1. EU Green deal - Farm to Fork
Lecture for ENZA, April 2022
Krijn Poppe

2. Content
 The necessity of transition
 Some agricultural economic concepts / insights
 EU proposals
 EU Common Agricultural Policy 2023-2027
 EU Green Deal
 EU Farm to Fork Communication
 Will the war make a difference?

3. Food chain: 2 weak spots – opportunity?
Input industries
Farmer
Food processor
Consumer Retail
• Public health issues –
obesity, Diabetes-2 etc.
• Climate change asks for
changes in diet
• Strong structural change
• Environmental costs
need to be internalised
• Climate change (GHG)
strengthens this
Is it coincidence that these 2 are the weakest groups?
Are these issues business opportunities / market failure?
Or system failure and lack of transformative capacity?

4. 4
Economic mechanisms in agriculture

5. Institutional economics: regulating mechanisms
5
Culture (religion,
customs, norms)
Formal rules
(laws)
Governance
(contracts, market
organisation)
Resource
allocation
(incentives, outcomes)
Formal rules
(laws)
Culture (religion,
customs, norms)
Governance
(contracts, market
organisation)
Resource
allocation
(incentives, outcomes)
© Williamson, 2000

6. 6

7. EU Green Deal
A new growth strategy that will transform the Union into a modern, resource-efficient and competitive
economy, where
 there are no net emissions of greenhouse gases by 2050 (2030: at least -55%)
 economic growth is decoupled from resource use
 no person and no place is left behind
The European Green Deal provides an action plan to
 boost the efficient use of resources by moving to a clean, circular economy
 restore biodiversity and cut pollution
Climate neutral in 2050. Proposal for a European Climate Law Action by all sectors, including
 investing in environmentally-friendly technologies
 supporting industry to innovate
 rolling out cleaner, cheaper and healthier forms of private and public transport
 decarbonising the energy sector
 ensuring buildings are more energy efficient
 working with international partners to improve global environmental standards
Financial support ( €100 billion) and technical assistance for the most affected (the Just Transition
Mechanism)

8. Contents EU Farm to Fork Communication
 1.Need for action
 2.Building the Food chain that works for Consumers, Producers, Climate and the
Environment
 2.1.Ensuring sustainable food production
 2.2.Ensuring food security
 2.3.Stimulating sustainable food processing, wholesale, retail, hospitality and food
services practices
 2.4.Promoting sustainable food consumption and facilitating the shift to healthy,
sustainable diets
 2.5.Reducing food loss and waste
 2.6.Combating food fraud along the food supply chain
 3.Enabling the transition
 3.1.Research, innovation, technology and investments
 3.2.Advisory services, data and knowledge-sharing, and skills
 4.Promoting the global transition
 5.Conclusions

9. • Reduce nutrient losses by 50%
• Reduce fertilizer use by 20%
• Reduce pesticide use by 50%
• Reduce sales of antimicrobials by 50%
• Increase organic farming to 25% of UAA
• Increase high-diversity landscape features to 10% of UAA
F2F and biodiversity strategy targets

10. Institutional change and coherent policy package is needed
for a Food System approach
Price
Quantity
Demand
Supply
Current
price
Export to feed
10 bln ??
Less waste
Less (animal)
protein
More sustainable
BioTech, plantbased meat,
vertical farming, insects etc.
(Digital) knowledge / Precision
Agriculture
Less
chemicals
Social policy for food insecure
persons: not a price but an
income problem
Current volume
Create market like
in energy, mobility
Organise platform
economy
True cost

11. 3 Main options in a Food SYSTEM policy:
It seems to me that in a Food Systems Policy that tries to solve the wicked
problem by improving the transformative capacity of the food system, three
options [that can be combined for optimal results] stand out:
 Bring new actors in the system that can help to transform it
 Circumvent the food markets and add additional transactions to the
food system
 Force the main current actors in the food system to change their
behaviour towards farmers and consumers so that markets internalise
external costs in their current transactions
 Compare in mobility: Tesla and Uber / Working from home by Zoom /
Tax flying or oblige car manufacturers to sell x% e-cars.

12. Bring in new actors that disrupt the system…
Bringing in new actors is perhaps the easiest solution, but also rather slow, like R&D in the current
system. Examples that can be empowered are:
 New actors with innovative approaches in food processing like plant-based meat and dairy products,
backed up with venture capital (e.g. Beyond Meat, Vegetarische Slager etc). In the hope they are the
Tesla’s of the food industry.
 New actors in retail like home delivery, online (e.g. direct sales from farmers in digital short supply
chains) and out-of-home [e.g. Denmark supported organic sales by labelling restaurants; Austria via
public procurement for canteens, schools, hospitals – to be checked].
 New actors in government like cities that start regulating public space and the food environment.
New democratic bodies like Food Policy Councils, Citizen Summits etc.
 New actors in the eco-systems market like organisations that want to offset their GHG emissions and
buy carbon credits from farmers who are then incentivized to change water tables in peat areas (Rli,
2020) or other operational farm actions.
 Health professionals that are interested in preventive health and the role of food in addition to the
current curative approach by those who studied medicine.
 Etc ?

13. Add new types of transactions…
Circumvent the current transactions in the food system, e.g. by creating a market for eco-system services or
provide food stamps for sustainable products to obese people:
 Consumers do not pay the true price of their food. To rebalance that, VAT rates should be higher (e.g.
like in Denmark at the normal level), perhaps differentiated between some categories (higher for
livestock products, lower for fruit and vegetables).
 The fund created with this money is used to compensate low incomes and to provide farmers that are willing to
become more sustainable than the law asks, get a 25-year conservation contract to do so. Such contracts could
be auctioned, creating a market for eco-systems. 25 year, as this is can be a basis to change a farm system
fundamentally.
 If farmers in such a system can also market their product at a higher price, that is their luck and not a big
problem (we give subsidies to e-cars, the fact that a taxi firm creates a sustainable brand with these cars and has
an advantage in the taxi market is also not seen as a problem, that is intended leverage). If contracts are
auctioned, such operators will demand a lower price.
 Like in an American System medical doctors could be supported to hand out food stamps / tickets to
obese people that entitle them to shop for a much reduced price at farm markets for healthy products
or sustainable products from certain labels and provides education (cooking lessons) and buddy
groups.
 With such corrections the large actors in the food system can stay with their current behaviour.

14. Force farmers to behave differently….
 Current actors do not factor in the externalities of production of food into their transactions.
It means that farmers are incentivised to overexploit nature and that consumers pay a food
price that is too low.
 Forcing farmers (and other producers) to operate more sustainable, means we have to define
at farm level what is (un)sustainable, otherwise we can not subsidize or regulate these
practices.
 Sustainability indicators differ per farm type and region, but measuring is possible Indicators
at farm level can be monitored (see the FLINT project with KPI), sustainability schemes are
available, systems like organic can be certified and audited. The (extra) costs of these
production methods can be monitored by the proposed Farm Sustainability Data Network or
any big data strategy.
 Forcing farmers to produce more sustainable increases their cost price. Without
compensation that is rejected and leads to policies that are not ambitious enough, (current
agricultural policy); this means that it starts with a higher product price that farmers have to
be paid by food processors and retailers, and in the end consumers or by payments for eco-
system services

15. How to force and reward sustainable farming
As farms can be classified and certified in their level of sustainability, what are the
incentives to move them up on the ladder from red to green ?
• Eco-schemes and contracts in Pillar 2 for eco-system services. Farms do not
change for a 1 year contract > 25 year conservation contract ?
• Food processors (or all organisations that buy for e.g. more than 100.000 euro
of farm produce in a year from different farmers) could be obliged to report the
sustainability of their sourcing. E.g. in their annual ESG / sustainability report
with the data of the digital dashboards of their farmers.
• Use EU Sustainable Finance Taxonomy: higher interest costs for polluters
• Oblige dairy factories and slaughterhouse to buy 25% from light and dark green
farms at higher prices (like in the petrol market with ethanol) ? If green farms
have to buy their feed in a 500 km distance produced on green farms, it would
also indirectly green arable farming. Increase percentage over time ??
• Like in the car market, the factories could be allowed to trade certificates
between manufacturers that do more than 25% and those that do less. (that is
how Tesla makes its money).

16. How to force and reward sustainable farming - 2
• Use instruments as ETS (CO2 emission rights) to deal with climate change.
An Agri-ETS could be set up for these farms large than 50.000 euro sales.
Agriculture could benefit from carbon credits.
• For other emissions, like NH3, an emission rights system (tradable emission
quota) might also help to allocate resources to the greenest farms. Ibid for
water rights if water is scarce. Such economic instruments give long term
clarity to farmers and are relatively simple to operate.
• Intervene in land market (and quota markets) like SAFER (Fr): allocate land
to the green category of farmers (now the polluting farms have the buying
power)
• ?

17. Effects of the Ukrainian war on the debate
 Decreasing supply of grains, sunflower oil from Ukraine, Belorussia and Russia
 Fear that 2022 harvest / export in Ukraine will be very problematic
 Higher energy and fertilizer prices (Nitrogen, acces to Potassium)
 Food security concerns for the MENA region and beyond
 Should this influence the debate on CAP and Farm-to-Fork
 Increase European supply: is that possible in the short run??
 At the expense of biodiversity (e.g. less ecological focus area)?
 Or in the long run with new breeding techniques etc ?
 High feed costs: less animal protein, less feed and biofuels, more grains for MENA ?
 (compare discussions on the energy mix: speed up or slow down the Green Deal ?)

18. krijn.poppe@wur.nl
www.wur.nl
kjpoppe@hccnet.nl
Thanks for
your
attention

19. DG RTD (2018):
Recipe for change:
An agenda for a
climate-smart and
sustainable food
system for a healthy
Europe : report of the
FOOD 2030 expert
group

20. Cochrane’s Treadmill
Technology for
labour
productivity by
research, input
industry
Innovation
profitable:
more
ha/man
Efficiency of
scale: lower cost-
and market price
Lower margin
Farmers do not
easily quit:
innovation as
solution
Higher bidprice
for marginal ha
Intensive land
use
Increase in
income implies
increasing
labour costs
Agri-
Business
Complex
environmental
problems
Demand for healthy
environment
Environmental
legislation
Other
services
or exit?

21. Chain organisation changes (©Gereffi et al., 2005)
inputs
End
product
PRICE
Shops
Complete
Integration
Lead
company
Lead
company
Turnkey
supplier
Relational
supplier
Market Modular Relational Captive Hierarchy
Low Degree of explicit coordination and power asymmetry High
Lead
company
Farmers

22. Unchanged
Unchanged
Larger
Healthier and
more sustainable
Role of the State
Behaviour
Business
as Usual
Government
Control
Regional
Communities
Green
High Tech
Transformation