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August 17, 2003

Comments

Matt Prescott

Farmers get subsidised like no other industry...

Perversely, these subsidies have created a positive feedback loop where market prices are so low that farmers cannot operate without subsidies... this is crazy, not to mention expensive!

We need to separate farm subsidies from production and to encourage alternative forms of rural development and farming.

For the billions we spend food should also be becoming higher in quality, more local and less environmentally damaging. Seemingly, most modern subsidies achieve the opposite outcomes!

As to someone's earlier comment, Japan may not flood the world with it's surplus rice (partly because it is isn't competitive with the world price!) but it does have a population of 120 million wealthy people who are unable to buy foreign rice. Japan therefore represents a huge lost market that is unavailable to more competitive farmers, especially from poor nations.

Subsidies could do a lot of good if they were diverted away from vested interests, but as things stand many are rotten, and are responsible for a huge hidden costs.


Andy

Unequal Protection

http://www.tnr.com/doc.mhtml?i=scholar&s=levy082003

The New Republic has a great article by Jacob T. Levy, a Chicago School economist, on how the new deal by the U.S. and Europe on agricultural subsidies damns the poor in the run up to Cancun.

Moptop

"The trouble is that conservatives are ideologically schizophrenic..."

Ahem... we can read this too you know.

Did it ever occur to you that maybe your space might have been better spent in attempting to influence the Democrat party to go along with this instead of attacking allies that you will need. If Bush did seriously come out for dropping payments to farmers, who would be the first in line attacking him in order to get back red-state electoral votes and senate seats? Tom Daschle Senate majority leader, in a line of wheat state majority leaders, that's who. There is no way that the Republicans can open themselves up to such an attack without the Democrat Party coming on board in a meaningful way. In the cut-throat game of US politics, this is extremely unlikely.

Tom Daschle is the man who holds the key to this, but he is way to partisan to do anything about it. At least you lefties have influence in the Democrat party. The poster is correct, we Republicans believe in this on principle. We are happy to see you lefties making arguments about efficient allocation of productive resources, instead of your usual clap trap of how govt can do it better.

And no, we are not all nationalistic. That is just a stereotype that you use to make it easier to crank our your bromides.

Zathras

I commend the Guardian for this intiative, and hope it will find many allies in Europe.

For Europe is the core of the problem. Japan represents a large, closed market but does not seriously distort world markets through export subsidies. The United States does distort markets through production subsidies, but has a strong farm constituency for freer trade because American farmers are the lowest-cost producers of many commodities even without subsidies.

Europe combines the worst of all forms of subsidy and trade distortion. Europe is the excuse protectionists and subsidy seekers everywhere use to justify their demands to keep imports out and keep their deficiency payment checks up. Europe is the largest obstacle to an agreement liberalizing trade in agriculture, and has been since the days of GATT and the founding of the Cairns Group.

Why? Let's just say I hope the Guardian has thought to make this blog available in French.

oliver sutton

The only way to persuade right wing world leaders such as Bush and Blair that agricultural subsidies to their own farmers should be scrapped is to speak to them in their own language.

With most political issues, it is the impossibility of doing this that makes progress impossible. The reason that political debate is so often a moribund spectacle is that the two parties invariably sit fatly within a cocoon of political ideology, interpreting what that adversary says in terms of their own beliefs. Hence when a liberal talks about a ‘fair playing field’ for developing countries, the conservative sees the ‘national interests’ of his country under attack. When the conservative speaks of ‘free trade’ the liberal immediately sees the safety net being pulled from under the poorest people in society. However, in this case there shouldn’t be any problem persuading the right wingers of the importance of scrapping agricultural subsidies. After all they already believe it. It forms a, perhaps the, central plank of their ideology. From Adam Smith through Darwin to Thatcher and Reagan there has been a fundamental conviction that the ‘market’ is a universal panacea, which if only it be allowed to follow its own course unfettered would deliver both prosperity and social justice (albeit a variety of social justice which looks a lot like ‘survival of the fittest’).

So what’s the problem? Why aren’t the likes of George W. falling over themselves to abandon these commie subsidies? Why do they even need persuading, when to do so is so completely consistent with their own ideology? The trouble is that conservatives are ideologically schizophrenic, for whilst on the one hand they believe passionately and sincerely in the curative effects of the market, they are also, pretty much to a man and to a woman, nationalists. Now nationalism does not sit well with free market economics in a global economy. Surrendering control of economic forces is all well and good if those forces are contained within your national boundaries, but to surrender that control to the global economy could run counter to national interests.

So what’s to be done? Well first we should recognise that the battle is already half won. The right wingers already subscribe to an ideology which supports the abolition of subsidies. They believe that unfettered working of the free market is the best way to improve the standard of living for everybody. So work on that. Don’t even mention justice for poor countries or ‘fair playing fields’, because if you do they’ll smell a liberal rat and close ranks behind their nationalism. All that is required, employing their own terms and building upon their own assumptions, is to convince them that by allowing the free market to decide whether rice is more cost effectively produced in China or the United States can only be of benefit, in the long term, to all sides (and yes that does include the U.S.). Sure American rice producers will be pissed off in the short term, but in the long term they’ll be productive in a way that is more genuinely useful to the United States than by producing something that could be produced more cheaply elsewhere (and therefore sold to U.S. consumers more cheaply) This might be old hat as far as economic theory goes, but my point is that we’ve got to get the Republicans in the States and ‘New Labour’ in Britain starry eyed about this (I’m not at all sure it would work with leaders of other European countries). Invent slogans like ‘back to basics’ ‘economic revivalism’ or ‘we’re going global’ to ignite enthusiasm for a tenet of right wing ideology that has been watered down for too long, but who’s day has finally come. Appeal to their innate competitiveness. Any nation that regularly cleans up in the medals tally at the Olympics, as the U.S. does, surely can’t be afraid of unfettered competition with the rest of the world when it comes to trade. Long live Adam Smith, long live president Reagan, gloves off, seconds out and let’s see the U.S. come out swinging.

Jonathan L

Thank you for this timely addition to the cause.

The CAP and its USA equivalent are the leading cause of poverty and corruption in the developing world. If farmers in poor countries were able to freely sell produce to rich countries it would both enrich and empower them.

The typical poor country economy is very dependent on one or two commodities, the sale of which is controlled by corrupt politicians. The end result is that politicians and their cronies get rich whilst farmers remain dirt poor.

The end of agricultural subsidies will bring accelerated economic growth to the poorest countries, whilst supporting greater democratic development.

Paul Ross

This issue has been around for over 50 years. It is the most important economic/social issue in the world. It is relevant to everything from poverty, development, population control (its the poor countries that have the largest population growth), economic efficiency, human rights and terrorism.

It is a far greater blot on the global psyche than the latest addition of the Iraq War was and yet there is no political leadership on this. For the damage it does many many political leaders should burn in hell for their dispicable role on this issue.

Congratulations on the website! My question is can we do even more? What about a petition? What about the organisation of a totally united front between organisations like Amnesty, Greenpeace, Salvation Army, the U.N. and economists etc.?

The bottom line is that the world is able to achieve appropriate outcomes on this issue. It is all our faults that it hasn't!

Below is an automatic signature that goes out automatically on the bottom of all my emails. Perhaps this is a way us ordinary people can help.

"I am a Kick-AAS (Kick All Agricultural Subsidies) supporter!
http://kickaas.typepad.com/
Please also consider becoming one."

andy

www.subsidieskill.org
Many people seem confused about the economics here. Instead of paying farmers to produce more than the market demands we can pay them conservation payments. This way small farmers can stay in business and produce what the market demands, supplying domestic markets and exports where its efficeint. This would keep agribusinesses from collecting all of the subsidies and using them to buy small farms, while allowing poor farmers to reach their full potential. There is a great explaination on www.subsidieskill.org

Tom Davies

Billions of dollars have been pumped into so-called third-world countries since WW2 - with little effect. Corruption, nepotism and indifference have mitigated the initial benefits of many projects that were financed from international money.

I just hope that the KICKAAS proposers have thoroughly thought out their economic theories, or we will end with SICKAAS in the farming industry throughout the developed world.

Just think of it! The nation's food supply dependant on the production of third-world countries. Surely wide open to political blackmail with third-world countries waxing considerable political authority over their food dependants

Don Williams

What economic puritanism...what naivety ! You want OUR farmers to compete with the LOWEST wage rate, DUMBEST industry on the planet ??? My Dad was 75 when he finally HAD to sell his farm .. he had told us kids that we shouldnt stay on the farm because we had to compete with corrupt regimes who had screwed their agrarian populations into the dirt. Our Oranges are plowed back into the soil..and they are better than the shit we get from Brazil. For what ? another financial boon to corrupt governments.. Where is the priniciple in all this that provides some substance for a future hope that things will change. WHY make the poorest in our countries pay for the self righteous rhetoric of the industrial beneficiaries of cheap labour !

moptop

"imagined subsidies"???

"NAFTA panel orders duties recalculated
Upholds U.S. complaints of subsidies" -- Toronto Star.

But seriously. Does the world really want to make Africa and South America the low cost source of lumber? Imagine the moonscape that would leave. On the other hand, the Everglades sure could use some releif from the sugar growers.

max

While the current system of agricultural subsidies needs to be destroyed, it is counterproductive to bankrupt small first-world farmers for the sake of impoverished third-world farmers. We need a system that rewards farmers for quality and sustainability, and distributes produce rationally, and locally.

David Carr

I would like to know if Kickaas are opposed to all subsidies or only agricultural subsidies?

Jordan Carter

It is an interesting debate. A couple of points seem to have been overlooked.

The ending of subsidies here in New Zealand did cause some considerable hardship to farmers, who for years had been paid far too much for production of things for which there was no market. Like much else in the reform programme, it was done suddenly without much care for the effects.

In terms of European and American subsidies, it's important to untangle subsidies for agricultural production from support for rural communities et cetera. I would have no problem if European taxpayers, particularly the French, want to pay people to have small farms with three cows and a three-legged stool for milking. Even if assistance were available for more commercial but still small scale farmers.

Where we do have a problem is a) where subsidies are linked to production, and b) where subsidies are available to the massive agri-business concerns which dominate most agricultural sectors. a) continues to drive down the world price of agricultural commodities, to the detriment of countries like New Zealand and the other countries which produce them. Even NZ, a relatively developed country, would gain something like 6-8% of GDP - as a permanent gain - if world food prices were at market as opposed to subsidy levels.

b) allows something which can be seen as legitimate - protecting rural heritage and communities - to be hijacked as an argument in support of massive transfers to wealthy agri-business. I can't see why anybody would support this.

Ending the subsidies or at least untying them from production and removing them from corporate producers would have major benefits. It would save taxpayers money; it would help countries with a comparative advantage in agriculture which includes many developed countries; it would allow rational debate about the kinds of measures that could help the survival of rural lifestyles and communities without hurting other people.

That's even without the opening of European markets to imports from other places. No doubt non-tariff barriers would still be a problem, but opening those markets would be a second step to the benefit of European consumers as well as those who produce the food. Having recently visited the UK and found New Zealand butter cheaper than UK butter, I think there are lessons to be learned. Past quota, that butter faces a huge tariff for entry; hurting farmers here and family food budgets in the UK.

I'm not naive enough to think this will be easy to solve. Like every other industry sector, capital in agriculture is very powerful and Governments tend not to stand up to it. Yet, it is just so blatantly over-subsidised, hope must remain for some improvement.

Jordan

steve

what's up with a newspaper blogging? doesn't that take away part of the point of it? they have an entire web page + broadsheet to fill up with their views rather than crowd the blogosphere.

anyway, like everything, agricultural economics can't be properly diagnosed on a bumper sticker. a very modest and good start would be to at least reign in french subsidies to the levels of other european countries (they are actually exempt from the rules agreed last year! mon dieu!)

James Lee

Wow when you see the pain caused here in Canada when the US lobby groups fight imagined subsidies on softwood lumber production. Some people even had to visit the food bank but no one starved. We have a free trade agreement that is okay as long as it benefits the US. Tread carefully when dealing with Satan.

Hank

I'm not convinced that it's a good idea to sacrifice agriculture employment in First World nations for the benefit of the Third. There is already a fundamental labor surplus that is being very poorly addressed, and throwing away these last remaining agriculture jobs will only exacerbate the problem. Perhaps it would be a good compromise to allow the First World to compete freely with one another, and allow the Third World their own realm of free competition as well. Using subsidies to beggar poor nations doesn't appeal to me, but I am highly skeptical of our rural communities' ability to absorb these job losses without a massive blow to their quality of life. Economic principles such as free trade must serve human needs, and I guess I'm not convinced that the proponents here are exagerrating the benefits while pooh-poohing the very real costs.

jim

We can make no claims to being a moral or virtuous society if we fail to tame the dominance of might is right economics/democracy. For democracy to reclaim any ligitimatacy, the only way forward is to truly create fair trade and to do away with any special protections unless you are a developing country. How can anyone claim to be democratic, religious, humanist, secular or anything worth being unless trade is fairer.The US and Britain only got where they got through protectionism. This has got to become a mainstream issue to promote further democracy and help stabilise the world

Aaron

Hi, could you spread the word more by adding an xml -- rdf, rss, etc. -- feed?

Al

The more site sliek this the better! This is the most important issue on the world agenda at this moment. Until last year I never realised what damage we in the West were doing to the developing world and I am determined to do something about it.

Ian

This is the most ludicrous proposition I've heard. Some subsidies are bad, other subsidies allow small farmers to compete with the multinational agricultural behemoths. I live in sunny California; we have a great growing environment for damn near everything. Some of the best produce I've eaten in my life has been grown by friends, neighbors, and local farmers. Our climate is suited for growing phenomenal food. But walk into a supermarket, and you would never know. The stores are filled with low quality bland GM foods, polished to a high shine but lacking any gustative worth. Products of the little organic farmers are simply not in evidence. To get any of the great produce you have to go to alternative grocers and farmers' markets. I personally know a number of these farmers, and the fact is their food is simply not competitive without subsidies; lacking shelf space in major retailers and the benefit of economies of scale, they don't make enough money without subsidies to stay afloat.

Neo-liberals have no problem with this and say that those who can't compete deserve to fail; an overwhelmingly misguided statement. If you cut ALL subsidies, you will immediately kill all the farms that aren't part of some multinational exploiter. The ensuing oligopoly would NOT be good for the consumer, and would especially not be good for anyone who wants an affordable organic, and in the US case, GMO free produce option.

Farming subsidies need to be overhauled, with that I agree. But to say they need to be eliminated? That would cause more harm than good. The major agricultural players already have too much power, granting them such market control would be sheer folly.

Mohammed

I am pretty sure there are many intelligent economists in our excellent universities, who can come up with a definite way of dealing with this crisis, without harming the farmers in the west. The only thing we need to deal with is the nutheads (politicians) to agree and we can do this by showing our unanimous support for the better of all of us. A petition online is a very good idea, to be used and shared with other people across the globe.

Michael Saunby

Elisa wrote: "The other day I went to my local supermarket, looking to buy apples grown locally (at least in the country), but failing that, had to choose between Fiji and New Zealand grown varieties." This actually has nothing to do with subsidies (just consider where those places are), it is a consequence of a well known phenomena called "the seasons". The correct response if you really want to return to local farming is to not buy imported produce and accept that some things that don't grow in the UK, bananas, soya, etc. won't be available to you and most fruit and vegetables will only be available when in season. Of course modern technology would allow quite a lot of produce to be stored chilled or frozen but there are energy costs to that.

As Elisa also points out, what everyone in the world wants (except perhaps for those who don't even know they have it) is food security. Perhaps we could all make this the number one aim rather than all the nonsense associated with the various anti-farming political movements that wish to see redistribution of land, bans on field sports, that are cleary just the remaining bitterness of a class war that most of them never really knew.

Though perhaps if we reduced our population density down to New Zealand levels all this would seem quite trivial to the few thousand people left.

Michael Saunby

matt

I'm surprised at how many are opposed to this idea, but perhaps i shouldn't be. weaning people off taxpayer subsidies is very hard...

it's a great idea on two levels. one, we won't have to pay so many taxes - or we'll have more left for health/education/etc. two, it will make farming in the north more rational, and farming in the south more viable.

new zealand got rid of all of its farming subsidies overnight in 1984, to howls of protest from farmers and protectionists. now our farming sector is as strong as ever, though we don't just rely on lamb, wool and milk products. we've diversified into all sorts of areas, truffles and saffron the latest ventures i've noticed but am sure there's more. This link gives more detail: http://www.subsidieskill.org/solution2.htm (Thanks Andy Schmidt)

of course one policy won't change the world, but you have to start somewhere, and this is a great start.

just a thought, but what if we all banded together and started buying up sugar beet farms in the uk and france? then we could just stop producing... farm losses are tax deductable, so a group of owners could recoup some money that way. a better use for our taxes. does anyone know just how many beet farmers there are in the UK for instance?

Elisa

I believe that local farming ought to be encouraged. Transportation of produce across the world leads to excessive transportation of goods (shipping from across the world what you have in your back yard), leading to more pollution. The other day I went to my local supermarket, looking to buy apples grown locally (at least in the country), but failing that, had to choose between Fiji and New Zealand grown varieties.

I also have to agree with Gerard, who had several good points;
- subsidies to the farming industry here doesn't necessarily help poor farm workers in the developing world
- subsidies aim at establishing local 'food security' (a 'nobel aim', as Gerard puts it)

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