by Frank Schnittger
Mon Nov 1st, 2021 at 11:06:15 AM EST
One of the privileges of going to university is that you get to know some very interesting people. One such is Alan Matthews, now professor emeritus of European agricultural policy at Trinity College Dublin. In an industry noted for its short-sighted self interest, his work shone a light on the impact of the Common Agricultural Policy (CAP) on third world producers faced with the price impact of large quantities of subsidised European exports being dumped on their markets.
European farmers were being subsidised to over-produce, and their surplus product was off-loaded onto third world countries with European taxpayers and third world producers facing the cost. Farmers are not alone, of course, in seeking to off-load the costs of their income and production methods onto others, but the report which the Irish Farmers Journal commissioned from consultants KPMG is a classic of the genre of ensuring a supposedly independent report only asks the questions they wanted asked.
Alan Matthew's de-construction of the report is also a classic of critical analysis, and deservers to be read in full.
In Summary, the KPMG report:
- Quantifies the production and employment effects of particular emissions reduction scenarios and and doesn't ask how agriculture might achieve these emissions reductions with minimum impacts on the level of output and income.
- The report assumes that farmers will remain totally passive in response to the projected reductions in output. and that prices would be unaffected. But fewer cattle and less milk produced would mean meat factories and dairies competing for more limited supplies and thus higher prices for farmers, which would offset some of the loss in income it foresees
- No allowance is made for the potential for diversification and assumes that farmers will not seek opportunities in forestry, bioenergy, organic production, or alternative enterprises if ruminant agriculture is reduced.
- Significantly, the report makes no attempt to estimate the impact of providing the necessary incentive framework to reduce agricultural emissions. Farmers are well aware of the damage these emissions cause, but it is someone else's problem. To solve the emissions problem, the cost of these emissions, as well as the benefits of reducing them, need to be factored into each farmer's financial planning.
- Some years ago, the Citizens' Assembly voted overwhelmingly to recommend the introduction of a levy/rebate scheme whereby emissions would be taxed, and the proceeds recycled to support farmers to farm in less emission-intensive ways. The proposal was dismissed by the political establishment and the leaders of the main farm organisations, but existing schemes have been ineffective.
- The KPMG report overlooks the fact that putting a proper incentive scheme in place at farm level would unleash a wave of innovation as farmers, coops, input suppliers and the research establishment see the benefits of focusing on emissions reduction, where today there is no individual benefit to taking action.
- The KPMG report also ignores the co-benefits from ambitious climate action. Agriculture not only faces the challenge of reducing greenhouse gas emissions. Current levels of output are also associated with unprecedented biodiversity loss, deteriorating water quality, and levels of ammonia emissions that exceed legal limits.
- There is also a cost to inaction. Ireland already fails to meet its EU climate targets and will continue to do so if agricultural emissions are not reduced. This will require considerable tax expenditure on an annual basis to purchase allowances from other EU countries to bring ourselves into compliance, funding that could be used to promote the green transition at home.
- The KPMG report should not be used to delay the urgent action to reduce agricultural emissions. Its real message is the need to properly price emissions at farm level so that farmers are incentivised to take the necessary actions to avoid the most severe scenarios that it projects.
(The above largely quotes from the article, edited for brevity).
It is not a new phenomenon for a lobby group to ask the questions it wants answered and to seeks to off-load the costs of inaction onto taxpayers and the general public. This KPMG report is a classic of the genre, as is Professor Matthew's deconstruction of it.
