PalenQ

Quoting BBC today verbatim: "40% of the European Unions' budget is made up of subsidies to agriculture, called the Common Agricultural Policy or CAP." The CAP currently totals a staggering $60 billion annually.

Current EU discussions apparently are aimed at reducing and eventually eliminating these subsidies though the usual suspects are opposing any cuts and even increasing them, in the case of the French, kings of agro subsidies.

I know my French in-laws and French in general favor keeping the land in agriculture because once it goes fallow it may never return - believing that they may need it in the future and also for their nostalgia for agricultural interests. (Bove bulldozes a MacDonalds and becomes a national hero.)

The U.K. is amongst those in favor of practically scrapping the subsidies and letting market forces dictate what agricultural interests do. And that these generous subsidies distort world food markets - making third world producers actually stop farming because they can't compete with the subsidized farm product prices with their tiny plots of land and primitive farming methods.

So for the average tourist driving or railing thru the bucolic countryside of Europe what does it all mean?

Well if subsidies are scrapped then many farms will disappear and the land will become even more alluring in its natural state - you may actually see some forests for instance and not just isolated trees.

And cows and sheep, etc. may disappear en masse in certain areas outside of Switzerland (which has its own staggering agricultural support - there is no way those tiny farms could be viable in a free market IMO)

There may be fewer 'Fromage de Chevre' signs along French byways inviting you in to buy goat cheese produced on the premises - though the organic and buy locally movement may well be a savior of some types of agriculture - but still a niche market. And Agro-tourism as well, like in France and Italy that is becoming so popular.

Cattle in Northern Ireland the the Republic of Ireland may decrease - the incidents of bovines being counted on each side of the border and thus getting twice CAP subsidies is legend.

Indeed one proposal is not to replace rural subsidies but to scrap the crop price supports and then give money to rural folk to safeguard the countryside.

So though vineyards look romantic too many of them may be uprooted and turned into wildflower fields, etc.

Comments? and all the info i report here are ideas and data coming directly from a BBC report.

Will Europe really cut the CAP?

Dukey

"...in the case of the French, kings of agro subsidies."

Then somebody in France has obviously been taking cues from the US Congress wouldn't you say????????

travelgourmet

They may have gotten the idea from the US, but the EU has perfected the practice. Per the link below, US agricultural subisidies amounts to approximately $16bn per year, or roughly a quarter of the amount cited above.

http://en.wikipedia.org/wiki/Agricultural_subsidies

AnselmAdorne

"... the French, kings of agro subsidies."

I think that depends on how you measure it, whether it's euro per capita, euro per farmer, or percentage of farm income that is made up of supports. Whichever measure you use, though, I think the Swiss, the Koreans, the Japanese, the French, and the Americans are all near the top of the hit parade.

Conversely, among developed countries, I think New Zealand has the lowest or close to the lowest subsidies. Not sure where the Australians fit in there.

Subsidies are only half the problem. Tariff walls can equally distort markets, as can practices such as diverting food to fuel, whether subsidized or not. (The Brazillins, by the way, make ethanol from grass. It could be imported to the US and sold for less cost than US-produced corn-based ethanol, but there is a huge protectionist tariff that makes Brazilian ethanol more expensive.)

And then there is the most odious of practices which we conduct in Canada: supply management, where quasi-governmental bodies with pleasant names like "milk marketing boards" assign milk quotas to farmers and set the price of milk at the farm gate (and, by extension, at the grocery store).

If anything in the world needs fixing, it's agricultural policies relating to subsidies, tariffs, and price controls.

Anselm

flanneruk

Before any American tries to pretend the US is less of a subsidiser than the EU, they might try looking at the suns involved in, and thne iontended beneficiaries of, the absurdly named Food, Conservation (!!!!!!), and Energy Act of 2008, and the majorities by which it passed through both Houses last week.

And the usual Democrat suspects on this site might try explaining why Bush and McCain are practically the only two people in your country opposing it.

AnselmAdorne

Interesting article on the US bill, from the Globe and Mail:

"Last week, the House and Senate overwhelmingly approved a whopping $290-billion farm bill that perpetuates and enhances one of the most sweeping subsidy regimes on the planet ..."

Full article at the Globe and Mail website:

http://tinyurl.com/4s3a65

AA

PalenQ

but of that figure a lot of money was for food stamps, etc for the poor

how bout europe's $60 bill - does it contain the same?

perhaps not because the regular dole is so good no need for food stamps?

but no doubt there was a lot of pork in the U.S. bill - welfare for the rich farmers

flanneruk

"but of that figure a lot of money was for food stamps, etc for the poor"

Cobblers.

It is - apart from a long-overdue concession to Haiti, meaning the country's products temporarily get the same access rights to the US they have forever to the EU - almost entirely welfare payments to America's richest farmers.

We can understand Michigan media not covering foreign affairs. But if they leave you so ill-informed about your own country, what on earth DO they cover?

PalenQ

crime, crime and more crime and sports, sports and more sports

twk

My family has been ranching in Texas for over 100 years, yet I'm appalled by the hypocrisy of our Congress in the current Farm Bill (and the one that preceded it, for that matter). The thing about US subisidies is that they are rather targeted. My impression (and I could be wrong) of EU subsidies is that they are pretty darn broad.

For beef producers, the only direct susbidy that I'm aware of ususally is in the conservation field--money for clearing brush, improving range, and that sort of stuff. There are no direct price supports. I suppose, however, that beef producers may indirectly benefit from price supports for other commodities which can be turned into feed, but I tend to think that doesn't really affect the beef producer's profit margin. I suspect (and I will note that I have not studied the subject in depth) that it all gets factored in by the market, and the guy who raises the cattle is going to make the pretty much the same profit regardless of his input costs--those costs (or savings, as the case may be) will get passed along to the consumer.

What is really sad about the deal is the impact that it has in the 3rd world. The system of international handouts is a poor susbtitute for having a market where producers in those countries had the incentive to maximize their output.

alanRow

So according to PalenQ there are no forests in Europe

PalenQ

trees yes but not forests at least in the American sense

In France 'forets' are trees planted in straight rows for the most part like corn in a field.

most forests i believe were chopped down during the last two world wars - no no forests in the sense of miles of wild looking unplanned forests that are periodically chopped down and re-planted.

PalenQ

alan - have you ever seen a real forest - coming from England perhaps not?

Padraig

twk wrote: "The system of international handouts is a poor susbtitute for having a market where producers in those countries had the incentive to maximize their output."

While handouts and dumping might cause problems in some places, the market does not solve all problems. Farmers in drought-stricken countries in Africa and flood-stricken countries in Asia may be maximising their output already.

twk also wrote: "For beef producers, the only direct susbidy that I'm aware of ususally is in the conservation field--money for clearing brush, improving range, and that sort of stuff."

That looks to me like underwriting costs. Reducing a producer's costs is as beneficial as increasing farm-gate prices.

The EU has recently scrapped a wide range of supports for particular farming activities, and substituted a single annual payment per farm (called, imaginatively, the single farm payment). The farmer has now more, but not unlimited, freedom to produce what he or she thinks works best.

PalenQ wrote: "Cattle in Northern Ireland the the Republic of Ireland may decrease - the incidents of bovines being counted on each side of the border and thus getting twice CAP subsidies is legend."

Like most legends, not quite true. Most of the dodgy counting involved pigs and sheep. There have been years, however, where fecundity in the Northern Ireland cattle herd was low, but an unusually large number of twin calves were born in the republic.

altamiro

>trees yes but not forests at least in the American sense

You obviously havenīt been to Germany, or Switzerland, or Italy...
(not to mention Sweden and Finland which are more or less one big forest with a few cities hidden in)

AnselmAdorne

twk, yes, the US subsidies are typically targetted, in this case to corn, wheat, soybean, sugar, peas, lentils, and chickpeas. I think US cotton is also protected, but by tariffs, not subsidies. Not exactly sure.

It's pretty easy to beat up the US on this but that is hardly fair. Most (but not all) developed nations support or protect the farmers in one way or another, some of which are more market distorting than others. (As an example, supporting a farmer to get out of tobacco farming and into, say, canola, might be a better use of public funds than supporting continued tobacco production in a falling market.) My own country is no exception, as noted in my earlier post.

But one cannot underestimate the power of the farm vote (and their lobby) in some developed nations. I remember reading once that it is the second most effective lobby in the US, right up there behind the NRA.

AA

PalenQ

Forests in Germany are largely dying i believe

Switzerland forests? few and far between

Italy? few trees under the Po river IME unless you count olive trees

Sweden and Finland yes do have proper forests but they don't count in Europe

GSteed

The world's food customer numbers are increasing by 6,000,000 plus a month. Subsidies are one way to lower costs and hence prices. Much of the subsidies can be reterieved using tax systems. There will be no effect on tourism. Tourists seek urban sites.

Jake1

"Cobblers.
It is - apart from a long-overdue concession to Haiti, meaning the country's products temporarily get the same access rights to the US they have forever to the EU - almost entirely welfare payments to America's richest farmers.
We can understand Michigan media not covering foreign affairs. But if they leave you so ill-informed about your own country, what on earth DO they cover?"

About 75% of the 290 billion goes for food stamps, emergency food aid, and other aid to feed the needy. 15% goes to farm subsidies and 10% to farmers who let their land go idle and other environmental efforts.

PalenQ

i suppose the EU is 100% dole for farmers?

as i said the regular dole precludes the need for food stamps in socialist countries like the U.K. and La France.