Sunday, April 20, 2008

Colbert lives!

France has launched a political campaign to restore protectionism to the CAP. French farm minister Michel Barnier has called on Europe to establish a food security plan and to resist further cuts in the EU agriculture budget. The EU should resist WTO pressure to cut farm subsidies. In contrast, Gordon Brown has called for a world trade deal that cuts subsidies to richer countries.

One might think that tighter supply and demand, producing higher food prices would mean that farmers would need fewer subsidies to carry out the commercial aspect of their work as they would be better placed to obtain a return from the market. Admittedly, the buying power of supermarkets that allows them to be price makers and often makes farmers price takers is an issue, especially in the UK, but what that requires is a more effective application of competition policy. Input costs are also rising, but smarter farmers are working out what they can do to use fertilisers more sparingly and more intelligently.

As the Financial Times commented last week, 'The bias towards home production in richer countries betrays ... a historic affection for farming that is often bound up with emotional attachments to culture, cuisine and landscape.' Interventionist measures that boost farmers' incomes may create shortages in global markets, accentuating the problems of those who have to depend on imports: what has been called a 'starve your neighbour' policy.

France says that the EU should increase aid to farmers in developing countries, but that often does not really help the farmers themselves and is really a political fig leaf for continuing the European subsidies game. Just as it seemed as if the skids were under subsidies, a new set of justifications has appeared.


Anonymous said...

Im curious about your comment that aid to farmers in developing countires does not actually help the farmers there. Care to elaborate?

Wyn Grant said...

It depends on what the aid is used for and how it is administered, many NGOs have a better record in this respect. Aid has, however, been misappropriated. It is most helpful if it is used for (appropriate) infrastructure, for the dissemination and application of relevant knowledge etc.