Econ Dev Prof sez that . . .

[Lawrence of Arabia]

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.

which would make farms bigger on average, and more productive and thus able to withstand those shocks more, making prices more stable.

but back to the original point. are developped economies really self sufficient and more productive in agriculture then developping ones?

[Shogun Gunner]

Originally posted by Lawrence of Arabia

which would make farms bigger on average, and more productive and thus able to withstand those shocks more, making prices more stable.

agreed. which makes subsidies less appropriate now than in the past.

but back to the original point. are developped economies really self sufficient and more productive in agriculture then developping ones?

Yes, developed countries have advantages as automation, transportation, and for some, large populations to buy these products. I would argue that they are more productive.

Regarding self-sufficient, that would depend on the climate, population versus farmable land of the country in question. The United States? Self-sufficient without a doubt.

[Lawrence of Arabia]

so if 1st world economies are more prductive, then you could say that they have a comparative advantage in producing agricultural products (lower oppertunity cost) and higher wages. why then do many producers need subsidies in the developped world in order to compete?

[Shogun Gunner]

*bingo*

That is a good question.

[Lawrence of Arabia]

(that was my first question )

[Imran Siddiqui]

And I think Shogun's first post answered it .

[KrazyHorse]

Originally posted by Lawrence of Arabia


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.

WTF are you on about?

Agriculture in the developed world is not the major employer. Wages at market equilibrium would be higher for farmers here than in the third world, but not enough higher to meet 1st world living standards.

[KrazyHorse]

Basically, a factory worker or software engineer in the first world is so much more productive than a farmer in the first world is, that without subsidies 1st world farming could not provide a living wage to its practitioners...

[KrazyHorse]

Or at least not at the current level of agro-production.

If subsidies were removed then:

a) Food prices would rise
b) Some of the marginal producers in the first world would go under (the rise in prices would obviously not completely cancel the lost revenue from subsidies)
c) This production would shift to the third world

[GePap]

The first world most certainly can feed itself, in terms of basic staples: the US is a massive exported or grain and soy-lots of Mexican farmers are goign bust cause they can't compete with US corn and wheat growers.

Now, when it comes tot hings like Sugar, Coffee, Cotton, and other such commodities, there things get dicey.

[Lawrence of Arabia]

WTF are you on about?

Agriculture in the developed world is not the major employer. Wages at market equilibrium would be higher for farmers here than in the third world, but not enough higher to meet 1st world living standards.

yeah but heres the problem. if 1st world farmers were more productive, then you would see them supplying the goods at lower prices. when they supply them at lower prices, they can sell more of it, making larger profits, and pushing out LDC less productive farmers (and grabbing a larger market share)

if they were more producitve you woiuldnt see them neeeding subsidies to survive.

[Sandman]

First world farming is basically a heavy industry requiring a huge input of water, chemicals, machinery and energy. This allows large yields, but also confers high costs.

Some crops (sugar, cotton) are simply better suited to third world climates, as well.

[Kidlicious]

Originally posted by 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?

[trev]

The USA and Europe have heavily subsided agricultural systems and this subsidy makes them uncompetitive on a non-subsidised basis. Countries where agriculture is subsidised to a minor extent only eg Australia and New Zealand can and do compete globally with non subsidised exports of developing countries.
Economic theory shows that costs generally rise (or fall) in any economic system to a long term level that is sufficiently under the returns to allow a reasonable profit. As subsidies tend to increase the return to farmers, they also tend to increase the cost basis also, thus negating the intention of the subsidies.
This cost basis is increased by a tendency to pay increased money for labour, or for machinery when returns are higher, but particularly important is the tendency to pay more for land when profits are increased as a result of subsidies. This benefits existing farmers, but makes it much harder for new entrants to the industry, entrants with fresh ideas who may have increased productivity and reduced costs.
Agricultural subsidies are therefore a serious drag on the economies and productivity of most 1st world economies. It is interesting to note that the two 1st world economies with the lowest subsidies also have had above average economic growth in recent years, Australia and New Zealand.

[TheStinger]

subsidising your farmers so your country can be self suffcient is just about ok, but to subsidise production so that your surplus undercuts the prices of developing countries is economicaly inefficient and morally wrong