Agri-Environmental Relationships and Multi-Functionality : Further Considerations

Multi-functionality is a currently fashionable argument, especially within the EU, for continued support of the farming sector. However, there is a substantial danger that this will be used, and be seen to being used, as a facade for continued traditional support and protection. If so, the current trend towards liberalised agricultural markets, on which much of the developing world depends, will be frustrated. Nevertheless, farming does matter to many communities, over and above its marketable surplus and the incomes so generated. It follows that any negotiations aimed at liberalising agricultural trade have to take these arguments seriously. To do so requires that the critical elements of the debate be widely understood. This paper outlines these critical elements, in the light of a previous contribution from Hodge (2000). It argues that there are ways in which quasi-market systems can be used to correct market failures implicit in the notion of multi-functionality. It also argues that proper compensation to existing supported farmers is a necessary and separate condition for sensible policy reform. Much of the commentary on farm trade liberalisation confuses the two separate conditions for reform: multi-functionality and compensation. This confusion threatens progress towards agricultural trade liberalisation, without generating any reliable benefits of a more multifunctional agriculture