Policy options for environmentally friendly agriculture in Central and Eastern Europe: a three-track policy approach

Summary

Low-input agriculture is dominant farming style in majority of the Central and East European (CEE) countries. However, the shift from high-input agriculture as practised during the communist time to the present low-input farming was not the result of a designed policy for agricultural development but rather the consequence of a socio-political evolution from state economy to market economy.
Ten years after the transition, the agricultural policies of most Central and East European countries are still at the “crossroad”. They are characterised by a diversity of visions on the further development and concepts how to implement these visions. The agri-environmental component of the current CEE’s agricultural policies either doesn’t exist or is rather vague and underdeveloped. Most of the CEE countries still aim at restoring agri-chemical inputs to the pre 1990 level.
The low-input farming is not necessarily environmentally friendly since it often doesn’t pay sufficient attention to the environmental degradations caused by agricultural operations. This type of farming too can lead to severe soil erosion, declining biodiversity and building up of pests and diseases. Besides, the low-input farming is often not economically viable.
To enable development of environmentally friendly agriculture in CEE countries, a three-track policy approach is suggested. Its measures should:
1. improve environmental and economic performance of the current low-input agriculture;
2. promote further development of pioneering organic agriculture, and
3. convert the remaining high-external-input regime to integrated agriculture.
A mix of policy instruments (regulative, economic, informative, institutional and voluntary) should be put in place to facilitate further development of this three-track policy.
The calculation from a recently finished Phare project in Bulgaria, Hungary and Romania suggests that a tree-track policy approach make an interesting policy option both from the economic and environmental point of view. A share of as little as 30% of improved low-input agriculture and organic agriculture in the total agricultural production results in gross national agricultural production values comparable to those obtained by the conventional scenario. However, when the external (environmental) costs of N-leaching are internalised into the price of the produce by charging a shadow price of €1 per kg of nitrogen leached, the sustainable scenario showed even greater economic benefit. It resulted in net national agricultural production values of 5% (Romania), 16% (Bulgaria) and 40% (Hungary) higher than by the conventional scenario. At the same time, the sustainable scenario exhibits substantially lower nitrogen leaching (45% in Romania, 34% in Bulgaria and 18% in Hungary) as compared with the conventional scenario. This nutrient emission reduction complies quite well with the targets set for nutrient reduction for the Danube River and the Black Sea.
Establishment of an international facility to support national teams in preparing and implementing the-three track policy would enable a concerted action in CEE countries.