[Fiona]

[quote=Lestat]Well, those small farmers that thrive are playing on our quest for different tastes and natural (bio-)products. They'd probably thrive without subsidies. There is the policy of "terroir", of regional branding, of niche play which is very strong in France.
In general, you will see that even in France, farm size is increasing and the number of farms is steadily decreasing. I can't give figures like that, but you'll see that those farmers growing the more standard foodstuffs need a certain critical size. And bigger is better, since many costs are fixed (remaining the same for large bracket of production level) not variable (varying with production level). While production subsidies are directly related to level of production.[/quote}

Lestat

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:

http://www.ifpri.org/pubs/books/ppa88/ppa88ch01.pdf

(Please forgive if this is not the right part of the book - Cuchulain 82 has taught me a bit about the mechanics of posting but I am still very clumsy and find it hard)

Let's take a simple tariff: you add 10% to the price of imported wheat, wheat prices go up with 10% in the EU. The farmers in the EU will get more income, and the citizens of the EU pay more for their bread. But as long as you are importing, some money finds its way to the state.
Encouraged by this higher price, more farmers grow wheat, so much that they supply the whole internal market. And then more... To keep the price at the level that it was, the EU is now obliged to pay an export subsidy for the wheat it is now exporting to keep a price difference of 10% and is losing money (so you are paying as tax payer and as consumer)

I don't see how I am paying twice. I am paying in two different ways, one of which (price of food) is regressive and one of which(tax) is progressive. At the risk of being facile this sounds good to me, though the tax is not as progressive as I would like to see.( I am assuming the subsidy comes from general taxation not consumption taxes since in the UK food is exempt from VAT. This may not be true everywhere)

The environmental question: would you prefer capital intensive (high energy consumption), high use of chemicals and little labour in EU (think greenhouses for tomatoes in winter), or labour intensive, low use of chemicals in a country at some distance away. OK this is simplifying and not perfectly true, but agriculture in Europe is of the most energy intensive in the world (may Japan beats it).

If we have surplus, as you suggest, I don't see that this is truly a choice. You acknowledge this is a simplification and you might like to elaborate. At present I think that I would need to know how the costs of chemicals are fixed and if they truly are fair. I don't know how the costs and environmental impact of transport are included in your calculation. The link above also discusses the less obvious benefits of releasing people from direct food production into other areas. Could it be that the strong manufacturing and financial and service sectors can only exist where farming is not labour intensive ? The strong economies seem to get their wealth from concentration on sectors other than food production. Why would poor countries get rich in a different way ? Surely they need both capital and labour which is free to develop more technology etc. I am not saying that the environment wouldn't benefit but I am saying there is more to it than letting poor countries produce all our food, quite apart from the dangers of putting food into the same situation oil was in in the 1970's. Where a crucial commodity is controlled abroad it seems to me to lead to conflict and the potential for serious dislocation.

The question of getting surplus where it is needed: the horrors of food aid ! I understand the real sincere feeling behind it , but there are few things worse to happen to a country than food aid.
1. Seldom a famine has been caused by lack of food, mostly it is a question of access to food (and thus: income). People die, because they cannot afford to buy food. Most of the time there is enough food available if not always on the spot, then in the country or in the region.
2. Giving out free food harms local farmers and food producers who see prices plummet, and percentage of people in this category is much higher in developing countries. It should be done only in dire, sudden emergencies.
3. If there is a need to hand out food, buy as local as possible (if there is not enough food in that country buy with the neighbours). Tastes and preferences are not the same. (eg: Maize in EU: fodder, Maize in Africa: staple food; different strains, different tastes).
I once spoke to a Ugandan scientist about this and he got really worked up about this issue.

Again, see the link above. I am aware that many people would argue that the abolition of aid etc would be the best thing that could happen to many poor countries. In the book above it shows that things are not that simple. In particular:
1. Even if you are right and famine is (normally) a question of access people still die.
2. When the poor are given access to food through higher income or subsidised prices they eat more. According to the book this generally means that food has to be imported at least for a time. This does cause problems, which are fully elaborated there, but it does not suggest there is usually enough food in situ
3.I don't see how giving out free food can cause prices to plummet. The poor aren't buying it they are dying instead. How can feeding them affect the market directly. Indirectly they are more likely to be able to work and produce if they are fed. Wouldn't that be beneficial in the long run ?
4. As to tastes and preferences, I have already alluded to that above. It is more elastic than you suggest (though there have been major errors in the past, they are sometimes based on religious taboos and more often on fundamental misunderstandings. For example, in the UK for a long time government and researchers advised the poor to buy cheap cuts of meat, dried beans etc and spent money to teach them how to cook them. This patronising approach was a complete failure because the poor could not afford the fuel to cook things for a long time)

Well if those people grow pppies they can pay for their potatoes... and much more potatoes than they could have grown.

Perhaps true, but maybe immoral ?

If they choose to grow a cash crop, they have good reason for it.

Certainly. People are not stupid. My point is they often do not have a free choice.

But in cases where food is exported, while people are starving: look for government involvement.

Yes, but. The world bank and the IMO etc place demands on governments in desperate situations and this seems to me to be based on a theory of economics which, as I said before, does not seem to me to work.

And if everyone starts growing cash crops and noone food crops, you'd be surprised how quickly the price of food crops would go up, and thus become cash crops.

To the point where the proportion of the population living below the poverty line increases. What good is that ?


Apparently I am out of space so I am going to add another post even if this is a strong hint that I am overdoing it. Sorry