Posts Tagged ‘Agri-Environmental Measures’

Supporting Greening with Agri-Environmental Measures: Improvement or rather a waste of money?

21. Juni 2016

The concept of Greening of Direct Payments and more specifically the Ecological Focus Area (EFA) are going into their second year of implementation. I will discuss the pragmatic option to additionally support EFA by agri-environmental measures (AEM) in order to improve effectiveness of EFA. The experience in Germany do not deliver strong arguments for this option. The advantage of this option is the application within the existing CAP-framework.

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One effective EFA-option: Flouring strip with phacelia in Lindau, South Lower Saxony

The uptake of effective EFA-options in 2015 was very poor: Landscape elements, buffer strips and fallow land together contributed to 20% of EFA-area in Germany and 25% in the whole EU (figures before weighting factors and excluding figures from France, see my last post here). After the first year of learning and getting along with administrative restrictions, it is unclear whether we will observe an increase of effective EFA-options or not. Beyond the general recommendation to abolish Greening and to use the resources for agri-environmental schemes, we might think about options within the existing Greening-framework. And one of these options are the registration of existing agri-environmental measures (AEM) as EFA-option and thereby improve the effectiveness and focus of EFA-options.

In Germany, agri-environmental measures (AEM) are designed by the federal states (Bundesländer) and additionally supported by the national government. If the federal states want to get financial support form Berlin, the need to adjust their AEM to the regulatory national framework called “Joint Task for the Improvement of Agricultural Structure and Coastal Protection (GAK)“, which sets the general rules for the support by the national government. One rule is, that the payment has to be reduced, since part of the environmental service is already paid by the greening payment. Besides this, the rules have to go beyond the EFA-rules. Within the German framework GAK, the option to support EFA by agri-environmental measures or, vice versa, to register AEM as EFA is given for several EFA-options, as described in the next table 1:

Table: Payments in agri-environmental schemes and reduction rate due to registration as EFA in Germany

Table1a

Note that there is always the problems of ‚double funding‘, which is forbidden by EU-law: Services cannot be paid twice. However, the rules of the agri-environmental measures are more detailed and strict and the EAM-payment is reduced (as displayed in tab. 1), therefore the services are higher and therefore the EU-Commission accepted the programs by the German states. Following a question of Alan Matthews, the way I put this option in this post is probably not very precise in legal sense. The legal logic is rather the other way: Farmers participate in the agri-environmental measure (AEM) and can register their measure as EFA. And if they do, they receive a reduced payment.

The agri-environmental programs of the federal states show that only some German states are using this additional support and only for some of the EFA-options. This creates a very heterogeneous picture, which is displayed in table 2:

Table 2: Table: Additional support of ecological focus area by agri-environmental programs in the federal states of Germany.

The table shows that some federal states use this additional option extensively like Lower Saxony, Bavaria and North Rhine-Westphalia, Rhineland Palatinate and Saxony-Anhalt (all with three options) and some East-German states like Saxony and Brandenburg, but also Saarland and Hessen don’t use this option at all. Some of the options are more strongly supported, like buffer strips (in 9 states) and nitrogen fixing crops (in 5 states with payment), and on the other hand fallow land is only supported in two states, and the forestry options are not supported at all.

The key question here is on the effect of this additional support. We might very simple look on the figures of the states, which use supporting options and find out, whether we can determine higher shares of the respective option. However, the answer to this question is not as easy, since this goes to more general issue on how farmers decide on the choice of EFA-types. And here we see conflicting determinants of decision, which probably overlap with the incentive of agri-environmental measures. Besides this, we know the existing options, but we do not know (so far) to what extent farmers use the specific option and participate in agri-environmental measures eligible for EFA.

To the more easy and obvious question, whether we can directly discover statistical evidence, I will give a try. This is done, by separating the EFA-figures of the federal states with additional support and without. The result is displayed in table 3:

Table 3: Impact of additional support by agri-environmental measures on EFA uptake
(The figures indicate shares of the respective option in states with and without additional AEM-support)

First of all, the main issue is, whether we can observe a higher uptake of the measures, which are additionally supported. This is the case of buffer strips, catch crops and nitrogen fixing crops with a higher share within the states with support. However, the rest of the results is rather puzzling: In many federal states with support, the share of the supported EFA-options is lower or even substantially lower like in the case of fallow land. And on the other hand, the additional of Nitrogen fixing crops and catch crops is marginal with 20 and 75 €/ha, therefore here the factors leading for an high uptake might be others.

For instance, in Lower Saxony, which supports 4 options, the participation rate is not 100% clear. In 2015, 10.866 of 39.500 farms in Lower Saxony were working under agri-environmental schemes (including the organic farming support and all grassland-programs), which is just 27% of all farms. To figure out an impact, we would need to know, how many farms use the combination of EFA and EAM, because with low participation rates AEM can’t simply exert any impact on EFA. And this was probably the case in many federal states displayed here.

Finally, only buffer-strips we might observe a small impact, for the rest of the options AEM are not leading to high rates of uptake in absolute terms. We might conclude, that the additional incentive of AEM is outweighed by other factors in the decision process.

Coming to the conclusion:  The advantage of this option is the comparatively easy application within the existing CAP-framework. So states can decide to take this option and improve the effectiveness of EFA. If we don’t want to loose five years for biodiversity, we might still want to consider this option, even if this has a number of drawbacks like double funding and even more complicated requirements: Farmers in this case need to fulfill the requirements of two systems, where sometimes one is already too complicated.

The additional support of AEM is so far rather a theoretical option and the rates of uptake do not give strong arguments for this option. Greening is not effective and highly inefficient. And at the end of the day, with additional support of EFA we take away money from other, much more effective support schemes within the agri-environmental measures, which are essential for the support of biodiversity in agriculture. So the final long-run conclusion is (again) to abolish Greening, shift money into pillar two and to extend agri-environmental measure instead of sticking to the ineffective and inefficient instrument of ecological focus area.

Greening and Ecological Focus Area: First Data on Decisions in Germany

7. Oktober 2015

Some weeks ago, we asked on this blog how farmers would implement Greening 2015 and which options they would choose in order to comply with the criterion of the ‘ecological focus area (EFA)’. The main message was that farmers would probably prefer to use the options of catch crops, nitrogen-fixing crops and fallow land, since they provide cost-advantages against the classical biodiversity options such as buffer-strips and landscape elements. This expectation was also based on the fact, that the latter go alongside with legal insecurity. In addition, structural policies and the practise of direct-payments before 2013 lead to a situation, where farmers would rather exclude landscape elements from their registered farm land. Overall, the expectation was that landscape-elements and buffer-strips (as the most effective options to support biodiversity) would hardly be chosen by farmers.

EFA Fallow land in the region of Göttingen

EFA Fallow land in the region of Göttingen

In May, the EU-Commission published a detailed report on the implementation of the CAP-reform. Most of EU-member-states (MS) have offered a number of EFA-options (see a report from the EU-commission on the CAP-reform implementation), 14 MS are offering 10 EFA-options and more, 9 MS are offering between 5 and 9 EFA-options. Only in 5 MS the choice is restricted to max. 4 EFA-options. So the choice within most member-states is quite broad and it is going to be an interesting topic to observe how farmers finally decide.

Development of legumes and fallow land in 2015

During this summer there were some press-releases and reports were published, that document the impact of ‚Greening‘ on farms in Germany. On August 03, 2015 the Federal Statistical Office of Germany (Destatis) published some preliminary production data. According those data ‚Legumes‘ (74%) and ‚Fallow Land‘ (+62%) have drastically increased in Germany. The following fig.1 shows the increment of legumes from 2014 to 2015.

Fig 1. Growth of legume production in Germany 2014 to 2015 Source: own calculations, data from Destatis 2015

Fig. 1. Growth of legume production in Germany 2014 to 2015 Source: own calculations, data from Destatis 2015

The main production area are in Eastern Germany and Hesse with shares between 2% and 3% of the total arable. In contrast, in most western states we find just shares of 0.5%. In Eastern Germany this can be explained by economies of scale, i.e. larger average farm-size and the available harvesting machines for harvesting legumes. Appropriate machinery and harvesting techniques are important, since harvesting legumes is often regarded as one of the main problems in legume-production.

However, the impact of Greening is only a turn-back to the shares of the mid-2000s. At the moment, legume production has reached almost the level of 2005 (95%). Since 2004, the production mainly of beans has drastically declined (as shown in fig. 2):

Fig 2. Harvested legumes in Germany from 2004 to 2014 (1,000 t) (Source: Agrarmarkt-Information 2010, 2015)

Fig. 2. Harvested legumes in Germany from 2004 to 2014 (1,000 t)
(Source: Agrarmarkt-Information 2010, 2015)

A similar effect (+62%) can be observed on fallow land, which has been decreasing after the ‚Health-Check-Reform‘ 2009. And here again, the shares have been substantially higher in the mid-2000s: The share of fallow land is just a 37% of the share in 2005.

Overall, my expectation would be that the observed growth of legumes won’t be sustainable. If Greening gives incentives to produce legumes and ‘fallow land’, farmers will follow, especially because other options are much more costly. However, as soon as those incentives fall, the shares of legumes and fallow land might decrease again.

Any market impacts of Greening?

In addition, it is unclear how the market-equilibrium of legumes is affected by Greening and how supply and prices of beans and peas develop. If all legumes are finally harvested and processed, we might observe and oversupply and prices might drop substantially. The price of legumes is displayed in figure 3:

Fig 3. Prices for Legumes and Soybean meal in Germany 2007-2015 Source: Agrarmarkt-information 2010/2015

Fig. 3. Prices for Legumes and Soybean meal in Germany 2007-2015
Source: Agrarmarkt-information 2010/2015

So far this does not seem to be the case: During the summer we could observe prices for peas and beans of 150-185 €/t, which is still above the low level of the years 2009/2010. During this low-price period prices use to reach a low level of 100-140 €/t. The price-drop of legumes after harvest 2014 until Sept. 2015 is rather due to the general decreasing price-trend on the world-market followed also by legumes.  It might be that a share of farmers finally did not harvest the legumes and rather used it as a green nitrogen-fertilizer and that some of the produced legumes are not appearing as supply on the market. (But this is just speculation.)

Reports of Ecological Focus Area in Lower Saxony and Saxony-Anhalt

The Statistical Office of Lower Saxony has also published detailed data on the registration of Ecological Focus Area (compare Dahl 2015, in the monthly statistical report 08/2015). The data document that fallow-land and catch-crops are the most important option chosen by farmers in Lower-Saxony (See fig. 4):

Fig 4. Ecological Focus Area in Lower Saxony 2015 (Source: data from Dahl 2015)

Fig. 4. Ecological Focus Area in Lower Saxony 2015
(Source: own calculations, data from Dahl 2015)

Fallow land and catch crops take 95% of the total EFA in Lower Saxony. The high share of catch-crops is not surprising. For catch crops it is necessary to use a summer-crop, mainly with sugar beet (which has a high share in Lower Saxony) catch crops are useful, because it also avoids soil-born diseases and nematodes. According our calculations (published in Natur & Landschaft in June 2015) catch crops have the lowest costs of all EFA-options.

Dahl has prepared the same data for six production regions in Lower-Saxony (11 of all counties don’t belong to those regions):

Tab 1: Production Regions in Lower Saxony (Dahl 2015)

Region Main type of farming
Western Lower-Saxony Pig- & poultry production
Costal Region, East Frisia Milk farming
Lüneburg Heath Potato-production
Lower Saxon Börde Arable farming
Southern Lower Saxony Arable farming
Old Country
(between Hamburg & Bremen)
Fruit-production,
milk & mixed farming

 

The following fig. 5 show the regional reports of Ecological Focus Area (EFA):

Fig. 5: Options for the Ecological Focus Area (EFA) in the Regions of Lower Saxony (Source: based on Dahl 2015)

Fig. 5: Options for the Ecological Focus Area (EFA) in the Regions of Lower Saxony (Source: own calculations, based on Dahl 2015)

We can see, that decisions in the regions vary substantially. We can observe high shares of fallow land in the arable regions ‚Börde‘ and ‚Southern Lower Saxony‘. However, this might be due to small sizes of land plots. And within the respective counties, there are plots with lower productivity, where fallow land is then applied. Under sawn crops are mainly chosen in regions with a higher share of grassland (‚Old Country‘, ‚East Frisia‘), which can obviously be combined with the production of fodder-grain. A similar statistics on EFA in Saxony-Anhalt gives a different picture (Fig. 6):

Fig. 6: Ecological Focus Area in Saxony-Anhalt 2015 (Source: own calculation, data from the Ministry of Agriculture and Environment in Saxony-Anhalt 2015)

Fig. 6: Ecological Focus Area in Saxony-Anhalt 2015 (Source: own calculations, data from the Ministry of Agriculture and Environment in Saxony-Anhalt 2015)

This is fully consistent with the statistics above: Farms in East-Germany are using the option of legumes, which take a share of 24% – in contrast in Lower Saxony, where legumes have only a share of 2.4%. This might be explained by economies of scale: The average farm size in East-Germany is larger and farms also have better harvesting techniques.

Conclusions

Overall, the share of landscape elements and buffer strips is very low, around 2% in both states. Landscape elements and buffer strips could be the most effective and useful options to support the maintenance of biodiversity in agri-ecosystems. However, this options as almost not chosen.

  • This might be explained by the recommendation of the official advisory services to register mainly catch-crops, fallow land and legumes for legal security reason.
  • Legal issue and insecurities, and in East Germany fragmented land-ownership might explain the low use of landscape elements. If e.g. hedges are used for EFA, the diverse land-owners of this hedge need to accept this options, which might cause problems and a lot of communication and transaction cost.
  • Structural policy and the control practise of cross-compliance have rather given incentives for farmers, to exclude landscape elements form their core-farmland and sell it to the local communities. Therefore, a lot of farmers do not own their former landscape elements anymore.
  • Finally, planting a new landscape element is (probably) the most costly options to comply with the ecological focus area. The greening component (87 EUR/ha) is not enough to cover investment- and maintenance-costs of landscape elements. Therefore, greening is not the appropriate measure to support landscape elements.
  • Interestingly, the option of buffer-strips also has a very low share. Buffer-strips are sometimes also additionally supported by agri-environmental measures in the II. pillar. This sounds attractive, but in practice there are a lot of restrictions and requirements: e.g. in Saxony-Anhalt, this support of the II. pillar is restricted to only 2.5 hectares per farm. With an regional average farm-size of ca. 400 ha, about 12,5 ha would be necessary to comply with EFA. Therefore, this highly supported combination does not seem to be attractive for farmers.

Finally, these results are only the first round of 2015 and for two regions, where arable farming plays an important role. I have picked those federal states, since biodiversity indicator show that landscape deficits are high especially in the main arable regions (‚Börde‘) of those two federal states. The results for the states are rather poor. It will be interesting to investigate other regions as well and to observe the development during the next years. However, a substantial increment of landscape elements and buffer-strips from my point of view doesn’t seem to be very realistic.

The figures document that farmers react according the general expectations and incentives and they use the given production option of Greening. A moderate small impact on biodiversity might still come from fallow land, however, overall Greening shows to be mostly ineffective to protect biodiversity. The EU-commission and the supporters of the greening-concept need to answer questions, such as how we can justify the greening-component of 1.5 Billion EUR per year in Germany, which has little effect on biodiversity and windfall gains for farmers between 70% and 90% of the greening component. Even the most severe measure, the ‚ecological focus area‘ seems to show almost no effect on biodiversity, but restrictions for farmers entrepreneurial decision and a substantial amount of administration for both farmer and state.