Outlook on Agriculture

Europe's countryside has no parallel in the world. The most urgent conservation measures imply the continuation or resumption of traditional agricultural practices in sufficiently large areas. The economic situation of the agricultural sector is likely to justify heavy subsidies for many years to come. But in the long run, subsidies are untenable. It is argued that current subsidies should be transformed into remunerations for ecological services including conservation. Although agri-environmental programmes seem to translate this argument into practice, society is still far from accepting that the production of agricultural commodities and the ‘production’ of conservation services can be regarded as equivalent.

With the recent reform decided in June 2003, the EU Common Agricultural Policy (CAP) will fundamentally change the support of agriculture. In this contribution, impacts of decoupling as the core reform element are assessed from a theoretical point of view and using an explorative modelling exercise for Brandenburg, a less favoured region in Germany. Special attention is paid to interactions with other policy measures such as agri-environmental schemes and support of renewable energy from biomass. A good understanding of farming in marginal areas is needed, as major impacts on production and on the environment can be expected from the abandonment of agricultural production in such areas.

The agricultural sector in Europe faces a number of important challenges, such as developments in biotechnology and biofuel, globalization, vertical integration and policy changes. The important questions are whether and how farms are able to adapt to these changes and what are the potential forces working against adaptation. This paper elaborates on internal frictions regarding structural change in agriculture, namely sunk costs, dependence on subsidies and the challenges of an increasing demand for vertical integration.

The production of biomass for renewable energy supply has found wide acceptance among farmers in Germany. This paper examines the potential benefits of bioenergy for agricultural operations. Reasons for the successful implementation of biomass production in agriculture involve economic factors, the forms of public incentive tools, a compatibility with farmers' cultural patterns, and psychological aspects. In Germany, there are signs of considerable positive effects on the creation of employment and investment in rural areas. Still, the authors argue for a differentiated view of small- and large-scale bioenergy plants, and hypothesize that the former lead to a more comprehensive creation of added value in agriculture and rural areas than the latter. Competition for land and biomass is increasing, both between the bioenergy industry and other land users and within the bioenergy industry itself, especially between centralized and decentralized plants and between biogas and liquid biofuel uses. Due to the emergence of bioenergy, increasing linkages of agriculture with other economic and policy fields can be observed, especially with the energy industry and policy, with forestry, and with biodiversity and landscape conservation.

As in many industrialized countries, non-industrial-scale agriculture in the western USA faces severe economic challenges. Many farmers and ranchers experience great difficulty earning a living from the land. Huge areas of western American landscapes have been converted from agriculture to commercial and residential use (the much-dreaded phenomenon of ‘sprawl’) as farmers and ranchers have been forced by economic realities to sell their land for development. With an increasingly conservative political orientation and fiscal constraints, effective programmes by the federal government to help non-industrial-scale farmers and ranchers to survive have largely disappeared in recent decades. During this same period, however, environmental organizations and large numbers of relatively wealthy new ‘ex-urban’ residents in rural areas have recognized that helping farmers and ranchers to survive is crucial for protecting open spaces and rural and environmental qualities. As a result, there have emerged a large number of highly innovative and effective partnerships between environmental organizations and farmers and ranchers. Today, these locally based, grassroots collaborations may represent the best hope for the survival of farmers, ranchers and the unique open landscapes and environmental qualities of the American West.

Despite billions of euros of economic and infrastructural support, East Germany has experienced neither economic recovery in the form of the ‘flourishing landscapes' promised by Helmut Kohl in 1989, nor a boom in innovation. Instead, the region is undergoing processes of accelerating demographic change: declining birth rates, selective migration – mainly of young women between 15 and 25 – and as a result, an ageing population. The results include peripheralization of rural regions and marginalization of social groups. It is time to think about alternatives to classic forms of economic and infrastructural support, and to seek and foster potential for innovation beyond the traditional forms of market-oriented product innovation. Examples include process innovations in the public sector, services such as e-government, and new concepts of geriatric care and education that can, in turn, help to maintain the quality of life in peripheral rural areas. Following introductory comments, the authors examine the overall concept of innovation to identify the key issues at stake for rural innovations. Then, after describing the specific situation in rural north-east Germany, they discuss several innovations that can increase the quality of life in such areas.

European Common Agricultural Policy (CAP) reform not only has an impact on agriculture, but also has significant effects on rural areas. This is caused specifically by decoupling direct payments from agricultural production, which will increase the market orientation of agriculture. Based on an analysis of the CAP reform, this article suggests a number of key tasks for future research on rural areas. In particular, a greater focus on behavioural aspects of farmers and on an integration of agriculture into regional and local structures is recommended.