| Muck and Mystery Loitering With Intent |
blog - at - crumbtrail.org |
It's frustrating when someone is struggling to make a point that may be valid but they stumble and fail to make it.
A lot of the reason that subsistence farming entails so much misery, however, is that we've decided for some reason that it's a really good idea to offer subsidies to farmers in this country (subsidies which, for the record, mostly benefit agribusiness and not the nice folks whose farms I pass every day on my drive to work). By subsidizing relatively rich American farmers, we make it impossible for farmers in developing nations to compete.Nonsense. The US only subsidizes a few commodities, and almost none of them compete with subsistence farmers anywhere. It is large agribusinesses in comparatively wealthy middle tier countries that are impacted by US subsidies. This isn't a justification for US subsidies, but let's damn them for their real harms rather than making up stuff.
The US is a small market for such commodities anyway. The population is pretty small. The real demand for food in the world is in developing countries, a fact that will become ever truer as time passes since their populations are growing more quickly too. But they have two problems: they have less money to buy imports and they have high tariffs against imports from other developing nations. They have the power to drop their tariffs and help their people, but that isn't the objective of international trade whingeing.
Perhaps worse, the majority of developing countries are net food importers. If the US (and the EU which has even higher subsidies) were to reform themselves the world price of food would rise, for a while, and make life even harder for those least able to bear more burdens. The world production system would be in disarray for a while as opportunists scrambled to take advantage of new opportunities, and soon there would be overproduction of those foods and a price drop. When all the blood, sweat and tears dried food prices would be back down and those countries that can't compete now would still be unable to compete.
This is a common confusion.
It really is galling how we (and Europe) screw over the rest of the world with farm subsidies. Its inverse comparative advantage- we pay extra for our high cost producers and put world farmers out of business, thwarting development and sticking it to our own (quite rich by world standards) poor. In fact we pay for it thrice; once in taxes for subsidies, once at the check out line, and once again in taxes as development aid. If we’d just let them farm commercially by refusing to overproduce food, they’d make money the old fashioned way. The extra bonus would be that superintensive farming would lessen in the developed world, which has environmental benefits. If the goal is to keep the family farm-type lifestyle and/or pastoral land use in play, then we should explicitly make policies to support that goal rather than trying to do it indirectly through subsidies.Simple ignorance explains some of this confusion, but it is poorly reasoned as well. World farmers are not put out of business by developed world subsidies. You only need to look at crops not produced in the developed world, such as coffee, to see that this is a nonsensical proposition. We wouldn't have "fair trade" whackos if subsidies mattered for these things. If the US prohibited farming of all sorts and imported everything prices would still be low and subsistence farmers would still be starving. There are too many of them and too few of us for our behaviors to matter. In a couple of decades the developing world population will increase 10 times as much as total US population. Our 300 million is chump change compared to the 5 billion current residents and 3 billion new people expected in the developing world. We're fat, but not that fat.
Eliminating subsidies won't help "family farms" either. Those that can't compete now won't be in any better position trying to compete with the developing world. Their costs of production won't fall, and farm gate prices of commodities won't rise. They need a new business plan.
Shifting production to developing countries won't reduce environmental harm, it will greatly increase it. They use more energy per unit of production by a factor ranging from 3 to 7. They produce less with the same land and resources, or said another way they use more land and resources to produce the same. Often they have less of these resources than needed just to feed themselves, and expansion of production will increase pressure on whatever undeveloped areas they have, further reducing critical environmental services such as water, as well as biodiversity etc.
US (and EU) subsides need reform, but the arguments these folks make are nonsense.
thanks.
r2_jane@yahoo.co.jp
Indeed, thanks. Good information, well reasoned and well explained.
So, then, what *does* need reforming about subsidies and why?
Posted by: Cal at May 10, 2006 12:48 PMHi Cal,
You could check out these earlier comments.
Briefly, subsidizing production makes no sense, though the argument for environmental subsidies such as the reformed CAP is edging toward are less obviously wrong. In that case the wrongness comes from implementation: there is no good implementation even though the theory seems sensible.
There are supporting statements for those views in earlier posts if you want to check them out. I may be able to say more later, after work, but I'm pressed now.
Posted by: back40 at May 10, 2006 01:22 PM