Econ Dev Prof sez that . . .

[Lawrence of Arabia]

developped countries are a) self sufficient in agriculture products and b) more productive in terms of agriculture.

why then is it that developped countries feel the need to subsidize agricultural products to the tune of $350 bn a year?

[Shogun Gunner]

special interests

[Lawrence of Arabia]

maybe the prof is wrong . . .

[Dracon II]

Because its cheaper to produce food in developing countries.

[Shogun Gunner]

agriculture is a cyclical industry prone to boom and bust.

I believe one of the original intents was to guarantee continued investment (employment) of farmers into the food business. However, large corporations have taken over from the small family farmer and price supports are less appropriate.

Another argument is that investing the "small" amount of money into our agriculture impacts the developing countries' agriculture industries leaving the advantage to us

[Lawrence of Arabia]

but the price is the same, whether you buy from abroad or not. there is an single international price for the agriculture good, like cotton, or whatever it is that you are growing.

[Barinthus]

Really? I thought it was cheaper to buy from 3rd world countries?

[KrazyHorse]

Re: Econ Dev Prof sez that . . .

Originally posted by Lawrence of Arabia
developped countries are a) self sufficient in agriculture products and b) more productive in terms of agriculture.

why then is it that developped countries feel the need to subsidize agricultural products to the tune of $350 bn a year?

b) doesn't mean more bushels of grain per dollar; it means more productive per acre

Labour is so much more expensive in the first world that inefficient 3rd world agriculture will outcompete it...

[Lawrence of Arabia]

Really? I thought it was cheaper to buy from 3rd world countries?

not anymore, with subsidies that make prices lower in rich countries, plus transportation and other such costs for bringing over stuff from LDCs

[Lawrence of Arabia]

b) doesn't mean more bushels of grain per dollar; it means more productive per acre

Labour is so much more expensive in the first world that inefficient 3rd world agriculture will outcompete it...

but again with b), if it means more productive per acre, then why must the 1st world have subsidies to keep them in business, knowing that

W = P x MP

i mean, that equation insinuates that the more productive you are, the higher your wage will be, so you will outcompete the rest and wont need subsidies.

[Kidlicious]

Originally posted by Shogun Gunner
agriculture is a cyclical industry prone to boom and bust.

[Shogun Gunner]

LoA is right. The subsidies have the effect of lower US agriculture costs keeping them competitive with the cheaper labor of the 3rd world.

It's also not very politically palatable to import food and become dependant on imports for something as critical as food. Japan has rigid rules of protecting it's rice industry for this reason -- however, they have no choice but to import food as they cannot produce enough for their populations needs.

[Lawrence of Arabia]

its not prone to 'boom and bust'
its prone to fluctuations in prices.

its two different things. when production increases and prices go down is that a boom or a bust?

[Shogun Gunner]

great years in production push down prices...however the effects are delayed because of the growing season...the delay of planting seeds to harvesting product and getting it to market.

unregulated, the swings between prices can be enough to push small farmers into debt and out of farming.

[Lawrence of Arabia]

It's also not very politically palatable to import food and become dependant on imports for something as critical as food. Japan has rigid rules of protecting it's rice industry for this reason -- however, they have no choice but to import food as they cannot produce enough for their populations needs.

also true. and as a side not, countires like japan with little arable land, actually ahve a leg up on aagricultural productivity versus others (to a point obviously) because they need to constantly increase productivity to feed the more and more people in the cities, (not enough land for them all to work as farmers) while countries with a lot of arable land will have more farmers, less people to feed, more land, and less incentive to be more productive.