Horticulture

Accordingly, foreign monetary authorities will underestimate their own money demands, and their policy will turn out to be more restrictive than desired. Foreign monetary independence from U. S. policies is lost. A second possibility is that foreign authorities recognize unanticipated shifts in U. S. monetary policy quickly. They may act to maintain the value of their currencies rather than allow them to appreciate. They accommodate the U. S. money growth by responding with the same policy. Money is no longer as tight in the rest of the world, but the result is an even greater increase in the world money supply. This is exactly the phenomenon McKinnon has claimed was responsible for the rapid worldwide inflation of the 1970s. As foreign monetary policy is more or less restrictive than originally intended, without monetary independence agricultural exports either fall or rise. The magnitude of changes in foreign income effects, and the resulting changes in export demand, will depend on the failure abroad to anticipate changes in domestic monetary policy. As long as money growth is not perfectly anticipated,raspberries in pots there will be real effects on income and other variables.

The changes in domestic money growth rates can be thought of as sterilizing the effects of unanticipated money shocks abroad. In this context, it is important to clarify the conventional view of the sterilization of reserve flows. The usual interpretation involves a central bank intervening in currency markets to prevent its currency from, for example, depreciation. Since this involves buying its currency with bonds or foreign exchange, there is a reduction in the money stock. Sterilization would involve an offsetting expansion of domestic money so as to maintain previous money growth targets. There is no clear reason, however, for such an operation. As long as capital is mobile, the sterilization operation will indeed leave the total money stock unchanged; but the situation of excess currency supply, pressuring a depreciation, is also unchanged. It will, therefore, be necessary to adjust monetary growth to accommodate, or sterilize, unanticipated changes in money demand. To the extent that monetary authorities are able to make this adjustment, and to the extent that money holders do not perceive this as a shift in policy , there will be no real effects on economic activity. More likely, however, there will be shocks in real variables, such as income and the real rate of interest, as unanticipated money growth is discovered by money holders.

The importance of the disincentives typically inflicted upon agriculture by LDCs can be best dramatized when those disincentives are removed. The reforms in the People’s Republic of China provide the clearest example of what happens when policies become more market oriented. After two decades of sluggish growth, Chinese agricultural output soared after 1978 when regulations were liberalized and prices were allowed to rise and approach market-determined levels. This remarkable expansion, making China now the largest wheat producer in the world, was achieved almost entirely through productivity gains. The amount of land under cultivation and the use of tractors for farming declined between 1978 and 1983–the major change was clearly to the incentive system. Some observers have argued that such policy changes lead to reduced export demand for agricultural products from the developed economies of the world. This is not necessarily the case. By fueling domestic growth and increasing rural income, many of these countries become better customers for some agricultural products for which only developed nations can provide. Studies have shown that the “crowding out” of U. S. agriculture by expanding developing country production are exaggerated. Thus, there may be a basis for cooperation in agricultural trade reform between developed and developing nations. Nations that have not liberalized their agricultural policies, particularly those in Africa, have suffered from food shortages, and even widespread malnutrition and famine. When the enormous surpluses of the developed economies are juxtaposed with the situation of poorer developing countries, the world agricultural imbalance seems particularly galling.

The problem is not one of agricultural supply, however, but one of allocation and distribution. The poorer countries are not poor because they need more agricultural production but because they lack the income to buy more food on world markets. By liberalizing their agricultural policies and allowing market incentives to spur their farmers, poorer LDCs can not only increase domestic production in products for which they have comparative advantage, but they can increase rural incomes so they may trade for the essential foodstuffs. OUr particular concern here, however, is not with the internal policies of LDCs but with the links between industrialized country policies and economic conditions in the developing world. Monetary and fiscal pOlicies, distortionary agricultural policies, and other macroeconomic policies in the developed world affect general economic conditions in LDCs. The implications of these policies for a specific nation depend largely on its internal economic structure. Essentially, industrial country policies can affect an LDC, especially a commodity-exporting LDC, through real rate of interest, the terms of trade, and the stocks of primary products. The effect of these forces will vary with the degree of openness in a particular LDC’s trade structure and its level of initial indebtedness.Macroeconomic policies also affect the level of trade and the competitive advantage of other countries. The major macroeconomic variables are income growth rates, real interest rates, and exchange rates, with the rate of income growth being the most important of these three. Most notably, the income growth of OECD countries is crucial to the growth of world trade in general and of LDC exports in particular.

World demand for typical LDC goods is particularly procyclical, explaining why exports of such goods fell sharply from 1980 to 1982 after the rapid growth in the 1970s. LpG export volumes responded well to the U. S. recovery that began in 1983 and spread weakly to other industrialized countries in 1984. Prices of LDC exports, however, which began to fall during the recession, continued a downward trend through 1985. This was true whether measured in terms of dollars or in terms of LDC import prices. In part because of high real-interest rates, prices of LDC exports, particularly of commodities, have remained depressed throughout the 1980s. The increase in world interest rates,blueberries in containers growing in the early 1980s was primarily the result of U. S. monetary and fiscal policies. This increase has had three major effects on commodity-exporting LDCs. The first effect has been a depressing effect on the price of commodity exports. Since storable commodities are viewed as a portfolio asset, real interest rates will represent the opportunity cost of holding a commodity and will affect the demand for storage.Consequently, the relative price of commodities will decline until the expected rate of change in the product’s value is equated with the real interest rate. The second effect has been an increase in the debt-service burden of the debtors. An estimated 80 percent of all major LDC debt is under variable rate agreements. As real interest rates crept upward in the early 1980s, so did the interest payments portions of their debt service. Additional principal also accumulated with the occurrence of current account deficits due to falling exports receipts .l A debtor carries an additional burden when the value of the debt is fixed in one currency, and the export receipts are valued in another. When the debt currency appreciates relative to the export currency, the value of the LOCs’ external liabilities rises. This was a common occurrence with the huge dollar appreciation in the 1980s. Finally, higher interest rates can also affect internal economic performance by reducing investment in favor of increased saving. Capital flows to countries with higher real rates, and it is not uncommon for real differentials to exist between the developing countries and the United States due to regulated financial markets in the LDCs. Although not easily quantifiable, this channeling of savings may have important consequences for future LDC debt prospects as the stock of capital goods dwindles and with it future production possibilities. This was as important as the loss of export revenue during the early 1980s in the creation of increases in the current account deficit, the external debt, and the debt/export ratio.

The third and final effect of higher world-interest rates is the direct effect on interest rates within each LDC because of arbitrage opportunities. For many LDCs, the magnitude of capital flows in response to interest rate differentials helps explain why local LDC interest rates eventually must adjust. Another major variable, the exchange rate, is influenced not so much by the level of macroeconomic policies but by the differences between macroeconomic policies in the United States and other countries. Although the influence of exchange rate on agricultural trade is indeed complex, a number of direct effects have been captured empirically . These include price effects, cross-price effects associated with sub-stitutable commodities, and policy-distortion effects. If the value of the dollar were to increase by 10 percent, it would make very little difference to the importers of corn in Japan if the price of corn were to fall by an equivalent amount because the net cost in Japanese yen to an importer would remain the same. In the early 1980s, however, with a rapid increase in the value of the dollar, a corresponding ‘fall in the price of U. S. corn was not possible. U. S. support prices were simply too high, and there occurred a so-called policy distortion effect. When the price of corn from other origins is downwardly flexible and currency is arbitraged, the export demand naturally falls for corrunodities with “high” price supports. There are a number of secondary, or indirect, effects of exchange rates that exert influence on agricultural trade. Indirect influences on income and growth affect export demand. One of these indirect effects is from foreign central banks’ systematic intervention in exchange rate markets to influence the value of their currency. When such intervention is not sterilized, it changes money supplies of the intervening countries and, in the short run, also changes the rates of income growth. Another effect is when a change intrade balance due to movements in the exchange rate increases growth in income, a part of which is spent on imports. A third, indirect effect is from wealth transfers associated with current account imbalances. Current flow payments are equivalent to wealth transfers, and such transfers require movement in interest rates to restore equilibrium in money markets. A new equilibrium causes changes in investment income and in export demand for agricultural products. In addition to all of the above effects of exchange rates, there can be additional effects on the debt/export ratio if the currency composition of the denomination of debt differs from the currency composition of the exports. For example, many debtor countries suffered from the sharp appreciation of the dollar when their debts were in dollars, while their exports were in other currencies as well. This phenomenon occurred regardless of whether or not a shift occurred in a debtor country’s terms of trade during the 1980s. For this reason, the dollar’s appreciation has often been listed as one of the three macroeconomic shocks, along with the recession and the increase in real interest rates, that helped precipitate the debt crisis of 1982. The shift to a more restrictive monetary policy and the unprecedented expansion of the fiscal deficit in the early1980s pushed up real ;interest rates both in the United States and abroad. This rise in rates of return directly enlarged the LDC debt service obligations and indirectly drove down commodity prices via overshooting and dollar appreciation. Expansionary fiscal policy can, however, also increase demand for LDC agricultural goods, thereby, producing an offsetting effect on the terms of trade.Because of inadequate domestic savingst current and foreseeable budget deficits will continue to be a major force behind the United States’ large existing trade imbalances. The so-called twin-deficits problem will continue plaguing the export performance of U. S. agriculture. Few policymakers realize that the large budget outlays for farm policy are partially responsible for the dismal trade performance of the sector. The causal flow moves from subsidization of agriculture t to government budget deficitst to the need of foreign countries to generate trade surpluses that will finance their capital flows into the United States. The latter capital flows finance U. S. credit demands.

Prior to Smith and Mendelsohn , several notable studies examined the state of the knowledge of climate assessments at the US level . In particular, Lewandrowski and Schimmelpfennig integrate the knowledge from both programming and econometric studies of the agricultural sector. Other reviews have focused on the technical details of the different modeling approaches without discussing the results of the various studies . Following the pioneering work of Smith and Mendelsohn , this paper also focuses on California. The state is a leader in agricultural production, with $53.5 billion in sector cash receipts in 2014. California accounts for roughly 2/3 of US fruit/nut production, and 1/3 of US vegetable production . Roughly 1/3 of California cropland, or 9 million acres, is irrigated , making the state’s agricultural sector highly vulnerable to changes in groundwater and surface water supply . Several programming and econometric studies have been published after Smith and Mendelsohn , that operationalize the concept of adaptation . It is followed by a review of the results from recent programming and econometric studies.

The final section synthesizes the results from these studies, addressing lessons learned about vulnerability,adaptation,plastic plant pots and adaptive capacity; and how these relate to economic welfare and efficiency.Observational studies indicate that average daily temperature and daily minimum temperatures, particularly during the winter season, have increased in California . Average daily temperature in the US Southwest for the previous decade has been higher than any decade observed in the previous century . Barnett et al. find that daily minimum temperatures in winter have increased between 0.28– 0.43
C per decade from 1950–1999. Not just magnitude, but an increased rate of warming has been observed. Karl et al. suggest that the US Southwest has experienced the most rapid rate of warming in the nation. Observed precipitation patterns are fundamentally more complex and variable than temperature, exhibiting a high degree of variability across space and time. Trenberth et al. indicate that annual precipitation has decreased in the southwestern United States for the period 1901–2005. Consistent with scientific theory, empirical research suggests that warmer climates, such as those projected for the Southwest, will lead to more extreme precipitation intensity and frequency , particularly during the winter season . Since annual precipitation is projected to decline , more extreme events do not translate into higher total rainfall for a given year. Instead, it is projected that light precipitation — an important source for soil moisture and groundwater recharge — will concomitantly decline.

Between 1901 and 2010, the areal extent of drought increased in the southwestern United State . Some have attributed the increasing expanse of drought, particularly in the previous decade, to warmer temperatures . Others have suggested that it is due to changes in atmospheric circulation . In addition to temperature and precipitation, CO2 fertilization is another climate change pathway affecting agriculture. Increased atmospheric carbon dioxide stimulates photosynthesis, leading to increased plant productivity and decreased water and nutrient use . Benefits from elevated CO2 concentrations depend upon plant type and irrigation level. C3 photosynthetic plants will benefit more than C4 plants , and dryland cropping systems will benefit more than irrigated systems . The extent to which CO2 fertilization mitigates climate-induced water scarcity in the field still lacks scientific consensus, and there is debate on the extent to which simulating CO2 effects actually reproduces the results in free air carbon dioxide enrichment experiments . Agricultural impacts from climate change are rooted in complex pathways. Assessments of crop impacts due to climatic change fall under two, broad categories: process-based and statistical models. Process-based models simulate physiological development, growth and yield of a crop on the basis of interaction between environmental variables and plant physiological processes . Statistical crop models impute a relationship between historic crop yield and climate variables, often in order to project the impact on yield under future climate scenarios.

Process-based models remain the gold standard in crop modeling as one is able to study the relationship between weather and all phases of crop growth in a range of weather possibilities, even those lying outside the historical record . California field crops have been modeled using DAYCENT . Both studies highlight resilience of alfalfa yield under A2 scenario by end of the century, whereas 5 other crops exhibit a decline. Jackson et al. also find alfalfa yield to be particularly resilient to early and repeated heat waves during May–July. Lee et al. also run climate projections with and without a CO2 fertilization effect on seven field crops in the Central Valley of California. They assume a CO2 increase of 350 ppmv from 1990 levels enhances net primary production by 10% for all crops except alfalfa and maize. They find that CO2 fertilization increases crop yields 2–16% above the model without CO2 effects under the high-emissions scenario by the end of the 21st century. There is a much smaller yield increase under the low-emissions scenario. Lobell and Field use two estimation methods in studying the effects of temperature and precipitation on perennial crop yields. Their model includes 72 potential weather predictor variables for each crop, such as monthly averages for max and min temperature and their corresponding squares. They find that cherries and almonds are harmed by future warming out of a set of 20 perennial crops in their analysis. Crop-level adaptations — such as adjusting the planting and harvesting date , and substituting between different crop varieties — have been included to a limited extent in crop models. However, these cannot account for the broad range of decision making at the farm-level under which many of the negative effects of climate change could be partially offset with input and output substitutions, improving information, and effective water institutions. Thus, economic models are necessary to capture a broader range of responsive decision-making as the climate changes.Recently, adaptations specific to California agriculture have been studied using three economic programming models: the Statewide Agricultural Production model, Central Valley Production Model , and the US Agricultural Resources Model . Capturing the decision-making process is an important part of modeling. In programming models,blueberry pot the farmer’s decision is captured by the objective function. The main decision variable in these models is acres of land allocated to a region-specific crop mix. The farmer responds to reductions in water availability and yield by adjusting crop acreage. Exogenous adaptations include institutional , socioeconomic , and technological change . Calibration through positive mathematical programming also captures decision-making by preserving observed crop mix allocation decisions . SWAP employs a PMP cost function to the capture the decision of bringing an additional unit of land into production . Both CVPM and USARM have also been calibrated using PMP . CVPM studies have also generated synthetic crop share data from Monte Carlo runs using a base water supply and groundwater depth with random perturbations. Crop adaptation equations are then derived from a multinomial logit regression of this CVPM-generated synthetic crop share data . In order to represent climate-induced changes in water supply, many mathematical programming models are linked to hydrological management models, such as the California Value Integrated Network , Water Evaluation and Planning , CalSim-II, and C2VSim. CALVIN is a generalized network flow-based optimization model that minimizes economic operating and scarcity costs of water supply, subject to water balance, capacity, and environmental constraints for a range of operational and hydrologic conditions .

CALVIN has the potential to incorporate several basin-level adaptations to water allocation rules such as contract changes, markets and exchanges, water rights, pricing, and water scarcity levels. However, it has limited ability to represent important physical phenomena, such as stream-aquifer interactions and groundwater flow dynamics under different climate and water management scenarios . WEAP has many of the same water management features as CALVIN and CalSim-II. WEAP includes demand priorities and supply preferences in a linear programming framework to solve the water allocation problem as an alternative to multi-criteria weighting or rule-based logic. It is different because analysis in the WEAP framework comes directly from the future climate scenarios and not from a perturbation of historical hydrology as with the other models. Unlike CALVIN and CalSim-II, WEAP only has a simplified representation of the rules guiding the State Water Project and Central Valley Project systems . CalSim-II is also very similar to CALVIN and WEAP . C2VSim is a multi-layer, distributed integrated hydrologic model that could represent pumping from multiple aquifer layers, effects on groundwater flow dynamics, and stream-aquifer interaction . Recent programming studies focus on how certain adaptations may affect costs under relatively extreme cases of water scarcity. These studies thus assess how these adaptations may offset costs under worst-case-scenarios of water supply reductions. Given that reduction in statewide agricultural water use due to the current drought is estimated at 6% , studies on 40–70% flow reduction should be interpreted with caution. The subsequent studies are organized according to magnitude of water supply/flow reduction. Studies on 5–6% reduction in water supply reveal the heavy fallowing and groundwater use . Howitt et al. find that a 6.6 maf deficit in surface water caused by the current drought is largely substituted by 5.1 maf of additional groundwater. This is estimated to cost an additional $454 million in pumping. In addition to over-pumping groundwater, farmers adjust by fallowing crop land. The overwhelming majority of the 428,000 acres estimated fallowed in 2014 are in the Central Valley, where the majority of fallowed acres belong to field crops. However, they project that fallowing will decrease by 43% by 2016, suggesting a trend toward stabilization. Frisvold and Konyar use USARM to examine the effects of a 5% reduction in irrigation water supply from the Colorado River on agricultural production in southern California. In particular, they are able to compare the potential value-added of additional adaptations that include changing the crop mix, deficit irrigation, and input substitution to a “fallowing only” model. They find that these additional adaptations have the potential to reduce costs of water shortages to producers by 66% compared to the “fallowing only” model.1 Medellin-Azuara et al. examine the extent to which more flexible2 versions of California water markets could reduce water scarcity costs under a 27% statewide reduction in annual stream flow. They compare agricultural water scarcity in the year 2050 under two scenarios: 1. Baseline: population growth and resulting levels of agriculture to urban land transfer, 2. Warm-dry: includes population pressure and climatic changes under GFDL CM2.1 A2. Under the warm-dry scenario, even with optimized operations, water scarcity and total operational costs increase by $490 million/year, and statewide agricultural water scarcity increases by 22%. If water markets are restricted to operate only within the four CALVIN sub-regions, statewide water scarcity costs increase by 45% and 70% for the baseline and warm-dry scenarios, respectively. Marginal opportunity costs of environmental flows increase under the warm-dry scenario, with particularly large percentage increases for the Delta Outflow and American River. Medellin-Azuara et al. conduct a similar analysis, adding the comparison with a warm-only 2050 scenario. The agricultural sector water scarcity costs rise by 3% from the baseline to warm-only scenario, versus an increase of 302% from the baseline to the warm-dry scenario.3 Indeed the greater hydrological impact of the warm-dry scenario results in significantly greater scarcity costs than the warm-only scenario. Using the CALVIN model runs from Medellin-Azuara et al. , MedellinAzuara et al. analyze adaptations at the farm-level, including adjustments in crop acreage , and to a more limited extent, yield-enhancing technology . Similar to the 2008 paper, the model compares economic losses between a baseline scenario and a warm-dry scenario . Results reveal an anticipated decline in acreage of low-value crops , which is particularly severe due to the large reduction in water availability. For example, pasture acreage is reduced by 90% across 3 out of 4 agricultural regions. The results also suggest that statewide agricultural revenues decline at a proportionately lower level than the reduction in water availability . Their model also captures the complexity between crop demand and climate-induced supply reduction. Although the demand for high-valued orchard crop increases, production decreases due to the negative impact on yield from temperature increases.The resulting price increase cannot compensate for the decrease in supply, and gross revenue still declines. Two studies examine the impacts of more extreme reductions in water supply .

Sobal sensitivity analysis utilizing polynomial regression like- wise determined FBS, MgSO4, and L-Phenylalanine were the most explanatory components when taking component-component interactions into account. Focusing on optimizing only those components might bring further improvements, which is now feasible because fewer experiments were needed to arrive at this conclusion. Another issue was that the HND algorithm often did not change experimental conditions enough, leading to heavy clustering around early high performing local optima . Myopia should be encoded into the DYCORS arm of the HND to allow for more exploration of the design space, while balancing the need for exploitation of regions of the design space that show promise. It is also possible that initializing the optimization with a more dispersed design would yield a more successful optimization. However, results from indicate that the initialization strategy used may not have a large effect. In reality,growing blueberries in pots the impact of initialization is likely to be a strong function of the design surface and how close initial points are to the true optimum, neither of which are know a priori.

Using α as a metric, HND performs similar to DOE, and both better than GM . This is true over multiple days after cell seeding and is true when using cell number to calculate α , seemingly validating the use of %AB at 48 hr post-seeding in approximating proliferation more generally. However, when measuring cell number at multiple passages both designed media perform worse than GM. This is because the objective function α relied on measurements without multiple passages, so does not account for the dynamics of long-term cellular growth. This was a major shortcoming of the objective function picked, but not the HND or DOE itself. Future work in media design should incorporate more relevant metrics for optimization, such as a multi-passage objective function. Additionally, the %AB metric was not a perfect measure of cell number. Figure 3.5 and Figure 3.2 appears to indicate HND and DOE media outperform GM, but when cell number is measured both optimal media have 8–9% fewer cells. Because AlamarBlue is a metabolic indicator, using it in the objective function for both methods may have biased the process towards higher metabolic activity rather than more proliferation. Despite these shortcomings, the HND has been demonstrated to be able to optimize high dimensional experimental systems.

In our previous work in media optimization, fewer variables required more experiments to complete. In this work, we demonstrate optimization of 30 components with 70 experiments with no dimensionality reduction or screening designs, to our knowledge, a unique accomplishment in experimental optimization efficiency. Therefore, this represents a valuable proof of concept in the field of experimental optimization. While not able to fully replace first principles understanding of systems often based on the DOE approach , we show that the HND could aid in the optimization of the hardest design problems, including those found in the bio-processing and larger cultivated meat industry, reducing the cost of experimentation and time-to-market for a new product. Culture media used in industrial bio-processing and the emerging field of cellular agriculture is difficult to optimize due to the lack of rigorous mathematical models of cell growth and culture conditions, as well as the complexity of the design space. Rapid growth assays are inaccurate yet convenient, while robust measures of cell number can be time-consuming to the point of limiting experimentation. In this study , we optimized a cell culture media with 14 components using a multi-information source Bayesian optimization algorithm that locates optimal media conditions based on an iterative refinement of an uncertainty-weighted desirability function. As a model system, we utilized murine C2C12 cells, using AlamarBlue, LIVE stain, and trypan blue exclusion cell counting assays to determine cell number.

Using this experimental optimization algorithm, we were able to design media with 181% more cells than a common commercial variant with a similar economic cost, while doing so in 38% fewer experiments than an efficient design-of-experiments method. The optimal medium generalized well to long-term growth up to four passages of C2C12 cells, indicating the multi-information source assay improved measurement robustness relative to rapid growth assays alone. Every bio-process in which cells are the final product or used in the production process requires suitable culture conditions for cell growth and product quality. In the rapidly growing cellular agriculture / cultivated meat industry, where cells are grown for consumption to replace carbon intensive and often unethical animal agriculture, cost-effective media has been identified as the most critical aspect in scale-up and commercialization. Optimizing these conditions is difficult due to a large number of media components with nonlinear and interacting effects between cells,medium, matrix material, and reactor environment. Typically, culture media used for processes in cellular agriculture consist of a basal medium of glucose, amino acids, vitamins, and salts supplemented with fetal bovine serum for improved cell survival. FBS is an undefined, animal-derived serum consisting of proteins, hormones, and other large molecular weight components, and contributes substantially to the cost of media. Even when enriched with additional growth factors or FBS, media is often far from optimal for all cell types and requires adaptation and/or optimization, which is difficult for media mixtures with >30 components, as is common in cell culture. To manage this complexity, design-of-experiments meth- ods are often employed in which factors are set to a user-specified value and outputs are measured. These DOE designs are arranged in such a way that statistically meaningful correlations can be found in fewer experiments than techniques like intuition, “one-factor-at-a-time” sequences, or random designs. A more advanced form of this is to use sequential, model-based DOEs such as a radial basis function or Gaussian Process,drainage gutter combined with an optimizer/sampling policy, to automatically select sequences of optimal designs. These approaches are often more efficient than traditional DOE at optimizing systems using fewer experiments and allow for more natural incorporation of process priors, measurement noise, probabilistic output constraints and constraint learning, multi-objective, multi-point, and multi-information source designs. Even with these methods available, limitations still exist. In previous work, we applied a machine learning approach to optimize complex media design spaces but had limited success due to the difficulty in measuring cell number for multi-passage growth.

Therefore, in this study, we utilized a multi-information source Bayesian model to fuse “cheap” measures of cell biomass with more “expensive” but higher quality measurements to predict long-term medium performance. We refer to the simpler and cheap assays as “low-fidelity” IS, and more complex and expensive assays as “high-fidelity” IS. While not always predictive of long-term growth, these lower fidelity assays are at least correlated with cell health and can help in identifying interesting regions of the design space for further study with the high-fidelity IS. We used this model, with Bayesian optimization tools, to optimize a cell culture medium with 14 components while minimizing the number of experiments, optimally allocating laboratory resources, and building process knowledge to improve our optimization scheme and model. In Section 4.2 we discuss the computational and experimental components of this BO method. In Section 4.3 we present the results of the BO method in comparison to a traditional DOE method, followed by Section 4.4 where we demonstrate the importance off using multiple sources of information to obtain relevant process knowledge and/or optimization results. The system under consideration was the proliferation of C2C12 cells. These cells are immortalized muscle cells with similar metabolism and growth characteristics as other adherent cell lines useful in the cellular agriculture industry. Cells were stored in 70% DMEM , 20% FBS , 10% dimethylsulfoxide freeze medium at -196◦C until thawed. Vials were thawed to 25◦C and the freezing medium was removed by centrifugation at 1500 × g for 5 min. The centrifuged cell pellet was resuspended in 17 mL of DMEM with 10% FBS and placed on 15 cm sterile plastic tissue culture dishes . Cells were incubated in a 37◦C and 5% CO2 environment. After 24 h the medium was removed, the culture dish washed with Phosphate Buffer Solution , and fresh DMEM with 10% FBS was introduced. After an additional 24 h, cells were harvested using tripLE solution , diluted in PBS, and counted using Countess II with trypan blue exclusion and disposable slides . The process of removing cells from a plate, counting, and re-plating them with fresh medium is called sub-culturing or passaging. How well the C2C12 cells survive and grow after passaging is indicative of their long-term potential in a large cellular agriculture process. The design space was comprised of the components and minimum/maximum concentrations listed in Table 4.1. These components were chosen because they are often used to supplement standard DMEM to improve cell growth; this represents a reasonable test case for the industrial application of these multi-IS BO methods to the cellular agricultural industry. The composition of standard DMEM , is shown in Table 4.3, and should not be confused with the base DMEM “supplement” , which contains only amino acids, trace metals, salts, and vitamins and none of the other 14 components. pH and osmolarity are not controlled in this study, so act as latent variables. Production scale cellular agricultural processes will require > 10 passages of cell growth so optimizing growth based on single-passage information is not adequate. However, multi-passage growth assays are difficult / expensive to measure, and even more difficult to optimize when given many components. We managed this complexity by coupling long-term cell number measurements with simpler but less valuable rapid growth chemical assays in murine C2C12 cultures as a model system for cellular agricultural applications, capturing a more holistic model of the process. We combined this with an optimization algorithm that efficiently allocates laboratory resources toward solving argmaxD for desirability function D, a function that incorporates both cell growth and medium cost. This resulted in a 38% reduction in experimental effort, relative to a comparable DOE method, to find a media 227% more proliferative than the DMEM control at nearly the same cost. As the longer-term passaging study suggests, our Passage 2 objective function and IS were well calibrated to mimicking the complex industrial process of growing large batches of cells over many passages, with Passage 4 cell numbers well predicted by this objective function. The reasons for the success of the BO are myriad. The BO method iteratively refines a single process model to improve certainty in D-optimal regions, whereas the DOE relies on a series of BB designs where the older data sets are ignored because they were outside of the optimal factor space. The BO also used a variety of IS, whereas the DOE only used a single low-fidelity AlamarBlue metric . Looking at Figure 4.8c, the AlamarBlue and LIVE tended to cluster around the point y =1, making it difficult to distinguish between high quality and low-quality media. The BO method also refined its multi-IS model over the entire feasible design space, allowing it to take advantage of optimal combinations and concentrations of all 14 components over the entire domain, whereas the DOE needed to reduce the design and factor spaces to reduce the number of experiments needed, and may have identified the wrong optimal boundary locations resulting in sub-optimal experimental designs. The BO method was also able to leverage information about process uncertainty to improve the model is poorly understood regions of the design space, whereas the steepest accent method used by the DOE chased after improved D with little regard for overall noise or experimental errors. This was worsened by the sensitivity of the polynomial model to random inter-batch fluctuations in AB%, which may have driven the DOE to sub-optimal media. Note that the success of our BO method should not be taken as generic superiority over all potential instantiations of DOE or commercial media used for C2C12 growth. While the BO method worked well at solving the experimental optimization problem, the multiIS GP accuracy was limited to highly sampled regions of the design space, thus limiting the efficacy of sensitivity analysis. This was a conscious decision made to trade off post-facto analysis for sampling media with high desirability D.

The most straightforward approach to vaccine development would be based on inactivated or attenuated strains of SARSCoV-2, but the production of sufficient material generally takes longer than is the case for subunit vaccines, high-level containment would be necessary to grow the virus before attenuation/inactivation, and the candidates would carry a risk of reacquired virulence . For subunit vaccines, target antigens must be selected carefully. Research on the original SARS-CoV strain indicated that the N protein is highly conserved among coronavirus families, including strains responsible for mild respiratory tract infections, thus suggesting the possibility of developing a universal vaccine. However, antibodies induced by N proteins did not provide protective immunity; likewise, the M and E proteins elicited only weak protective responses . These studies helped to confirm the S protein as the most suitable target for eliciting a neutralizing humoral response.The entry of coronaviruses into host cells is facilitated by the S protein, which assembles into homotrimers on the virus surface . The S protein comprises two functional subunits: S1, which binds to the host cell receptor, and S2,drainage collection pot which facilitates the fusion of the viral and host cell membranes.

For many coronaviruses, the S protein is cleaved at the boundary between the S1 and S2 subunits and mostly remains non-covalently bound in the pre-fusion conformation . Hence, the uptake of coronaviruses into host cells is a complex process that requires receptor binding and proteolytic processing of the S protein to stimulate membrane fusion and viral uptake .Companies currently developing COVID-19 vaccines are mainly expressing variants of the SARS-CoV-2 S1 protein or RBD. The S1 proteins of SARS-CoV and SARS-CoV-2 are heavily glycosylated, with an approximately equal mixture of complex and high-mannose glycans . It is unclear whether plant-type complex glycans would affect the efficacy of a recombinant SARS-CoV-2 S-protein vaccine expressed in plants. High-mannose glycans are generally conserved across higher eukaryotes, so it could be expected that at least some high-mannose glycans will be added during the expression of the antigen in plants. Furthermore, it is not clear whether sialic acid plays a role in host-receptor interactions. This is not generally present on native or recombinant plant glycoproteins, although engineered plant varieties that produce sialylated proteins have been described . Virus-like particles displaying SARS-CoV-2 antigens are larger than subunit vaccines, promoting recognition and internalization by antigen-presenting cells and thus triggering an adaptive immune response. Furthermore, the regular array of epitopes acts as pathogen-associated molecular patterns to induce strong cellular and humoral responses .

VLPs are readily produced at scale in plants by molecular farming . The Medicago VLP platform is a prime example and has previously been used to produce millions of doses of seasonal influenza vaccines . Furthermore, iBio is also using a proprietary system to develop VLP-based vaccines in N. benthamiana plants.Given the time required to develop and test a COVID-19 vaccine, the possibility that a vaccine may not be effective in all populations due to the variability of immune responses, and the likelihood that SARS-CoV-2 will mutate, we foresee an ongoing demand for therapeutic proteins, such as mAbs, immunoadhesins, interferons, and antivirals, to either target the virus itself or reduce the severity of the associated acute respiratory syndrome .Several recombinant mAbs and antibody cocktails against COVID-19 are currently undergoing clinical development for therapeutic and prophylactic applications, including REGNCoV-2 , CSL312 , LY-CoV555 , and TYO27 . Many of the mAbs in development target the S-protein, aiming to block interactions with its receptor, angiotensin-converting enzyme 2 . Efforts to exploit convalescent sera from patients who recovered from COVID-19 have helped identify antibodies with neutralizing potential. For example, Eli Lilly/ AbCellera identified such an antibody in a blood sample from one of the first United States patients who recovered from the disease. The mAb was developed into LY-CoV555, a potent, neutralizing IgG1 that binds the S protein. In collaboration with NIAID, the product began Phase III clinical evaluation in high-risk assisted living facilities in August 2020.21 Most COVID-19 antibody products in development are produced in mammalian cells, but antibodies were among the first products of molecular farming in plants and many different mAb products have been expressed, including complex secretory IgA .

The dose of a mAb or mAb cocktail needed for the prevention or treatment of COVID-19 is currently unclear. About 9 g of the ZMapp cocktail was needed per treatment against Ebola virus and in a subsequent clinical study , but that dose level was selected from the outcome of studies in non-human primates , which enabled rapid deployment under the compassionate use protocol and did not benefit from dose optimization studies in humans. Assuming similar doses, manufacturing scalability is likely to be a key challenge in the production of COVID-19 antibodies. The scaling up of conventional bioreactors is particularly challenging due to changes in mixing, mass transfer, and heat exchange, whereas transient expression in plants can be scaled in a linear manner because each plant is effectively an independent bioreactor, equating to a process of numbering up by increasing the plant inventory and throughput of the facility. Similarly, cost will be an important consideration. In 2013, total sales of mAbs produced in mammalian cell bioreactors amounted to ~€48.5 billion for 8,182 kg of product, with an average sales price of ~€5,957 g−1 . Production costs and capital expenses for the transient expression of mAbs in plants are estimated to be at least 50% lower than mammalian cell culture production facilities , allowing manufacturers to reduce sales prices while still making some profit or providing these therapeutics at cost, and saving taxpayer resources.Another promising therapeutic approach is the use of plants to produce immunoadhesins . Such molecules combine the virus-binding region of a receptor, in this case ACE2, with the immunoglobulin Fc domain . The ACE2 component acts as a decoy to bind SARS-CoV-2 via the S protein, preventing it from engaging with native ACE2 on the surface of human cells, while the Fc region confers a longer circulatory half-life and provides effector functions that promote viral clearance,square plastic pot as well as facilitating product purification by Protein A affinity chromatography during manufacturing. Immunoadhesins form dimers via disulfide linkages between Fc domains, increasing their avidity when binding the S protein. One advantage of this strategy is that if the coronavirus mutates to escape binding to the immunoadhesins, it would similarly lose affinity for native ACE2, reducing its infectivity. Likewise, the SARS virus that re-emerged in 2003–2004 had a lower affinity for ACE2 than the original isolate, resulting in less severe infections and no secondary transmission . An additional advantage of this strategy is that exogenous ACE2 would compensate for lower ACE2 levels in the lungs during infection, thereby contributing to the treatment of acute respiratory distress. Several companies in the United States and the EU have developed recombinant ACE2 and ACE2-Fc fusion proteins for preclinical and clinical testing, although all these products are currently produced in mammalian cell lines . The impact of plant-specific complex glycans on the ability of ACE2-Fc to bind the RBD has been studied using molecular dynamic simulations and illustrates the important role that glycosylation may play in the interaction between the S protein and ACE2 .Griffithsin is a lectin that binds high-mannose glycans, and is currently undergoing clinical development as an antiviral against HIV-1.

However, it also binds many other viruses that are pathogenic in humans, including HSV , HCV , Nipah virus , Ebola virus, and coronaviruses including SARS-CoV and MERS , and as recently determined, also SARSCoV-2. A clinical product in development by University of Louisville is currently manufactured in N. benthamiana by Kentucky Bio-processing using a TMV vector. The API is also undergoing preclinical development as a nasal spray for use as a non-vaccine prophylactic against coronaviruses, with clinical evaluation planned for 2020 . This candidate PMP antiviral could be deployed under the EUA pathway if found effective in controlled clinical studies. Griffithsin is an interesting example of a product that is ideally matched to plant-based manufacturing because it is naturally produced by a marine alga. Griffithsin has been expressed with limited success in E. coli and tobacco chloroplasts, but better results have been achieved by transient expression in N. benthamiana using A. tumefaciens infiltration or TMV vectors, with expression levels of up to 1 g kg−1 fresh mass and recoveries of up to 90% . A TEA model of griffithsin manufactured in plants at initial commercial launch volumes for use in HIV microbicides revealed that process was readily scalable and could provide the needed market volumes of the lectin within an acceptable range of costs, even for cost-constrained markets . The manufacturing process was also assessed for environmental, health, and safety impact and found to have a highly favorable environmental output index with negligible risks to health and safety.In addition to COVID-19 PCR tests, which detect the presence of SARS-CoV-2 RNA, there is a critical need for protein-based diagnostic reagents that test for the presence of viral proteins and thus report a current infection, as well as serological testing for SARS-CoV-2 antibodies that would indicate prior exposure, recovery, and possibly protection from subsequent infection. The design and quality of the binding reagents , along with other test conditions such as sample quality, play a key role in establishing the test specificity and selectivity, which determine the proportion of false positive and false negative results. Although the recombinant protein mass needed for diagnostic testing is relatively small , the number of tests needed for the global population is massive, given that many individuals will need multiple and/or frequent tests. For example, 8 billion tests would require a total of ~2.5 kg purified recombinant protein, which is not an insurmountable target. However, although the production of soluble trimeric full-length S protein by transient transfection in HEK293 cells has been improved by process optimization, current titers are only ~5 mg L−1 after 92 h . Given a theoretical recovery of 50% during purification, a fermentation volume of 1,000 m3 would be required to meet the demand for 2.5 kg of this product. Furthermore, to our knowledge, the transient transfection of mammalian cells has only been scaled up to ~0.1 m3 . The transient expression of such protein-based diagnostic reagents in plants could increase productivity while offering lower costs and more flexibility to meet fluctuating demands or the need for variant products. Furthermore, diagnostic reagents can include purification tags with no safety restrictions, and quality criteria are less stringent compared to an injectable vaccine or therapeutic. Several companies have risen to the challenge of producing such reagents in plants, including Diamante , Leaf Expression Systems , and a collaborative venture between Plant Form, Cape Bio Pharms, Inno-3B, and Microbix.Resilience is the state of preparedness of a system, defining its ability to withstand unexpected, disastrous events , and to preserve critical functionality while responding quickly so that normal functionality can be restored . The concept was popularized by the 2011 Fukushima nuclear accident but received little attention in the pharmaceutical sector until COVID-19. Of the 277 publications retrieved from the National Library of Medicine22 on July 9th 2020 using the search terms “resilience” and “pandemic,” 82 were evenly distributed between 2002 and 2019 and 195 were published between January and July 2020. Resilience can be analyzed by defining up to five stages of a resilient system under stress, namely prevent, prepare, protect, respond, and recover . Here, prevent includes all measures to avoid the problem all together. In the context of COVID-19, this may have involved the banning of bush meat from markets in densely populated areas . The prepare stage summarizes activities that build capacities to protect a system and pre-empt a disruptive event. In a pandemic scenario, this can include stockpiling personal protective equipment but also ensuring the availability of rapid-response bio-pharmaceutical manufacturing capacity. The protect and respond stages involve measures that limit the loss of system functionality and minimize the time until it starts to recover, respectively. In terms of a disease outbreak, the former can consist of quarantining infected persons, especially in the healthcare sector, to avoid super-spreaders and maintain healthcare system operability . The response measures may include passive strategies such as the adjustment of legislation, including social distancing and public testing regimes, or active steps such as the development of vaccines and therapeutics .

The model even projects a reduction in annual groundwater pumping compared to the historical period until mid-century under some scenarios. Unfortunately, this positive effect of switching to drip irrigation is lost toward the end of the century as higher temperatures drive up crop water demands.One of the earliest econometric evaluations on the impacts of human-induced climate change to US agriculture developed out of a reaction to the limited substitution options in earlier production function models . Given long-run production decisions, one could use a cross-section of county farm data to assess how climate could impact agricultural rents. The underlying assumption is that farmers have fully adapted to their environmental circumstances . While one cannot explicitly identify these decisions, these models are an improvement over older models because one could at least measure the consequences of adaptive decision-making . Other econometric models are able to capture annual decision-making using panel data. However, these models are unable to capture the idea of adaptation because farmers are very likely unresponsive to changes in weather from one year to the next. In their classic paper, Mendelsohn et al. evaluate the impact of climate variables on the expected present value of future rents in US agriculture,25 liter pot which they assume is proportional to farm land value under a few simplifying assumptions.

They regress farm land values on climate, soil, and socioeconomic variables using cross-sectional data for 2933 US counties. Their results reveal the seasonality and non-linearity in the relationship between climate variables and farm land value. Beyond this, both the direction and magnitude of their estimated climate parameters have been criticized and subsequently revised . One criticism with the original model, now obvious with hindsight, is the omission of ground and surface irrigation variables . Indeed, the negative effect of summer precipitation on land value in Mendelsohn et al. is potential evidence of omitted variable bias and, as Schlenker et al. suggest, misspecification. In response, Mendelsohn and Dinar include a surface water variable interacting it with annual temperature and precipitation. They find that the former is positive while the latter is negative, suggesting that counties with more surface water can tolerate higher annual temperatures and lower annual precipitation. Schlenker et al. indicate that dryland and irrigated counties require two separate estimation equations, unlike the single estimation equation in Mendelsohn and Dinar . A single equation erroneously implies that dryland farms requiring irrigation in the future will have access to analogous large-scale water projects peculiar to the western US at a given point in history. In testing the null hypothesis that each of the 16 climate variables in the original analysis are individually the same in the dryland and irrigated farm sub-groups, they find that between 4 and 6 coefficients are significantly different from 0, depending on the weighting method. Even though Schlenker et al. did not have access to water data on irrigated counties at the time, their F-test was still able to provide sufficient proof of the bias in pooling dryland and irrigated counties into one model. After studying climate impacts to dryland agriculture in the US , Schlenker et al. study the impact of water availability and degree days on California farmland values. Their cross-sectional dataset represents individual farms, rather than county aggregates.

Including groundwater and surface water supply corrects for the omitted irrigation variable bias in Mendelsohn et al. . Importantly, Schlenker et al. include a nonlinear measure of temperature effects on crop growth known as degree days.6 Their results suggest a positive relationship between the long-run annual availability of surface water and farmland value . They find that the coefficient on surface water is sensitive to water price: as water price per acre-foot increases, this coefficient decreases. They also find that the coefficient on degree days is positive and statistically significant, while degree days squared is negative and statistically significant. They do not use these relationships to estimate impact to farmland value under future climate scenarios. A criticism of degree days, as used in Schlenker et al. , is that it is a measure of weather not climate . In contrast to cross-sectional analysis, Deschenes and Greenstone estimate the impact of yearly fluctuations in weather on annual farm profits using US county level panel data , under 3 climate scenarios: uniform, Hadley II , and Hadley II . When they account for county and year effects, the results from all three models show a negative impact on profits. With the addition of state-by year fixed effects, all three models show a positive impact on annual profits. Fisher et al. find data and coding errors in the Deschenes and Greenstone model, biasing the original results in the positive direction. Specifically, the climate variable on the average number of degree days has a zero value for several counties, and climate projections varied by state while their historic climate data varied by county. Both of these errors tend to result in a regression toward the mean effect, with warm counties projected to get cooler, and vice versa. In response, Deschenes and Greenstone acknowledge the data and coding errors, and find that the $1.3 billion benefit in annual profits under Hadley II is actually a $4.5 billion loss.

However, Deschenes and Greenstone disagree that state-by year fixed effects are misspecified. Like Fisher et al. , they find that state-by-year fixed effects tend to absorb most of the weather variability, resulting in a positive impact on profits. Their purpose in including state-by-year fixed effects is to control for state-level shocks in prices and productivity. To test for this, Deschenes and Greenstone include two additional specifications of year fixed effects: varying according to 9 USDA Farm Resource Regions, and varying according to 9 US Census Divisions. The results from an F-test reject the null hypothesis of zero local shocks. Just as excluding all year effects, as in Fisher et al. , may bias the results downward, including fixed effects at the state level may be too strict, biasing the results upwards. The two intermediate cases of region-by-year fixed effects may present a “happy medium” to this problem. Schlenker and Roberts use panel data to study yield impacts to cotton in the western US.8 Constructing a dataset that incorporates the entire distribution of temperatures within a day,25 liter plant pot and across all days of the growing season, they find that the level of yield decline is greater under nonlinear temperature effects than linear ones. Even under a moderate emissions scenario , cotton yields decline across the western US by approximately 30%. Their approach is analogous to statistical crop studies discussed in the Impacts of Climate Change to California section . Massetti and Mendelsohn test the use of panel data on a Ricardian model using the same Agricultural Census data as Deschenes and Greenstone . They test the stability of climate variables using two panel data approaches against a repeated cross-section Ricardian model. Both panel models have relatively stable climate variables across the six Census years tested. There are $15 billion in welfare gains for a uniform 2.7 C warming and 8% precipitation increase for both panel models, although this ignores distributional welfare impacts. In contrast, the climate variables of a repeated cross-section Ricardian model vary through time. As a result, the welfare calculations also vary through time.

Deschenes and Kolstad use panel data on aggregate county-level farm profits to study the differential effects of climate and yearly fluctuations in weather . Their climate variables include a 5-year moving-average of the annual degree days and precipitation, while weather variables are represented by annual degree days and precipitation. While none of the coefficients on annual degrees days are statistically significant with either the historical or CCSM models, their study is instructive in finding that the climate variable has a greater magnitude than the weather variable both in the baseline and climate change scenarios. This corroborates the theory that long-term changes in weather are more costly for some farmers than short-run fluctuations. They tease out which farmers may be most affected by changes in climate by analyzing 15 of the largest crops . They find that certain crop revenues respond positively to degree days , while others respond negatively . A few econometric approaches study specific adaptations. Mukherjee and Schwabe evaluate the benefits of access to multiple water sources for irrigated agriculture in California. Using a hedonic property value approach, they find that the marginal value of average water supplies from the Central Valley Project or State Water Project decreases as access to other sources increases. Lobell and Field study the use of federal crop insurance and emergency payments/loans in California from 1993–2007. They find that the most common cause of insurance and disaster payments during this period is excess moisture. Cold spells and heat waves are also important causes.We return to the question posed in the title. What have we been assessing with respect to the human and institutional responsiveness known as adaptation to climatic change in more recent studies on the topic? Several sub-questions are subsequently discussed. To what extent have study results identified economically efficient adaptations? To what extent have economically efficient adaptations reduced vulnerability to climatic changes and/or welfare losses? Have these studies identified limits to adaptive capacity in the agricultural sector, tempering the optimism of earlier studies? We have examined both normative and positive approaches to studying adaptation. Normative approaches have provided insight into which adaptations may be economically efficient equating this with the optimal solution to the farmer’s objective function. There are two such adaptations explicitly represented in the CALVIN/SWAP models: changes to crop mix and water transfers/markets.9 As water resources decline, the resulting crop mix will reflect a decline in field crop acreage, with relatively less change for specialty crops . CALVIN includes water markets as an institutional adaptation. Under climate-induced water reduction scenarios, water is transferred from low-value to high-value use. Implicit in this is the transfer of land from agricultural to urban uses, though this is not directly modeled in these studies. In the WEAP-CVPM framework, Joyce et al. implicitly model the potential for converting to drip irrigation, particularly for thirsty field crops. By contrast, economically efficient adaptation is assumed, rather than modeled, in positive approaches, such as Ricardian models. Ricardian approaches have thus studied how climatic change will impact agriculture in the presence of long-run economically efficient adaptations. Without knowing the actual adaptations undertaken, this approach provides limited analysis on economic efficiency. Hanemann argues that Ricardian models may not even capture long-run efficiency because economic agents do not behave optimally even in the long run. Studies of both short-run and mid-to-long run suggest that farmers with access to groundwater will tend to increase pumping, increasing the likelihood of aquifer subsidence, to compensate for losses in surface water or increases in crop water demands . Based on definitions in the latest IPCC report, this is maladaptation more than it is efficient adaptation. Schlenker and Roberts suggest that there is minimal adaptation even in the long run when they find that the results of their isolated time series are similar to those of the isolated cross section. Suffice it to say, that Ricardian approaches are capturing some level of adaptation, but it is likely not economically efficient. In both programming and econometric approaches, vulnerability is measured as loss in economic welfare , which is perhaps the greatest limitation of comparative static approaches. Unlike economic welfare, vulnerability is a dynamic concept. For example, the move from field to high-value crops dampens the economic welfare decline caused by a warm-dry climate mid-to-late century. That is, the percentage loss in farm revenue is less than the decline in farm acreage. Water markets are also likely to dampen the welfare loss associated with climate change . However, these high-value crops tend to have lower heat tolerance as temperature increases . Further, field crops are generally regarded as more secure assets with lower associated production costs, than vegetable or tree crops. The concept of vulnerability is able to capture this insecurity. Vulnerability to overall profit loss may be reduced by the crop mix change, but the increased variability in farm income will also increase vulnerability to temperature increases. Medellin-Azuara et al. illustrate this with high-value orchard crops, where the gross revenue declines even as prices increase. Econometric approaches illustrate that California agricultural land value may be particularly vulnerable to changes in surface water supply and nonlinear temperature effects .

After a series of political scandals, the LDP lost control of the upper house of the Diet, and with it, the desire for agricultural policy reform. In order to position itself for the 1990 elections, the LDP promised farmers that, “not one single grain of foreign rice would be permitted to enter the Japanese market” . Yet again, close ties to politicians and a general belief in the electoral importance of farmers allowed agricultural interests to sway the position of their governments. Ultimately, the GATT Midterm Review meeting failed to produce a draft text on agriculture. The failures of the MTR extended beyond agriculture, as the Cairns Group “refused to approve the draft texts of any of the other fourteen negotiating groups…until there was a text on agriculture” . The contracting parties agreed to adjourn the talks until 1989 and left the task of resolving the impasse on agriculture to GATT Director General Arthur Dunkel . Dunkle attempted to jump start the negotiations by circulating a draft final act, black plastic planting pots better known as the Dunkle Draft, which provided a broad negotiating framework. An opening was created for the negotiations to move forward after the EC completed the MacSharry Reform of the CAP.

Three main aspects of this reform helped bring the CAP in line with GATT objectives and thus increased room for a negotiated agreement between the US and the EC. First, cereal prices were reduced and controls were placed on surpluses, which implied a reduction in EC cereals exports, indirectly addressing the US concerns over EC export subsidies. Second, lowering Europe’s own cereals prices made EC cereals more competitive with imported duty-free foods. As a result, the need for market rebalancing was no longer a sticking point for the EC in negotiations over market access. Finally, the transition from production subsides to partially decoupled direct income supports gave the EC and US a new basis upon which to discuss domestic support policies. The negotiations resumed with the US and EC agricultural representatives engaged in a series of bilateral negotiations at Blair House in Washington, resulting in an agreement on the agriculture portion of the GATT UR, called the Blair House Accord. There were two major components to the Blair House Accord that facilitated an agreement. First, the “blue box” was added to the GATT’s subsidy stoplight system as a category for domestic support. Essentially, this category served to exempt the US deficiency payments and CAP area and head age payments from reduction commitments, which they would have been subject to without the creation of the new “blue box” category.

The second important addition was the inclusion of a peace clause, which exempted support schemes that complied with the agreement from dispute settlement actions. After the intense negotiations within the EC over the Blair House Accord, the Commission, under the guise of seeking “clarification” on the Accord, received further concessions from the US. While the majority of the concessions were minor, there were two noteworthy concessions. First, it was agreed that when implementing export subsidy reductions countries could base those reductions on the level in any year between 1986-1992. This modification removed front-loaded reductions in those commodities that had high base levels in 1986. Essentially, the agreement allowed the EC and the US to continue to subsidize a much large number products during the implementation period. The second modification related to tariffication rates. In exchange for accepting higher minimum import levels, select countries could delay tariffication of specific products. This modification was negotiated specifically for Japan45 to allow it to delay tariffication of rice. This concession was vitally important to Japan, which took a defensive position throughout the negotiations, resisting tariffication at every turn, and only agreeing to a system that guaranteed special treatment for rice, “a sacrosanct product in Japanese agricultural politics” . In addition to a full exemption for rice at the time, Japan was also permitted a slower tariff transition process for non-rice products.

For example, Japan was permitted wide use of tariff rate quotas , which allow more control over the amount of foreign goods that may enter the market. Products governed by the TRQ system included starches, dairy products, and legumes. Delaying or preventing tariffication was the main focus of Japan’s efforts because it was the tariff system that allowed Japan to continue to support its farmers with high prices. Because Japan was successful in extracting this concession, it avoided having to make domestic reforms to its agricultural policy. However, the defensive position of Japan with its single minded focus on the issue of tariffs made it difficult for Japan to “extract the kind of compromises from other countries that it sought in other areas” . Overall, the US granted the EC more than the mere “clarification” it claimed it was requesting. These concessions by the US were likely motivated by the fact that it wanted to conclude the negotiations before the Congressional Fast Track Authority expired in 1993 . For agreeing to the revised Accord, France was able to extract additional concessions within the EU, including an agreement that no further land would be taken out of production to meet GATT requirements. In the end, the major goals of the GATT UR for agriculture were either defeated entirely or so watered down that farmers felt little to no effect . Most significantly, direct payments, even if not fully decoupled, were exempt from reduction or even challenges under GATT rules. Indeed, the rules were essentially constructed in order to define the EC payment system as permissible. Ultimately, the EC traded CAP reforms it had already made, designed to safeguard European farmers’ bottom lines and to protect the operation of the CAP itself from foreign meddling,drainage pot to the US for an agreement on agriculture in the GATT. As is often the case in CAP reform, farmers were not subjected to cuts; rather their support payments were directed to them through different or new channels. The fact remains, whether the negotiations take place at the EU or at the GATT, about trade policy or about agricultural policy, it is incredibly difficult to actually impose cuts on farmers.Beyond issues of agricultural in trade negotiations and in the domestic politics of countries , the theoretical ideas in this dissertation can speak to scholars and policymakers working on a range of issues. Disruptive politics and politics as usual help uncover conditions that favor reform. This information is particularly relevant for scholars studying inertial or difficult to reform institutions, such as the EU. Similarly, the factors that contribute to the out sized influence of farmer power can help explain why some areas of policy are harder to reform than others. Finally, the story of the decline of farmers speaks to the politics of managing major social transformations and provides lessons for how such a transition can be executed with minimal social upheaval. A first set of implications of my research is relevant for European Union scholars and policymakers. My dissertation identifies conditions that favor EU reform. As discussed in the CAP cases, reforms can be categorized as undertaken at a time of “disruptive politics” or under “politics as usual”. Disruptive politics, like concurrent trade negotiations or looming enlargement, provide policymakers the opening to propose farther reaching and more fundamental reforms to the operation of policies than would be considered under politics as usual. Disruptive politics thus provide the most favorable conditions for reform.

These lessons about exploiting conditions that facilitate reform have implications for the European Union beyond just the CAP. Indeed, they can cast light on reforms in other policy arenas, such as the EU’s other common policies, namely Common Fisheries Policy and Cohesion Policy. The EU adopted a major fisheries reform in 1976. Prior to then, the Common Fisheries Policy had been dealing with several persistent issues, the most fundamental of which was overfishing. There was no clear plan in place to manage fishing stocks, and as the Union continued to expand, more and more pressure was placed on Community waters. Previous efforts to address the overfishing problem had failed, driven in part by reluctance to place constraints on an industry that was already suffering. Left unaddressed, the problems of overfishing compounded over time. Reformers had hoped to design a system that ensured Europe’s fishing stocks for the long term while not making it impossible for fishermen to earn a living. As was the case with the CAP, reform only occurred once the proposals were linked to disruptive politics. A signal disruptive politics event, looming Iberian accession to the EU, finally opened space for reform of the CFP in the 1980s. As both Spain and Portugal had major fishing industries, the existing member states wanted fishing management policies in place before the accession negotiations had proceeded too far. Indeed, EU officials thought it best for the reforms to be adopted before accession negotiations got into full swing. Reforming the fisheries policies in the middle of Iberian accession negotiations ran the risk of derailing those discussions. If reformers were forced to wait until after accession, member states feared these reforms would never be adopted as Spain and Portugal would make every effort to block them. The pressure of Iberian accession created the disruptive politics necessary to facilitate reform of the CFP. To finally address the systemic problem of overfishing a “total allowed catch” system for the main fish stocks in community waters was adopted. Under this system member states were given a quota, which would ensure stability for the domestic fishing industry while also protecting Community waters from overfishing . In short, like with the CAP, once a disruptive politics opening occurred, CFP reform was possible. When no such disruptive event occurred, as was the case in past efforts to reform the CFP, major reform did not happen. A second set of implications of my research speaks to scholars of the welfare state, suggesting why some areas of social policy are much harder to retrench than others. Within the domain of welfare state policy, scholars of retrenchment may want to give added attention to the role played by expert knowledge and control over policy implementation. The context of agricultural policy reform is influenced in significant ways by the fact that farmers and the vast range of institutions that support them have a monopoly of expert knowledge. Farmers’ monopoly of knowledge means the government is often forced to rely on the very group whose program it seeks to cut for both expert advice and implementation. Many policy domains of the social welfare state, especially medical and health policy, entail a similar dependence. The beneficiaries of the policies and their representative organizations typically have a knowledge advantage that allows them to shape the course of negotiations and even the implementation of the policy. Control of implementation is often delegated to the targeted group for highly technical policy reforms in order to make use of its expertise. For example, it is typically left to medical professionals and health care providers to roll out and implement systems that govern patient care and treatment options. These systems are technical, depend on the expert opinion of highly-trained actors, and involve confidential information. For all these reasons, healthcare professionals can challenge policy maker’s positions and resist government efforts. There are at least three potential strategies retrenchment-minded reformers can use to manage the challenges posed by social groups that possess a monopoly on expert knowledge. The first and most direct strategy is to break that monopoly of expertise by utilizing their own experts. One way to begin to achieve this goal would be to stop relying on the social group itself to provide information and analysis. For example, in debates over how to revise environmental standards or adjust crop prices, policymakers rely on agricultural experts. More often than not, those experts are employed by farmer organizations, rendering their advice and opinion biased. To counter this problem, governments can employ in-house experts to close the information gap. Alternatively, governments can, and indeed already do in some domains, employ business consulting companies. A second strategy for countering the expertise imbalance is to reduce the target group’s control over implementation of policies. While leaving the task of implementation to another actor reduces government costs, both economic and manpower, it also increases the risk that the policy will not be implemented or enforced as intended.

Perhaps most importantly, the CAP was not a sticking point within Doha agricultural negotiations, as its payment system had been brought into compliance with WTO rules. In the 1992 reform, MacSharry was able to advocate for and achieve systemic CAP reform by connecting the reform to the GATT Uruguay Round negotiations. If the CAP was not reformed, he argued, the GATT would fail, the CAP would be blamed, and external actors would force drastic and unpleasant changes upon the CAP. This argument was credible because it was widely known that agriculture was the reason for the delay in concluding the round and that European agriculture, and CAP policy in particular, was the source of the impasse in agricultural negotiations. Cioloș simply did not have the same opening to call for far-reaching reform because the CAP, thanks to MacSharry, and later Fischler, was comfortably in compliance with WTO policy. Another potential disruption was EU budgetary policy. The 2013 CAP reform occurred at the same time as negotiations over the new Multi-annual Financial Framework ,plant pot with drainage known colloquially as the EU budget. While the 2013 reform was not the first time MFF negotiations coincided with CAP reform, it was the first time they occurred simultaneous to CAP reform under the rules of co-decision.

Unlike past CAP reforms, then, the EP and the European Council refused to move forward with CAP reform discussion until the budget was fixed. These negotiations could have been just the sort of disruptive event that strengthened the Commission’s hand. Indeed, the Commission had called out the CAP, saying that future reform “must stimulate a further significant reduction in the overall share of the EU budget devoted to agriculture, freeing up space for new EU priorities” . These growth priorities included: “innovation, the digital economy, employment, youth, industrial policy, poverty, and resource efficiency” . The Commission’s proposal for the MFF included a small decrease in real terms but a small increase in nominal terms for the CAP budget over the period of 2014-2020. Maintaining the CAP budget, even if only in nominal terms, was an important victory for farmers as the financial crisis meant there was a real need for budgetary austerity at all levels of government and across virtually all sectors . The Commission’s surprising support for agricultural spending stemmed from the priority given to fixing the payment imbalances. Had the Commission proposed to shrink the CAP budget while also demanding that old member states shift money to the new member states, the member states would never have gone along. The resulting MFF agreement made retrenchment more difficult, however.

Once the MFF was agreed to in February 2013, and thus the CAP budget set, reformers could not threaten to reduce the budget if their proposals were not accepted. Indeed, the status-quo-oriented actors relied on the argument that the scale of greening preferred by reformers was simply not possible without a larger CAP budget and therefore could not be adopted . Thus the concurrence of MFF negotiations and the delaying effect it brought to the CAP discussions supported the member states and other actors who favored the status quo. In the end, the Commission would not only fail to cut the CAP budget to support innovation but would redirect some €2.8 billion from growth programs to a reserve crisis fund for agriculture. In sum, almost all of the major events and issues that disrupt politics and allow for far reaching change did not operate during the 2013 reform. Economic crisis did not provide a consensus for change, instead reinforcing defenders of farmer interests. Previous reforms had brought the CAP into WTO compliance, eliminating stalled trade talks as a prod to reform. Enlargement provided the only source of disruption for Cioloș to exploit. Making the case for reform and retrenchment even harder, reformers could not threaten to cut the budget if their proposals were not accepted, as a new multi-year budget had just been set. As a result, Cioloș was forced to negotiate his reform largely under politics as usual. The importance of disruptive politics for reform is illustrated by the case of the 2013 CAP reform, when the only significant change in this reform, the adjustment to the payment system, had a clear link to the only source of disruptive politics.

The centerpiece of the proposal was a revision to the operation of the direct income payment system. It was intended to reduce the disparity in the distribution of payments both between the member states and among the farmers within each individual country . This approach, adjusting an existing policy to correct for inefficiencies and inequalities in outcome instead of trying to create an entirely new program, is a clear example of the traditional social welfare state strategy of turning “vice into virtue”. Under the new proposal, existing methods32 for calculating direct payments would be replaced by a single, common program called the Basic Payment Scheme, or BPS. All member states would move toward a uniform payment per hectare, fixed either nationally or regionally. Whether the payment was fixed at the regional or national level, the important change is that a single method of calculation would be used to determine this payment, which would aid in reducing disparities both within and across countries. The assumption was that it would take time to close the gap in payments among the member states because, as the Commission acknowledged, the degree of redistribution needed between national direct payment envelopes was such that “it is likely to make it politically unacceptable for many member states to agree to such a redistribution”. Initial redistribution would be minimal, targeting those member states that were receiving less than 90% of the EU average payment per eligible hectare and would aim to close one-third of the gap between what member states had been receiving and 90% of the EU average per hectare payment . The second major component of the plan concerned the oft proposed and always defeated effort to cap CAP payments. The Commission proposed to cap payments under the BPS at €300,000 annually. In addition, the Commission called for the progressive reduction of payments, by 20% for the part from €150,000-€200,000, by 40% for the part from €200,000- €250,000, and by 70% for the part from €250,000-€300,000 . Additional payments received for greening would not count against these reductions, however. What is more, in an effort to reward farms with many employees, farmers would be allowed to deduct salaries, taxes,pots with drainage holes and social security contributions from their CAP payments before any reductions were applied33. The third major Commission proposal concerned greening and cross compliance. Under the proposal, the new BPS would still be linked to basic requirements concerning the environment and animal welfare, known as cross compliance. For purposes of simplification, the number of rules would be reduced. The new proposal also included another greening payment, which farmers would receive on top of their base payment per hectare. This greening component would require farmers to adhere to an “enhanced” form of cross compliance . Any farmer who wished to receive even the base BPS would be required to adhere to the rules for this “bonus” greening payment. Specifically, this initiative was intended to be a way to forcibly apply stricter greening and environmental standards to farmers. Those certified as organic and small farmers would be exempt from these requirements. The payment was thus not truly a bonus payment but rather a set of mandatory greening standards that must be met to receive the BPS. For their trouble, farmers would be given an additional greening payment award for meeting these now required standard. This payment was a way for the CAP to impose more basic greening requirements into Pillar 1, which had long been a goal of the most environmentally concerned.

Two other smaller components of the reform covered rural development and definitions of who counted as a farmer. The rural development component sought to provide greater flexibility to the member states for providing resources to farmers, particularly in the area of risk management by giving member states more autonomy in deciding where to allocate resources and emphasis among the three broad objectives of fostering competitiveness, protecting the environment, and improving the diversity and quality of life in rural areas. The rural development proposal also addressed the broader concerns about internal and external convergence by proposing that member states be allowed to move 10% of their Pillar I funds to Pillar II while member states whose direct payments were below 90% of the EU average would be allowed to move 5% of funds from Pillar II to Pillar I. The farmer definition proposal aimed to exclude payments to those individuals who no longer engaged in real, tangible, agricultural activities. For example, it is not uncommon for some farmers to turn their land into resorts, golf courses, sports clubs, or even airports. Under the Commission’s proposal, those individuals who failed to meet minimum activity standards or those farmers for whom CAP payments amounted to less than 5% of their total receipts for non-agricultural activities would no longer be defined as active farmers, thus losing benefit eligibility.The initial reaction from French officials to the proposal was lukewarm at best, and patently negative at worst. Among France’s most important preferences and priorities for the CAP were: preserving as large of a CAP budget as possible, retaining a large first pillar , maintaining the current allocation of subsidies among member states, and increasing the amount of support for ailing sectors and for risk and crisis management more broadly . On the issue of working to re-allocate income support funds among the member states, French Minister of Agriculture Bruno Le Maire suggested that this reallocation must be sustainable and fair. For Le Maire, reallocation could be, at most, only marginal, as more substantial redistribution would affect some farmers and member states disproportionately, which, for Le Maire, was unfair. On the matter of greening, while Le Maire confirmed France’s support for the principle in general, he argued that greening initiatives must be both simplified and developed and adopted with the economic realities of the farmer in mind . In other words, the initiatives could not impose financial costs on farmers. Such restrictions would severely limit the range of possible greening initiatives that could be adopted. Germany’s position on CAP reform was conservative, even more so than France’s. Like France, Germany favored maintaining a strong first pillar continuing the current allocation of icome payments among the member states, supporting safety net subsidies, and simplifying the CAP . As a major net contributor to the overall EU budget, the German government opposed reforms that would increase CAP spending. Denmark, the Netherlands, Sweden, and the UK formed a block of member states that supported CAP reform, particularly in a market-liberalizing direction. They preferred reforms that would cut prices and offer limited, if any compensation. The UK and the Netherlands also supported budgetary discipline. The Eastern European member states, led by Poland, wanted as large a CAP budget as possible. Like most of the other member states, they preferred a strong first pillar. However, they supported the redistribution of these funds among the member states to correct existing imbalances. They were opposed to measures and programs that relied on co-financing or that included nationally funded top-ups since they lacked the money for such initiatives. . In addition, given that Eastern Europe was already lagging behind the West in terms of distribution of direct payments and that several of these new member states, most prominently Slovakia and the Czech Republic, were home to exceptionally large farms, these countries opposed any efforts to place a cap on direct payments. The Eastern European bloc wanted to protect the second pillar since they received a larger share than the older, Western member states. Finally, like the rest of the member states, the Eastern European countries expressed a preference for the simplification of CAP programs. This preference was particularly important for the Eastern member states as they had less efficient bureaucracies and more generally struggled to find the administrative capacity necessary to implement the CAP. The Eastern Europe bloc therefore focused most of its political capital on pushing for a system that would redistribute direct payments while opposing a hard upper limit on those payments .

In addition, the MidTerm Review became tasked with making the CAP financially viable in an enlarged Europe, particularly once it was accepted that the new member states simply could not be excluded from receiving CAP income payments. The MTR then, unlike Agenda 2000, would be undertaken in a context of disruptive politics, permitting both the proposal and consideration of deeper and more fundamental reforms of the CAP than was possible during Agenda 2000. The previous chapter examined the Agenda 2000 Reform, led by Agricultural Commissioner Franz Fischler. Agenda 2000 affirmed bold objectives but ultimately introduced limited change. Decoupling was not extended any further, and the most ambitious initiatives, such as environmental protection and a shifting of money from market support to rural development, were strictly voluntary. Little was expected to change with the 2003 Fischler Reform, sometimes also referred to as the Mid-Term Review , because it was intended only to check and respond to the implementation of Agenda 2000. Instead of being only a review, however,vertical tower for strawberries the 2003 agreement resulted in a major overhaul of the CAP. The most striking reform was the decoupling, in most sectors, of CAP payments from production, continuing and extending the policy first introduced by MacSharry.

Instead of production-based income support, the MTR switched farmers to a direct income subsidy, which is the same whether they grow millions of tons of grain or nothing at all. The new payment system, called the Single Farm Payment , was designed to compensate farmers for income lost from decoupling and to provide a source of income in the years to come. Finally, the voluntary environmental and rural development policies first introduced in Agenda 2000, cross compliance and modulation, were made mandatory. Receipt of the SFP was conditioned on meeting certain environmental standards , and member states were required to direct 5% of direct payments for farmers earning over €5,000 to support the environmental and rural development initiatives of the Second Pillar . The purpose of this chapter is to account for the content of the 2003 MTR, and to explain specifically, why, despite the fact that the MTR was supposed to be only a review of Agenda 2000, major change was achieved. Because the MTR was only intended to check the implementation of the Agenda 2000 agreement, the member states did not expect to see any initiatives of significance. At most, the MTR was expected to produce comments on the status of Agenda 2000 and minor corrections to existing policies.

Indeed, French President Jacques Chirac summoned Fischler to Paris and told him bluntly, “Just so we are clear, the MTR is just a report, not a reform. You can make a proposal in 2007” when Chirac was scheduled to leave office . Fischler, however, had grander ambitions for the MTR. These ambitions would be aided by a series of important challenges that were coming to a head. Fischler had already made ambitious proposals during the Agenda 2000 negotiations, but the CAP was operating under politics as usual, with no significant extraordinary circumstances or crises that could generate disruptive politics. As a result, Fischler’s big ideas were either watered down or shot down entirely. At the time of the MTR, however, bigger changes were afoot. Fischler was able to link his proposals to key challenges, raising the stakes for reform, and compelling the member states to consider changes that were more far reaching and dramatic than they would have entertained during a regular round of CAP reform, let alone a mid-term review. Disruptive politics made it possible for Fischler to propose and reach agreements on more dynamic reforms than would be possible under politics as usual.The impending accession of 10 largely agrarian new member states posed the most direct and disruptive challenge to the CAP. Once these countries joined, the number of farmers who could claim CAP support would more than double, and agricultural land area, which is also supported and maintained through CAP programs, would increase by nearly 50%.

Projections suggested that in order to extend existing support programs to the new member states, the CAP budget would need to double. The CAP was already the EU’s largest program, consuming 40% of the budget. Given that the CAP was routinely targeted for budget cuts, there was simply no way financial commitments to the program could expand to the extent necessary to accommodate the new member states. The CAP needed to be reformed so that it would be financially sustainable in an enlarged Europe. An added incentive to move quickly was that the new member states would render the decision making process even more complex in future, when there would be 25 Ministers of Agriculture attempting to support and defend the unique agricultural preferences of their respective home countries. The CAP was also under pressure from international trade negotiations. In previous rounds of GATT/WTO negotiations, European agriculture had been the stumbling block. A significant problem in the Uruguay Round was that CAP programs were in direct conflict with GATT rules. European manufacturing and services representatives were now signaling to their agricultural counterparts that they would no longer tolerate complications and delays due to agriculture that damaged their ability to defend their sectors’ interests. Officials representing these sectors made it clear that they were willing to sacrifice Europe’s agricultural policy preferences in order to forge the best deal possible for manufacturing and services. Taken together, all of these challenges and time-sensitive circumstances confronting the CAP meant that the reform took place during disruptive politics, making more reform possible under the MTR than had been achieved in Agenda 2000.

Despite the urgent need for change, the CAP reform process again shared many features in common with welfare state retrenchment. The most ambitious and far reaching reforms were significantly watered down, and some were defeated outright. Many reforms ended up following a “vice into virtue” logic: rather than introducing entirely new initiatives, existing programs are adjusted to fix inefficiencies and inequalities. Finally, the entire package was filled with side-payments and special agreements in order to defuse opposition. The ultimate reform package in the MTR is consistent with my central claim that it is difficult if not impossible to reduce farmer support.At the time of the MTR, the basic ability of the CAP to continue to function was under threat from WTO negotiations, a looming round enlargement, food safety scares, and public frustration with existing policies. The MTR would, like the MacSharry Reform, be developed and negotiated at a time of disruptive politics. Existing programs were now unstable due to the rapidly approaching accession of new member states from Central and Eastern Europe. Food safety scares, and more importantly,vertical growing continued trade negotiation issues related to agriculture potentially introduced new actors into negotiations that typically concerned agricultural interests only. These challenges created an opportunity for Fischer to propose and advocate major reforms. They also informed the content of the proposed reforms. WTO pressures facilitated the consideration of policies that made the CAP less trade distorting. Enlargement allowed for deliberations over policies that would improve the financial sustainability of the CAP in the expanding Union. Concerns related to food safety and perceived public dissatisfaction allowed policies to be considered that increased environmental and animal welfare standards and that improved the equity of existing programs. Though these pressures were critical, the MTR was not launched in response to them. Rather, a provision requiring an MTR had been included in Agenda 2000 at Fischler’s insistence. Fischler had been frustrated by the tepid Agenda 2000 agreement and wanted another chance to enact meaningful reform. The MTR was a concession to Fischler in return for Chirac’s last minute revisions to Agenda 2000 at the 1999 Berlin Summit27. The purpose of the MTR was to assess the status of the implementation of Agenda 2000 and to offer improvements, if necessary . While Fischler hoped that the MTR would be his avenue for more far-reaching reform, he was careful to only refer to it as a review, and not a reform . Most member states assumed that the MTR would be merely a review and that no substantial changes would result. Still, pressure was building to overhaul the CAP, starting with the recently launched Doha Development Round.

Fischler wanted to avoid a repeat of the Uruguay Round of GATT negotiations when stalemates in the agricultural sector had caused negotiations to drag out four years longer than planned. European manufacturing and services were angry at agriculture for the difficulties they faced in their negotiations because the structure of the CAP was a major obstacle to reaching a final agreement. Specifically, the EU, with its trade-distorting price supports and production-based payments, was at the center of the controversy over how to structure the agricultural component of the GATT. The European Commission and several member states concluded that entering the WTO negotiations with the CAP in violation of WTO rules once again would weaken the chances that EU representatives would be able to both defend the European Union’s vision for agricultural policy and also extract competitive agreements for services and manufacturing. In the run up to the Doha Round, European manufacturing and services sectors made it clear that they would not allow their bargaining position to be weakened or their interests threatened by European agriculture. These sectors signaled their intention to push aggressively for open markets “regardless of the price paid in terms of additional access to the EU agricultural market, which would presumably have to be borne by their fellow farmers” . In order to gain access to new markets, representatives for manufacturing and services stated their willingness to trade away core components of CAP policy. In addition, the European Commissioners for Trade, Competition, and Industry routinely challenged agriculture’s share of the EU budget and sought to diminish the prominence of the agriculture portfolio. Struggles and delays at the Doha Round caused by agriculture would provide additional ammunition to their efforts to siphon money from agriculture and into their own budgets. Given the clear signals sent by European manufacturing and services, Fischler wanted to enter the Doha Round with the ability to pursue and defend European agricultural interests without the sector being a stumbling block for progress towards Europe’s goals in other domains. The most important and fundamental way to position European agriculture for negotiation success was to ensure that CAP subsidies complied with existing WTO regulations. The WTO used a “subsidy stoplight28” system, containing green, amber, and blue boxes, to evaluate and classify member country subsidies. Permitted subsidies, meaning those that do not distort trade and do not include price supports, are in the green box. Examples of green box programs include decoupled subsidies and rural development supports. Examples of amber box subsidies are production based subsidies and price supports. As subsidies in the amber box are considered trade and/or production distorting, they are subject to strict limitations, including an agreement to reduce them over time. In developed countries, only 5% of a country’s subsidies can fall into the amber box. Countries that exceed that limit must reduce their subsidies accordingly. The Uruguay Round agreement included a specific commitment by the 30 WTO members whose subsidies exceeded amber box limits to bring those subsidies in line with the 5% rule. The last category is the blue box, which is also referred to as the “amber box with conditions”. It contains, “any support that would normally be in the amber box [which] also requires farmers to limit production” . It was developed as a way to help states move away from trade and production distorting amber box subsidies without causing too much hardship. Compliance in the agricultural sector was important because it meant that EU could press for market access for goods and services in emerging markets without being told that it first needed to get its agricultural policy in order. Keeping agriculture from hamstringing the pursuit of EU objectives for goods and services was also important for Fischler because it weakened the arguments often used by the EU Commissioners for Trade, Competition, and Industry to call for a reduction in the CAP budget. Speaking about his Doha Round strategy, Fischler noted, “we needed to change the conversation for the WTO. We couldn’t have a Uruguay Round repeat. We needed to be on the offensive.

Production had been increasing far more rapidly than consumption, resulting in the accumulation of massive stocks. Excess goods were then dumped onto an already stagnant world market, angering the EU’s trading partners. This problem of surplus dumping was one of the core sources of tension in the GATT that was forestalling progress toward an agreement. The second problem related to the economic well-being of farmers. Inequality was increasing. CAP support payments concentrated on the largest and most productive farms such that 20% of the Union’s farmers received 80% of the support. Meanwhile, the overall agricultural population continued to decline and the per capita income of farmers improved very little. This income problem highlighted a failure of the CAP to achieve one of the basic goals laid out in the Treaty of Rome, which formally proposed the creation of the CAP: to improve the standard of living and decrease income inequality in agriculture. These income problems persisted even though spending on the CAP was increasing rapidly from year to year The Commission argued that any reform undertaken needed to keep a sufficient number of farmers on the land because farmers play an essential role in preserving the natural environment and traditional landscapes of Europe.

The Commission suggested that more emphasis be placed on this environmental role of the farmer and that rural development be promoted more broadly. Keeping farmers on the land was also tied to preserving the family farming model,vertical plant rack which the Commission asserted was “the model…favoured by society generally” . Finally, the Commission suggested that reforms needed to make the agricultural budget “an instrument for real financial solidarity in favour of those in greatest need” by which it meant a more equitable distribution of support . Specifically, the Commission proposed that compensatory payments be modulated based on size of holding and income level. In other words, full compensation would be allowed up to a certain amount. After that, the payment would be decreased, and the money saved would be redirected to smaller farmers and rural development objectives. Exemptions under quota and set-aside policies were also to be targeted towards the smallest and weakest producers. The broad objectives on market issues concerned re-balancing markets by bringing production back under control, promoting a system of production that relied on fewer inputs , and encouraging the spread of technology. The document singled out cereals, suggested that previous policies for the sector were flawed and instead proposed price cuts and mandatory removal of land from production.

Lower cereals prices were needed to make European cereals competitive with animal feed substitutes, which were already a threat to grains in the European market, and stood to be an even bigger threat if and when the new GATT agreement was ratified. Overall, the contents of the Reflection Papers marked a sharp break with past practice in CAP reform . Instead of trying to make the existing system work, MacSharry was proposing systemic change and the, at least partial, introduction of new instruments, most notably a direct income payment. In addition, these reforms marked the first time that a proposal was made to directly and intentionally privilege smaller farmers. The proposals as first outlined by MacSharry in the leaked document were officially presented by the Commission in July of 1991, formally kicking off the CAP reform debate. This official proposal matched the specifics of the initial leaked document, with minor changes to the systems for managing price cuts and compensation payments. The Commission projected that, due to the extension of compensatory payments and the other new programs created for early retirement, afforestation, and environmental measures, total CAP spending would increase by 2.24 billion ECU. The Commission anticipated however, that expenditure on the CAP would decrease in the long run as stocks of cereals, beef, and dairy, as well as the agricultural population itself, declined . Still, estimates of how much savings there would be and how far into the future they would come were vague and unspecified. There were three broad camps that emerged after the reform was officially announced.

The first group, Denmark, the Netherlands, and the United Kingdom, though in favor of the market liberalizing price cuts, was staunchly opposed to any “special treatment” for small farmers. Their farming sectors were comparatively large and efficient. With less protectionism and more liberalization, representatives for these member states believed that their farmers would gain market share at the expense of EU farmers who were propped up via protectionist policies. Countries in this group strongly opposed the Commission’s proposal to modulate aid in favor of small farmers, since their agricultural sectors were dominated by larger farmers. They believed that their farmers would be unfairly forced to bear the financial burden of sustaining unviable farms. In addition, the UK argued that modulated compensation offered farmers a perverse incentive to “split their holdings, becoming pensioners and non-competitive” . British Agricultural Minister John Gummer summed up his opposition to a program of modulation by stating that the United Kingdom was “not prepared to buy a reform at the expense of turning Europe’s agriculture into a tourist attraction for people who liked farming in Marie Antoinette style” . Fundamentally, all three countries advocated the largest possible price cuts with the lowest possible, ideally temporary, compensation administered at a flat rate to all farmers. France and Germany formed the second main group and maintained their traditional CAP alliance despite somewhat contradictory positions on the proposal. Germany, whose support for high prices, particularly for cereals, dated to the creation of the CAP , unsurprisingly objected to MacSharry’s proposed price cuts. German Agricultural Minister Ignaz Kiechle questioned the link between price cuts and production, suggesting that cutting prices for cereals would have little to no effect on production levels12 . That said, as one of the member states that underwrote most of the CAP budget, Germany generally favored all measures for controlling production, including set-asides and reductions of dairy quotas. France, however,growing strawberries vertical system rejected set-asides outright and was internally divided over the issue of price cuts for cereals. In addition to questioning the need for such a deep cut in cereal prices, French Minister Louise Mermaz called for the continuation of Community Preference13, which would provide adequate protection for domestic supplies on the European market . Ireland’s main concern was over the cuts to beef prices, which it opposed even though it had no stake in the debate over cereals, as its cattle industry was grass fed. Finally, Ireland joined Germany and France in favor of a program of modulation that would focus support on the neediest farmers. This second group of countries was important for an additional reason. Under the rules of Qualified Majority Voting France, Germany, and Ireland formed a blocking minority, while the Denmark, Netherlands, and the UK did not. So, while MacSharry and the Commission wanted to pass the reform with unanimous support, particular attention was directed to winning the cooperation of the group with the potential to block reform. All of the remaining countries, primarily the southern bloc, composed of Greece, Spain, Portugal, and Italy, accounted for the third group. The main agricultural sectors of these countries were largely excluded from the reforms.

Because farmers in these countries were typically poorer and less efficient than their northern counterparts, they stood to benefit from any redistributive programs,growing vegetables in vertical pvc pipe and thus were supportive of modulation. The minority of farmers in these countries that did grow products that were to be subjected to price cuts objected to a yield based calculation for compensation, as the yields in these countries were the lowest in the Union. If compensation for the price cuts was calculated on the basis of the historical yield in the area , then farmers in these countries would be paid a smaller direct income payment than farmers in other member states. Finally, Greece, Spain, and Portugal, and Italy most of all were particularly focused on the debates surrounding the milk quotas, hoping to preserve existing levels, if not increase them. The fact that every member state objected to at least some aspect of the program, and that many of these CAP positions put member states in direct opposition to one another, might seem to have doomed the negotiations from the start. However, as Dutch Farm Minister Piet Bukman, who chaired the Agricultural Council while the Netherlands held the rotating presidency noted, “all delegations agree that if there is no fundamental reform we will have an unbearable situation” . The common belief in the necessity of some kind of reform allowed for compromises to be made and an agreement to be reached, despite the wide range of positions held by the member states. In addition to internal conversations that each member state government held, part of the process of reaching the final agreement involved MacSharry and Arlindo Cunha, Portugal’s Agricultural Minister and Chairman of the Agricultural Council16 each working with the member states one by one. While Cunha toured the capitals in an effort to determine each country’s bottom line, MacSharry met with each minister privately, requesting a list of the 4-5 items most important to them. MacSharry agreed to include at least some of the requests in the reform in exchange for that minister’s support for the passage of the overall package of reforms . The bargaining that followed centered primarily on three core issues: level of price cuts for cereals, modulation, and milk quotas. Typically united in the CAP, France and Germany were divided over if and how much cereal prices should be cut. A major step in clearing the way for a deal was the reaching of an informal agreement between Mitterrand and Kohl. Germany agreed that it would not veto a cereal price cut in exchange for a promise from the French not to veto a new GATT deal, or at the bare minimum, to display “good will” . While Germany was opposed to any price cut for cereals since most of the farmers in the East grew that crop, it placed far more importance on a GATT deal. Conversely, France, favored cuts to cereal prices but had broad objections to liberalizing the CAP. France believed in general that the Commission had far exceeded the negotiating mandate that had been agreed to prior to the start of GATT negotiations. French representatives were particularly upset with the extent to which EU negotiators were willing to reduce or even eliminate export subsidies. The informal deal between Mitterrand and Kohl helped each side advance an interest of particular importance. This agreement was made possible by a meeting in September of 1991 of the Quadrilateral that confirmed that the terms of the MacSharry proposals could unblock the stalemate in GATT agricultural negotiations. Shortly thereafter, the German cabinet formally announced that it would not veto the CAP deal over a cereal price cut .To get to this point each government had to come to some hard realizations about the CAP reform under discussion. Germany was facing a domestic fiscal crisis induced by the costs of reunification. In addition, its farming sector had changed dramatically. While small farms had dominated in the West, the East German model was the factory farm. East German farms lagged in production, but they were expected to rapidly become more efficient with access to improved technology and information. Any surpluses produced by the East would, under the current model, add to CAP costs and expenditures. Germany was already one of the main underwriters of the CAP budget and was confronted with having to pay even more to fund the CAP. These budgetary increases would also come in addition to the growing costs of reunification. While some of the new money from added CAP costs would be filtered back to the East German farmers, Germany’s overall contribution to the CAP would likely increase at a higher rate than its return, as CAP costs continued to grow rapidly. It was therefore more economically advantageous for Germany to advocate for a smaller and less expensive CAP, which would reduce Germany’s overall contribution, leaving more money to be deployed as needed domestically. Germany also desired a successful conclusion of the GATT round, which would benefit its industry tremendously.

While both types of negotiation scenarios may be motivated by a similar set of core common pressures, including the budget, environment, and rural community, at times of disruptive politics, additional pressures including trade negotiations and enlargement come to bear. When the CAP is considered in an environment of politics as usual, the actors involved are agricultural stakeholders only. By contrast, discussions of the CAP at a time of disruptive politics often entail intervention from non-agricultural actors. For example, when trade negotiations are concurrent with CAP reform, member state governments often feel pressure from business leaders who do not want agriculture to jeopardize an important trade deal. At the EU level, other commissioners who may have a stake in negotiation outcomes, such as the commissioners for trade or the environment, may lobby or pressure the agricultural commissioner to reach an agreement in line with their preferences. Although reformers under both politics as usual and disruptive politics push for bold, broad reforms,vertical hydroponic the ultimate outcomes vary across the two contexts.

When negotiations involve politics as usual, reforms are muted. New programs and initiatives are voluntary, often including a lot of member state discretion for if, when, and how to implement them. Binding changes to programs rarely amount to more than a minor tweak or surface adjustment. When EU officials and the member states operate under disruptive politics, including the extension of the CAP to new member states or its application in global trade agreements, the outcome is different. Proposals to make fundamental changes to the operation of the CAP are adopted and reforms are binding, rather than optional. These changes are made in order to ensure that the CAP can survive and continue to meet its operating objectives given the broader issues confronting negotiators, like enlargement and trade negotiations. Of the four CAP reform initiatives since 1992 analyzed in this dissertation, one has involved politics as usual , two have been marked by disruptive politics , and the most recent took place under mixed conditions. The MacSharry and Fischler Reforms occurred in times of disruptive politics, with trade negotiations and enlargement looming large, and resulted in systemic change to the operation of the CAP. Not only were new rules and conditions adopted for determining eligibility for CAP income payments, but the entire system of calculation and delivery of CAP payments was revised.

By contrast, the Agenda 2000 and the 2013 reforms, which occurred under politics as usual conditions , resulted in little meaningful change. New initiatives were optional and non-binding, and no systemic changes occurred to the structure or operation of the CAP. In the case of the CAP for 2020, the only change of note that occurred could be clearly linked to disruptive politics5 , demonstrating the importance of such conditions in facilitating reform. CAP reforms have often defied expectations. The outcome of the Fischler Reforms, for example, was supposed to be a mere “review” of existing policies. While the member states expected little change, the Fischler Reforms resulted in major alterations to the operation of the CAP. Conversely, Agenda 2000 was supposed to bring about a new CAP for the new millennium, but instead yielded no major changes. Ultimately, a pattern can be identified whereby, regardless of member state expectations, major change is possible when negotiations grapple with disruptive politics while only narrow, limited change is possible during politics as usual. Table 1The third part of my argument concerns the forms that CAP reform takes when it does occur. Many of the ways in which reformers endeavor to change the CAP echo the politics of welfare state retrenchment described by Pierson. Reformers of the social and agricultural welfare state must navigate a host of obstacles, in particular, resistance by the beneficiaries of the policies they seek to retrench.

The set of possible reform outcomes is contingent upon navigating the influence of farmers. This dissertation explains CAP reform outcomes by highlighting five different strategies for dealing with farmers that reformers employ. Four of the five strategies are loosely modeled on the strategies used by welfare reformers as described by Pierson , while the other applies Levy’s “vice into virtue” to agricultural policy reform. The first strategy is obfuscation. Using this tactic, reformers attempt to hide or disguise cuts and manipulate information about policy changes. One way technocrats can engage in manipulation is to “lower the salience of consequences”, for example, by freezing a program, such as unemployment benefits, in a growing economy, thus not adjusting for inflation . The ramifications of non-adjustment build slowly and are unlikely to attract attention. At first glance, it appears as though there is no change, but in the long run, spending is reduced greatly. In the realm of agricultural policy, an example of obfuscation is to freeze the subsidy payment levels and not adjust for inflation. Another example is to increase the complexity of the reform. Simple cuts are easy to detect, but complex rules and standards can make potential losses much harder to detect and trace. The CAP is already among the EU’s most complex policies, offering ample opportunity to veil cuts in obtuse Eurospeak. If the procedures and rules are sufficiently complex, reformers can restrict the population of beneficiaries and/or the total amount of benefits delivered.

Obfuscation strategies have the potential for meaningful change because reforms can be imposed without causing immediate pain to the farmers themselves, the member state representatives answerable to the farmers, or the EU policymakers. A second option for reformers is to “divide and conquer” the target population. In the welfare state, cuts can be designed, typically through changes to eligibility rules, so that only some benefit recipients are affected . For example, many pension reforms exempt existing retirees and those nearing retirement from the new, less generous calculation of benefits. Such divide-and-conquer strategies find success because they are able to limit the size of opposition, in this case objection from senior citizens. In the domain of agricultural policy, a divide-and-conquer strategy involves proposing changes that will affect only some farmers, such as big farmers or commodity producers. Policy examples include price cuts for only some crops, or changing eligibility rules of certain types of income-aid payments. This strategy has the potential for meaningful change because either the farmers are no longer united and thus less able to resist change, or the reforms have targeted those sectors that are most amenable to change,vertical farming supplies while avoiding producers who would resist reform. Certain types of producers are more willing to accept retrenchment or reform than others. In particular, reforms that target large-scale and/or commodity producers tend to be more successful because many of these farmers believe that they can compete internationally without assistance and could take markets from weaker competitors.A third approach for reformers is to enact reform in exchange for “compensation”. Under this strategy, the potential for fierce opposition is quelled by offering a positive gain to victims of cuts . For example, while cutting general pension levels, reformers offer better or more attractive pension plans to women who have taken time off from work to raise children or lower the retirement age for people who have been working since their teens. A compensation strategy is the mostly likely to succeed and provides the most protection to loss-imposing politicians, but is also the most expensive avenue. Under the CAP, this strategy involves advancing policies that buy off or incentivize farmers for adopting certain behaviors, for example offering farmers direct payments in exchange for price cuts and or paying farmers for meeting specific environmental benchmarks. The fourth route is for reformers to engage in what Pierson calls “systemic retrenchment”. Following this strategy, reformers implement changes that may increase the prospects for future cutbacks or reform. This strategy is indirect, and potential consequences will only be realized in the long term. Examples include institutional reforms that limit the government’s revenue base, strengthen the hand of budget cutters, or undermine the position of pro-welfare state interest groups.

Ronald Reagan engaged in systemic retrenchment by introducing tax cuts that significantly weakened the government’s ability to finance social programs . In the realm of the agricultural welfare state, systemic retrenchment takes a slightly different form. Rather than using fiscal tools to strengthen the hand of reformers, systemic retrenchment within the agricultural welfare state plants the seeds of future reform by introducing controversial proposals on an optional basis at first. Once a policy is established, even on an optional basis, reformers have an easier time converting the voluntary provision into a mandatory policy. Typically, they rely on the argument that the member states had already agreed to the idea in principle, so the conversion to a permanent rule is simply a matter of implementing what has been agreed to. Indeed, this exact logic was used in the 2003 Fischler reform to convert an optional set of environmental standards into a compulsory greening program. As in the social welfare state, the inclusion of optional rules in 1999, did not change anything initially, but opened the door to deeper reforms down the line. The fifth strategy entails turning “vice into virtue” by reforming existing policies that are operating unequally and are also a source of “economic inefficiency or substantial public spending” . Reformers can work on correcting these programs rather than taking the much harder road of eliminating the program and attempting to adopt an entirely new program that functions better. In addition, by correcting the program, reformers are often able to extract new revenue streams that can then be redirected and redeployed toward achieving other policy objectives . Elements of “vice into virtue” overlap with Sheingate’s discussion of how CAP reformers take advantage of opportunities to control and manage issue definition. For Sheingate , CAP reform is possible when these changes are tied to broader objectives, like increasing animal welfare standards or promoting good environmental practices. CAP reformers have taken advantage of many opportunities to use the both “vice into virtue” approach and the issue definition strategy, particularly when changing to the system of income assistance for farmers. In some cases, this strategy is employed in order to shift money from one program to another, so that farmers still get paid the same amount, but the money comes from a different program. More often than not, the money is shifted out of a program that has been tagged as operating inefficiently or perpetuating harmful practices and into an existing program that corrects for these problems. For example, income assistance payments were channeled out of a system that paid farmers based on output that encouraged environmentally destructive industrial farming and massive surpluses, and into a new system that paid farmers a flat rate based on holding size. This shift did not reduce CAP spending, but by delinking payments and production, it reduced the incentive to produce no matter the consequences for the environment. All five of these strategies have been deployed by CAP reformers. The most commonly used have been compensation and vice into virtue. Such is the farmers’ influence that is is nearly impossible to impose new costs on them without offering some form of compensation in return. Vice into virtue, meanwhile, has facilitated the successful overhaul of major CAP systems by presenting the task as correcting a malfunctioning program as opposed to simply shutting it down. In sum, the first part of my argument shows why CAP reform is so difficult by revealing both how farmers have managed to retain political influence despite losses in demographic and economic power and by using welfare state theories to identify key obstacles to retrenchment. The second part of my argument identifies the circumstances that may permit systemic reform. The third enumerates the welfare state retrenchment tactics policymakers use to navigate and manage the influence of the farmers. Taken together, my argument accounts for when and why CAP reform occurs as well as the final outcome of CAP reform. Chapter Two describes the history and operation of the CAP leading up to the contemporary period of reform covered in the dissertation’s empirical chapters. The chapter focuses on three main periods of the early CAP: its creation in the 1960s, including early successes and challenges, the failed Mansholt Plan of the 1970s, and the limited changes of the early 1980s. I show that even in these early periods of reform, disruptive politics were a necessary condition for reform and that policymakers utilized welfare-style tactics to achieve what limited success they could. This overview provides the background necessary to understand contemporary challenges to the CAP and obstacles to reform.