and is m inl pr ovided throu gh poli i strum nts that are the st productio n an d trade distort ng. Although th e cause-effect linkages between support levels and environ ental pressures ar e co lex, correlation does not necessarily im ply causat ion. At the aggregate country level, the envi ronm ental effects of further ltilateral agricultural trade liberalis ation are likely to be small. Only under the ful trade

liberalisation scenario would chem ic al inte nsity in certain arable crop sectors in Australia and New Ze alan d increase by than 10%. The producti on and trade effects of overall support, agri-environm ental pay en ts and regulations warrant further em pirical analy is. SUMMAR AND CONCLUSIONS Trade and en vironm ent iss es in agricu ltu re have ga ined increasi ng prom inence at international and national leve ls alike. The present r port analy ses the linkage s betwe n agriculture, trade and environm ent in OECD c ountries for the arable crop sector (grains, rice and oilseeds). The report

first provides so bac kground m rial on econom c and environm enta l aspects ass ociated with arable crop far ing and discusse s the policies both agricult ural support and envir onm ental po licies affecting the arable crop sector. It then analy ses so of the cause- effect l nkag es betw een policies, including trade policies and regulatio ns, and the en vironm ent. What are the main en vironmenta l impacts associated w th arable crop farming? Arable cultivation sy stems are among the st im portant factors influencing soil qualit Whil e chem cal in puts, such as fertili sers, herbicides and

other pesticides, ke major contribution to arable crop productivit the also create environm ental problems in som regions across OECD countries. The environ ental im cts of arable crop pro ductio n var across OECD countr es for at least three reasons. First the depend on the quality and quantit y of natural resources used in, or affected b , arable crop productio n. For exam ple, growing w eat in a sem -arid region m cause wind-indu ced soil erosion and particles in the air. In a countr that r lies heavily on irrigation however, the primary effects are likely to concern water use and qualit

Second, the impacts vary according to th e technologies em ploy ed to produce crops. Reduced tillage sy stems, for example, decrease erosion and greenhouse gas e ssions, but may require an increas ed use of pesticides, which c n cause degradation in certain situations. Thir d, the im pacts will depend upon the countr ’s relative demands for different ty pes of environ ental quality. If the dem nd and willingness to pa y for a particular environm ental outcom ar e high ( e.g. mixed us landscape), then mea ures may be n eeded to ensure its provision. AGRICULTURE, TRADE AND THE ENVIRONMENT – THE

ARABL CROPS SECTOR BN-92-64-009965 © OEC 2005
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What are the key econ mic and structural ch aracteristics of arable crop farming? The arable cr op sector occ upies approximately one-third of the OECD agricultural area, and contributes to around one-hal f of the OECD’s total agri cultural outp t. OECD countries are responsible for approxim te ly 80% of g obal trade in cereals. The num be r of arable f s and the ar ea us ed for a able crop f ing have de clined over the last two decades in OECD countri es as a whole, but average f size has increased, as the num ber of far has

fallen by m re than far nd. In several OEC mem er countries, however, the num ber of larg er, more capital-in tensive and specialised arable crop fa s has incre ased in absolute ter s. Notwithstanding t e diver ity between countries, ar able crop pr oduction in OECD countries increased, on average, by 0.5% pe r annu m over the 1985-2002 period. Overall, st of this growth was de rived from an increasingly intensive use of land already under crops rather than expansion of the harvested area, althoug h the latter was the main source in som countries. How extensive is the agricultural support

affecting arable crops? Support to arable crop producers in OECD countries am ounted to USD 62 billi on in 2001- 03, accounting for 39% of far r eceipts fro m crops. Reflecting overall t ends, the average support levels decreased over time fo r all arable crops, except rice, for which support level have changed little since 1986- 88. T e rice sector is the st-supported arable crop and oilseeds the least-supported. In 2001- 03, pri ces received by rice producers and paid by consumers wer , on average, re than four times h gher than world rice prices. It is not onl y the level of support, b t

also the form in which it is provided, t at is im portant in term s of the im acts on resour ce allocation and o t e environm ent. Man governm nts utilise a com lex array of m easur es –including tariff rat quotas and preferential trade agree en ts – that direc tly or indirect ly affect prod uction, co nsu ption, trade, prices and the environm ent. For arable crops as a whole in the OECD ea, market price support and output- elated support – which are the forms of support with the greatest potential to stim ulate production, exacerbate environm ental pressures and dist ort trade – accounted for

about half of the s upport to t e sector in the 2001- 03 peri od. What are the effects on the environment of agricultural support policies for arable crops? Price support and input su bsidies both provi de incentives for ou tput expansio n and intensification of input se, as they stim ulate farmers to change their managem nt practices and rates of inp t use. Co mm odity -linke d support will also alter the x of crops grown, which may not be neutra l for the envi ronm ent. If higher levels of support are given to high-perform ance crops th at are more input-intensi , then the im acts on input

use and crop m x will be even greater. Further, when high levels of support ar maintained over ti , this im pede structural cha nge in the sector and may sti ulate the development of new y eld-enhancing and cost-reducing techn logies, which could be biased in favour of those crops receivi ng the highest support, a nd which m result in AGRICULTURE, TRADE AND THE ENVIRONMENT – THE ARABL CROPS SECTOR BN-92-64-009965 © OEC 2005
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variable environm ental ou tco es. At the sa me ti me, capitalisatio n of support into land prices may enhance the underl ng pressure s for far

consolidation and production intensification. However, the link tw een production chang es and environm ental outcom s is s ite-specific. How large are the impacts of further agr icult ral trade liberalisa ion on the environmen t? The analy is provides an illustration of th e potential i plications for the envir nment of m ltilateral agricultural trade liberalisati on. Two hypothetical multilateral agricultural trade liberalis ation scenari s are consid ered. The firs t scenario a mes an extension of the WTO Ur ugua Round Agreement on Agricu ltur . The second scenario involves the elim ination

of all agricultural policy m asures in all countries. The latter scenario can be viewed as an upper bound of potent al outcomes of ltilateral agricultural trade liberalisation. In m st cas es , the si late d liberalisation im pa cts for the aggregate arable crop s ector do no t sugges significant environm ental im plic ations: the percentage changes in land an che ic al use, aggregate o tput, and the rate of che ical applica tion are s al l. Overall, the estim ated changes in arable crop p oduction ev en in t e ext em e scenario of f ll agricultural trade liberalis ation, are within the bounds

of average seasonal variations witnessed over the last twenty ears in the OE CD area. The si lations also suggest that trade liberalisation would c use global methan e and ni trous oxi de emissions to decline. The cross-countr quantit ative analy is is supplem ented with so me country -s pecific disaggregated analy is. What are the main policies addres sing enviro nmental iss es in the a able crop sector? Notable trends in pa t m asures include the growing use of lan reti rem nt pay ents to prom ote en vironm ental objectiv es; pay ents to support the adoptio n of less-intensive far ing prac

tices, such a orga nic far ng; and transitional pa ts based on farm fixed asset s, such as as sistanc for water, soil and land conservation. The scope of regulatory p licy m asures ha s generally ex panded in OECD countries over the past two decad es. These measures range fro br oad prohibitions to very prescriptive details for t e adoption of e nvironmentally benign farm management practices. M st regulations are i ple ented at the local level, and environm ental legislative responsibilities usuall rest with sub-nati onal level governments. Regulations to protect gr oundwater q alit and co

ntrol soil ero ion are often used, with the m st severe re strict ions apply ng to pesticide use. What are the production and trade eff ects o agri-env ro nmental pa yments and regulations on arable crops? The recent gr owth in agri-environm enta l regulatory and pa ent programmes raises concerns abo t the possible negative ef fects on trade, including ar able crop imports and exports. Correcting for missing markets for environmental externalities, or reducing AGRICULTURE, TRADE AND THE ENVIRONMENT – THE ARABL CROPS SECTOR BN-92-64-009965 © OEC 2005
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governm nt polic distort

ons im proves social welfare, despite having trade im pacts. However, if agri-environm ental programmes ar e not i ple ented in cost-effec tive way , there is a risk that national and global welfare will be lower. Effects of regulations on factor costs and trade dep nd on the rticular regulatory, countr and crop condit ons. The regul ations cover erosion, fertiliser and pesticide use, as w ll as land mai tenance req ire ents un der co lian ce sche es. Rese arch generally has not shown that environmental regulations have significant im pacts on trade co etitiveness and fir l cation. Despite the

rapid growth of agri-envir onm ental pa ents, ther e have been few si ilar advan ces in odell ing their production and trade i pact s. However, si tion analy is suggests that a ri-environm ental pay ents could have odest effects on productio n, a nd larger im acts on trade flows, in certain countr -c rop situations . Some policy conclusions Further agricultural poli reform a nd trade liberalisation shoul reduce environm ental pressure in countries wit hi gh support and environmental pressure. But reductions in price suppor t alone are unlikel t redress the environm ental har caused by decades

of such support unless acco anied by t rgeted agri-environm ental policies. Production-l nked agricul ural support fo r crops has hindered the adoptio n of environm entally beni gn f rm ing sy stems. Decoupl ing of agricultural supp ort from productio n d ecisions, provision of inf rmation and investm nts in hum an capital would facilitate the adoption and diffusion of such sy stem s. Cross co li ance atta ched to direct pa ents can a hieve so objectives at low increm ental cost, but the i come suppo rt a nd en viro nmental objectives are sometimes in conflict. A crucial li itat on of cross co

liance is that thos e far ers w ho receive pay ents wit cross-co liance conditions are not neces sarily those far ing t e st environm entally sensitive land or highly valued landscape. I proved environm ental outcom s at lower cost co uld be achieved th rough ta rgeted environmental measures such as taxes and regulations to deter the use of specific dam ging inputs, and pa yments to foster certain environm enta l services. A crucial consideration in asse ssing the cost eff ect iveness of an agri-environmental programme, taking into account its production and trade im acts, is whether, or to

what extent, crop production a nd the envir nmental servi ces ar e joint outputs and, therefore, whether the agri-environ ental policies can or cannot be deco upled from production Even if the e nvironm ental services and productio n ar e joint, m asures to im prove the cost effectiveness of the programme ill lessen potential tr ade i pacts. There is a need for a coherent institutional framework in order to rationalise local and regional envi ronm entally inspired initiat ves. The level of government involvement that is appropriate, i. e. local, state/provincial, national or i rnational, is

the one t at i the m st cost-effective and which involves the low est transaction costs for the particular environm ental problem concerned. AGRICULTURE, TRADE AND THE ENVIRONMENT – THE ARABL CROPS SECTOR BN-92-64-009965 © OEC 2005
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© OECD 20 05 This summary is not an official OECD translatio . Reproduction of this su mmary is allowed provid ed the OECD copyright and the title of the original publication are mentioned. Multilingual summaries are translated excerpts of OECD publications originall published in English and in French. The are av ailable free of charge on the OECD

Online Bo okshop www.oecd. org/bookshop/ For more information, contact the OECD Rights and Translation unit, Public Affair s and Communications Directorate. Fax: +33 (0)1 45 24 13 9 OECD Right s and Translation unit (P AC) 2 rue André-Pascal 75116 Paris France Visit our website www.o AGRICULTURE, TRADE AND THE ENVIRONMENT – THE ARABL CROPS SECTOR BN-92-64-009965 © OEC 2005