Everywhere farmers are criticised for causing damage to the environment: letting their pesticides and livestock waste spill into the environment and their fertilisers run off into streams and groundwater; causing obnoxious odours; harming the welfare of animals; removing ancient stone walls and hedges; and allowing their soils to erode and destroying wildlife habitats.
Farmers retort that they are the “stewards of the countryside”, providing landscapes and green spaces that benefit urban dwellers and tourists, and controlling the flow of water to avoid floods and droughts. It is clearly not in farmers’ interest to destroy the resources on which their livelihoods depend, but they face a dilemma. On the one hand consumers demand cheap all-year-round food of consistent quality, while at the same time calling for food produced in environmentally and animal friendly ways, which can be more costly.
All this has led to some serious rethinking about the role of agriculture in our societies. What do we want from farming? How can we best feed the world while conserving natural resources? Should we be paying farmers to protect the environment? Are current farming practices sustainable? Will agricultural trade liberalisation help or hinder the pursuit of a more sustainable agriculture?
Sustainable agriculture seeks to achieve three main goals: economic efficiency, environmental quality and social responsibility. Economic efficiency means meeting an increasing global demand for food at the lowest cost, while responding to changing preferences for different foods and adjusting to structural change within the agro-food sector and in the overall economy. At the same time, sustainable agriculture requires farmers to satisfy the public’s demand for improved environmental performance, by reducing pollution from agriculture, conserving the natural resource base, and generating environmental benefits. And agriculture must achieve all of this in socially acceptable ways, by increasing farmers’ education and skills, taking account of animal welfare concerns and ensuring that working the land can provide an acceptable level of income.
The whole agro-food chain therefore has to increase productivity and be more efficient in its use of scarce resources, especially land and water. It has to reduce waste and the environmental damage that spills over to other sectors. But choices have to be made, which incur trade-offs. Efficient arable farms may need large fields to use high powered machines – which means that hedges, walls and trees have to be removed, destroying wildlife habitats. The most environmentally friendly form of livestock production may require a reduction in output, leading to higher consumer prices. Essentially, farmers need to face the right signals from markets or policies such as taxes, payments or regulations, so that they provide the best combination of sustainability attributes that the public wants.
Agriculture has certainly registered steady output growth through productivity improvements. In general, over the last 15 years agricultural output in the OECD area as a whole has risen by 15%, on 1% less land and with 8% fewer workers. The price of food, adjusted for inflation, has fallen by around 1% annually. As a result, on average in the OECD area, the share of food in consumers’ expenditure is around 12.5%, although only a small part of it actually goes to farmers.
But this increase in output has been boosted in many countries by costly government policies. In 2000, total support to agriculture in the OECD was US$327 billion, or around 1.3% of overall GDP. Support to farmers was estimated at about 34% of the value of farm receipts, but varied from around 1% in New Zealand and 6% in Australia to 20% in the United States, 38% in the European Union and to over 60% in Korea, Japan, Norway and Switzerland. And because most support policies protect domestic farmers through trade barriers, they raise food prices to consumers and penalise low cost competitors, including many developing countries. In short, sustaining production in one country has to an extent been at the expense of production in other, often much poorer, countries.
Agriculture has also incurred environmental costs. The absolute levels of nitrogen run-off are still very high in some countries, such as the Netherlands, or regions such as the East Coast of the United States. There are concerns about the effects of the toxicity of some pesticides on human health.
New agricultural practices to boost productivity, like more monoculture or reduced crop rotations, have also led to a decline in biodiversity and wildlife habitats. Agriculture is using more water and in countries like Australia where topsoil is thin, farming and removal of wetlands and trees has caused problems of soil salinity.
There have been some improvements. Since the mid-1980s, there has been a decrease of more than 10% in both nitrogen and pesticide use in many European countries and Japan, and an associated rise in water quality. Progress has been made in adopting farming practices that enhance environmental performance. Adoption of conservation soil tillage practices and increased soil cover, for instance, is helping to reduce CO2 emissions and thereby enhance the greenhouse sink function of agriculture. Other farming practices and systems are acting to reduce risks of flooding and provide wildlife habitat and landscape amenity benefits.
The challenge is clear. With the world population projected to increase from 6 billion to 7.5 billion by 2020, together with higher per capita incomes, producing enough food to meet the demand while preserving the environment and responding to public expectations will put enormous pressure on resources.
Part of the answer lies in the choice of farming systems countries adopt. In the OECD area there is an enormous variety of such systems, be they “intensive” or “extensive”; “conventional” or “organic”; “industrialised” or “traditional”. These terms are often not well-defined and may mean different things in different countries. The ever-increasing influence of technology and structural changes in the agro-food chain also contributes to a complex picture. But the bulk of agricultural output (around 80-90%) in OECD countries is produced by a small number of farms (around 10-20%), most of which could be defined as using “conventional” systems. Organic farming, while on the increase, only accounts for a tiny fraction of output – between 1-10% of land area across Europe (see databank).
But is organic farming better than “conventional” farming systems as a way to ensure sustainability? At first glance, perhaps yes. Organic farming uses only organic-based fertilisers, like manure and vegetable-based compost and natural pesticides, like predator animal species. Antibiotics and other animal-health products are used only to cure sick animals and not to enhance yields. The main problem is that compared with conventional farms, organic yields on a given area of land tend to be variable and low, and the small farm size does not permit economies of scale. The focus is more on ensuring ecological balance rather than maximising output and growth.
Conventional farming tends to put productivity and economic performance first. But it uses inorganic fertilisers, chemical pesticides and yield-boosting antibiotics, as well as suffering from waste management problems, and is often accused of being an ecological enemy. But the picture is not that simple. Because of its lower yields, a wholesale switch to organic farming would mean more land under cultivation and higher animal stocking rates to maintain current production levels. This could conflict with the conservation of biodiversity and habitats if additional “high nature value” lands, like woodland or wetlands, were brought into production. However, yields might be improved with a greater emphasis of public and private agricultural research expenditure on organic farming systems. This is happening, but is not yet very significant.
Moreover, in practice, many different farming systems can be sustainable if properly managed. Whether they are depends on farmers adopting appropriate technologies and practices in the specific agro-ecological conditions. And importantly, different systems can co-exist, though here again this requires a high level of farmer skills and management. In other words, human capital on the farm (and knowing how to stimulate that capital) is of primary importance.
In short, any comprehensive assessment of the value of different farming systems needs to take account of the relative economic, environmental and social costs and benefits of these systems in terms of varying yields, soil and water depletion, pollution, landscape, wildlife habitats, and animal and human health.
OECD countries know that agriculture needs to be made more sustainable. But it is not so clear how this can be achieved. If the environmental costs of organic systems are generally lower than conventional farming, but the economic costs are higher, what can be done to ensure that society gains? The OECD has started to throw some light on the way forward.
A first place to look is new technologies and practices. In the past, the agricultural systems and the knowledge that went into them were largely directed at increasing the quantity of production, but they are now also responding to the demand for output of higher quality, produced in environmentally and animal friendly ways. But it is not always clear which technologies and farm practices will make farming systems more sustainable in the long term, and more work needs to be done to measure progress.
Some people argue that genetic modification of crops might be an answer, offering the opportunity to raise agricultural productivity, reduce production risks and increase food supply by making available crop varieties that are drought and pest resistant. However, there are potential risks to agricultural genetic diversity, in particular, by threatening landraces and adversely affecting other wild species. Biotechnology is a contentious technology, and more work needs to be done to assess risks and potential. Whether genetic crops really do require fewer pesticides over the long term has to be tested, for instance.
For now, much can be done to improve the signals from policies and markets that farmers receive. Many different combinations of market approaches, regulations, taxes and subsidies have been used across OECD countries. These help or hinder the development of sustainable agricultural systems. Only by reforming production and trade distorting support policies will market signals be able to guide farmers’ decisions properly. After all, they have to be able to read the direction demand is moving in. Mechanisms have to be developed so that farmers pay for environmental damage they inflict on other sectors and are reimbursed for any extra costs of switching to providing environmental public goods.
But should governments be promoting one type of farming system that will best ensure sustainable agriculture? Only with restraint would be the answer. The market is already giving signals that the demand for organic food is rising – and farmers are responding. Many farmers employing conventional systems are finding that it is in their interest to develop integrated production methods. A valuable strategy for governments would be to provide a sound framework in which farmers could adopt sustainable farming systems – with the participation of farmers and other stakeholders. That would be the best way to meet the challenge of raising output with minimum ecological damage.
• “Agriculture” in the Analytic Report on Sustainable Development, OECD 2001.
• Adoption of Technologies for Sustainable Farming Systems, proceedings of an OECD Workshop, Wageningen, Netherlands, July 2000, OECD 2001.
• Environmental Indicators for Agriculture - Volume 3: Methods and Results, OECD 2001.
• Agricultural Knowledge Systems: Addressing Food Safety and Environmental Issues, proceedings, OECD 2000.
• Agricultural Policies in OECD Countries: Monitoring and Evaluation 2001, OECD 2001.
©OECD Observer No 226/227, Summer 2001