What would the global impact be if other countries adopt EU’s “Farm-to-Fork” strategy?
USDA economists are taking a closer look at the global impact on trade, as countries create their own climate policies. We have heard a lot about the European Union’s “Farm-to-Fork” initiative and U.S. ag leaders are reacting.
The European Union’s proposed “Farm-to-Fork” agricultural sustainability plan calls for reducing certain production inputs, like pesticides, fertilizer, land, and antimicrobials.
Economists at USDA used a model to gauge what could happen if the EU adopts the plan and if other countries follow along.
According to USDA ERS Senior Economist Jayson Beckman, “Basically, what happens in our model is the world becomes two trading blocs. So, you have the EU and everyone else who are adopting the strategies; you have the U.S., Brazil, Canada who do not adopt the strategies, and they basically just trade withing each other.”
Beckman says that the model showed clear market impacts in countries that limit farm inputs to reach climate goals.
“Production falls, prices go up, trade decreases by 10 percent, and food costs are now estimated at $651 dollars a person per year in the EU, and you can see a larger decrease of GDP of $186 billion dollars,” he explains.
He says that demand could grow slightly for U.S. commodities because of the lower production in the EU, but the reduction in global production would also cause higher rates of food insecurity in some of the lowest-income countries.
“In that middle scenario, there is an increase in food insecurity of more than 100 million people, but this time, since we are assuming that Africa joins the EU, all of that increase, basically, is manifested in the Africa region,” he states.
Response from the EU media and researchers noted that the report did not account for increased production or changing consumer preferences. Beckman also heard from EU counterparts that the report overestimated the impact to trade.
“There is a history of non-tariff barriers being put in place but we do agree that the assumption of what countries join might be too strong,” he adds. “So, perhaps not everyone in Africa might join.”
In the full report, USDA also modelled more extreme scenarios including if the entire world adopted the EU’s “Farm-to-Fork” strategy. In that case, average food costs around the world were shown to increase by more than $400 per person per year.