Sorry for addressing points that have already been addressed, but an extra 2c are still an extra 2c, right?
Jaypee wrote:I hope that this does not happen. Farming cannot compete globally in Finland without subsidies and I like to eat food produced in here. Even if it's more expensive. Call me paranoid, but I'm suspicious of the preservatives, additives and hormones that they use in foreign countries to pruduce food. Of course at least some those things are used in here too, but it's still nice to know that the food you eat is locally produced and extremely tightly regulated.
What you want is a non-economic trade barrier. Such barriers are already in place (i.e. Europe won't import genetically modified food, or anything that some commission doesn't deem 'safe'). Using subsidies for the role you're describing is highly impractical.
Local farming is also a issue of national security, you must have an option to produce food quickly in a time of crisis
This is the only semi-valid excuse, but it's a purely political one and for that matter I don't want to get into it right now. Sufficient to say, I don't think it's plausible that all food-producing countries will boycott countries not producing food.
I would be grateful if someone could explain all this to me. Obviously most of the people who have posted here know about farm subsidies and are against them. It is not clear to me why they are seen as clearly bad and I would like to know more of the arguments. In particular:
I see that 80% of the subsidy goes to large Agribusiness farms. Is this true in every country which gives subsidy? Is it possible that this is only true in countries where other pressures have led to centrilisation in agriculture. For example that process followed the "cheap food" policy pursued in the UK before that country joined the EU. That was nothing to do with the CAP but it did meant that when Britain joined the large farmers benefited most as they were also the biggest sector in the business. Could the CAP work better if it was implemented before that change had started?
Who in Europe benefits from the subsidies is to a large extent irrelevant, I think.
Since farming is capital-intensive and an industry that generally benefits from economies of scale (i.e. costs per unit lower as size of firm [farm] increases), the most efficient and competitive farms would be the largest ones so in capital-rich Western Europe it would make sense that most farms are large, explaining the figure and suggesting that the rest of Western Europe would follow the same trend (when 90% of food is produced in large farms it'd make sense if a lot of the benefits went to those large farms). However, if the subsidies were lowered it'd be most likely the small and thus ineficient farmers that will burn, meaning they're the ones benefitting the most.
Regardless of who exactly the subsidies are supporting the most, the fact is they're encouraging inefficiency and waste. Those who would be unable to compete at the world prices are better employed somewhere else.
In France I have noticed a very wide range of food options and a diversity of outlets even in the smallest places. This does not exist in the UK where small villages and towns; and even poor parts of cities are food deserts where little is available and what there is is expensive. What role does the CAP play in this difference?
I very much doubt it. I think it has a lot to do with local tastes and culture. If the small English villages were willing to pay for a diverse range of foods, there would be some enterpreneur who would deliver them.
If food subsidies are removed then what evidence is there that food prices will fall.
Cold economic theory
On the face of it this doesn't make sense to me since the costs of importing food are surely fairly fixed. If a country cannot produce what it needs it must import. Even leaving aside the environmental impact and the uncertaintly of the subsidies to fuel which lead to imported food being artificially cheaper than the real cost, it seems possible that food prices will rise, not fall.
It'll be easier if I answered your question with an example.
Scenario A:
On average it costs a German farmer 10 Euros to grow a bushel of wheat. The world price of a bushel of wheat is 5 Euros. In a totally free market, all German farmers who can't produce wheat for under 5 Euros would become bankrupt, and hopefully find a new job, since consumers will buy food from abroad. The land where they had farms would be used for something else which is more profitable. People rejoyce as they can buy cheaper food, more efficient firms rejoyce since they can use previously unavailable resources, 3rd world farmers rejoyce since they are selling food to Europe and making a profit. Local farmers grumble.
Scenario B:
On average it costs a German farmer 10 Euros to grow a bushel of wheat. The world price of a bushel of wheat is 5 Euros. The German government buys everything the farmers produce at 10 Euros/bushel and sells it at a loss for 7 Euros a bushel (imposing a tariff of 2 Euros/bushel on imports to minimize their losses). Since the price is artificially high, farmers are encouraged to produce more (which is then bought by the government and sold at a loss) and the consumers are encouraged to consume less. More production coupled with less consumption leads to an oversupply. This is the butter mountains and wine lakes you've been hearing about.
Local farmers rejoyce. Local people are unhappy since they have to pay more for food
and pay higher taxes for the subsidies, farmers in poor countries are unhappy because they can export less food, the community as a whole loses out because resources are being allocated to farms as opposed to something which is more competetive in the country (resources meaning both the land and the human capital).
The Timbro research institute has
cited figures pointing that on average, Europeans have to pay 80% extra for their food due to the CAP.
At least in some years. In the UK this would mean that the poorest could not afford even the very poor diet they eat at present. What proportion of any savings would have to be spent to raise low wages and benefits to compensate for this ?
All of those are reasons against the CAP not for it
If the subsidy makes food in the west cheaper than it would otherwise be it seems to follow it will get more expensive if the subsidy is removed.
Domestic food is cheaper than it would be. If there were no subsidies, it would be more expensive to produce so the consumers will switch to foreign food (as you yourself said). Consumers won't have to pay a higher price.
Presumably this will be met by buying food from developing countries (the thrust of the open the markets demand. I think). Again questions of costs of transport both in money and environmental terms remains.
I'm not sure what the question of transport is. Yes, transport costs money, and if the cost of foreign food and the cost of transport added together is more than the cost of domestic food, then no imports will take place and domestic food will continue to be consumed. In most cases though, it's cheaper to have someone else produce the food
and ship it than it is to produce the food domestically.
If the subsidy leads to overproduction can the same transport money not be used to send the surplus where it is needed as an addition to indigenous production. I dont see why this will necessarily undermine local markets, though there may be good reasons why this is inevitable
The reason it's inevitable is simple. If I were a farmer in Kenya, I'd have to sell what I produce. Now, if all of the sudden all this free food is available, who'd buy my food? With no one buying it, I'd have to sell my land, and mule (and firstborn), effectively going out of business, so that when the free food is gone I won't be able to feed myself or anyone else.
As to the above: 1. You say they'd thrive without subsidies. They don't in the UK. Evidence ? 2. I don't see how you can have it both ways. If, even with subsidies, the trend is to bigger "agribusiness" type farms, how will abolishing subsidy help? If the fixed costs are a large proportion of the total costs in standard food stuff production why is it different in the niche market? In Britain the distribution network has a very large impact on what constitutes standard food stuffs, as does the marketing industry. Eating patterns have changed a lot here, partly because of this. It seems to me that people eat what they can afford and this is relatively elastic (there is some support for this in a study of food subsidy I found here:
I agree with you here - Europe's food production will definitely shrink, and it's most likely small farms that'll go out of business (I'm assuming small==inefficient, here. It's possible that small farms target niche markets, but I have absolutely no knowldge of the matter). However, why shouldn't day? Why would small farmers have some sort of inherent right to stay in business? Not to sound like a vicious right-winger, but I, as a taxpayer, don't owe them a living. This is different than social safety-nets, which I support.