The parallels between the ways that farmers defend their policies and thwart unwanted policy changes at the domestic and EU levels can be made clear by looking at a case in which a national government attempted to impose new costs on their agricultural community without offering compensation. In 2013, Socialist French President François Hollande attempted to implement the so called “eco tax” first put forward by his conservative predecessor, Nicolas Sarkozy. The eco tax was intended to promote greener commercial transportation by imposing a tax on heavy vehicles. Under the plan, any vehicle over 3.5 tons would be taxed a flat rate of .13€ per kilometer traveled on 15,000 kilometers of roads included in the scheme. The government expected the tax to generate over €1 billion in revenue annually. The eco tax was slated to come into effect beginning 1 January 2014. The government’s proposal was immediately met with criticism from the main French farmers’ organization, the FNSEA. The organization described the tax as an “usine à gaz”, a situation where pipes are going everywhere and the system is overly complex. Through thus turn-of-phrase, the FNSEA meant to convey that the eco tax was a complicated procedure with little actual value or payoff. The FNSEA argued that the tax would place a significant burden on the agricultural community, particularly farmers in Brittany, who had suffered significantly from the financial crisis, and demanded that it be suspended immediately. Other critics raised concerns that Breton farmers might be driven out of business as a result of higher transportation costs. In addition to the concerns about its effects on Breton farmers, the FNSEA warned that French goods would pass through the tax gates more often than trucks carrying foreign goods, putting French farmers at a disadvantage compared to farmers’ goods arriving from abroad. Xavier Beulin,10 liter pot the leader of the FNSEA, promised immediate action against the proposal, directing members to target the “portiques” that were intended to scan the trucks as they passed underneath.

Beulin called on farmers from other parts of France, even from those areas without the tax scanners, to join the protests. The call for action was successful, as a wave of angry protests erupted in Brittany and across France. In Brittany, the heart of the demonstrations, protesters gathered in main town squares, many wearing red caps, or bonnets rouges in a reference to a 17th-century protest against a stamp tax proposed by Louis XIV. Some protestors threw stones, iron bars, and potted chrysanthemums at riot police, while others destroyed the electronic scanners intended to collect the fee from passing trucks. The protesters included not just farmers, but also the broader public, who were rallying to oppose taxes, with some also supporting the farmers specifically. In addition to the violent actions in Brittany, farmers elsewhere blocked roads with their tractors, including around Paris. Despite the disruptions these protests caused to the daily life of the average French citizen, the farmers did not face any negative public backlash, a further indication of the deep support and connections between farmers and urban France. Indeed, public polling concerning the image of farmers revealed that the public has a strong, positive image of farmers. According to a 2014 survey, shortly after the mass protests by farmers, just 26% of respondents were willing to describe farmers as selfish and only 16% of respondents agreed that farmers were violent. A resounding 80% agreed with the statement that farmers were trustworthy42 . After Prime Minister Jean-Marc Ayrault met with local officials from Brittany, the government proposed to “suspend” the tax until January. This concession, though it was expected to cost the government €800 million in revenue, was seen as insufficient, and tens of thousands of protesters continued to gather in the epicenter of resistance to the proposal, the town square of Quimper in Brittany. The tax was finally suspended indefinitely, pending a new proposal from the government.

France’s eco tax then, like to efforts to change CAP income support systems or greening policies, demonstrates that it is nearly impossible to impose new costs on farmers, without some degree of compensation or widespread exemptions. For example, new CAP greening standards that are costly for farmers to adhere to are typically coupled with subsidies for compliance. When some form of compensation is not offered, the reform is almost certain to be defeated. Thus, the eco tax was had little chance of success, given that farmers were not offered any compensation in exchange for this new cost being imposed on them. In June 2014, the Hollande government unveiled the final version of the eco tax plan, now called “truck tolls”. The new plan applied only to trucks weighing 3.5 tons or more and included just 4,000 kilometers of road, as against 15,000 kilometers in the original plan. In addition, all proposed roads in Brittany, the epicenter of the protests, were exempted from the tolls. Trucks carrying agricultural goods, milk collection vehicles, and circus related-traffic were also exempted. As a result of the transportation exemptions and significantly smaller area of coverage, the toll is expected to generate only a third of the revenue of the original plan.The French eco tax example shares much in common with CAP reform, particularly in the area of environmental policy. Proposed environmental policies in the CAP often mean that new costs will be imposed on farmers who are forced to conform to stricter standards and modify their farming methods in some way. These attempted reforms are virtually always modified by farmers in one of two ways: by extracting a new or additional form of compensation for meeting these rules or by compelling reformers to adopt exemptions, often so extensive that barely any farmers are subjected to new rules. In the case of the French eco tax, farmers followed the latter course: when faced with a tax that would have imposed new financial burdens on producers, they successfully compelled the government to completely exempt agriculture. The victory is all the more significant since these exemptions cost the government badly needed tax revenue at a time of austerity. The successful campaign against the eco tax highlights some of the new sources of power that farmers have developed. Organizations were one important source of power.

The FNSEA demonstrated the ability to coordinate its membership and to rely on regional branches to place pressure on both national and local politicians. In the fight against this tax, the FNSEA deployed multiple tactics to exert influence on the policy making process, mobilizing members for public demonstrations while simultaneously lobbying local and national political officials. The protesting French farmers also benefited from a sympathetic public that did not begrudge the massive disruptions and disturbances caused by demonstrations and blockades. While French farmers were able to use their powerful organizations to avoid a new, uncompensated tax, the same cannot be said of other groups. At virtually the same time farmers were thwarting a new tax, a series of austerity-driven pension reforms went ahead. Unlike the case of the eco tax,10 liter drainage collection pot protests did nothing to stop the reforms, and the policy changes were adopted despite widespread civil unrest. In 2010, then-president Nicolas Sarkozy proposed a series of reforms to the French pension system. The reforms included raising the retirement age from 60 to 62 along with increasing the age at which one qualifies for a full pension from 65 to 67. In addition, the number of years of required social security contributions increased from 40.5 to 41.5 years. In response to the proposed reforms, nearly 3 million people took to the streets, with plane and train travel severely disrupted and other sectors of the economy virtually shut down as the major unions called for strikes. Fuel shortages were a perpetual problem during the protests, as dock workers went on strike, leaving petrol stranded at ports. In addition, schools, ports, and airports were blockaded by demonstrators. In this case, however, coordinated protest was not able to compel the government to roll back reforms. Just a few years later, in 2014, Sarkozy’s successor, François Hollande enacted further reform to the French pension system. Contribution rates for both employers and employees were raised, a previously tax-exempt supplement for retirees who raised three or more children was made subject to taxation, and the number of years of required social security contributions was increased from 41.5 to 43 years. While France is generally viewed as farmer-friendly, the French case is not an outlier. Looking at other Western European countries, a similar pattern emerges. Pensions cuts were imposed, while national discretionary agricultural spending remained virtually untouched. Indeed, across Europe, pensions were significantly reformed in the wake of the 2008 financial crisis, placing new financial burdens on the average worker. This contrast between pension policies and agricultural expenditure is all the more glaring when the broader context is taken into account: less than two percent of the population benefits from agricultural support policies while all citizens are current or future pensioners.

Current spending levels are not a good indicator of reform, since much pension spending is locked in by decisions made decades ago. In the case of pensions, cuts are best identified by increases in the minimum retirement age or downward cost of living adjustments. Such reforms occurred in each of the four country cases, as summarized in Table 7.1.Germany reformed its pensions in 2007, just before the onset of the financial crisis, raising the retirement age from 65 to 67. In the UK, reforms raised the retirement age from 66 to 67. New reforms also increased the minimum number of years of contributions to qualify for a full pension from 30 to 35 years. A 2013 Dutch pension reform raised the minimum retirement age to 65 for workers currently under the age 55.While pensions were being cut across Europe, farmers were spared. At the EU level, in the first CAP reform after the financial crisis, spending on the CAP was not cut, and instead money was taken out of other areas in order to channel more support to farmers. Indeed, this reallocation of funds back into farming happened despite a stated objective of directing more money away from agriculture and into other objectives, like improving the provision of high speed internet. Spending on farmers was also preserved at the domestic level. European national governments spend some money on agriculture outside the CAP. National financing of agriculture comes via three main avenues: top-ups of Pillar 1 direct income payments; cofinancing of Pillar 2 programs ; and additional state aid payments to farmers by their national governments. Figure 7.1 tracks national agricultural expenditure as reported by the European Union in its annual statistical yearbook. The second mini case in this conclusion extends my claims about the politics of agricultural policy reform and the influence of the farming community beyond Europe to Japan. Like Europe, Japan has long committed to providing generous economic support to farmers in the form of subsidies, direct income payments, and protectionist trade policy. As in Europe, this support has persisted despite near simultaneous declines in the sector’s size and contribution to GDP. Figure 7.2 illustrates the decline in agriculture’s share of GDP in Japan, France, and the Netherlands. The latter two countries are the European Union’s top agricultural exporters.Like its European counterparts, agriculture’s contribution to GDP in Japan has dropped rapidly over the past 50 plus years. The economic decline of Japan’s agricultural sector has been quite similar to, if not more rapid than, the post-war economic decline of agriculture for Europe’s leading exporters. The decline in employment in agriculture over roughly the same period was also dramatic, and even more so in Japan. In a half century the sector went from employing nearly 40% of the population to under 5%, as Figure 7.3 illustrates. As in Europe, Japan’s agricultural sector has shrunk in size and economic importance since the end of World War II. In both of Europe’s top exporting countries and Japan, agriculture’s share of GDP is under 2% and the percent of the population employed in the sector has long been below 5%. Yet despite this decline, agricultural support has remained robust in both Europe and Japan. Figure 7.4 reports the Producer Support Estimate from 1986 to 2015 for Japan, the European Union and the United States, in millions of dollars.

Farms that were labor intensive, thus providing jobs in the local community, could have up to €8,000 exempted from dynamic modulation, at the member state’s discretion. Though this program seemed to be cutting overall levels of spending, the money garnished from farmer income payments was not leaving the CAP but rather being redirected into other CAP programs. Member states would keep a portion of the money for rural development and environmental programs, while the rest would be re-distributed among member states “on the basis of agricultural area, agricultural employment, and prosperity criteria to target specific rural needs” . Through this system of redistribution, and by garnishing the payments of the farmers who earned the most, dynamic modulation would contribute to achieving the twin goals of reducing the disparity in payments between large and smaller farmers and improving the distribution across member states. Dynamic modulation is an example of using the welfare state tactic of turning vice into virtue in the context of agricultural policy reform. Specifically, the dynamic modulation reform revised an existing program , reorienting this CAP program to operate more equitability. As with vice into virtue in the world of the social welfare state, an existing program that was operating inefficiently and inequitably was corrected through reform, rather than eliminating the policy entirely and attempting to replace it. Payments for all farmers above a certain threshold would be reduced, and collected funds would be redeployed to other areas of need. This objective of reducing the disparity in payment levels within and across countries was taken increasingly seriously,hydroponic vertical garden as inequality in the operation of CAP support payments was beginning to garner attention beyond EU technocrats.

The Commission noted that dynamic modulation would “allow some redistribution from intensive cereal and livestock producing countries to poorer and more extensive/mountainous countries, bringing positive environmental and cohesion effects” . The redirection of funds from income payments to rural development programs was also atangible way for EU officials to signal a stronger commitment to the CAP’s social and environmental objectives. These social and environmental objectives had been identified by the public via Eurobarometer surveys as both the most important objectives of the CAP and areas where the CAP was failing to meet existing expectations. Also included in the dynamic modulation package was a proposal to cap the amount of direct aid any individual farmer could receive at €300,000 a year. This proposal was motivated by the desire to prevent large farms from receiving what many considered to be exorbitant sums of money. Specifically, it would address public concerns over the inequality in the operation of CAP payments. The payment cap was also intended to help correct the problem of an inequitable distribution of support within and across countries. This limit would reduce the overall gap between the largest and smallest recipients. In addition, it would begin to correct for payment imbalances among member states, as most of the farmers who would be subjected to the income cap were concentrated in a few member states. The inclusion of a cap on income payments is another example of CAP reformers employing the vice into virtue technique, which has been similarly used by welfare state reformers to correct welfare programs that are operating inefficiently or producing unequal outcomes. The third and final reform was mandatory cross compliance. In Agenda 2000, cross compliance was adopted only in voluntary form. In the MTR, Fischler sought to make this program compulsory. Under cross-compliance, direct payments could be made conditional on achieving certain environmental goals. The income payment could, for example, be reduced if a farmer failed to comply with a given environmental rule. Farmers who met the standards would receive the full amount of direct payments for which they were eligible, but would not receive a bonus for full compliance.

Farmers who received direct payments would be required to maintain all of their land in good agricultural and environmental condition; if not, payment reductions were to be applied as a sanction . The inclusion of cross-compliance in Agenda 2000 positioned Fischler to make further reforms in the MTR, because he had already softened the ground in the previous agreement. As Fischler noted, “all the components of cross compliance [in the MTR proposal] were things that were already in place since Agenda 2000, but the member states had been responsible for implementing them. However, most members didn’t do it, or did a lousy job of implementing them” . Leading Commission officials argued that the member states had already approved and accepted the concept of cross compliance, so there was no reason that it should be rejected during the MTR. In reality, the vast majority of member states had chosen not to implement any of the standards or rules because cross compliance was an optional program. Still, Fischler was able to put them on the defensive for “failing” to implement Agenda 2000. As Fischler explained, “farmer ministers were put in a hard spot because now they had to account for failure to implement all of these measures in the past. They couldn’t oppose the concept of cross-compliance because they had already agreed to it, so they made the usual complaint that it would hurt farmers, but that’s always their line” . Fischler saw cross compliance as a legitimacy-boosting technique because it tied eligibility for support to compliance with environmental conditions and standards . Cross-compliance would help address public criticism of the CAP by strengthening the greening component and further developing the image of the farmer as a provider of not just food, but broader public goods and services. Mandatory cross-compliance could also attenuate the image of the farmer as a polluter.Fischler’s proposal for the MTR was sent to the College of Commissioners for formal discussion, revision, and approval.

The proposal was well received by the Commission overall. Fischler was respected within the Commission as an agricultural expert and a reformer . The way for his proposal was further smoothed, thanks to an October 2002 agreement engineered by Chirac and Schröder at the Brussels European Council meeting, which guaranteed that the agricultural budget for direct-market supports would not be cut before 2013, when a new budget would be drafted . Even though Commission President Romano Prodi had previously expressed a desire to cut the CAP by up to 30%, the ChiracSchröder deal prevented him from doing so, despite the fact that he was supported by other Commissioners who hoped to use these CAP cuts to direct more support into their own portfolios. The deal to not cut the CAP budget was extracted by France in exchange for supporting enlargement, and allowed the budget to increase by 1% each year until 2013 . This agreement was a major victory for France and the CAP, as the EU’s multi-annual financial framework at the time called for an automatic annual cut in the CAP budget . The proposal designed by Fischler and his team was also well received by the Commission because it addressed several of the main issues that provided the impetus for reform: food safety and quality, environmental impact, imbalances in the distribution of CAP support, and the CAP’s impeding of trade negotiations. Food safety and quality issues were addressed by cross compliance. Decoupling of payments and cross compliance handled the issue of environmental impact, while dynamic modulation confronted the problem of inequities in CAP support distribution. Finally, decoupling brought the CAP support payments into the WTO green box,vertical vegetable tower and thus into compliance with existing WTO rules on agricultural subsidies. The core components of the proposed CAP reform were also structured so that they would directly address the challenge posed by enlargement. Doing away with payments tied to production and instead basing income support on historical yields tied to holding size would save the CAP money in both the short and long term. Farms in the East were, on balance, much smaller and less productive than those in the West. As a result, their calculated income support payment would be comparatively low. In addition, there was no risk that, as these farmers gained access to improved resources and technology enabling them to improve their output, the CAP would have to fund larger payments. Instead, income payments would be tied to a low historic yield. Cross-compliance would serve as a further check on the amount of funds dispersed to the new member states.

Farmers in new member states would have difficultly meeting and adhering to these new standards, resulting in reductions in the funds paid to them. Countering some of these effects, modulation would allow some funds to be redirected from richer to poorer countries The MTR was the last opportunity to reform the CAP before the candidate countries would be full members of the European Union, and thus party to CAP negotiations. Unlike previous reforms, it would be much risker to put off or delay making reforms to the operation of the CAP. Even adopting reforms that were optional but not binding, as had been done in the past, was risky. If these changes, ones that were necessary to save the CAP but were deeply unpopular in the East, were not taken immediately, they would not be in the future because the new member states would band together to block them. The only component of Fischler’s proposal that was significantly revised by the Commission was dynamic modulation. The Commission altered the rules governing eligibility for modulation and income payment limits. Though the revised proposal maintained an exemption for farms earning less than €5,000, it added a provision stating that only those farms earning over €50,000 would be subjected to the full 19% reduction in direct income payments prescribed by modulation in order to ensure that small holders would not be targeted. In addition, the final version of the Commission proposal removed the €300,000 limit on total income payments. The Commission also revised how the money collected under dynamic modulation would be redistributed. The new version significantly reduced the amount of money that would be directed to general rural development objectives and increased the amount that was to be set aside to fund future CAP reforms. This change was made in order to accommodate the rules that emerged from the Chirac-Schröder deal at the Berlin Summit in 2002. Specifically, it ensured that there would be some funds in reserve to uphold the agreement from the deal that allowed for a 1% annual increase in the CAP budget. These amendments to the Commission’s proposal were important victories for both larger and small farmers. Larger farmers avoided a cap on how much support they could receive and small farmers were granted important exemptions and protections from reductions in their income payments under dynamic modulation. After review and revision by the Commission, the official package of proposals was sent to the European Council on 23 January 2003. Among the member states, France and UK were the key players. France led the effort to block the reform while the UK was the primary member state that Fischler worked with to achieve the necessary votes to pass his reforms via Qualified Majority Voting . France was the leader of the anti-reform camp and used its relationship with Germany to cement a blocking minority, while the UK proved central to breaking the French-led blocking minority. Three groups emerged after the reforms were announced. The first group, the pro-reform coalition, consisted of the Denmark, the Netherlands, Sweden, and the UK. This group of countries favored reforms that would make the CAP more market-oriented. Sweden was a vocal new partner of the pro-reform club. Upon joining the EU, Sweden had been required to reintroduce subsidies, which the government had removed in the early 1990s after a period of substantial agricultural policy reform . Sweden was thus a strong supporter of reforms that would move the CAP in a market-oriented direction. Other members of this group had long been proponents of market-oriented reforms. Agriculture in each of these countries was marked by the predominance of large holdings and/or highly efficient farming. Agricultural and political elites expressed the belief that their farmers, in general, would benefit from freer competition and the removal of support programs that served to prop up inefficient competitors in other member states. Within this group, the UK also objected to modulation. As one of the member states with the largest farms, the British felt that this policy, if adopted, would disproportionately negatively affect its farmers.

Essentially, this category served to exempt the US deficiency payments and CAP direct income area- and headage-based payments from these reduction commitments . EU officials considered it highly likely that these payments, since they were not fully decoupled from production, and thus remained trade distorting, and the blue box more broadly, would come under fire in future negotiation rounds, with some speculating that the blue box might be eliminated entirely. Adding to the concern over the survival of the “blue box” was the United States’ adoption of the Federal Agricultural Improvement and Reform Act, also known as the Freedom to Farm Act. The FAIR Act introduced a system of direct payments, completely decoupled from production, that replaced the existing deficiency scheme. In addition, the FAIR Act stipulated that these payments would be reduced over a period of seven years . With the passage of the FAIR Act then, the blue box existed only to provide special status and exemption for the CAP payment system. Despite concerns about what future rounds of WTO negotiations might mean for some core components of the CAP, it was not enough to push the member states into undertaking meaningful reform. The MacSharry Reform negotiations were concurrent with actual GATT talks, while Agenda 2000 began, was negotiated, and concluded before the new WTO round was even launched. For Agenda 2000, trade-related concerns had ultimately little impact because they were all hypothetical: the special status of CAP payments could disappear; partially decoupled payments might not fit within the new WTO scheme; the US’s FAIR Act might be a sticking point between the US and the EU.

In addition,vertical hydroponics the trade conflicts between the US and the EU at this time were not really about the operation of the CAP as they had been in the GATT UR. In sum, the major events and issues that disrupt politics and allow for extensive reform to be achieved did not operate during Agenda 2000. Enlargement was thought to be a non-issue, and any potential trade issues were, at best, hypothetical. As a result, Fischler had to negotiate his reform under politics as usual. The importance of disruptive politics to achieving meaningful reform is clearly illustrated by the case of Agenda 2000, since no major adjustments to CAP policy were achieved, with major initiatives either being made optional or rejected outright.Fischler and the Commission had four main objectives for the Agenda 2000 reform: 1) to extend the systems of price cuts and direct income compensation started under MacSharry in 1992; 2) to reduce the CAP budget and improve financial discipline, particularly in light of the transition to the Euro and the financial strictures involved with that transition; 3) to rebalance the distribution of CAP benefits across member states and sectors of production; and 4) to overhaul and simplify the CAP’s rural development and environmental schemes by putting them into a single framework, the so called “second pillar” . The first objective was particularly important with Guy Legras, still head of DGVI, stating, “you might call [the new reform proposal] MacSharry Mark II” . To extend MacSharry, the Commission sought to continue to reduce price supports, in order to bring prices closer to the world level, and to increase direct income payments. Objectives 2 and and 3 followed the same model as they had in previous negotiations- cut CAP costs to the extent possible and attempt to adopt a system that would limit the payments received by the largest farmers, facilitating better distribution of payments across countries while also improving support for small farmers. This latter point, directing more support to small farmers, was seen as important to preserving the social acceptability of the CAP to the broader public.

Finally, the fourth objective, like the first, was part of a continuation of a bigger project, begun under MacSharry.They sought to direct more funds to agri-environmental measures so as to better support sustainable rural development and better meet the growing environmental demands of the broader public . A major discussion of a potential CAP reform occurred in the late summer and early fall of 1997, after the Commission had formally launched Agenda 2000 in a document called “Agenda 2000: For a Stronger and Wider Europe”. In reference to the CAP, the general document on Agenda 2000 called for compensated price cuts to arable crops, beef, and dairy, a commitment to rural development and agri-environmental measures, and ceilings on income payments in an effort to mitigate perceived inequalities in the system . Reform along the lines proposed by Agenda 2000 would, the Commission argued, increase the EU’s agricultural competitiveness, improve food safety and quality, advance the fundamental CAP goal of stable farm incomes , promote sustainable agriculture, and simplify EU legislation . Under this initial Agenda 2000 announcement that set the scope for thenegotiations, agriculture would remain the single largest program in the EU, consuming roughly 45% of the budget, with structural funds remaining the second largest, accounting for just over 35% of EU spending . Agricultural Commissioner Franz Fischler publicly defended the need for reform, arguing in an editorial in the Frankfurter Allgemeine Zeitung, that: “acting as though everything would stay the same as in the past without reform is verging on a lie” . He further stated that the reform’s main objective was protecting farmer incomes, and predicted that Agenda 2000 would improve farmer welfare. Beyond making this public defense of the CAP in the German press, Fischler also undertook a tour of the member state capitals, much like MacSharry did before the 1992 reforms. In so doing, Fischler hoped to get some sense of the political acceptability of his reform goals. In addition, he began to negotiate some elements of the reform in the hope of making the general Commission proposal more acceptable and limiting negative reaction.

At the end of the tour, despite some divergent opinion, Fischler found that the balance of support was in favor of “maintain[ing] the status quo, with only slight modifications to the CAP” . The Commission formally made its proposals for Agenda 2000 in March of 1998. The package consisted of four main components: 1) intervention price cuts for arable goods, beef, and dairy, with partial compensation in the form of direct payments, 2) a system of modulation and price ceilings; 3) cross compliance; and 4) a package of rural development policies.Overall, the reforms sought to continue MacSharry’s legacy by cutting prices and maintaining quotas in exchange for increased direct compensation. For beef and dairy, these cuts would come in one step, but would be offset by increasing the amount that farmers received via their direct payments. In an effort to continue MacSharry’s objective of keeping milk production under control, the Commission proposed extending quotas for a further 6 years, while also allowing a 2% increase in a farmer’s production limit. Other dairy products like butter and milk powder would follow a program similar to that for beef and cereals, with the price cut offset by an increase in compensation. The Commission once again attempted to address the issue of inequality in payments and to respond to the public criticism of CAP payment operations and spending levels by introducing payment ceilings and other mechanisms to reduce the amount of funds directed towards Europe’s largest farmers. The Commission sought to impose a 20% cut on all payments over 100,000 ECUs and a 25% cut on all payments over 200,000 ECUs. The other payment-related initiative, modulation, was intended not to reduce the CAP budget but rather to redistribute aid among farmers and member states and also to reinforce the second pillar,hydroponic vertical farming systems as a portion of the money collected would be earmarked specifically for rural development and environmental programs and policies. Specifically, member states could make some adjustments to the amount of financial support a farmer received based on the number of persons employed on the farm. Those savings would then be redistributed to those farmers and member states that were disadvantaged and to support second pillar goals and programs. The Commission attempted to improve environmental accountability and to advance the perception of the CAP as promoting the multifunctional role of farmers, as both producers of food and stewards of the environment. The main tools through which the Commission sought to achieve these goals were cross-compliance and a series of reforms designed to direct funding and support to issues related to rural communities. Cross-compliance would tie the receipt of direct income payments to adherence to a set of basic environmental standards. This program was to be mandatory, applying to all farmers. Finally, a series of smaller reforms were designed to provide support for young farmers, to fund early retirement, to support training programs and opportunities, and to provide additional support for those farming in “less favored areas” and to provide compensation for farmers engaging in approved agri-environmental activities.Three broad camps emerged after the publication of the Commission’s formal proposal. The first group, the pro-reformers, was led by the UK and Sweden but also included the Netherlands and Denmark. These countries welcomed the reform, but felt that the Commission had not gone far enough.

They preferred a bigger reduction in intervention prices and the eventual elimination of subsidies and income support payments. These countries favored the development of a more market-oriented European agricultural sector. In addition, the UK expressed opposition to modulation. The second group, led by Germany, and also including Austria, Belgium, Ireland, Luxembourg, and Portugal, all had some significant problems with the reform as it was proposed. Germany was among the most staunchly opposed, preferring the status quo. The German agricultural minister Jochen Borchet stated that he could see “very few positive things” in the proposal . The third and final group included the remaining member states who, rather than take a strong position for or against the reform proposal, “emphasized the specific interests of their national agricultural sectors, and declared their firm intention to defend these interests in the upcoming reform negotiations” . For example, Spain was concerned that increasing spending on the CAP would make it more likely that structural funds would be targeted as a way to find more resources. Italy wanted an end to milk quotas, Greece and Portugal desired reform for Mediterranean products, and Finland and the Netherlands preferred changes to formulas for compensation . The French supported a reform that would continue along and expand the reform path started by MacSharry by lowering prices in exchange for a transition to direct payments, but were dissatisfied with Commission proposals for compensation. Specifically, France sought to protect and increase compensation for small, particularly livestock producers. France’s position in these negotiations was particularly interesting given that it was a period of cohabitation, with Jacques Chirac and the right-leaning Rassemblement pour la République controlling the presidency while Lionel Jospin, a member of the Parti Socialiste , was the prime minister. This configuration arguably strengthened the farmers’ hand, as neither side wanted to tip the balance in favor of their political opponent. The left wanted to find a way to distribute CAP money more equitably but was confronted with a president who, according to a former minister, was “united with the FNSEA. Chirac was their spokesman. He was most concerned with the cereal farmers from the grand Parisian basin and was forgetting everyone else19” . The co-habitation government agreed on France’s other major priorities aside from how best to distribute income support. The former government minister identified three other priorities. The first was to defend the economic interests of France in agriculture on the grounds that “the CAP was France’s program. Germany and France are the core of the EU. Industry was for Germany and agriculture was for France. France was the number one beneficiary and the CAP was the largest program. We needed to defend this status”. The second priority was to channel more money to the second pillar and rural development and environmental objectives. The third and final priority was to extend the MacSharry reforms by getting rid of price supports and transitioning to direct payment. France was arguably in a stronger negotiating position compared to Germany because the German finance and agricultural ministers were constantly at war with each other.

Mansholt asserted that CAP price policy encouraged and allowed marginal farms to stay in business. His plan’s core claim was that the only practical way to increase farmer incomes was for farms to become larger and more modern businesses. To make farms larger, there would necessarily have to be fewer of them. Achieving the objective of creating larger and more efficient farms, Mansholt argued, would meet the CAP’s goal of increasing agrarian incomes. Moreover, higher incomes would reduce dependence on high prices, allowing these prices to be lowered, which would in turn remove incentives to overproduce. The result, in the long run, would be lower EAGGF support costs and an efficient farming sector. Essentially, Mansholt’s plan was oriented around improving farmer incomes by removing farmers from the land in order to increase the average holding size. Reduced production and CAP spending were uncertain outcomes that would only emerge in the long term. Mansholt asserted that 5 million people would need to be removed from agriculture between 1970 and 1980. His proposal included several options to encourage exit. Exiting farmers could be offered either retirement pensions or compensation and training for a new profession. To prevent rural depopulation, however, Mansholt suggested that regional plans be implemented to bring jobs to the countryside. For those remaining in farming, financial assistance would be available for the modernization and expansion of their farms. Finally, because the remaining farms would ostensibly be larger and more productive, he recommended that 5 million hectares be taken out of agriculture and devoted to re-afforestation. The removal of agricultural land would prevent a worsening of the surplus situation because it would limit the ability of farmers to both keep excess labor in farming and expand the areas devoted to certain crops known for higher yields, such as grains and sugars . If the land were permanently removed from production, it could not be bought up and used by the highly-productive farmers already benefiting from the current system. In addition to better controlling production,vertical garden indoor system this initiative to both remove land from production and engage in a re-afforestation effort would help to reduce the Community’s dependence on timber imports.

Despite its efforts to address the real crises facing the CAP, the Mansholt Plan was poorly received by farmer groups and politicians. Farmer groups criticized it extensively, dubbing Mansholt “The Peasant Killer” because they perceived of the plan as an existential threat to their constituencies. For their part, politicians, wary of farmer voting power and the sway of agricultural lobbies, declined to engage in formal discussions of the plan. One issue that made discussion difficult from the start was that Sicco Mansholt’s understanding of the family farm was very different from that of key member states. Mansholt’s plan aligned with the Dutch assessment of a family farm as a unit that could support a family when run professionally, using modern techniques. The other member states saw the family farm as the key socio-cultural institution of Europe’s countryside, thus requiring its preservation. To the non-Dutch member states, Mansholt’s plan portended the destruction of the family farm as they knew it, thus rendering the plan politically unpalatable and fundamentally unacceptable. The fundamental problem, though, was that Mansholt undertook his reform initiative at a time of politics as usual. In 1968, when his memorandum was published, there were no ongoing trade negotiations. Moreover, not only was there no looming enlargement, but the prospects of accession in general seemed grim, with French President Charles de Gaulle blocking British membership. Paradigmatic reform, like the Mansholt Plan proposed, is essentially impossible to achieve under politics as usual. Mansholt’s plan faced strong resistance from farmers, and there was no disruptive event to overcome this resistance. Even though Mansholt did not take on the issue of surpluses directly and instead focused on the size of the farming community, he was unable to overcome the refusal of other key actors to accept the need for CAP reform. For these reasons, the fundamental problems plaguing the CAP’s operation carried on into the ensuing decades. The CAP’s unresolved production problems and their associated financial expenditures continued to build in the years following Mansholt’s unsuccessful initiative. The high cost of disposal was all the more alarming, given that in 1970 the CAP accounted for 75% of the Community’s budget.

A new funding agreement for the CAP which was reached in 1969 and would be implemented in 1975, would provide much needed stability for the financing of this incredibly expensive program. Previously, national contributions to the Community were settled through acrimonious negotiations. Under the new plan, the CAP, and by extension the Community, would have its own resources. Specifically, levies on agricultural imports and customs duties were to accrue to the Community. National value added tax receipts, up to a maximum VAT rate of 1%, would meet expenditures in excess of what could be covered by revenue from the levies . Due to delays in harmonization of the member states’ VAT systems, the VAT component of the financing was not implemented until 1979. Essentially, this financial program served to prop the CAP up without fixing it by providing a large, dedicated source of funding. Overproduction, and the associated costs, continued to drive up spending. By 1986, CAP annual spending had reached 56 billion ECU , up from an average of 30 billion ECU between 1979 and 1981. The 1984 Fountainebleu agreement attempted to stabilize expenditures in agriculture by limiting spending increases to 2% annually. The agreement, however, provided no incentive to compel individual farmers to cut back on production. In the wake of limited change, production continued unchecked, and overall expenditure continued to increase at a rate of 18% per year. By 1987, the CAP was violating the policy’s own financial regulations by running a budget deficit between 4 and 5 billion ECU, which, at the time, “was concealed through cleaver accounting” . Despite the swelling agricultural budget, farmers did not necessarily become richer. Rather, most farmer incomes held steady or declined because these new funds were directed towards costs associated with exports and/or maintaining the growing surplus. This decline in farmer incomes made reform even more difficult, particularly any proposals that would cut prices, since this strategy would hurt farmer incomes that were already not improving, despite a growing CAP budget. Yet, other than a major overhaul of the CAP, cutting prices paid to farmers for their production was the quickest solution for the CAP’s twin problems of out of control spending and excess production. The 1988 Stabilizer Reform was negotiated under politics as usual. Enlargement was not a pressing issue, as Spanish and Portuguese accession had been completed two years prior, and the next round of enlargement would not be until 1995. Although the Uruguay Round had been launched in 1986, negotiations were slow to get underway,vertical garden growing and it was not yet clear that the CAP was playing a key role in forestalling progress. With farmer interests dominating CAP policy making, only incremental change was possible. The CAP would be patched up by the 1988 Stabilizer Reform, rather than fundamentally overhauled.François Mitterrand and Helmut Kohl were facing major elections. In Mitterrand’s case, he was attempting to prevent a strong challenge from his prime minister, Jacques Chirac, in the 1988 presidential election. Both Mitterrand and Chirac “believed that the agricultural vote would play a crucial role in the election outcome” and thus were reluctant to challenge farmer preferences9 . In Germany, the Christian Democratic Union /Christian Social Union was facing tighter Länder elections in two states with significant agricultural populations, and believed that they would lose votes if they hurt farmer interests. Kohl and his party therefore had good reason to be reluctant to cross the farmers, as German farmers had habitually sanctioned the CDU/CSU in elections over agricultural policy.

To address the crisis, Germany and France each proposed price cuts of no more than 3% and a grain production ceiling of 165 million metric tons. This plan, however, would do little to address the actual problems plaguing the CAP, as the proposed ceiling would allow for a 6 percent increase in production over production levels that were already considered to be unsustainable. Only after reaching that point would production penalties be applied. In short, the Franco-German plan proposed little change to existing price supports with minor penalties, at best, for overproduction. It thus did little to address the budget problem. The UK, supported by Denmark, represented the opposite end of the spectrum on CAP reform. Given that British farmers were among the largest and most efficient in the Union, Prime Minister Margaret Thatcher viewed the CAP primarily as a means by which the UK was forced to support less efficient competitors. Just a few years prior to this reform, Thatcher had negotiated the UK rebate, essentially awarding the UK a refund for money they paid into the EU. The rationale for the rebate was that the UK got back from the EU far less than it paid in, with the CAP being the main cause. Thatcher proposed a 15% price cut for cereals in years in which production was in excess of an established ceiling and also advocated for a producer tax, called a co-responsibility levy, which would help defray the costs of export subsidies and surplus storage. Ultimately, the final agreement contained a 3% price cut for cereals, as France and Germany preferred, along with the co-responsibility levy that took effect only when cereal production exceeded 160 million tons . Beyond cereals, which was among the more contentious commodities, a system of production ceilings and co-responsibility levies was adopted for the other major crops. However, the ceilings were set so high, and the fines so low that no change in production practices would result. Ultimately, the reform did little to address the main budgetary issue, however, as it was estimated that “no savings would result until 1990, if at all” . Because of strong British and Danish resistance to contributing even more to an out of control budget, “Germany agreed to contribute an extra 5 billion ECU over a five-year period, representing a 30% increase in their net annual budget contribution” . For the most part, small adjustments were made to spending and revenues, while the basic logic of the CAP remained unchanged. The 1988 Stabilizer Reform did not attempt systemic reform, a change to the CAP’s fundamental paradigm of supporting incomes via incentivized production. Without an opening created by disruptive politics, this type of fundamental reform simply was not possible.The previous chapter examined the creation of the CAP and early efforts to adjust policies to correct increasingly evident problems. This chapter is the first of four empirical chapters examining the major rounds of CAP reform. Prior to the MacSharry Reform of 1992, the CAP had never undergone a major reform. While there had been minor reforms, none had altered the fundamental operation of the CAP. Instead, the fiercest CAP battles had pertained to the semi-regular negotiations over the setting of prices, particularly for core commodities like cereals and livestock. By the 1990s, one of the key goals of the CAP when it was created, to increase food production in order to make Europe food secure, had not only been achieved, but had since become a threat to the continued existence of the program. Minor adjustments to the CAP, as had been the norm in the past, would not suffice if the CAP was to be sustainable long term. The MacSharry Reform occurred when the CAP was in crisis. Linking farmer payments to agricultural output had created a production crisis which was quickly followed by a budgetary crisis. The current system was unsustainable. The CAP could no longer afford to pay farmers subsidies linked to production while also absorbing the financial cost of storing and dumping that production. Meanwhile, GATT Uruguay negotiations had ground to a halt and the clear culprit holding up an agreement that was badly desired by the European manufacturing and services sectors was European agriculture. The EU, under strong pressure from the French, staunchly defended the protectionist system of European agriculture, while the USled camp called for aggressive liberalization, including the elimination of income subsidies for farmers.

According to scholars who fall into what might be called the “demography is destiny” school, such as Mendras and Daugbjerg , now that farmers no longer have the numbers to be crucial and/or decisive alliance partners, they have lost political relevance. This political decline is perhaps most clearly illustrated by the rise and fall of agrarian parties. As their core population declined, however, these parties faded into irrelevance or transformed into centrist or environmental parties . For example, Sweden’s once powerful Agrarian Party, founded in 1910, was a key source of support for governments headed by the Social Democratic Party in the 1930s, 1940s, and early 1950s. As Sweden’s rural population shrank, however, the party’s political relevance declined dramatically. In 1958, the Agrarian Party was renamed the Centre Party, and its traditional rural and agricultural interests were replaced by a platform promoting environmental and green interests. Moreover, the Social Democrats found new coalition partners, and the Centre Party was cast into the opposition. In short, farmers used to have political influence because they were a large voting bloc. With their decline in population, however, farmers no longer had the numbers to attract coalition partners. As opportunities for alliances diminished, so too did the farmers’ ability to influence policy outcomes. The demographic perspective would expect CAP support to decline with farmer population. Yet such accounts ignore past examples of small group influence. Gershenkron for example,vertical farming hydroponic describes how landed elites in interwar Germany , despite accounting for only a sliver of the population, continued to steer the nation’s agricultural policy for nearly a century.

The low price of grain from Eastern Europe and the United States threatened the livelihood the Junkers, who operated large, grain-growing estates. However, the Junkers combined manipulation of the peasants and an alliance with heavy industry to protect agricultural subsidies, preserve an authoritarian social order prior to World War I, and undermine the Weimar Republic in the interwar period . The case of the Junkers demonstrates that, even when its members represent only a small percentage of the population, a group can be politically influential. While the “demography is destiny” literature correctly identifies population decline as a challenge for farmers and farmer syndicates, it does not fully consider the possibility that farmers, like other small groups in the past, may be able to overcome demographic decline and continue to exert out sized influence. It assumes that farmers and their organizations are static, and cannot evolve in order to maintain their political influence as their numbers wane. Yet CAP spending figures indicate that farmers continue to exercise political influence. Declining numbers may have changed the ways in which farmers exercise power, but they have not eliminated that power.A second set of arguments claims that the rapidly changing global economic climate is overtaking farmers and blunting their ability to shape policy , Daugbjerg , Frieden and Rogowski , Hennis , Keohane and Milner , and Potter and Tilzey. Scholars in this camp contend that in an increasingly globalized world, groups that are globally uncompetitive and oppose liberalization, such as farmers, will become marginalized in policy debates. Lower costs of international transportation, along with global liberalization reforms, has made trade cheaper and more prevalent. The effects of maintaining closed markets in a globalized world grow while sheltering agriculture behind a wall of tariff barriers, income supports, and inflated prices becomes increasingly costly. Thus, as countries around the world open their markets and lower barriers to trade, those segments of business, industry, and labor that stand to gain from liberalization have increased incentives to mobilize for reform.

Under these conditions, the protectionist demands of the much smaller farming population should be overwhelmed by the growing pro-liberalization preferences of consumers, industry, and business. In addition, while the farmer population continues to shrink, the expense placed on consumers and tax payers, like having 40% of the EU budget go to less than 5% of the population, appears increasingly egregious. Globalization arguments would predict a dramatic reduction in CAP budget and a sharp turn away from protectionist policies and towards market-liberal measures. Yet outcomes of major trade negotiations do not fully match this prediction. Although trade liberalization has occurred, CAP spending commitments remain high, and farmers have successfully defended their subsidies. Consider the Uruguay Round of the GATT. The UR, launched in 1986, was supposed to be concluded in 1990, but delays in the agricultural negotiations resulted in no conclusion being reached until 1994, doubling the expected length of the round. What is more, the central goal of the UR was to reduce subsidies to farmers. Yet, due to the efforts of farmers and their representatives, an agreement could only be reached and the round concluded once precisely the sort of payments targeted for elimination were redefined so as to be exempt from GATT/WTO regulations. Despite accounting for only a sliver of both the workforce and GDP, farmers stared down industry and services, delayed GATT negotiations for four years, and ultimately prevented reformers from cutting farmer subsidies. Farmers held the GATT agreement for ransom, ensuring the protection and continuation of their subsidies before allowing a deal to be reached. As the example demonstrates, farmers’ interests are not doomed to being swept aside or overwhelmed by the preferences of consumers, business, and industry. A consistent pattern has emerged whereby trade policy movement in a liberalizing direction has been accompanied by hefty side payments and/or policy concessions to farmers. Farmers have essentially been paid to accept liberalization.

Traditionally, CAP programs paid farmers based on how much they produced, offered guaranteed purchase prices, and assured the purchase, storage, and dumping of excess product. The programs were all labeled by the GATT/WTO as trade distorting. Instead of simply eliminating these trade distorting programs and forcing European farmers to compete on the open market, CAP programs were reconfigured so that farmer incomes could still be maintained, but in ways that did not violate WTO rules on trade distortion. Specifically,vertical planters for vegetables the CAP moved from supporting agricultural prices to subsidizing farmer incomes. The CAP became GATT compatible, but at no loss to farmers. Ultimately, while scholars in the globalization school expect farmers to be eclipsed in the move toward the market, in reality, contemporary farmers have been able to adapt to this trend, making market liberalizing measures compatible with the preservation of farmer incomes. Farmers are not prisoners of globalization; they are agents who have shaped the character of globalization in ways that protect their interests and preserve their incomes.A third set of arguments contends that farmer preferences are at odds with those held by the general public. Scholars including Berry , Inglehart , Kitschelt ; Montpetit , and Yearly describe the rise of a so-called post-materialist culture since the late 1970s. Post-materialism refers to a shift in political values and norms away from traditional political priorities such as economic growth and social order to new concerns, notably environmental protection, gender equality, and LGBTQ+ rights. Green parties have typically taken on the mantle of advancing these goals. Green parties have been successful politically and in many cases have come to replace communist parties as key alliance partners for Social Democrats and Socialists. Such “red-green” alliances have governed a number of European countries, including Germany , France , Finland , and Norway . In addition, Inglehart notes, “in recent decades, social class voting has declined and now shares the stage with newer post-materialist issues that emphasize lifestyle issues and environmental protection.” This change in how voters mobilize and vote should threaten farmer interests, with politicians targeting voters via issue area, like women’s rights and environmental protection, as opposed to making direct appeals to social classes, like farmers. The increased salience of environmental and animal welfare issues is particularly threatening to the CAP. European consumers have become more concerned about the quality of food production, with an increased interest in animal welfare and good environmental practices.

Eurobarometer surveys reveal that European consumers want a CAP that produces food that is safe to eat and that is not harmful to the environment. While 90% of respondents in a 2001 Eurobarometer poll expressed a belief that the CAP should “ensure that agricultural products were healthy and safe”, only 36% thought that “food bought could be safely eaten” . As the survey indicates, there is a vast disparity between what the public thinks the CAP should be doing and what it believes the CAP actually does. The traditional CAP is widely regarded as bad for both the environment and animal welfare. By guaranteeing high prices and a market for all output, the CAP incentivized farmers to produce as much food as possible, no matter the cost to the environment. A major side effect of this policy was the heavy use of pesticides and nitrates to maximize yields. A quantity-oriented approach was also at odds with animal-welfare standards. Given that the central elements of the CAP run contrary to increasingly influential post-materialist values, scholars in this school would predict a decline in support for and commitments to the CAP. Arguments in the post-materialist camp predict that policies that promote harmful environmental practices will be gradually eliminated, notwithstanding the opposition of farmer organizations. A further implication of these arguments is that policies will be enacted that protect the environment and/or guarantee the provision of food that is both safe and of a high quality. For these authors, farmers will be forced to go along with a shift from quantity-based production to quality-based production at considerable economic cost. The CAP has certainly felt the pressure of post-materialist values. Over the past several rounds of CAP reform, policymakers have striven to “green” European agriculture. New policies that focus on improving environmental practices are not just a threat to farmers, however. Such initiatives have offered opportunities for farmers to obtain more support. In exchange for greater regulation of the way that they farm, farmers have been able to extract subsidies for following “good farming practices,” such as reducing their use of nitrates and pesticides. In other words, farmers have ridden the green wave to more subsidies and income-boosting programs and policies.While many scholars provide compelling accounts of farmer power from the 19th century to the immediate post-war period, explaining contemporary farmer power poses more of a challenge. The reason is that the principal source of influence that the literature identifies for farmers, demographic and economic dominance, no longer exists. My dissertation therefore builds on and updates these arguments in order to provide an understanding of contemporary farmer power. My argument has three parts. The first examines why agricultural policy reform is so difficult. Despite globalization, changing European values, and demographic and economic decline, farmers have remained politically influential. Contemporary farmer power stems from the ability to access politicians on both the left and the right, to manipulate public opinion, to control the policy space, and to leverage the broader importance of food production. Because farmers continue to be powerful actors, technocrats and policymakers must contend with their influence. Another obstacle to agricultural retrenchment is agricultural policy itself. Just as postwar welfare states have been shown by Paul Pierson to have generated their own political support base and locked in certain kinds of social spending, so the CAP has mobilized farmers in defense of agricultural spending. Indeed, for a variety of reasons, cutting agricultural spending may be even more difficult than cutting social spending. The second part of the argument explores the circumstances that may make CAP reform possible. When CAP reform occurs in isolation, as a purely agricultural or budgetary issue, little or no change is possible. Conversely, when CAP reform is part of a broader agenda, such as adding new members to the EU or negotiating global trade agreements, more far-reaching change becomes possible as the introduction of new issues and actors may dilute farmer influence. Even in these circumstances, however, reforms are constructed so as to preserve farmer incomes. Finally, the third part of the argument describes and explains the character of agricultural reform when it does take place. Here again, my work links with the literature on welfare state retrenchment, specifically that of Paul Pierson. I illustrate how CAP reformers use many of the same tactics identified by Pierson as central to the retrenchment of the social welfare state.

Korea is an important export destination for many products and typically ranks among the top six export destinations for California agriculture overall. With lower import barriers that would accompany the KORUS FTA, there is significant potential for expanding California agricultural exports to Korea. Agriculture was at the center of the negotiations and delayed completion of the deal until the very last hour. It also will be at the center of attempts to ratify the agreement in the legislatures of the two countries. In the end, Korea resisted rapid and complete opening of agricultural markets and the United States was not successful in achieving comprehensive free trade in agriculture as soon as possible. These negotiating positions followed from typical pressures on governments to protect weak industries from imports and to support strong exporters. Overall, the agreement provides for gradual elimination of Korea’s high tariffs for most export commodities of interest to California agriculture. Importantly, exceptions include rice, for which a previously negotiated quota is in place and no new market opening was achieved, and fresh citrus fruit, for which high seasonal tariffs that limit shipments of oranges and mandarins will remain. Because its costs are high and U.S. barriers are already quite low, Korean agriculture has no potential to expand its tiny agricultural exports to the United States. We find that U.S. and California agriculture will expand exports to Korea substantially if free trade is allowed. Some of that increase in exports from California would be derived from trade diversion from other exporters, such as Chile, Australia, New Zealand, and China. This diversion follows from the KORUS FTA lowering the net price in Korea of U.S. goods relative to those of suppliers from other countries. In some cases these goods from other countries have tariff advantages now that would be redressed by the KORUS FTA.

Additional exports contribute positively to the California economy,greenhouse benches whether by diversion of other global sources or replacement of local Korean supplies. From a global perspective, trade diversion may reduce global welfare if products from the United States that currently have lower tariffs replace lower cost products from other exporters that would have higher relative tariffs after the KORUS FTA. To better understand the potential for implementation and the likely impacts of the negotiated agreement, this report outlines major characteristics and concerns within Korean agriculture and shows where Korean agriculture is most vulnerable to expanded imports that affect Korean producers negatively. We also point out significant gains to Korean food buyers. By analyzing impacts among Korean farmers and consumers, we can improve understanding of the Korean situation and opposition to the agreement in the legislature. This study provides detailed information on the potential effects of the KORUS FTA for California agriculture on a commodity-by-commodity basis. This helps California agriculture better appreciate and communicate what is at stake for California commodities. The report catalogs agricultural exports from California to Korea commodity by commodity. It also reviews existing trade barriers that limit exports to Korea, considers explicitly the export positions of major competitors, and examines the size of the Korean market for each commodity. This information helps us to assess the degree to which agricultural exports to Korea have been constrained by trade barriers and the potential additional exports that the Korean market can absorb. We provide a detailed market analysis for many important California products. We find that better access to the Korean market would create significant opportunities for dozens of major commodities.

California has the potential to more than double its current exports of about $280 million within a few years and to continue to expand exports as barriers fall gradually on products that are politically sensitive in Korea. For example, lower tariffs and fewer other barriers would allow important export expansions for citrus products, tree nuts, dairy products, beef, grapes and grape products, stone fruits, strawberries, fresh and processed vegetables, flowers and ornamental horticulture, processed tomato products, olives, hides and skins, cotton, and hay. Expanded agricultural output to serve greater demand for California products in Korea will also cause additions to farm employment and expansion of the agricultural economy past the farm gate. The state of the U.S. and global economy in 2009 provides further impetus for encouraging more open international borders for trade. Countries belonging to the Organization for Economic Cooperation and Development have pledged to resist new trade restrictions and reduce trade barriers to avoid letting the collapse in trade become even more of a drag on economic recovery. The agricultural industries in the U.S. and California are looking for sources of new growth given the decline in domestic demand. Better access to the Korean market could be one source of additional market opportunity for major California commodities.The Republic of Korea1 and the United States signed a free trade agreement on April 1, 2007. Although the bilateral negotiations have been finalized, the agreement must be approved by each country’s legislature in order for implementation of the agreement to take place, but it faces considerable opposition in each country. In the United States, the Bush administration slated passage of the Korean FTA as a major goal for 2008. The Korea-United States Free Trade Agreement has the potential to be a significant demand driver for California agriculture. The Korean economy, comprised of almost 50 million consumers, has been growing rapidly for decades and has per capita income that exceeds those of many European countries and approaches that of Spain.

The United States is already Korea’s top supplier of a broad variety of agricultural products at $3.5 billion in 2007. The United States is the number one supplier to Korea of such farm products as almonds, fresh cherries, hides and skins, poultry, soybeans, corn, and wheat. As a relatively large, relatively high-income country with a well developed food and fiber distribution system, Korea is a major market for agricultural goods of the type produced in California. As the country has become more developed over the past 40 years, Korean agriculture has become less competitive with imports and potential imports. Korea has relatively little arable land per capita and is now a highly urban country with agriculture accounting for only 3% of gross domestic product and about 7% of the population. Korea’s many small farms have relied on high government-protected commodity prices to maintain farm incomes comparable to rapidly improving urban incomes. Nonetheless, the average age of farmers has been rising. And because young people have avoided farming, the farm population has been declining rapidly in number. Despite high import tariffs, tight import quota quantities, and restrictive sanitary and phytosanitary regulations, South Korea has become a major agricultural importer with imported products comprising an increasing share of food consumption expenditures. Korea is an important export destination for many products and typically ranks among the top six export destinations for California agriculture overall. With lower import barriers that would accompany the KORUS FTA, there is significant potential for expanding California agricultural exports to Korea. This bilateral agreement, which lowers tariffs on Korean imports of U.S. products, is expected to help the United States compete against other countries, especially China and Australia, and, as a consequence,plant benches to expand U.S. sales in the Korean market. Agriculture was at the center of the negotiations, delaying completion of the deal until the very last hour. It also will be at the center of attempts to ratify the agreement in the legislatures of the two countries . In the end, Korea resisted rapid and complete opening of agricultural markets and the United States was not successful in achieving comprehensive free trade in agriculture. These negotiating positions followed from typical pressures on governments to protect weak industries from imports and to support strong exporters. Agricultural costs of production are high in Korea and U.S. barriers to imports from Korea are already quite low. Therefore, it is generally accepted that Korean agriculture has no potential to expand its limited agricultural exports to the United States. We fi nd that the significant agricultural effects for California are that U.S. and California agriculture will expand exports to Korea substantially if free trade is allowed. Some of that increase in exports from California would be derived from trade diversion from other exporters, such as Chile, Australia, New Zealand, and China. This diversion follows from the KORUS FTA lowering the net price in Korea of U.S. goods relative to those of suppliers from other countries. In some cases, such goods from other countries have tariff advantages now that would be redressed by the KORUS FTA. Additional exports contribute positively to the California economy, whether by diversion of other global sources or replacement of local Korean supplies.

From a global perspective, trade diversion may reduce global welfare if products from the United States that currently have lower tariffs replace lower cost products from other exporters that would have higher relative tariffs after the KORUS FTA. Because of the size of the Korean economy and the height of pre-existing trade barriers, the KORUS FTA is broadly acknowledged as the most commercially significant free trade agreement the United States has negotiated in nearly twenty years. Several factors underscore the significance for California agriculture of comprehensive and rapidly established free trade with South Korea. First, California agriculture is a major supplier of many fruit, vegetable, and tree nut products. It is also a large supplier of hay, rice, cotton, beef, and dairy products. Second, exports have recently accounted for more than 20% of California agricultural production and are important for the economic success of many commodities . Third, Korea has a large and well-developed consumer base for California agricultural products. Korea has long been an important market for California agriculture even as the leading export commodities have changed over time . Fourth, Korea has high trade barriers for many of the products supplied by California agriculture. Therefore, the potential for expanded imports from California is large. Finally, Korea has little or no potential to increase exports of agricultural products to the United States. Korean domestic prices are high and very few Korean agricultural products could compete successfully in the U.S. market. We find that better access to the Korean market would create significant opportunities for dozens of major commodities. California has the potential to more than double its current exports of about $280 million within a few years and to continue expanding exports as barriers fall gradually on products that are politically sensitive in Korea. For example, lower tariffs and fewer other barriers would allow important export expansions for citrus products, tree nuts, dairy products, beef, grapes and grape products, stone fruits, strawberries, fresh and processed vegetables, flowers and ornamental horticulture, processed tomato products, olives, hides and skins, cotton, and hay. Expanded agricultural output to serve greater demand for California products in Korea will also cause additions to farm employment and expansion of the agricultural economy past the farm gate. The rest of this report builds on these general points to consider more specifically the basis for these broad conclusions. It is important to understand some background information before delving into the details of the agreement and its implications. In Part 1, we provide a general background about the negotiation initiation and process; summarize the nature of the Korean economy, especially in agriculture; and describe the two countries’ trade positions. Understanding pre-existing overall and bilateral trade will help us appreciate the scope of interaction between the two economies, further understand the potential for trade, and see how the KORUS FTA fi ts within the context of Korea’s society, economy, and agriculture. We then turn our attention to California agriculture and its role as an export provider. Part 2 gives a snapshot of California agriculture that focuses on export commodities. Part 3 provides detailed information on how the KORUS FTA eliminates or reduces the trade barriers currently in place for products important for California agriculture. In Part 4, we discuss the impact of free trade on both Korean and California agriculture. We summarize the impacts for key commodities and commodity groups. The final section concludes the report. Much of the report consists of a series of detailed tables and charts that show trade patterns and current Korean trade barriers.

Regardless of the source of N, whether derived from N2 fixation, fertilizer, or other exogenous source, N cycles through soil, and the rate and manner in which it cycles matters fundamentally to its availability and loss . Soil has the capacity to not only provide plant-available N through soil organic matter turnover, but also to buffer its supply to plants— whether internal N or exogenous N—and control the loss of unused N to the environment by storing N as organic matter or binding N in the soil mineral matrix. As a result, accounting for soil N is integral to optimizing N use . Perhaps the single most important impact of the soil N cycle on NUE is the soil’s capacity for helping to match the timing of soil N availability with periods of plant N demand. In natural ecosystems, the presence of diverse plant species having different life histories, including perenniality, means that at least some species will be actively demanding N whenever soil conditions permit N release from soil organic matter. The result is a relatively tight N cycle: when N available for loss is instead taken up by plants, loss is at least partially averted. For example, fertilized perennial biofuel crops lose little-to-no nitrate– N to drainage, yet NO− 3 loss in drainage of fertilized corn is no different from unfertilized soybean . This highlights that a lack of synchrony between crop N demand and soil N availability is the primary reason for environmental N losses. How can the agricultural N flow be managed to improve NUE? The various processes depicted in Figure 1 serve as reminders of the major interventions that can be used as levers to adjust the flow of N through the system in such a way as to minimize inputs and losses while maximizing N capture and output. We held a workshop in 2019 to discuss problems associated with N in different agricultural cropping systems and to examine promising research and development avenues to solve these problems. Four broad areas of needed endeavor were identified: soil N cycling, systems agronomy, BNF,aeroponic tower garden system and plant breeding as shown in Figure 2. Strategies in each of these areas were organized into a matrix from low-to-high risk and low-to high reward .

In the sections below, we review briefly the state-of-the art in these areas, consider current frontiers in R&D, and propose an integrated set of strategies to increase by 2050 global cropping system NUE and protein yield by 50%, while simultaneously reducing N losses from crop production by 50%. As discussed above, N is used most efficiently when its availability in soil is synchronized with crop demand . Nitrogen synchrony is rare and difficult to achieve in annual monocultures typical of most high productivity agriculture. Most grain crops, for example, have a 90–100 day growing season and accumulate biomass and N at a significant rate only for 30–40 days mid-season. In the maize example above, N uptake can reach the astonishing rate of 5 kg N ha−1 day−1 . This high rate is sustained for only 3–4 weeks and it falls to nil quickly. Meanwhile, soil microbial processes that cycle N between various organic and inorganic forms are active whenever soils are not too dry or too cold to support biological activity, i.e., much of the rest of the year. This asynchrony between when N is available and when N is needed creates windows of N loss and is a principal cause of low NUE in most cropping systems . Depending upon cropping system and environment, achieving synchrony can be challenging as a result of variable weather, timing of equipment and labor availability, and other limitations and sources of uncertainty. First, plant N demand can be difficult to predict based on the data available at fertilizer decision time points and possible future weather scenarios. Second, estimating the N-supplying power of the system is difficult, particularly in mesic climates where N inputs from mineralization of soil organic matter and N outputs/losses to denitrification and leaching into groundwater exhibit large variation from year-to-year and field-to-field. Addressing these issues inherent to cropping systems remains challenging. The most commonly used N fertilizers readily dissolve into soil solution as mobile N ions that are subject to loss if not acquired by crops or retained by soils. Low NUE characterizes crop systems where transient or permanent N supply exceeds crop demand ; soil has a low capacity for N retention due to low organic matter content, coarse texture, and/or presence of weathered clay minerals with low ion exchange capacity; and climate and agronomic management promote N loss when there is high rainfall, heavy irrigation, or temporary water logging.

The difficulty in synchronizing N supply and demand is exemplified by mechanized sugarcane cropping, where farmers apply all fertilizer early in the crop season because crop height and summer rain prevent field access later. Sugarcane grows over 10 months or longer. Large pools of soluble N, high rainfall and/or irrigation, and an initial low crop N demand drive N losses from sugarcane soils in the first months . To compensate for this risk, sugarcane farmers in the main producer countries apply, on average, twice as much N fertilizer as is required by the crop . The range of N fertilizer use spans from near perfect use of fertilizer N at 100% , 60% to only 10% . Fertilizer timing with most or all fertilizer applied before the cropping season is also common with maize in the US Corn Belt, where crop height and wet fields can also hamper in-season applications. There are many management options available for increasing NUE through matching N supply with crop demand and thereby mitigating loss of N from agroecosystems. Many tools and best management practices are intended to help farmers apply nutrients in a “4R” management framework—using the right N source at the right rate, right time and in the right place. Basic, or low-tech, approaches involve adjusting timing or rates without needing different equipment. Beyond that, a range of precision N tools that detect chlorophyll and other crop vigor-related measures and agronomic techniques combined with weather forecasting are now available to support improved nutrient management. Spatial synchrony can be as important as temporal synchrony for matching soil N availability to plant demand. This is true both at the plant scale, ensuring soil N is most available close to growing plants, as occurs with furrow mulching and fertilizer banding, and at the field scale, where erosion and other geomorphological processes have created sub-field regions of low fertility. Using satellite images with 30 × 30 m sub-field resolution in 8 M cornfields across 30 Mha of the U.S. Midwest, Basso et al. identified that low-yield sub-field areas covering over half of the region had low NUE , in contrast with high-yield, high-NUE areas . The N losses from low-yield areas could explain a major portion of the average annual 1.12 New fertilizer formulations are a target for improving NUE of crop systems, primarily aiming to slow solubilization and the conversion of fertilizer N to more mobile forms while plant N demand is low. Globally, efforts are accelerating to improve N fertilizers, from nanotechnology formulations to achieve targeted release profiles, to supplying N as part of organic matter to slow the N release . Fertilizers and application technologies are being designed to take the physiological needs of crops as an entry point for fertilizer development . Enhanced efficiency fertilizers are formulations with coatings that consist of polymers or other materials that prevent immediate solubilization,dutch buckets for sale or with added inhibitors to temporarily slow the activity of urease enzymes and that of nitrifying microbes.

Several meta-analyses have reported small, but consistent, positive yield responses to N fertilizers treated with urease inhibitors, nitrification inhibitors, or a combination of both . The variability in yield response to these treatments has been attributed to interactions among genetics, environment, and management . EEFs containing urease inhibitors were successful in paddy rice systems, increasing average NUE by 29% and reducing N losses by 41%, while the various types of EEFs in wheat and maize systems are generally less effective , and yield responses may be site-specific . However, meta-analyses have also exposed possible pollution swapping when applying nitrification inhibitors, where a decrease in N2O emissions coincides with an increase in NH3 volatilization . Of additional concern is that some enzyme inhibitors can be transported to surface waters and non-biodegradable polymer coatings can impact soil biota such as earthworms . Alternative slow release fertilizer formulations are being developed, for example with biodegradable polymers that soil microbes can consume . Crop N physiology must be considered in all N fertilizer regimes. While NO− 3 and NH+ 4 are considered the main N sources for crops, all plants that have been examined can use organic N . The exact proportion of inorganic and organic N acquired by plants remains unknown , but the presence of soluble organic N in soils is well-documented. Soluble organic N is associated with reduced losses, which might motivate the development of alternative, organic N-based fertilizers, nutrient management, and crop breeding . Comparing the fluxes of inorganic and organic N forms in differently fertilized sugarcane soil, the estimated root intake rate for amino acids matched soil fluxes, while fluxes of NH+ 4 and NO− 3 exceeded the root intake rate . To maximize NUE, the release rate and forms of N should match the crop’s N acquisition capacity . Organic matter, including recycled organic wastes , has potential as an N source, and is widely used, though not always with the aim to supply nutrients . The overall effects of organic fertilizers are difficult to disentangle because soil physical, chemical, and biological properties are altered. Compared to inorganic fertilizer only, field experimentation often shows benefits when organic and inorganic fertilizers are supplied together due to interacting effects of improved micro-nutrient and soil microbial community status . In a global meta-analysis, Xia et al. found that substituting up to 50% of the mineral fertilizer N with fresh or composted manure increased grain crop yields, crop N uptake, and N use efficiency, but substituting more than 75% of mineral fertilizer N with manure negatively impacted yields. The authors also reported environmental benefits of integrative management, including a reduction in N losses and improvement in soil organic carbon content. On the other hand, regional trends for NUE in the USA are negatively associated with the proportion of total N from livestock excreted N, largely because manure is treated as waste rather than a nutrient . Net anthropogenic N balances for these regions are also high, indicating elevated risk of environmentally-concerning losses . Thus, there is both need and opportunity to repurpose nutrient-rich wastes as fertilizers, which requires formulating suitable nutrient stoichiometry and N release profiles to avoid N over- or under-supply of target crops. Managing the release of N from crop residue and as well from endogenous soil organic matter stores during the growing season is a difficult proposition. Tillage, developed primarily for weed control, has been traditionally used for this purpose but inefficiently so—tillage occurs 6–8 weeks prior to high plant demand for N, leaving a significant intervening window for N loss as accelerated microbial activity mineralizes soil organic N stores. A purported advantage of no-till is to avoid this quick release ofN, and while subsequently slower mineralization rates avoid the early pulses of N associated with tillage, there is little evidence that no-till reduces exogenous N needs and, by inference, improves NUE. No-till does, however, appear to reduce off- season N losses as more of the N immobilized in crop residues persists in accumulating soil organic matter until a new equilibrium is met. Improvements to soil porosity and other physical properties related to soil structure can also keep inorganic N from being easily leached , though beneficial effects on gaseous N losses are less clear . Improving the adsorption capacity of soils, or the ability to bind ions to soil components, is another approach used to control soil N cycling. NUE of maize and rice systems improved substantially when adding clay, such as zeolite, most likely due to enhanced NH+ 4 retention .

An in situ mesocosm experiment was conducted to assess the N contribution from shallow groundwater upwelling to the total crop N uptake budget. Rice was grown in the field in 61 cm x 47 cm x 40 cm rectangular plastic mesocosms. After tillage, the mesocosms were installed by burying them in the soil such that the upper rim was level with the soil surface. Soil was removed to install the mesocosms, and then the soil was replaced by depth within each mesocosm. Mesocosms were seeded at the same time as the rest of the field. Two treatments were replicated four times in an RCBD design at Sites 1 and 2. The treatments receiving shallow groundwater had 3.5 cm diameter holes drilled in the base to remove 23% of the base area and facilitate water movement between the interior and surrounding subsoil. Treatments without holes excluded shallow groundwater . Surface irrigation water was able to move freely across the surface of all mesocosms. Because surface water is moving uniformly across the surface of each mesocosm treatment, there is no net effect of surface irrigation water N on the assessment of groundwater N contribution. Fertilizer P and K were applied to ensure these nutrients were not limiting plant growth; no N fertilizer was applied. Ten cm long Rhizon MOM pore water samplers were installed at 20 cm depth inside each + groundwater and—groundwater treatments, and additionally at 45 cm depth outside the—groundwater treatment to measure pore water NO3-N and NH4-N throughout the growing season. Soil pore water was sampled six times during the growing season when fields were flooded. Pore water samples were collected using evacuated Exetainer vials acidified with 0.25 mL 1.0 M H2SO4 to pH 2.For determining the amount of N mineralized from field residue during the winter fallow season, chicken fodder system residue samples were collected in fall 2011 and again in spring 2012 to quantify the change in N content of residues during this period.

Residue samples were oven dried and prepared for analysis as described earlier for above ground biomass samples. These samples were used to determine pre- and post-decomposition total C and N in the residue. Estimates of winter decomposition of the rice residue were based on 2011 harvest yield data and spring residue sampling in 8 m2 plots with five replicate samples from each site. Spring samples were collected from the experimental site where all field residue was subsequently removed for the 15N-labeled residue experiment. Residue was weighed in the field and sub-samples were taken for analysis. Soils were analyzed for extractable mineral N using a cold 2 M KCl extraction within 48 h of sampling. Mineral N content was determined using colorimetric methods for NO3-N and NH4-N analyzed on a Shimadzu UV-160 spectrophotometer . The remainder of each sample was air-dried and saved for further analysis. Soil pH, total P, and total K were analyzed at the UC Davis DANR lab, and total C and N were analyzed at the UC Davis Stable Isotope Facility. Soils sampled from the 15N-labeled residue experiment at harvest to 30 cm were sent to the UC Davis Stable Isotope Facility for 15N, total N, and total C analysis using an Elementar Vario EL Cube or Micro Cube elemental analyzer interfaced to a PDZ Europa 20–20 isotope ratio mass spectrometer . Water samples were analyzed using the colorimetric method for extractable NO3-N and NH4-N. Plant tissue total C, total N, and atom % 15N analysis was carried out by the UC Davis Stable Isotope Facility using a PDZ Europa ANCA-GSL elemental analyzer interfaced to a PDZ Europa 20–20 isotope ratio mass spectrometer .Total above ground N uptake in the 15N-labeled residue treatment without N fertilizer was 135 kg N ha-1 and 128 kg N ha-1 . The lower N uptake in these plots compared to the N omission plots described previously could be due to increased N immobilization driven by the crop residue treatments in this experiment. Based on final 15N enrichment at harvest, results indicate less than 3% of the rice N uptake was supplied by the prior year’s crop residue: only 1.9 kg N ha-1 and 3.8 kg N ha-1 .

Of the 15N-labeled residue, 50–70% was recovered in the soil, similar to other studies , suggesting it will potentially be available to subsequent crops and subject to other losses . The contribution to N uptake from the 15N-labeled residue in this study is conservative due to losses that occurred during the partial decomposition prior to incorporation, but the value is still in agreement with earlier studies which show limited contribution from residue in the first year following incorporation of the residues. At each site in this study, when no residue was applied, there was no significant difference in total N uptake compared to the total N in the crop when 15N-residue was applied , suggesting immobilization occurs when rice residue is applied. The intensity of immobilization of soil N is controlled by the chemical characteristics of rice crop residues, and by an increase in soil microbial biomass stimulated by the addition of fresh, labile residue-C. These observations are relevant for N availability during the growing season, even as N immobilization in flooded soils is lower compared to aerobic soils due to reduced microbial activity. The high level of indigenous N supply as shown by the high crop N uptake in the no-residue treatment and the apparent immobilization of 15N-residue supports the conclusion that residue N only contributes a minor amount to the subsequent rice crop. However, considering the cumulative effect of incorporating residues over multiple growing seasons has been found to supply close to20 kg N ha-1 to the crop. Site 1 had higher crop N uptake than Site 2 across all treatments , possibly due to an additional wet-dry cycle that stimulated residue mineralization early in the season at this site .Surface water samples collected during the growing season had levels 0.7 mg L-1 NH4-N and 0.3 mg L-1 NO3-N at all sampling times, making irrigation water a negligible source of N for the crop . The low N concentrations in the surface water also suggest that the N attributed to shallow groundwater was not from surface water that percolated into the subsurface. Using the inlet surface water N concentrations multiplied by ETa , it was estimated that irrigation water contributed 2.9 kg N ha-1 and 3.0 kg N ha-1 . In contrast, shallow groundwater provided 40–60 kg N ha-1 toward total plant N uptake.

Total above ground N uptake in the + groundwater treatment was 122 to 188 kg N ha-1 which was significantly higher than in the—groundwater treatment which was 83 to 127 kg N ha-1. This finding was unexpected and shows that upward movement of previously mineralized N in the shallow groundwater may contribute a substantial amount to total crop N demands in this system. Pore water samples from inside the mesocosms yielded low N concentrations throughout the season ,fodder systems for cattle reflecting active and continual crop uptake. The natural abundance 15N signature of the rice plants suggests that the primary source of N was the same in the presence or absence of shallow groundwater: 0.3685 atom % 15N for both treatments at Site 1, and 0.3683–0.3685 atom % 15N in+ groundwater and—groundwater treatments at Site 2. This indicates a 0.0024–0.0026 atom % 15N enrichment relative to urea , suggesting that N from below 40 cm is likely the result of SOM mineralization. Additionally, samples of groundwater from deeper wells at each site showed high levels of NH4-N up to 18.8 mg L-1 as deep as 5.2 m, and no detectable NO3-N . Because there was no accumulation of NO3-N at depth and because this system is characterized by alternating aerobic and anaerobic conditions, leaching is not evidenced and residual fertilizer from previous years was most likely denitrified and lost from the system. It is therefore reasonable to attribute these subsurface N sources to SOM mineralization.Based on field residue samples collected in fall 2011 and spring 2012, the crop residue remaining at each site prior to spring tillage indicates that approximately 45% of the residue biomass decomposed during the fallow season . Similar values are reported elsewhere for the same residue management practices in California. Accounting for this rate of decomposition is important because it represents rapid C losses and reduces the annual net C balance compared to the total residue biomass input at harvest. Accounting for fallow season decomposition was also the impetus for the partial decomposition of the 15N-labeled residue prior to incorporation in the spring, bringing the C:N ratios of the two materials into close approximation . Losses of C from residues during the fallow season exceeded N mineralization from the residue over the same period, where only an estimated 16.9 to 21.0 kg N ha-1 mineralized . Soil samples from late spring immediately prior to flooding the fields showed NO3-N accumulation of 20.3 to 42.1 kg N ha-1 , a pool of N that for the purposes of this model we assumed was denitrified and lost following flooding. The lower soil NO3-N observed at Site 1 is likely due to an additional early season irrigation flush at this site which may have caused additional N losses. Denitrification and NH3 volatilization are the primary loss mechanisms, and leaching is generally minimal in rice systems.

The fallow season N losses not accounted for in this model result in a lower estimate of winter SOM-N mineralization and consequently decrease the final soil C loss estimate. However, these possible uncertainties are minor as the vast majority of SOM-N mineralization occurred during the growing season .Total annual SOM-N mineralization, the sum of growing and fallow season mineralization, was 302 kg N ha-1 and 279 kg N ha-1 . Based on the C:N ratio of the soil and the total annual N mineralization, the total annual mass of soil C mineralized was 4345 kg C ha-1 and 4136 kg C ha-1 . Accounting for the annual C input from crop residue following fallow season decomposition, the net C loss was 2473 kg C ha-1 and 2241 kg C ha-1 when NUE is assumed at 50% . Soil C loss from this rice system is lower than reported values for other agricultural peat land systems in temperate regions which ranged from 3700–8600 kg C ha-1 yr-1 . Similarly, modeled soil C losses from neighboring islands in the Delta where upland crops are grown ranged from 5000 to 15000 kg C ha-1 yr-1. The lower soil C losses estimated in this study are likely due to the seasonal flooding of the rice fields which reduces SOM oxidation in the system relative to conventional upland crops or pasture. Lower values of NUE correspond to higher rates of soil C loss because an assumption of lower N uptake implies more N, and thus SOM, was mineralized relative to plant N uptake. In general, fertilizer NUE ranges between 30 to 70% in rice systems. In this study, we are considering a range of NUE slightly higher, from 50% to 70% because no accumulation of N was observed in the soil-water system during the growing season based on pore water and soil sampling , suggesting mineralization was fairly synchronized with plant uptake. Also increases in NUE yield marginally smaller reductions in soil C loss, and standard errors are greatly diminished at 50% NUE and above, meaning that within this range the final net soil C loss estimate is less sensitive to the NUE assumption . There is reason to believe the NUE in this N fertilizer omission system is above the 50% threshold, as well-managed rice systems in California have reported NUE above 70%. Considering the effect of our NUE assumption on estimated soil C loss, the probable range of 50–70% NUE would give a range of estimated net soil C loss from 1246–2473kg C ha-1 yr-1 and 1149–2241 kg C ha-1 yr-1 . Using the calculated range of net soil C loss from this study, it is possible to estimate the corresponding soil subsidence under rice production at this site. Because of the limited resolution of soil bulk density measurements in this study, the correlation between soil C loss and subsidence is dependent on an assumption about the fraction of subsidence due directly to C loss versus the effects of compaction and consolidation of the remaining mineral soil material.

While I find that doubling agricultural productivity under either existing high or counterfactual low trade costs does lower food prices, the effects on farmer incomes are dramatically different in the two cases, with net agricultural revenues actually falling by 71.4% under existing high trade costs and increasing by 12.4% under counterfactual low trade costs. These results underscore the importance of implementing policies to lower trade costs and improve market access in tandem with technology adoption initiatives. This chapter is most closely related to a recent literature on trade costs along intranational spatial transportation networks that has expanded rapidly since the seminal work of Donaldson 2012. Atkin and Donaldson 2015 estimate the distance-dependent component of intra-national trade costs within two sub-Saharan African countries using price and origin data for specific, narrowly-defined manufactured goods. Sotelo 2015 uses a richer dataset from Peru to explore how intra-national trade costs lower agricultural productivity by preventing agricultural producers in particular locations from specializing in the crops in which they have a comparative advantage, a mechanism which is less important in the African context for the range of crops that I consider. This chapter goes beyond the existing literature in several important ways, including covering a larger network of African markets and using a dynamic monthly model with storage, which I show is important for identifying when trade occurs so as to avoid underestimating trade costs and welfare effects. In my case, using a static annual model underestimates trade costs by 23% and welfare effects by 33%. The balance of this chapter proceeds as follows. In Section 2, I describe the context and data. In Section 3, I present my model. In Section 4, I detail my estimation strategy, present my estimates for the model parameters including trade costs,dutch buckets and examine the goodness of fit of my estimated model. In Section 5, I present the results of my counterfactual analysis and robustness checks. Section 6 concludes.Due to data limitations and comparability issues, I restrict my attention in this chapter to the consumption and production of the six major staple cereal grains: maize, millet, rice, sorghum, teff, and wheat2 .

Table 1.1 shows the relative share of cereal grains and other categories of agricultural goods in production value, caloric intake, and gross value of international trade in sub-Saharan Africa. Although they make up only 17.2% of the total value of agricultural production in sub-Saharan Africa, cereal grains are by far the most important source of calories in African diets. Tubers like cassava and yams are another important source of staple carbohydrates, but their perishability and low value-to weight ratios severely constrain their trade and storage. Cash crops like cocoa and tea make up the largest share of the value of African countries’ international agricultural trade, but they differ from cereals in that their production is often localized near ports or in certain geographic niches and is nearly all exported to the world market. Grain trade in sub-Saharan Africa can be roughly classified into two types: farm-to market and market-to-market trade. Although farm-to-market trade may involve much higher trade costs than market-to-market trade due to extremely poor rural infrastructure, I will not be able to capture farm-to-market trade and trade costs in a continent-level model due to data limitations and will focus exclusively on market-to-market trade instead. One important difference between the two types of trade is the level of competition — while farm-to-market trade may be conducted by relatively few traders with significant market power, market-to-market trade at the level considered here tends to be highly competitive with many traders, low firm concentration ratios, homogeneous products, and few barriers to entry . I will therefore assume that traders are competitive price-takers. Grain is bought and sold in thousands of open-air markets across sub-Saharan Africa. I seek to identify and include in my model the larger, regionally important hub markets that collect grain from surrounding smaller markets for trade with other hub markets. I do so in three steps. First, I include the 178 towns and cities in my 42 countries of interest which have a population of at least 100,000 people and are at least 200 kilometers apart . Second, I add smaller towns that are located at important road junctions or ports. Third, I add additional major towns in countries which still have high population-to-market ratios after my first two steps.

Together these steps produce a list of 263 markets . In order to be able to include a particular market in my model, I must have grain price data for it. Using my “ideal” list of 263 markets, I conducted an exhaustive search for monthly grain price series from these markets and obtained price series for 230 of them. I then used maps of road networks and navigable waterways to identify the pairs of these markets between which direct trade is feasible. A map of my final network of 230 markets with the 413 direct links between them is shown in figure 1.3. A complete list of markets and further details on the market selection process are contained in the appendix. The median market town has a population of 207,000, and the median transport distance between directly linked markets is 337 kilometers. Among the 230 markets, I identify 30 major ports that trade with the world market and include direct links between them and the most important world market for each crop . I also treat Johannesburg, South Africa like the world market for maize in my model due to its special circumstances3 . The monthly grain price series for the 230 markets cover a 10-year period from May 2003 to April 2013. The price series include series for the 6 cereal grains most produced and consumed in sub-Saharan Africa – maize , sorghum , millet , rice , wheat , and teff 4 . In each market, only a subset of these major grains are sold – 54 markets have price series for 1 grain, 111 have series for 2 grains, 24 have series for 3 grains, and 41 have series for 4 grains. Maize is by far the most common grain with price series from 180 of the 230 markets, followed by rice , sorghum , millet , wheat , and teff .Of the 512 total price series, 42% were obtained from the World Food Programme’s VAM unit and 25% from FAO’s GIEWS project, which both maintain online databases of staple food price series collected by themselves or by national government agencies. The remaining 33% were obtained directly from national ministries of agriculture and statistical offices or through USAID’s FEWS NET project, non-governmental organizations,grow bucket and other researchers. Each original source typically employs teams of surveyors who observe and record prices at multiple points of sale in each location on a weekly or monthly basis and then relay them to analytical teams in the capital city who compile and publish monthly and annual reports. The price series are not all complete — the average series has 72 observations worth of data.

The original price series are in local currency. Of the 512 series, 76% are identified as retail price series for quantities ranging from 0.5 to 3.5 kg, while the remaining 24% are identified as wholesale price series for quantities ranging from 50 to 100 kg. I convert all price series to USD/kg using monthly exchange rates and conduct a statistical analysis of 37 series for which I have both retail and wholesale prices that fails to reject a hypothesis of equality between retail and wholesale prices. This is consistent with interviews of market participants which suggest that separate retail and wholesale markets typically do not exist and that prices per kilogram often do not vary with quantity sold. Details on this statistical test as well as the grain types and data sources by market are contained in the appendix. Across all time periods and all markets, average prices are $0.41/kg for maize, $0.44/kg for wheat, $0.45/kg for both millet and sorghum, $0.58/kg for teff, and $0.84/kg for rice. Regressions with market fixed effects comparing price levels within particular markets show maize significantly cheaper than sorghum, which is significantly cheaper than millet and wheat, which are significantly cheaper than teff, which is significantly cheaper than rice . My next step is to acquire production and population data for sub-Saharan Africa and assign each of the 230 markets a monthly production and population to match its monthly prices. I start by obtaining annual national totals for production of all cereal grains from FAO and annual national totals for population from the UN Population Division. To allocate the production data by month, I use agricultural calendar data from FAO to divide the continent into three zones: a Northern Hemisphere zone with a single annual grain harvest in October , an Equatorial zone with a larger grain harvest in July and a smaller grain harvest in December , and a Southern Hemisphere zone with a single annual grain harvest in May 5 . Allocating the national-level data by market is more challenging. I first obtain GIS grid cell level data for population and production of each crop for the year 2000 at the 5 arc-minute level from the GAEZ project of FAO and IIASA and the Harvest Choice project of IFPRI and the University of Minnesota6 and use it to derive the percentage of national population and production of each crop belonging to each grid cell.

Under the assumption that these percentages stay constant during my study period, I combine them with my monthly national production and population data to get monthly production and population series at the grid cell level. The final step is to assign grid cells to particular markets. I do this by constructing market catchment areas following the methodology of Pozzi and Robinson 2008. The underlying assumption of this methodology is that if producers and consumers in a given grid cell have to choose one of the markets in the network at which to sell and buy their grain they will choose the market to which they can travel in the least time. To identify which of the 230 markets is the closest in terms of travel time for each of the 292,000 grid cells, I combine information from the following GIS datasets: the roads layer from the World Food Programme’s SDI-T database7 , the FAO Land and Water Division’s Rivers of Africa and Inland Water Bodies in Africa datasets, the USGS-EROS Global 30-Arc Second Elevation dataset, the European Commission Joint Research Centre’s Global Land Cover 2000 dataset, and the US Department of State’s Large Scale International Boundaries and Simplified Shoreline datasets. Following Pozzi and Robinson 2008, I assign different average travel speeds to different categories of road and different average walking speeds to different land cover classes, and I then adjust these speeds based on the degree of slope of the terrain. I assign inland water bodies and rivers with Strahler number of at least 4 a travel speed of zero 8 . I also assign a travel speed of zero to international borders so as to keep market catchment areas within countries to match my national production and population data. Combining all of this information, I assign each pixel a travel cost in minutes and then use a least-cost path algorithm to identify the minimum travel time from each grid cell to any market in the network. I then assign each grid cell to the market catchment area of its nearest market in terms of travel time. Figure 1.4 shows maps of estimated grid-cell level travel time to the nearest market in the network and the resulting market catchment areas. Once each grid cell has been assigned to a market catchment area, it is straight-forward to add up the production and population data for all of the grid cells in a given market catchment area and assign the total production and population to that market and its price series. Although my 512 price series do not include a price for every grain in every market, 86.3% of total cereal grain production in my countries of interest is covered by a price series in its associated market.

Preliminary research shows that vineyards and alfalfa show no significant yield penalties after controlled flooding from the end of winter to early spring when the fields overlay highly permeable soils . Thus, land parcels planted with vineyards, pasture , idle lands , grain and hay crops , and field crops, which likely are fallowed in the wet season, were deemed suitable for Ag-MAR.Geospatial data of existing surface water conveyance infrastructure were provided by nine water management agencies . For the remaining surface water districts, conveyance infrastructure was digitized from publicly available maps and aerial images. In areas where surface water conveyance infrastructure was visible in air photographs, features were digitized at a scale of 1:10,000. GIS data of larger conveyance infrastructure were obtained from the California Open Data Portal . Groundwater well capture zones are defined as the areal extent and volumetric portion of a groundwater system that contribute discharge to a particular well . Captures zones were derived for all domestic wells in rural communities using the California Department of Water Resources’ Online System for Well Completion Reports and the California Central Valley Groundwater-Surface Water Simulation Model .C2VSim was used to extract a generalized groundwater flow field for the study area. C2VSim is an integrated surface water-groundwater model based on the finite element code of the Integrated Water Flow Model capable of accounting for reservoir deliveries, stream flow, stream diversions, canal distribution systems, irrigation, runoff, crop water uses, vadose zone processes, and groundwater-surface water-irrigated landscape interactions typical of irrigated agricultural basins . The model domain covers the entire CV alluvial aquifer. More information on the model development, calibration and validation, and application for Ag-MAR can be found in Brush et al. , Brush and Dogrul , and Kourakos et al. .

The fine grid model version was used to extract a quasisteady-state representation of the regional groundwater flow field ,hydroponic nft channel taken as the mean of the monthly flow fields from October 2005 to September 2015, to best inform recharge efforts.In the State of California, construction of a new well must be reported to OSWCR. Well locations in OSWCR are reported at a 2.6 km2 resolution by stating the centroid coordinates of the 2.6 km2 Public Land Survey System section a well is located within . For this study, well logs of 27,482 domestic wells located within the study area were downloaded from OSWCR. Wells located within a 1.61 km radius of any of the 288 rural communities were extracted, reducing the number of domestic wells to 7,673 . Well logs were screened for completeness of the following well construction information: well depth, depth to the top of the well screen, and depth to the bottom of the well screen . For wells with incomplete records, well status modeling was used to impute missing information, specifically the depth to the top of the well screen and the submergence depth of the well pump .Investigation and mapping of factors that increase vulnerability to or probability of natural and socio-economic hazards can provide a useful way to prioritize where efforts should be focused . To determine community vulnerability to change in groundwater supply, data describing domestic well failures, domestic well reliance, pesticide applications, land subsidence, and socio-economic factors were used.A thematic layer describing “domestic well failures” was generated using domestic well construction logs, groundwater table information, and self-reported drinking water supply shortages . The California Household Water Supply Shortage Reporting System contains information on self-reported household drinking water supply shortages due to well failure, well under performance, or loss of surface water supply. During the 2012–2016 drought, 867 wells were reported dry within our 288 rural communities. However, this is assumed to be an underestimation of the actual water supply shortages experienced during the 2012–2016 drought, since reporting is optional and many rural communities likely lack access to these tools.

Submergence of the well screen and pump intake are desired to ensure proper well function . The initial installation of the pump intake is usually above zt to minimize costs of screen installation and to maximize the capacity for useable water production . It was assumed that the cost of rehabilitating wells to alleviate well production losses caused by falling groundwater levels would be prohibitive for rural communities. Thus, the analysis assumed that pump intakes would remain at some depth above zt and wells would become inactive if the groundwater level dropped below the pump intake . Since the OSWCR contains no information on the pump intake depth, a submergence value, hs, was calibrated using the reported well failures as a validation data set. Submergence in this study is defined as the depth of the top of the well screen below the groundwater table. Depth to the groundwater table and estimated zt values were used to quantify changes in well status between Spring of 2011 and Fall of 2015 . Groundwater depths at each well location were extracted from interpolated seasonal groundwater levels spanning the entire shallow to semi-confined CV aquifer system . To calibrate the required submergence value, hs, zt values were compared to predrought and post drought groundwater levels to identify wells that became inactive as a result of groundwater level declines. Using the reported well failures in rural communities as validation data, the required pump submergence value was calibrated to be hs = 10 m for which the model estimated 923 well failures during the drought period, most of which were concentrated in the northeastern region .Many rural communities in the southern CV are not connected to municipal water supply systems and generally rely on a single water source, typically a groundwater well, which puts them at risk of water supply failures . Water supply connection density is a metric that describes the pressure exerted on community drinking water supply sources, given as the ratio of active public water supply sources to water supply connections in each community .

Lower values indicate a higher per capita reliance on active public water supply sources, indicating the community has lower water supply security. Communities that rely on a single public water supply source are especially vulnerable to shortages and contamination, as the failure of a single source compromises the community’s entire water supply. In the study area, 91 rural communities only have a single public water supply source of which more than 75% rely on groundwater. Communities solely reliant on unregulated domestic wells do not have any access to public water supply sources and as such, are the most vulnerable to shortages and contamination. The communities reliant on single or unregulated sources are concentrated in the northeastern and eastern regions of the southern CV.Prolonged and unsustainable groundwater pumping causes severe settling or sinking of the land surface due to subsurface compaction of earth materials, known as land subsidence . Land subsidence rates estimated with In SAR technology between May 2015 and September 2016 was used in this analysis. The data reveal two major subsidence bowls in the northwestern and eastern regions of the southern CV and the development of a new hot spot between them . Land subsidence is of particular concern because it directly affects major surface water conveyance systems and threatens the integrity of shallow, domestic wells.Socio-economic parameters of poverty status, linguistic isolation,nft growing system and educational attainment were selected as unique and complementary factors contributing to community vulnerability to change in groundwater supply . Socio-economic data were obtained by block group from the U.S. Census Bureau’s American Community Survey’s 5-year estimates for 2011–2015 and processed using the R library tidycensus .

For each of the three parameters described below, demographic percentages were calculated for all block groups in the region. If multiple block groups intersected a community, an area-weighted average was calculated and the value was applied to each respective community. Poverty status is defined as the percentage of the population for whom the ratio of income to national poverty level in the previous 12 months was below one . Poverty status is believed to contribute to community vulnerability as poorer households have less financial capacity to preemptively address or remediate water supply shortages . Linguistic isolation is defined as the percentage of households that are limited English-speaking households . Households that have limited English-speaking capacity are to a lesser extent able to engage with administrative authorities to voice concerns or resolve problems, and thus have increased community vulnerability . Educational attainment is defined as the percentage of population over 25 years of age, who have completed some education above the high school level . Educational attainment can influence risk perception, skills and knowledge, and access to information and resources, hence less educated populations may be less empowered to prepare and recover from resource shortages .A GIS-based MCDA was used to combine the biophysical, hydrological, and social-ecological data listed in Table 1 to delineate and prioritize locations for multi-benefit Ag-MAR. An equal weighting scheme for thematic layers and proposed rankings of categorical features was adopted in this study following recommendations of Visser and based on the variability present in existing recharge mapping studies . The well status model was used to impute missing well data and provide a more spatially complete estimate of the domestic well failures that occurred during the 2012–2016 drought. Of the 27,482 domestic wells in the study area, 2,907 wells were excluded from the model development because the top of the well screen was shallower than the predrought groundwater levels in spring of 2011. The remaining 24,575 wells were used to estimate the depth to the top of the well screen, zt, using Equation 1. Of the 7,673 domestic wells located within the rural communities, 291 wells were missing zb and the total completed well depth information, thus zt could not be estimated. However, zt was estimated for 279 of the 282 wells only missing zt data. For these 7,673 wells, well capture zones were estimated using groundwater modeling and particle tracking. Most of the capture zones delineated for the domestic wells within rural communities are concentrated in the northeastern and eastern regions of the study area, where the majority of the communities and domestic wells are located . Figures 5b and 5c focus in on the Orosi and Cutler communities east of Dinuba, CA, and the Okieville community, west of Tulare, CA. Both maps show a diverse pattern for the particle exit points of each well highlighting major differences in the groundwater flow velocity, well depths, and lengths of the well screen across the domestic wells in the study area. Well capture zones extend generally between 1 and 6 km upgradient of wells . Some neighboring wells show clear differences in groundwater flow direction and upgradient capture area, which are likely due to differences in well depth and well screen length .Community vulnerability index values were classified into five classes representing “Extreme Vulnerability,” “Very High Vulnerability,” “High Vulnerability,” “Moderate Vulnerability,” and “Low Vulnerability” . Communities classified as extremely vulnerable are concentrated in the eastern part of the study area while highly and very highly vulnerable communities are mainly seen in the northern and northeastern part of the southern CV . There are clear differences in the mean theme scores between the most and least vulnerable communities . For example, in the 30 communities classified as extremely vulnerable, on average, 44.6% of the population live below the poverty line, 30.7% of the households are limited English-speaking, and only 8.1% of the population above 25 years have completed some education above a high school degree. Extremely vulnerable communities are also characterized by higher well failure rates, greater land subsidence, and higher pesticide applications on fields surrounding these communities . In these communities, on average, over 99 households rely on a single water supply source .These communities had, on average, much lower well failure rates during the 2012–2016 drought, less land subsidence, and no reported applications of the seven active ingredients contained in pesticides known to pollute groundwater. These communities also have a much lower percentage of the population living below the poverty line , a lower percentage of households that are limited English-speaking , and a higher percentage of the population above 25 years that have completed some education above a high school degree .