Sell Yer Euros

[Dinner]

We did and our farmers got hammered for two years thus the reintroduction of the subsidies. All of the rich countries would rather have their farmers fat 7 happy sucking welfare from the state while the rest of the world's farmers are starving to death then to risk offending this lobby.

The best possible solution is to end market distorting subsidies and let free trade run its course.

[CerberusIV]

The basic current problem is that the French voters (not unreasonably) gave two fingers to Chirac's government for mainly domestic reasons. Chirac then dragged up the UK rebate to distract attention from a French originated crisis by manufacturing a different crisis he could blame on Britain. Juncker is either a complete idiot or in Chirac's back pocket. He could, and should, have deferred the budget decision for a few months once it became clear there would be no agreement.

The Irish government are unhappy about this because the EU agreed a level of farm subsidies in 2002-03 to run for ten years and Ireland, and presumably several other countries, aren't prepared to pull the rug out from under their farmers by going back on what the farmers have been promised. The correct point to tackle the UK rebate was when the current CAP arrangements were being negotiated a couple of years ago. I don't know whether Chirac either didn't get his way then or didn't push the issue but it's too late now and he knows it.

Not subsidising farmers isn't really an option in Europe for various reasons. The newer members need some support to get their agricultural industries modernised, Britain needs to give money to smaller farmers to maintain the landscape and other countries wish to support a traditional industry. So not helping is to abandon the sector and cause major domestic political upset.

The real issue is who gets the money and what for. I don't know how French agriculture works but the problem in Britain is that increasingly the Government would like to support smaller farmers in areas where the traditional landscape is important, partly for tourism reasons. Supporting a purely commercial operation farming prairie sized fields in East Anglia isn't high on their list of priorities, paying a hill farmer to maintain drystone walls in the Yorkshire Dales is a bit further up that list.

A sensible compromise from France might have been to accept a lower overall CAP budget but target it domestically at more for the smaller farmers and less for agri-business (if that is possible in France) when the current round was agreed. But Chirac seems to be too much of a dead duck in french domestic politics for that.

I don't see much hope of any real movement until Chirac, Blair and Schroder are off the stage.

[Lawrence of Arabia]

We did and our farmers got hammered for two years thus the reintroduction of the subsidies. All of the rich countries would rather have their farmers fat 7 happy sucking welfare from the state while the rest of the world's farmers are starving to death then to risk offending this lobby.

The best possible solution is to end market distorting subsidies and let free trade run its course.

who cares if our farmers got hammered - they cant produce efficiently anyways, or competitively, whether the euros have subsidies or they dont.

[Dinner]

Want to bet? The Euros almost universally have higher costs due to greater fertilizer usage and smaller farm sizes. The larger farm sizes and less need for expensive additives means the US based farms have much lower costs and much higher volumes to work with. This is especially true of the corporate factory farms which dominate the US farm industry.

The real reason the CAP was introduced was because European farmers were being strangled by American competition and the subsidies shifted things back into their favor. The US countered to shift things in the other way and the big losers in all this have been the tax payers who have to pay for it all and third world farmers who get drownd in a sea of excess 1st world farm produce.

[Lawrence of Arabia]

Want to bet? The Euros almost universally have higher costs due to greater fertilizer usage and smaller farm sizes. The larger farm sizes and less need for expensive additives means the US based farms have much lower costs and much higher volumes to work with. This is especially true of the corporate factory farms which dominate the US farm industry.

and the third world takes them both, so its really irrelevant if the US farmers smash the euro farmers because the third world farmers smash all. (btw, europe doesnt grow cotton, which is the most highly subsidized agricultural good in america, so I dont see how an increase in the cap challeneges the US cotton extorters)

[Dinner]

Originally posted by Lawrence of Arabia
and the third world takes them both, so its really irrelevant if the US farmers smash the euro farmers because the third world farmers smash all. (btw, europe doesnt grow cotton, which is the most highly subsidized agricultural good in america, so I dont see how an increase in the cap challeneges the US cotton extorters)

Cite on cotton getting the most subsidied and that it is subsidized to a greater extent then many other crops in Europe or Japan? If you'd like I can link cites showing US farm subsidies per acre of farmland are half that of the EU 15.

Further more the third world will win in commodities crops like grains which can be stored and shipped long distances and they will take over much of the agricultural business since they're cost structure is so low but not all. It is desirable for the third world to export more crops since they have nothing else to export but crops or raw materials and the lower prices will be good for consumers. That said many people will still want fresh locally grown or organic produce which will be locally supplied. Many restaurants demand locally made goods or varieties which large commercial producers don't want to deal with so there are always alternatives for daring farmers to persue. Competition wll be tight but 1st world farmers will benifit by being close to the big markets and by having the best infastructure.

[Lawrence of Arabia]

For example, the U.S. has only 25,000 cotton growers, but they are prosperous (with an average net worth of $800,000) and thus influential. So the U.S. spends $2 billion a year subsidizing them, and American production of cotton has almost doubled over the last 20 years -- even though the U.S. is an inefficient, high-cost producer. The result is a glut that costs African countries $250 million each year, according to a World Bank study published in February.

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Kristof, Nicolas D. "Farm Subsidies That Kill." New York Times, 5 July 2002. Section A, Page 19, Column 1; Editorial Desk

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According to reseearch done by Frankel and Romer, the US should eliminate its subsidies no matter what the euros do: a 1 percent rise in the share of trade in GDP raises income per capita by 2 percent

[Straybow]

Dang, I wish I were currency trading

[Dinner]

That quote was so transparently unobjective! He speaks about networth like that means a damn thing. The truth is most family farmers have everything locked up in land and can't use it to get cash without morgaging their family farm. On paper it says they're filthy rich but in reality commodity prices, adjusted for inflation, have rarely been lower. Cotton is a prime example because China's government has started a massive new cotton growing push in the last 10 years so that China can substitute imported cotton for Chinese made cotton and thus keep more of the profits its massive textile factories are creating. That's all well and good but it also means that despite surging sales of textiles cotton prices are near record lows.

Thus the US steps in with farm subsidies to keep 1st world farmers a float and 3rd world farmers are literally starving because they can't sell their raw cotton for enough money to buy food. It's just another example of how government interferance in the market is bad and just distorts the proper function of the market.

[Dinner]

http://www.fb.org/issues/analysis/China_Briefing_Issue13.html

China passed the US in cotton production around 2000 based mostly on state subsidies to cotton farmers (cheap loans for planting, free water in desert regions, etc) and a heavy dose of protectionism to keep out foreign grown cotton. More then 50% of the world's cotton is grown in the US, China, and Pakistan with a bunch of second tier producers in Asia, Africa, and South America making up the other half.

[Lawrence of Arabia]

(1) theres nothing 'familial' about cotton farming. the average farm is 1,000 acreas.

(2) cotton prices are at record lows because between 1995 and 2003, the US dumped 11 million bales on the open market, causing prices to fall by 48%. cotton now sells on the market at 40 cents US below what it costs to make it.

(3) China exports none of its cotton. the US exports 40 - 60% of its cotton.

(4) 10 million africans depend on cotton for their livelyhood.

http://www.organicconsumers.org/clothes/224subsidies.cfm

[aneeshm]

A question : Why doesn't the US lift agrucultural subsidies , and prohibit importing of agricultural goods from countries that subsidise their farmers ?

[Dinner]

Originally posted by aneeshm
A question : Why doesn't the US lift agrucultural subsidies , and prohibit importing of agricultural goods from countries that subsidise their farmers ?

Fear of retaliation? My guess is that the WTO is already working as it is supposed to if at a rate so slow that most people can't see it. Cotton subsidies have been declared illegal and the same logic (good logic I might add) can be applied to every single farm subsidy on the planet. It will take some time for the WTO to deal with this on a one subsidy at a time basis and it is to bad all subsidies can't be reviewed and declared illegal in one case. The world would be better off if it was so.

[Dinner]

Originally posted by Lawrence of Arabia
(1) theres nothing 'familial' about cotton farming. the average farm is 1,000 acreas.

(2) cotton prices are at record lows because between 1995 and 2003, the US dumped 11 million bales on the open market, causing prices to fall by 48%. cotton now sells on the market at 40 cents US below what it costs to make it.
url]http://www.organicconsumers.org/clothes/224subsidies.cfm[/url]

That means the US sold 1.3 million bales of subsidized cotton on the world market (assuming that's what you meant by dumped) during that 8 year period. China used subsidies to double production from 3 million to 6 million bales per year. The big increase in supply and thus the big decreases in price were brought about by Chinese government policy. The US production has remained flat even with subsidies.

China doesn't need to export its cotton until it is in finished form because their labor is so cheap and western markets so open that every western or even third world producer is shifting production to China. It sanity reigned then foreign markets would tarrif the hell out of finished Chinese textiles until they stopped playing the subsidy game. That won't happen though.

[Lawrence of Arabia]

That means the US sold 1.3 million bales of subsidized cotton on the world market (assuming that's what you meant by dumped) during that 8 year period. China used subsidies to double production from 3 million to 6 million bales per year. The big increase in supply and thus the big decreases in price were brought about by Chinese government policy. The US production has remained flat even with subsidies.

no, it wasnt the chinese who caused the drop in prices. China doesnt export their stuff, and they didnt import much before they started producing it like no other. beween 1997 and 2003, (china became a net importer in 1999) the international flow chart shows that one third of US imports of China/Japan/Indonesia/Korea are US imports of cotton. China is a net importerer, not an exporterer.

The US also accounts for 50% of world exports.

EDIT: my facts were wrong. between 1995 and 2003, the US dumped 11 million bales per year on the open market.