Our industry 2014 - (Page 29)

    Sustainable agricultural systems 02   29   Investment and subsidy trends   Given increasing pressure and global focus on achieving food security, there  have been significant positive trends in recent years related to investment in  agriculture. The necessary productivity increase can only be achieved if it is  underpinned by adequate levels of both public and private investments. Higher  levels of agricultural investments translate directly to an increase in productivity.  These investments can take a number of forms, including: ■■ Government agricultural subsidies and support ■■ Public-private partnerships ■■ Private investments   The FAO estimates that to meet the food requirements in 2050, US$ 120 billion  needs to be invested in the agriculture sector annually in Asia Pacific. The  present level of investment, both from public and private sector, is estimated at  US$ 80 billion. Government subsidies: US Farm Bill Recent years have seen substantial contributions by the US Government under  the US Farm Bill of 2008 to help alleviate the financial pressures on farmers.   However, with higher crop prices and increased farmer incomes, the  government is seeking to reduce the levels of funding, and hence national  deficits, by introducing a more revenue-based policy framework compared with  the prior subsidized production payments scheme.  Nutritional program funding accounts for 80%  of the spending under the  2014 US Farm Bill Consequently, the US Congress has passed a new law "The Agricultural Act of  2014" (2014 Farm Bill) with farm policy reforms that will eliminate $16 billion  from government expenditures in the next 10 years.  Estimated expenditure  over the same period is $956 billion for the entire legislation. The legislation, which remains in effect for five years, covers 12 titles and over  450 provisions driving commodity support, conservation, international food aid,  nutrition assistance, farm credit, rural development, forestry, energy, horticulture,  regulatory reforms and crop insurance.  Around 20% of the mandatory dollars committed under the 2014 Farm Bill will  provide domestic support for farmers and ranchers. Direct payments to farmers  are being replaced by an expansion of government-backed crop insurance and  support programs that would pay out if crop prices collapse. The remaining 80% of the Farm Bill expenditures cover nutrition programs such  as The Emergency Food Assistance Program and the Supplemental Nutrition  Assistance Program (food stamps). With the new legislation, nutrition program  spending will be reduced by $8 billion over the next 10 years.  Under the 2014 US Farm Bill, farmers will receive support through a variety of  federal programs:  ■■ Commodity programs providing price and income support; intended to help  farmers stabilize their incomes. These have now seen aggregate income caps  adjusted down since last year. 2014 Farm Bill policy  reforms will eliminate $16  billion from government  expenditures in the next  10 years 

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Our industry 2014

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