The red cap movement brewing in Brittany since the summer of 2013 is usually presented as farmers and workers struggling against the introduction of a new environmental tax – yet it is as much, if not more, a fight for the preservation of a very old instrument of agricultural policy: export subsidies.
Export subsidies and environmental externalities
Export subsidies have been receiving bad press in Europe (and especially in Britain) since the 1990s. NGOs such as Oxfam have exposed the political incoherence of export subsidies: by helping European agricultural producers sell their products cheaply on the international market, European agricultural policies harm small farmers in developing countries, thereby undermining European development policies. Contrast this with the French situation, where Breton farmers are campaigning since July for the reintroduction of export subsidies. They aim to keep the Breton poultry industry – from primary production to export – afloat, at a time where its main competitor, Brazil, is seeing record sales, fostered by the devaluation of the real .
In the year running up to June 2013, the EU subsidized the export of frozen chickens with up to 55 million euros. Ninety-three percent of that money went to France – and most of it went to the two Breton firms leading the market, namely Doux and Tilly Sabco. But in July 2013 the Commission decided to stop the subsidies – to the consternation of Breton industries who were counting on continued subsidies until the new Common Agricultural Policy’s introduction in January 2015.
In our globalised market economy, Brittany makes for an interesting case, which draws a new light on the impacts of export subsidies. We do find the usual narrative of a “North” industry struggling to keep abreast with growing “South” competition with lower production costs, but the Breton case adds another, diverging, layer. Breton poultry production is pollution-intensive and fully geared toward export – something that is conventionally associated with industrial goods in South-East Asia, not with the food production of a country renowned for its haute cuisine. Under intense competition, Breton agro-industries fail to compete on the international market despite paying low wages and buying cheaply from local providers. Their economic activity furthermore contributes to the very high concentration of battery farms in Brittany – and its ensuing agricultural pollution, leading to coastal eutrophication and algae bloom.
In a discussion on CAP reform, Professor Alan Mathews argued that agricultural export subsidies are expensive for the European taxpayers and should be phased out. The Breton case highlights that other costs should be considered: export subsidies may also allow the continuation of productions with high negative environmental externalities.
The end of export subsidies – toward a new agricultural model in Brittany, or simply new subsidies?
In a previous post on the red caps revolt, I highlighted that despite intense pressures, Breton agro industries failed to change the European Commission’s mind: from now on export subsidies will be disused except in very specific situations of strong market disturbances, assessed by the Commission. What does this mean for the Breton poultry industry…and the Breton environment?
Stéphane Le Foll, the French agriculture Minister, managed to obtain different subsidies from Brussels, as well as Brussels’ caution on the French government’s investment plan for the future of Brittany. This represents at least 11.5 million euros of French subsidies for the poultry sector, and the activation of different CAP instruments, amongst which 15 million euros will be targeted at raising standards, and ultimately the price the industry can charge for its product. Thus, although the red caps have failed to maintain export subsidies, they have managed to obtain new subsidies. Agreed subsidies do not stack up to the level of the previous ones, but with additional private investments (a Saudi Arabic customer of Doux invested heavily in the Company in November) they will most likely keep Breton poultry production afloat.
What about the environment?
The environment has been at the heart of the red cap revolt – with environmental constraints to economic activities a key target of the movement. While new subsidies have been put in place to replace phased-out export subsidies, the environmental rules (apart from the écotaxe) have not been relaxed. Is this a victory for environmentalists, or is it yet another missed opportunity? What does this mean for the environment in Brittany? It seems very unlikely that the current social movement in Brittany will deliver any positive results for the environment. Environmental NGOs and green party members in Brittany argue that, once again, instead of ushering an “ecological transition” toward sustainability, subsidies are geared at maintaining the status quo, : big agro-industries will keep on producing, and polluting, in Brittany, securing (low-paid) jobs in the region.
Regarding the poultry sector, the environmental situation may get better if Doux and Tilly maintain their activity, and if their produce fetches a better price, and if they share some of that added-value with the farmers that supply them, and if these farmers use part of that money to reduce chicken slurry run-off… too many ‘ifs’ to come true.