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A future-oriented social contract with
the agricultural sector:
Plea for a new agricultural policy
This policy paper is a result of the collaborative research and development project, "ZA-NExUS: Future-oriented
agricultural policy - preserving nature, safeguarding the environment". Members of the project team were:
Prof. Dr. Peter H. Feindt (Projektkoordinator), Ass.-Prof. Dr. Kai Purnhagen (Wageningen University)
Prof. Dr. Dr. h.c. Alois Heißenhuber (TU München-Weihenstephan)
Dr. Christine Krämer (Projektbüro mareg)
Prof. Dr. Claudia Pahl-Wostl, Caroline van Bers, M.A., Fabian Thomas, M. Sc. (Universität Osnabrück)
Prof. Dr. Volkmar Wolters, Dipl.-Ing. Andrea Früh-Müller, M.Sc. (Justus-Liebig-Universität Gießen)
Please cite as: Peter H. Feindt, Christine Krämer, Andrea Früh-Müller, Volkmar Wolters, Claudia Pahl-Wostl, Alois
Heißenhuber, Caroline van Bers, Fabian Thomas, Kai Purnhagen: A future-oriented social contract with the
agricultural sector: Plea for a new agricultural policy, Policy paper from the ZANEXUS project, presented to the
Federal Agency for Nature Conservation (BfN) and the Federal Ministry for the Environment, Nature Conservation
and Nuclear Safety, Bonn/Berlin, January 2017.
I. Summary
What can agriculture, policy-makers and society expect from each other? To respond
to this question, we are advocating a new agricultural policy based upon a future-
oriented social contract with the agricultural sector. The contract includes the
continued provision of substantial public funding for the agricultural sector. In the
future, however, these funds should support farmers who produce high-quality food
and at the same time provide public goods that are not remunerated by the market.
These include contributions to nature conservation, environmental and climate
protection, the cultivation of particularly diverse landscapes, and the conservation of
landscape diversity where land is managed under difficult natural conditions. A new
architecture for agricultural policy aims to enable farmers to receive an
adequate income from sustainable production and the provision of public services
despite strong international competition. Efficient and flexible instruments such as
premiums for landscape diversity and for basic agri-environmental and
climate protection measures would reduce the burden of bureaucracy for
farmers and public administrators.
Subsequently, regional agri-environmental and climate protection programs
as well as a new nature and agriculture cooperation program safeguard
important ecosystem services and promote networking and participation. In addition,
effective regulations ensure compliance with reasonably extended minimum
standards. An innovation program, consumer communication, applied research and
farm consultancy help develop value-added markets for environmentally-friendly
products. Because a future-oriented social contract also means that competent
consumers recognise, value and pay appropriate prices for the public goods provided
by agriculture.
II. The current problem
Agriculture in Germany is in a state of upheaval. Liberalization and the opening up
of the market, new technologies and the growing demand of an expanding global
ZANEXUS: Ein zukunftsfähiger Gesellschaftsvertrag mit der Landwirtschaft 2
population are creating enormous opportunities for development. At the same
time, the challenges are growing. Farmers, in light of increasing competition, feel
forced to embark on continuous operational growth with high investment risks.
Furthermore, Germany is already having difficulty meeting European regulations for
the protection of nature and the environment in the agricultural sector. The pollution
of groundwater with nitrates exceeds regulatory limits in many agricultural regions.
At the same time, societal demands for transparency, animal welfare, environmental
protection and the preservation of biological diversity are increasing. Added to this
are the effects of international agricultural trade on developing countries and
emerging economies with often problematic consequences for land use, the
environment, food security and smallholder farming structures.
Thus, the role of farms in rural development – as a source of income, social
backbone and landscape manager – is changing.
In light of these challenges, agricultural policy in Germany and Europe needs a
new approach that secures jobs in agriculture as well as the ecological foundations of
agricultural production and meets the expectations of consumers for sustainable and
healthy agriculture. With its annual expenditure in the billions, however, the current
funding policy is predominantly designed as a sectoral income support policy – with
often negative consequences for environmental and nature protection. A substantial
portion of the funds do not even remain with the farmers, but are channelled to non-
agricultural land owners though rising land and lease prices. Only a small portion of
the tax-funded agricultural payments are used to pay for public goods. The negative
effects of current production methods on soil, water, climate, landscape, air and
biological diversity are therefore not adequately addressed. Coherent strategies to
secure the public goods provided by agriculture under conditions of open markets
and rapid technological and social change are lacking.
This is why we in Germany urgently need a forward-looking understanding of what
society expects from agriculture and what support farmers can expect in return.
III. Our proposal for a future-oriented social contract
This paper is intended to stimulate discussion about a future-oriented social
contract with agriculture in Germany and Europe. The starting point is based on
two premises. First, we need an agricultural sector that produces marketable
products and provides people with a broad variety of high-quality foods. Second,
society expects the provision of public goods for which there is often no market. In
particular, agriculture is expected to:
• increase the attractiveness and thus the vitality of rural areas through manifold
and highly structured landscapes;
• provide habitats for many species, thereby promoting biodiversity and reducing
the dramatic loss of species;
• maintain ecosystem services (for example, pollination of flowering plants by
insects or groundwater recharge in open cultivated landscapes);
contribute to climate protection (for example, through land use practices adapted
to location);
reduce emissions of chemicals into soil, air and water below the minimum
prescribed by law through environmentally friendly production methods;
provide higher levels of animal welfare.
ZANEXUS: Ein zukunftsfähiger Gesellschaftsvertrag mit der Landwirtschaft 3
However, farmers can only do all of this if they earn an adequate income – gener-
ated either by consumer demand or through public funds. If society wants compre-
hensive, multifunctional, nature and environmentally-friendly agriculture, it must also
provide the appropriate framework conditions. This is why agricultural policy ur-
gently needs a new orientation. Three principles are central:
safeguarding the ecological foundations of life and production;
consistent orientation in the allocation of public funds for the provision of public
goods that are not remunerated by the market;
a guarantee of fair competition through effective social and ecological standards
for all producers (including those of imported goods).
In addition, agricultural policy should combine the use of public funds more effective-
ly with trends such as consumer sensitivity, digitalization and networking, social par-
ticipation, integrated value chains and transnational private standards.
To achieve this goal, we propose a new architecture for agricultural policy. It can
be introduced step-by-step until 2027 by means of a gradual shift in current re-
sources from 2020 onwards.
At its core, this new architecture consists of five elements:
A. More environmental and climate protection on all farms: Fully EU-funded
basic agri-environmental and climate protection measures are intended
to compensate farmers in a non-bureaucratic way for environmentally and
climate-friendly land management practices. Farmers can select the measures
that suit their operation from a list. This is supported by professional farm advice.
All measures have benefits for nature and environmental protection irrespective
of the site-specific conditions and are relatively easy to integrate into the farm
concept. They include, for example, multiple crop rotation, provision of habitats,
landscape elements or buffer strips, reduced use of fertilizers, pesticides and land
management measures (harrowing, ploughing, rolling, hauling, etc.), (multi-
annual) set-aside, a roughage premium and sustainable animal husbandry
(grazing, limited livestock density). Each measure is given a standard value
(points), based on the typical opportunity costs. In order to make uptake more
attractive even in high-yield locations, additional points are awarded there (for
example, based on soil quality). Since the participation of all farms is expected, a
fixed financial amount is reserved per hectare of agricultural land. In order to
obtain this amount, a farm enterprise must attain a minimum average number of
points for its agricultural land area. This is also a prerequisite for the payment of
the premium for the preservation of landscape diversity (see element B). Beyond
the minimum number of points, farm enterprises can choose further measures
from the list, which are then remunerated separately.
B. Additional premiums for the preservation of landscape diversity: These
premiums are fully EU-funded and are available throughout the EU. They serve to
safeguard existing richly-structured landscapes and thus the preservation of
biological diversity. Their allocation is non-bureaucratic because they are
calculated and granted automatically. Their payment requires the provision of
basic measures for agri-environment and climate protection (element A). There
are two types of premiums:
ZANEXUS: Ein zukunftsfähiger Gesellschaftsvertrag mit der Landwirtschaft 4
A Landscape Conservation Premium is granted for relatively richly
structured sites irrespective of region and size of operation. It rewards, for
example, small-scale agricultural landscapes, buffer strips alongside structural
features or areas with landscape elements, e.g. agroforestry. The premium is
calculated location-specific on the basis of remote sensing data. It is
differentiated according to the density and ecological value of the structural
elements.
A land management premium is granted at the level of the field at
predefined sites where, due to difficult conditions, land management is
typically not cost-effective. The premium is differentiated according to the
degree of management difficulty at the respective location. The degree of
difficulty depends, for example, on slope, soil quality or the length of the
growing season. This premium is only available in areas where large-scale
land use abandonment must be avoided in order to maintain a diverse
landscape.
C. Incentives for agri-environmental and climate protection: Agri-
environmental and climate protection programs remunerate targeted farm-
level measures for nature and environmental protection (for example, protection
of specific species, management of protected areas, restoration of wetlands or
construction of biotope networks). The success of such measures generally
requires the regional design of programs which, under the leadership of nature
conservation or environmental experts, takes the site-specific conditions fully into
account. Their contribution to EU-wide policy objectives justifies co-financing by
the EU and Member States. In order to increase attractiveness, the transaction
costs should be included in the premiums and an incentive component should be
provided in accordance with WTO law. This would create a financial incentive to
participate beyond the reimbursement of income foregone.
D. More money for innovative cooperation: A cooperation program nature
conservation and agriculture funds regional cooperation initiatives which
develop and implement schemes for integrated landscape and resource
management. These are, in particular, multi-farm measures for the management
of water, soil, air and climate, as well as the protection of species and biotopes.
This also includes non-production-oriented investments ('green and blue
infrastructure'). In contrast to the predefined agri-environmental and climate
protection programs (see elements A and C), learning-oriented approaches and
innovative forms of cooperation are encouraged. Therefore, 80% of this program
should be available for the actual implementation of the measures and up to 20%
for planning, monitoring and network management. The funds will be awarded in
a competitive process, as is currently already the case for the EU LEADER
program. All stakeholders (agriculture, forestry, fisheries, nature conservation
organizations, municipalities, etc.) can be remunerated for cooperative
environmental and nature conservation activities. The cooperation program
should be implemented throughout the EU and co-financed by the EU and
Member States. As a first step, a federal program for model and demonstration
projects can be launched at the national level.
E. More money for sustainable markets: Sustainable agriculture also needs
market players who are acting sustainably. An innovation initiative for
sustainability-based value-added markets could be implemented nationally
and financed as a federal program or within the framework of the shared federal-
ZANEXUS: Ein zukunftsfähiger Gesellschaftsvertrag mit der Landwirtschaft 5
laender program "Improving agricultural structures and coastal protection" (GAK).
The innovation initiative covers three areas:
a) Strengthening consumer competence, for example through measures to
promote healthy and sustainable eating habits. The measures range from the
design of choice architectures through classic communication campaigns by
the federal government, regional authorities or social groups to the
preparation of teaching and learning materials for general education schools.
b) The promotion of sustainability-based, value-added chains, in particular
regional marketing structures, which pay particular attention to environmental
protection. This also includes the use of digital technologies for networking
and transparency of the entire production system. New concepts for financing
and relationships between production, distribution and consumption (as in the
case of community supported agriculture) are also supported.
c) The introduction of a harmonized labelling system for nature conservation
and environmental performance in agriculture across Europe. This makes,
among other things, participation in measures A and C transparent for
consumers. The label could also be linked to certification systems for
sustainable agriculture, provided that these are ambitious and officially
accredited. The labelling of products with higher sustainability and animal
welfare standards should also be anchored in transnational private law
systems such as GlobalGAP, making them binding for imported products as
well.
The five core elements of the new agricultural policy are accompanied by
investments in the following framework conditions:
1. Investments in digital infrastructure in rural areas are a prerequisite for
networking, new business models and the interactive use of digital data.
2. Practice- and public good-oriented, publicly funded research and
improved knowledge transfer, advisory services, training, and further
education, as well as support for farm investment and innovation programs
encourage the rapid development and dissemination of new sustainability-
practices.
In addition to the various funding measures, regulatory minimum standards ensure
the enforcement of the polluter-pays principle (nitrates directive, regulations for
animal identification, etc.). Their consistent implementation prevents that
environmental costs are passed on to third parties or the general public. In addition
to the existing basic requirements for farm management, erosion protection, soil
preservation and a ban on the conversion of permanent grassland should also be
included in the regulatory standards.
Cooperative implementation with close coordination between agricultural
policy and environmental and nature protection policies brings the social
contract to life. Depending on the respective circumstances, the main responsibility
for program elements that predominantly address environmental and nature-specific
objectives should be with environmental and nature conservation policy and
management. For program elements which predominantly address agricultural and
income policy objectives, agricultural policy and administration should take the lead.
The range and financial means available for the environmental and nature-specific
program sections should, in particular, make it possible to achieve the objectives of
the Natura 2000 Directive. Cross-sectoral effects and consequences for nature and
ZANEXUS: Ein zukunftsfähiger Gesellschaftsvertrag mit der Landwirtschaft 6
environmental protection must be consistently taken into account during policy
development and implementation. Flexible, results-oriented planning and
implementation processes facilitate cooperation and learning processes between the
actors and increase adaptivity. Based on advancement of scientific knowledge and
the practical experience of agricultural producers, all measures should be regularly
reviewed with regard to the need to adapt to evolving conditions driven by global
change.
The new agricultural policy proposed here takes account of the mutual expectations
of society and the agricultural sector. As an expression of a future-oriented social
contract with the agricultural sector, it should make it possible to effectively address
the enormous economic, environmental and social challenges in rural areas.
The ZANExUS project was supported by the Federal Agency for Nature Conservation in cooperation
with the German Environment Agency with funds of the Federal Ministry for the Environment, Nature
Conservation and Nuclear Safety, FKZ 3515880400. The report reflects the views and opinions of the
authors and does not necessarily correspond with the opinion of the funding agency.