AgrarBriefing 01-2021 (englisch)

The EU Green Deal and Agriculture:
Damage to Climate and Global Natural Capital

TFFA e. V.

Thaer Forum für Agrikultur e. V.

Thaer Forum for Agriculture e. V.

Harald von Witzke

The EU Green Deal is an ambitious plan aimed at helping to protect the world’s climate. The provisions for agriculture, however, would result in the opposite of what the EU claims to accomplish with it. If implemented, both climate and global natural capital would be severely harmed. The key reasons are that both the changing global environment faced by agriculture and an effect known as indirect land use change (ILUC) have been disregarded. The climate cost of moving to organic farming in Germany would average more than € 18000 per hectare of cropland.

Climate change is at the forefront of the public debate and will likely be so in the future. The EU is fueling this debate by a plan referred to as the European Green Deal. The central objective is to achieve climate neutrality by 2050. This is both an honorable goal and an ambitious plan. There should be no doubt that Europe must undertake serious steps to help avoiding both a global climate catastrophe and a further erosion of the world’s natural capital including water resources, natural habitats and biodiversity. However, as far as agriculture is concerned the Green Deal would cause the opposite of what the EU claims to achieving with it.

The central instrument of the Green Deal is a system of tradeable emission rights. However, land use and land use change would be exempt from it. Rather, agriculture shall face provisions for the reduction of local emissions. In addition, organic farming shall be expanded and fertilizer as well as crop protection use shall be significantly reduced.

No doubt, climate change is for real, and it is for the most part the consequence of human activities. It will also become rather expensive. But it would be even more so, should the wrong actions be taken. With the set of political measures proposed for agriculture, future farming in the EU would aggravate both climate change and the erosion of global natural capital. In addition, the price of food would rise.

A key reason is that the global economic environment faced by agriculture in the EU and in the world at large has changed significantly since the turn of the millennium. The more than one century long trend of declining agricultural prices has come to an end. 2000 marked a mega-trend reversal in international markets. Since then, agricultural commodity prices have tended to rise. And this may be expected to continue, raising concerns about food security – particularly in the poor countries of the world. Before the recent energy price hike and the Ukraine War, more than 800 million people have been estimated to suffer from food deprivation or hunger. Presently, this number is likely to be significantly above 1 billion. UNICEF estimates that more than 8000 children die every day from undernutrition. This human toll is the equivalent of fatal crashes of 22 B747-8 Jets every day.

In the EU and globally, the times of plenty in food and agriculture are over. In fact, the EU has become one of the world’s largest net importers when the trade flows are broken down to the agricultural commodity level; i. e., when the value added of EU production is eliminated from the traded goods.  Research has shown that every year, the EU makes on balance use of cropland outside her boundaries for her own needs in food and agriculture which is in the range between 17 and 34 million hectares. Germany contributes to it a large portion of 6 to 7 million hectares.

At the same time, climate change acts to reduce agricultural production growth around the world – particularly in the poor countries – amplifying their rapidly growing import needs. In fact, the world at large has entered a new era of scarcity. Not only have the prices of agricultural commodities risen, but the world’s natural capital has also become ever scarcer, including land suitable for farming, fresh water, natural habitats, and biodiversity.

Agriculture continues to be the world’s single most important industry. Almost 30 per cent of the world’s workforce is employed in the production of agricultural commodities alone. Hence, it is not surprising that agriculture is also a major source of greenhouse gas emissions. Two sources of agricultural emissions are of relevance. One is the emission on the land presently being farmed. The Intergovernmental Panel on Climate Change lists the annual emissions from this source at 6.2 billion metric tons (mt) of CO2 equivalents (CO2e) or about 4 mt per hectare. The other is the annual expansion of the global agricultural acreage which probably averages around 4.5 million hectares and emitting 4.9 billion mt of CO2e. This is about 80 per cent of what is emitted on the more than 1.5 billion ha of cropland presently being farmed.

The atmosphere in which the world’s climate is formed is a global common resource – shared by all people on this planet. As long as greenhouse gas emissions are limited such that they do not cause significant climate change, there is no major problem. If this threshold is exceeded, however, then the phenomenon known as the Tragedy of the Commons begins to manifest itself – the overuse of the common resource.

Therefore, the interrelationships between agriculture and climate may only be fully understood when the international dimension is explicitly considered. This implies that national climate policies must consider how they affect other users of the commons and how their actions repercuss on the global commons – directly or via agricultural policy interventions. It is this aspect which is disregarded in the EU Green Deal leading to false conclusions and, thus, to an acceleration of both climate change and further erosion of the global natural capital.

At the heart of the reasoning that leads to this conclusion is a phenomenon commonly known as Indirect Land Use Change (ILUC). ILUC plays a central role in the criticism of the growing acreage used for bioenergy crops in the EU and elsewhere. The argument is as follows: When there is direct agricultural land use which acts to reduce production in one part of the world, it also acts to cause a reduction of crop production for food and feed. Consequently, prices of agricultural commodities increase as do the incentives to expand production around the globe through expansions of the agricultural acreage – typically through deforestation or the conversion of pasture into cropland. This, in turn, leads to a loss of natural habitats around the globe, along with losses in biodiversity and a substantial increase of greenhouse gas emissions.

This cascade of events would be triggered if the EU follows through with the Green Deal plan of expanding the acreage under organic farming use. The intended reduction of crop protection and fertilizer use would aggravate this effect. Empirical evidence for Germany suggests that the effects on climate and on global natural capital would be quite dramatic. The key reason is the significantly lower productivity of land under organic farming. A rather conservative estimate has yielded the result that the ILUC effect of moving to 100 per cent organic farming in Germany alone would accelerate the global expansion of agricultural land by 6.5 million hectares. That is equivalent to more than half of the arable land in Germany. At the same time, this would result in a loss of 6.5 million hectares of natural habitats around the globe. An equally conservative estimate suggests that this, in turn, would act to emit an additional 1,1 billion mt of CO2e. The climate cost to society at large would amount to € 220 billion and average more than € 18000 per hectare of land converted to organic farming. In addition, the global biodiversity would decline by the equivalent of what may be found in 2.2 million hectares of tropical rain forest. These are the one time cost of land conversion.

There would also be recurring annual reduction of 24 million mt of CO2e in emissions on the cropland in Germany converted to organic farming. They are somewhat smaller than the additional emissions on the land expansions around the globe which would amount to 26 million mt of CO2e. Hence the tax necessary to compensate for the climate cost to society for each hectare of land converted to organic farming practices would be around of €18000.

The Green Deal document also states that the EU wants to set a positive example for other countries by expanding the acreage under organic farming and by reducing crop protection and fertilizer use. However, if other countries would actually follow the EU’s lead and move towards farming practices with reduced yields, the global agricultural acreage would be expanded by even more, with all the attendant cost to climate and global natural capital. The plan of expanding organic farming would be like having neighbors who brag about how little garbage they produce but actually discard their garbage along the roadside.

There is certainly the potential of reducing emissions on the acreage being farmed in the EU without causing massive damage to both climate and global natural capital. Examples include crops bred with modern molecular genetic methods, precision farming, low-till cropping methods or the sequestration of organic matter in the soils.

The reduction of chemical crop protection and fertilizer applications could have the potential, however, to avoid significant ILUC effects and thus to be consistent with the objectives of the Green Deal. This would be the case if products of molecular plant breeding, such as CRISPR/Cas9 would be approved for use widespread use within the EU. Such crops could make more efficient use of plant nutrients and they could also make more efficient use of the sun‘s light. And they could be resistant against abiotic stress as well as diseases and pests. However, with very few exceptions the regulatory framework in EU member countries‘ agriculture disallows planting fields to such crops.

The turn of the millennium marks the end of the times of plenty in world food and agriculture. The set of measures envisioned for agriculture under the EU Green Deal may have appeared to be reasonable in the last century when the world choked under the surplus production by the EU or the USA which flooded the world markets. In the new era of scarcity this type of policy strategy is anachronistic. There is no reasonable alternative to modern, productive, and innovative agriculture. Only with modern agriculture will the world be able to secure enough food for the rapidly growing world population at prices the poor can afford and at the same time protect our climate and the global natural capital.

In this context arises the question of whether there is a difference between the Volkswagen automobile exhaust scandal and the claim made by politicians and organic farm lobby groups that organic farming is a sustainable form agricultural production. Volkswagen had to pay huge fines to compensate customers of their diesel engine cars, because the company had given false statements about the environmental effects of their cars. Some decisionmakers of Volkswagen have been sentenced as well. It is surprising that so far, no comparable law suits have been brought to the courts challenging the widespread claim that organic agricultural production is a sustainable form of farming as claimed by some politicians and lobby groups.

The EU appears to have become aware of the ILUC effects of the Green Deal, as there now is a new proposal for a regulation on deforestation-free products. This regulation aims at reducing the expansion of the global agricultural acreage by restricting EU imports of timber and its products from deforestation. Deforestation is for the most part an issue in the poorer countries of the world which typically have limited administrative capacities to monitor and enforce domestic compliance of timber industries’ regulation. Besides, a lot of deforestation around the globe is the result of slash and burn. Not the commercial use of timber but rather additional agricultural acreage is the primary motivation for deforestation.

About the author

Harald von Witzke is an Emeritus Professor of the Albrecht Daniel Thaer Institute at Humboldt University of Berlin and member of the executive Board of the Thaer Forum for Agriculture e. V. From 1983 to 1994 he was on the Faculty of the University of Minnesota’s Department of Agricultural and Applied Economics in St. Paul, MN. From 1994 to 2015 he served as Chair for International Agricultural Trade and Development at the Albrecht Daniel Thaer Institute of Humboldt-Universität zu Berlin, Germany.