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EU minister argues for farm subsidies

Discussion in 'Issues Around the World' started by Swamp Fox, Jan 11, 2003.

  1. Swamp Fox

    Swamp Fox Veteran Member

    Why in God's name would anyone want to encourage money-losing farms in the Old World, which is overcrowded already? I wouldn't even encourage it in North America, which is still an empty land.

    The most sensible policy is to phase out agriculture.

    But what's the economic rationale for farm subsidies?
  2. Sierra Mike

    Sierra Mike The Dude Abides Staff Member

    Phase out agriculture?!

    In favor of...what?

  3. ditch

    ditch Downunder Member

    Perhaps not phase out agriculture altogether but certainly parts of it that require subsidies to continue producing. This is complicated by world prices that can fluctuate dramatically for some crops making it a hit and miss affair as to whether some produce is profitable or not.

    The farm lobby group is a powerful one in some countries and any move to change the status quo meets with a lot of resisitance. The French and American ag crops are subsidised heavily and both are reluctant to change their policies. Given that the contribution to the GNP is huge it probably is dreaming as the Frenchman put it, to consider phasing out agriculture altogether.
  4. Biker

    Biker Administrator Staff Member

    You guys priced farm equipment lately? I have and it's not a pretty picture. A run of the mill, 100hp (at the wiggle stick) tractor will set you back close to a hundred thousand bucks these days. Combine? Basic models will go for a cool quarter of a million. Add on your operating costs, seed costs, and drive the prices down on the market come harvest time and you wonder why farmers are hurtin'????
  5. ditch

    ditch Downunder Member

    Certainly don't wonder about Oz farmers hurting Biker. Its a fact. Especially with the drought here ATM.

    Subsidising the farm sector though creates "artificial" profit. I think the question is, should the govt subsdise or spend more elsewhere. Just where is matter for debate. To maintain profits in industries that are not profitable doesn't make a lot of economic sense if the industry cannot have a long term future without the tax payers proping them up. Its a case of robbing Peter to pay Paul.
  6. Biker

    Biker Administrator Staff Member

    But it's always been a case of Peter and Paul when it comes to governments. ;)

    I don't know.. Does the government step in and force an artificial inflation of grain prices so the farmer makes a larger profit? All that I see doing is raising prices all the way down the line for the consumer.

    Farming isn't easy, and most of us knew that and had our eyes wide open when we went into it. However, there comes a point and time where even the most stubborn of us need a helping hand.
  7. ditch

    ditch Downunder Member

    Sure. The farmer needs help sometimes as do other industries that find themselves in what they hope is temporary trouble. Its a hard nosed, and probably stupid, politician who says forget it if they cant pay their way.
    We have some pollies here saying that drought assiatance shouldn't be given. Its part of life on the land. I dont go for that however. If the decision is that the farm sector is a worthwhile contributor to the national economy, then they should be supported.
    But if that support is long term with no light at the end of the tunnel, a few questions need to be asked. If the only way to survive is heavy subsdisation I would think the funds are better off being spent elsewhere.
    Easy to say if you dont make your living off the land, I know. For those that do there's nothing that can be said that takes the place of an income and one you've relied on your entire life most likely.
  8. ShinyTop

    ShinyTop I know what is right or wrong!

    Just out of curiosity, if all countries quit subsidizing the farmers who will feed us? I think there is a more basic need of farmers than one more automobile company or airline.
  9. Coot

    Coot Passed Away January 7, 2010

    Farms as a business are subjected to much larger variances in market than are other businesses, and whether the farm is a corporate entity or a family business, the idea is that the risks should be contained within the normal ups and downs that other businesses are subjected to makes sense...on that level. By moving to constrain the costs associated with those risks, a more stable investment environment is maintained for the farmer. This also helps to serve the consumer as subsidies work to constrain large price swings that an unregulated commodities market would insure. The stabilization of food markets is key to stabilizing modern societies. A $10 loaf of bread only serves to destabilize whole economies.

    Now a discussion as to the efficacy of how and when subsidies are provided is quite another thing. Current programs, including the paying of farmers to fallow fields for extended periods needs to be questioned.
  10. Biker

    Biker Administrator Staff Member

    Shiny, there are those that say that the independent farmer is a dying breed and the large "conglomerates" should take over. Problem with that is you'll soon have a monopoly and the prices you pay will go nowhere but up.
  11. ditch

    ditch Downunder Member

    Shiny if we quit subsidising the unprofitable farm sectors and, to use Coot's example, for some farmers to not produce or plough crops into the ground, it may be a better long term solution. Imports can in a lot of cases be cheaper than the subsidised locally produced product which benefits the consumer of course.

    The big conglomerates will probably take over from the small operator just as they have in many other industries.

    The other side of the coin is when local unsubsidised producers get forced out of the market by cheap imports. That is happening here in Oz with only one Australian canner of asparagus. That same producer is also considering getting out of canning tomatoes due to the low price of imports from Argentina and Asia. The company I work for prints the labels for the local producer's cans. If they lose the work we suffer as well. No joy there either.

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