Crumb Trail
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Monday, August 18, 2003

The Guardian, confused and thoughtless as ever, has started a web log to advocate abolishing all agricultural subsidies. The kick-off post and associated responses preview what some have called a looney alliance of leftists and libertarians and others have called typical leftist attack on conservative rural values and communities. It may be all of those things but subsidies are an important issue.

Agricultural subsidies are damaging when they target production. This leads to overproduction, lowering prices and leading to further subsdised dumping in foreign markets. The benefits of production subsidies disproportionately accrue to high volume producers, which leads to industry concentration seeking economies of scale, as well as leading to agronomic methods that privilege production over resilience.

Fischler's reform proposals deserve attention since they advocated switching subsidy away from production to more durable agronomic concerns such as environmental management. Those proposals also advocate gradual lowering of subsidy level. When we look at the whole agroeconomic system rather than peering down a tube focused on just one bit of the system where there seems to be a political opportunity then Fischler's proposals seem quite good.

Farming is not just widget manufacture, not properly an industry like textile or automobile production, it is also land management. It is extensive rather than intensive. It is location dependent in ways that integrated circuit fabrication is not and slower to respond to changes in production strategy. Sitting in an office manipulating numbers and planning agricultural policy as an abstraction which equates the production of food and fiber with other types of production leads to nonsense policies.

Local production of food and fiber is not just a warm and fuzzy idea embraced by short sighted and narrow minded green barbarians-in-training. Every place requires management. Neglecting lands in service of a false concept of unmanaged wilderness doesn't bring about a pristine, primitive wilderness, it brings about an unlovely mess that may over geologic spans of time evolve to a self regulating though unstable wilderness very little like the one that existed before humans began managing the land eons ago.

Farmers have two major tasks; they produce food and fiber and they manage the majority of the world's area. Their activities determine air and water quality, soil fertility and bio-diversity, as well as food quality and volume. However, they are only paid for the food and fiber since environmental quality and aesthetics are not explicitly valued. They might get a little compensation from tourists but even that money is not well targeted or sufficient to reward good management. The most important aspects of farming for sustainability and resilience are externalities ignored by subsidies for production.

Eliminating production and export subsidies would stop ruinous over production but would not solve the existing problem of unbalanced valuation which ignores the value of land management to society. It would doom farmers to lives of comparative poverty and drive them from the land. Agriculture would become a bipolar mix of impoverished peasant small holders and huge agribusiness able to eek out margins with economies of scale enabling industrial methods. Then we would understand the value of what farmers had been doing since the land would erode away, floods and droughts would increase, air and water quality would degrade, and tourists would find little of interest in the moonscapes outside their urban hives.

Cities, from an environmental perspective no different than confined animal feeding operations (CAFO) - like pig factories which confine porkers to small areas where food is transported to them and wastes transported away - must pay for land management or face decline. They can hire armies of bureaucrats and field workers to do the monitoring, measuring, thinking and acting or they can pay farmers to do what they have always done without explicit pay. The cost of food would have to rise steeply to provide sufficient compensation for farmers or farmers can be subsidised not for production but for land management, for simply being farmers doing what they have always done for free.

If food prices rose to their true cost of sustainable production in developed countries the poorest members of society couldn't afford to eat. They would have to be subsidised. High prices to consumers would lead to importing cheaper food from places with comparatively lower costs of production in less developed countries. All developed countries would become net importers of food. This might seem to be the objective of those who claim that this is the road to development for poor countries but it ignores the reality on the ground in those countries. They don't produce enough food to feed their own populations at prices they can afford and those prices would rise too. The need for food is rising in poor countries since they are also the places still experiencing high population growth levels.

The market for food is not in developed countries, it is in undeveloped countries now and to an increasing extent in future. That market is not a premium market able to bear high prices and has different requirements, prizes different foods than developed countries. Not surprisingly, the foods they value are the ones well suited to being grown locally, ones that they eat now having developed the cultivars over the centuries of farming the area.

The market for food in developed countries is just the opposite. It is small and getting smaller as population declines. Fertility rates are far below replacement levels which will mean large population decline unless technology finds ways to keep those doddering old soixante-huitards alive and productive.

Immigration will even things out a bit, excess population will drift to available locations, but the point is that narrowly focused and static views of the world agroeconomic system lead to nonsense policies. Food needs to be produced close to where it is consumed for many reasons. Producing the desired types of food, in the needed quantities, at affordable prices while preserving and enhancing the environment and communities is the problem to be solved. Both current systems that subsidise production and proposed systems to eliminate subsidies are brain dead ideas that utterly fail to define the problem or offer workable solutions.

posted by back40 | 8/18/2003 10:18:00 AM


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