Bush to Drop Farm Subsidies if EU Does the Same

[Fiona]

@ Lestat. I may be dense but I don't think the article does answer any of my questions.

I don't think I am offended because I am left leaning, though I do think a big part of the article is mere playground insult, and that does offend me.

Although it says that the recipients of the subsidy are the big farmers it neither denies the fact that small farmers thrive in France nor does it demonstrate that is independent of the policy. My question remains.

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. 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. 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

I also worry about the export of food from nations where there is not enough to eat. There have certainly been examples in the past where that has happened because these countries have little else to export and there is also the example of the move to cash crops such as opium. No matter how many subsidies we remove a farmer is always going to get a better price for poppies than potatoes, surely

The article just assumes that a free market is always better. I know this is a popular view but I just don't see any evidence for it at all. Wherever free market liberalisation has been imposed as a condition of aid or debt relief or whatever poor economies quickly become basket cases. Sadly the free market proponents always seem to counter that evidence with the stolen cry that the experiment has not failed it just hasn't been properly tried. They then demand more of the same.

Can you start your course please

[CM]

The EU will not get rid of the CAP for the next 20 or 30 years. Plus Bush knows that. Even though Bush is pro-free trade, his vote base is agriculture. So he won't do it. Plus with CAFTA he has knocked out the US sugar industry so he won't be dumb enough to eliminate 20 billion dollars in subsidies. Plus this flies in the face of WTO negotiations that were conducted just last year.

Last year the US and EU forced developing countries to accept 20 billion dollars in subsidies to be placed in the Blue Box. (http://www.wto.org/english/tratop_e/.../agboxes_e.htm - an explanation on the boxes)

The US farm bill and CAP are amber box. But the additionally 20 billion was blue box. So they are "supposedly less distorting". They aren't. They are just amber box subsidies placed in the blue box.

Secondly right now at the WTO and negotiations are under way on NAMA - Non-agriculture market access. They have yet to touch agriculture at all.

[Lestat]

Originally Posted by Fiona

Although it says that the recipients of the subsidy are the big farmers it neither denies the fact that small farmers thrive in France nor does it demonstrate that is independent of the policy. My question remains.

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.

Originally Posted by Fiona

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. 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. 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 CAP, which is a very complicated system of tariffs, export subsidies, production subsidies, price controls and quota with different regimes for different produce, does not make food cheaper, in fact in many cases it makes it more expensive. Prices for sugar on the worldmarket can be half of what it is on the internal market.

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).
Price controls work in the same way, only you don't get the benefit of income from tariff.

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).

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.

I also worry about the export of food from nations where there is not enough to eat. There have certainly been examples in the past where that has happened because these countries have little else to export and there is also the example of the move to cash crops such as opium. No matter how many subsidies we remove a farmer is always going to get a better price for poppies than potatoes, surely

Well if those people grow poppies they can pay for their potatoes... and much more potatoes than they could have grown.
As said before, there are few places/situations were there is not enough food to go around. If they choose to grow a cash crop, they have good reason for it. But in cases where food is exported, while people are starving: look for government involvement.
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.
BTW Liberia imports rice, peoples favourite staple food, and exports rubber. Nobody is starving here.

Originally Posted by Fiona

The article just assumes that a free market is always better. I know this is a popular view but I just don't see any evidence for it at all. Wherever free market liberalisation has been imposed as a condition of aid or debt relief or whatever poor economies quickly become basket cases. Sadly the free market proponents always seem to counter that evidence with the stolen cry that the experiment has not failed it just hasn't been properly tried. They then demand more of the same.

Obviously, a free market is not always better, but when it's not better it is because not all costs are reflected in the price. But reflect on this: is it better to subsidise the price of a foodstuff or of petrol (and thus lower price for everyone) or let the market play and give money to those that are needy?
Most countries who opened up their economy have done actually better (Chile is fine example, when compared with more mercantilist Argentina, and China is doing also fairly well with market oriented reforms). And often those countries that you refer to were basket cases to start with. But liberalising the economy is not enough, you need strong institutions, rule of law, governance, etc. A free market is best at setting the right prices, but don't ask it to write the budget of a country or set its policies.

[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

[Fiona]

Obviously, a free market is not always better, but when it's not better it is because not all costs are reflected in the price. But reflect on this: is it better to subsidise the price of a foodstuff or of petrol (and thus lower price for everyone) or let the market play and give money to those that are needy?
Most countries who opened up their economy have done actually better (Chile is fine example, when compared with more mercantilist Argentina, and China is doing also fairly well with market oriented reforms). And often those countries that you refer to were basket cases to start with. But liberalising the economy is not enough, you need strong institutions, rule of law, governance, etc. A free market is best at setting the right prices, but don't ask it to write the budget of a country or set its policies.

Not sure about your first sentence. I think you have again introduced a false dichotomy when you suggest we either target money to the needy or subsidise food. Many countries target food subsidies with complicated outcomes depending on how it is done; what the aim is etc. As I said in my original post it is necessary to consider whether the increase in wages/incomes which would have to take place to offset the removal of subsidy would work out better. The book I have read suggests it would not.

In practice I fear food would go up but the concomitant adjustment would not take place and the poor would just die in greater numbers.

As to your final point, of course. It seems to me that the free marketeers have been telling a story which suggests that the problems are largely due to government interference and regulation. I disagree. I think that any progress in the quality of ordinay people's lives is directly tied to increased regulation of business. It is not always beneficial but it is, broadly. Business is only interested in profit (indeed is legally required to make share value their only goal, at least in the UK). A strong democracy is the best preventive medicine for famine, and that is why the free marketeers have an interest in conflating the two concepts.

Finally, I do not know what you mean by "mercantile". I did look up some facts about Chile and Argentina and the article did not seem to unambiguously support your case. I was interested to note that Chile has 22% of people living below the poverty line and that no figures were given for Argentina. Do you know any more ?

[Lestat]

@ Fiona: I'm not reacting for the moment, cause I'd like to read first the linked text and I'm preparing tests for recruitment of a driver. Discussion will be continued.
Food for thought though: remember that the CAP does not cover all agricultural products (notable exception: potatoes), and does include some non-food products as tobacco...
I'll try to find some up to date info on the Commission's site (though it is notoriously difficult to navigate).

Edit: I'm not so sure about the potatoes anymore (though some important price fluctuations are clearly allowed), but found that some other crops oh so typical for our temperate climates are included: rice & cotton. Alas no real time google and search around.

[Luis Antonio]

Originally Posted by C Elegans

Don't even get me started on Europe's agricultural subsidies. Unfortunately I am convinced we will never learn whether Shrub bluffs or or not since I believe the EU would prefer to sink in the Atlantic rather than allowing a free market for agricultural products.

Why? Both economies are known to subside their agricultures to insane levels. Brazil has a serious lack of competitivity because of the european subsides, and we have been trying to disrupt this... lets call "habit" for years, without success. If Shrub can do that, it'll be the only good thing he did in his whole government.

Agreed. Too many votes in certain nations that have gotten used to those agricultural subsidies over the years. I'm sure Bush knows that as sensitive as the EU is right now to the recent constitution rejection, they're not about to drop farm subsidies.

Yeah, Shrub knows. And EU wont drop the subside without a major change in the market policies for commodities. But that COULD be good for both, if other economical barriers were lowered. I'm not an EU economy expert but I'm sure that tons of agreements could happen to lower those "habits" and, lets say, unlock many barriers for the whole world. And I'll add my personal opinion here: were not EU so conservative about their own commodities barrier, we would not have such problems when diseases are spread in the fields and shorten the supply of food to their own table.

The EU will not get rid of the CAP for the next 20 or 30 years. Plus Bush knows that. Even though Bush is pro-free trade, his vote base is agriculture. So he won't do it. Plus with CAFTA he has knocked out the US sugar industry so he won't be dumb enough to eliminate 20 billion dollars in subsidies. Plus this flies in the face of WTO negotiations that were conducted just last year.

Fas, I cant disagree with your comment regarding the market, but see, BUSH IS COMPLETELY PROTECTIONIST. He'd close US market if he could. We're lucky he's not Emperor of the US. Alas, when he was elected, between us economists there was the rumor of bad news for commerce. Then he was re-elected, and we were certain that those were bad news for commerce.

[Lestat]

Oh well another quick contribution: for those who want to know more about the effects the CAP has in developing countries, check out Oxfam's site (www.oxfam.org) and use their search function with the terms CAP or Common Agricultural Policy, and you'll get a wealth of information. Since internet is rather slow here, I do not have the time to parse through it, but if you need any convincing, look there.

And just as a little extra, I looked in my cupboard and what did I see on my can of NIDO? "Prepared in the UK".
So if you were wondering what happens to those surpluses of milk and wheat and such: subsidised by European taxpayers they are transported to developing countries and dumped on their markets, neatly undercutting (or annihilating) local production. And in the case of milkpowder, sometimes replacing breastfeeding...

[Cuchulain82]

@Fiona, Lestat

I can't jump into the debate about the European CAP because I know nothing about it. However, I can talk a little about US farm subsidies, and my understanding is that they are far more destructive on the global scale than Euro subsidies.

The US produces a huge amount of food annually. Agribusiness here is so efficient at growing and the land is so perfect for cultivation that we make food like no one else in history. This isn't American bravado, it is a basic truth. Have you ever looked at a map of the US? The central part of the country is basically flat, with whole states (ie: Kansas) devoted in large part to growing or producing food- corn, soybeans, wheat, cattle, etc. IMO, this is a truly amazing feat, and I have heard it said that theoretically, the US could feed the entire world (this is far fetched, and usually involves every person being a vegetarian).

I say all this because the agribusiness of the US is so efficient at growing that they have become inefficient from an economic standpoint. Agribusiness is very capital intensive (as Lestat said)- big tractors, fertilization methods, irrigation, etc. This capital-intensive approach means that farmers have been able to produce more food, and anyone who has taken macro economics 101 knows that when there is a surplus of a product in a market, price goes down. So, farmers make up for the drop in prices by... producing more crops to cover their losses! Essentially they make up profit margin with volume. You can see where this is going.

Now, in a free market, eventually supply would outpace demand until farms couldn't compete, went out of business, and the relationship stabilized. However, because the US has farm subsidies, this can't happen. The subsidies establish an artificial price floor. The market can't ever fix itself, and so farmers keep overproducing milk, wheat, etc.

So far this is just bad domestic economics, but when you look at it in a larger context things really get messy. Because we here in the US subsidize our farmers (to the tune of $26 billion, btw), global prices for goods go into freefall. This hurts developing nations the most; with lower cost of labor and a majority of the population in agriculture, lesser developed nations (ie: most of subsaharan Africa) should be competitive. However, the subsidies here keep global prices too low for them to compete.

The best example of this that I know of is cotton. When I read a report about this a few years ago, the global price of cotton was around 26 cents/unit African nations, like Burkina Faso and much of Western Africa, should be competitive when cotton prices are 30-37 cents/unit. US producers of cotton were generally at or under that 26 cent price with farm subsidies included. However, when subsidies were removed, it was estimated that US producers priced cotton at 50-70 cents/unit- clearly not competitive. So, by my calculations, we are taking money from poor Africans.

(an article I found about cotton while googling- Oxfam)

Furthermore, most often farm subsidies work by the government buying goods at an artificially high price. This means that the government ends up with huge amounts of excess food that they can't get rid of domestically- cheese, butter, grains... all filling up warehouses across the US. Usually what happens to this food (the stuff that doesn't go rancid, that is) is that it gets used as... food aid abroad! This food aid goes abroad to nations that, because of us, can't compete globally in agriculture. These nations, often full of the stereotypical "starving africans", accept the food because they basically have to: their people are starving and they don't want to get in to trouble with the US politically. So, a cycle of dependance is established- the countries can't compete because we subsidize food, so the food becomes food aid that is sent to those countries that can't compete. You know that proverb about giving a man a fish and feeding him for a day, or teaching him to fish and feeding him for his life? We're definately giving them fish and deliberately keeping them from fishing.

Many people argue that these subsidies are equal parts domestic voter politics and international power play. Agribusiness lobbies are very powerful here, so subsidies don't ever go away. Plus, food aid is a valueable point of leverage internationally. Is it devious? Yes. Does it make sense? Yes. Do I think it should be undone? Absolutely.

Anyway, I hope this all makes sense. I wanted to back up my previous statement about how important undoing agricultural subsidies would be.

If anyone is still interested, here is another study I found about the impact of subsidies on developing nations:

http://www.ifpri.org/media/trade/tradebrief.htm

@Fiona

If you have any more questions about posting, don't hesitate to ask. I'm sure you will get the hang of it.

[Lestat]

@ Cuchulain: basically the CAP works the same and has similar effects. But you are clearly better at explaining.

Secondly, I'm working from my current and recent personal experiences and memory of my studies (MSc Agronomy + additional studies Business Economics) and have no access to written sources (my litterature on the subject is at a few thousand miles distance). Internet access is slow (a GB page takes at least a minute to load, if I am lucky...) so it takes too much time to do a thorough surfing search for info. So, sorry if my info is a bit hazy on detail.

[Jaypee]

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.

Also if the EU subsidies are dropped out the local governments in Northern Europe (where crops just don't grow too fast) just add up more to their portion of subsidies. Local farming is also a issue of national security, you must have an option to produce food quickly in a time of crisis.

[Cuchulain82]

@Lestat

Thanks for the compliment! I figured you had it under control... I just wanted to say my piece.

Originally Posted by Jaypee

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.

That's the whole point of a market-based solution. If you want to buy something, you will be able to. It is just that the market will set the price, not the gov't. Furthermore, agribusiness will be hard hit by a reduction, not small farms. The general concensus is that they will be able to survive because they have a geographic advantage (ie- the local market) and aren't as capital intensive.

Originally Posted by jaypee

Local farming is also a issue of national security, you must have an option to produce food quickly in a time of crisis.

That is a major justification that Bush uses to keep subsidies in place.

[Lestat]

Originally Posted by Jaypee

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.

Sorry, but most of your fresh produce will continue to be produced in Europe, with or without subsidies. Fresh produce is not that easy to transport over long distances. And there is such a thing as labelling. In Belgian supermarkets you'll find a whole lot of products specifically labelled with a "Dit is Belgisch!" (This is Belgian) label. So if you prefer local produce and want to pay extra for it, well, you're probably not the only one, so there will be market for it, so people will produce. But other people might prefer to pay less and go for a foreign product, if it costs less.
And the biggest scandal is in fact that because of the subsidy system, food products are exported from Europe to be dumped on the markets of developing countries.

[Fiona]

I haven't got a lot of time just now so I'll just make a couple of points here:

1 @ Lestat.We are blaming a lot on subsidy. From article linked in your post there is a lot of support for what you say. I was interested in this quote however "Until the early 1990's Jamaican farmers were largely protected from these subsidised imports and the sector was doing well. But when the government was forced to liberalise imports as part of World Bank-led adjustment policies, dairy farmers began to suffer". Import tariffs and protectionism have been effective ways of developing an economy from the UK in the 19th century to Japan and Korea in the 20th. The free marketeers are now successfully forbidding this, with the results we see. Although Oxfam are taking the line you suggest, I am not sure they are right. Maybe they think it is all they can get. As I said before I think the "solution" is maybe part of the problem.

2. @ Cuchulain 82. You say that the surplus production is the reason for the dumping. The ERS USDA report on food security for 2003 reported that 11.2 % of US households suffered food insecurity that year and 3.5% suffered hunger. That is apparently 3.9 million people. It would seem that abundance doesn't account for the exports, or am I missing something ?

You mentioned economics 101. I did that. One of the main things I learned was that this model only works if you lose reality completely. The demand/supply relationship is absurd. People who cannot afford to buy a commodity at all are left out of the measure of demand. So people who are starving are not demanding food - too scientific for me, I'm afraid

On your other point - Please excuse the exclamation mark. I hit it accidentally and I can't get it out. Any tips on cut and paste? I had to type that quote as I couldn't copy it. Thanks in advance

[Cuchulain82]

Originally Posted by Fiona

@ Cuchulain 82. You say that the surplus production is the reason for the dumping. The ERS USDA report on food security for 2003 reported that 11.2 % of US households suffered food insecurity that year and 3.5% suffered hunger. That is apparently 3.9 million people. It would seem that abundance doesn't account for the exports, or am I missing something?

Well, you're not really missing anything, you're just correlating two sets of unrelated data. Unfortunately, the large amount of food that the US sends abroad as food aid has nothing to do with domestic hunger/malnutrition. Domestic programs dealing with hunger (ie- foodstamps) are seperate from foreign aid. I agree with your underlying point- that if we are sending food abroad, every domestic citizen should be well fed. However, the situation is complex and I don't think there is an easy answer.

Originally Posted by Fiona

You mentioned economics 101. I did that. One of the main things I learned was that this model only works if you lose reality completely. The demand/supply relationship is absurd. People who cannot afford to buy a commodity at all are left out of the measure of demand. So people who are starving are not demanding food - too scientific for me, I'm afraid

Well, you're partially correct, but not completely. Classical econ is absurd, as Keynes proved- ie: before him economists thought that a prolonged defecit was impossible, and the great depression blew that myth up.

However, the demand-supply relationship is very real- remember all those graphs with X's shifting up and down and left and right? That is demand and supply. In this case the important factor is the price floor that subsidies create. The subsidies create a situation where excess supply is sustained. The ripple effects of this (artificially low world price, the inability of LDCs to compete, etc.) are what kills African nations.

Originally Posted by Fiona

On your other point - Please excuse the exclamation mark. I hit it accidentally and I can't get it out. Any tips on cut and paste? I had to type that quote as I couldn't copy it. Thanks in advance

I use the "quote" button most of the time. That copies the text of whatever was written in the post you are quoting. Other than that I just use the "copy" and "paste" functions in my browser's "edit" menu. If you want to figure out the nuts and bolts of what happens when you change your posts, try editing an old post of yours and seeing what happens- making it bold, then deleting one of the two "[b]" sections. You're doing just fine now, and I'm sure you'll master it shortly.