SD on 6/7/2006 at 15:33

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Nuh-uh. You don't honestly think organisations like Oxfam and Save The Children and Christian Aid would oppose subsidies if it meant people in developing countries would be harmed, do you?

See, because of the subsidies the EU and US give to farmers, the market value of agricultural goods is below what it costs to actually produce them.

Absurdly, this means that it is currently cheaper for Kenya and Ghana and Liberia to import rice and wheat from the EU than it is for them to grow that stuff themselves. I'm sure I don't need to tell you what kind of effect that has on farmers in those countries.

By repealing subsidies and curbing this excessive agricultural production and (consequently) raising the market price of these goods, we are actually opening markets for farmers in the developing world, rather than closing them, because it would actually be worth them growing the stuff in the first place once again.

SD on 6/7/2006 at 21:15

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brilliant simply brilliant


...

You aren't convinced by the argument that reducing the supply of something will force demand and, subsequently, value upwards?

You want to back that up with some solid economic theory, or is it just blather?



What does that last sentence even mean?

SD on 6/7/2006 at 22:41

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So, TGGP, are you telling me that if we remove this cheap EU grain that undercuts the natural market price, that the market price of grain will not necessarily rise?

SD on 7/7/2006 at 00:01

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I very much doubt it, the price of food with subsidies in place is less than it actually costs to produce ;)


Yes, Africa isn't quite the barren wasteland that many people in the West might believe it is, and I'm sure any of our resident Africans will be happy to confirm this for you. Africa, and indeed the rest of the developing world, is perfectly capable of producing enough goods to sustain quite a healthy market.


I'm not saying we should stop trading with the rest of the world entirely. It's a little difficult to grow bananas in Austria, for example. But it's somewhat ridiculous that the apples I buy from my local supermarket should come from Chile or South Africa when the farmer literally down the road from me is capable of producing them.

demagogue on 7/7/2006 at 01:02

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All just add three tidbits to this, while I'm thinking about it, that:

- Dropping subsidies, while a great first start from the perspective of development, still leaves challenges. E.g., most of the developing world farmers pushing the dropping of subsidies are actually relatively rich farmers that market in their own cities, where they are actually in competition with undercut EU imports. There is the possibility that most of the gains of dropping subsidies will actually be captured by the few richer farmers in a developing country, leaving the majority of poor farmers out there in the hinterlands little or no better off in developing their markets or production. That is to say, it's still worth doing, but it might not necessarily be the silver bullet people hope it will be. It may end up largely just making the already well-off in developing States better off.

- While I think it's right that dropping ag subsidies should also boost domestic markets, for all the reasons said here (because the global market will increase prices, so more capital and investment to develop supply, the "perverse" argument that EU imports can undercut their own domestic markets, etc) it still remains that one of Africa's main hopes in the Doha Round for dropping them is to increase its export market to the EU. And I wonder if the subsidies drop how the EU thinks it can keep their markets from being inundated with developing world crops ... since other routes run against EU customs and WTO obligations and (economically speaking) are just as bad if not worse than subsidies: tariffs, quotas or quantitative restrictions, environmental or health standards (you *really* have to have solid scientific proof this stuff is dangerous to avoid a WTO violation) ... except for one route, which is my next point, but then there are other issues with that I'll explain there.

- StD is right on, I think, that the "food security" argument is the main and best argument against allowing too much reliance on foreign crops. I'll actually answer my question above and say that the "food security" argument is a good one in that, because it appeals to national security as its main interest, it's on pretty solid political and legal footing ... No international organization is going to tell a State it can threaten its ability to secure it's national food supply, e.g., in the case of war or the threat of being blackmailed by supply States. The problem is it's quite hard to draw a line here; I mean, how much latitude to foreign crops is *too* much? It might allow the EU to put a quantitative restriction on crops, but not a very big one ... since the EU really has to argue its entire food security could be at stake if it allows any more in, which may be hard to make slam-dunk case for in all but extreme cases; it only goes so far (although for some it may be far enough). I mean, this is probably precisely why States want to avoid the argument altogether and just have a straightforward subsidy or tariff (on top of the "usual suspects" reasons, political capture by farmer lobbies, etc). If the subsidies do drop, I'll be very interested to see how the US and EU handle this issue (and Japan is a whole other story, since there's no really domestic support for dropping subsidies at all, given that it's a mountainous island State where the idea of creating incentives for "efficient farming" doesn't quite make much sense, and there's less public sensitivity towards "int'l humanitarian" sorts of issues).