Nigel Meek draws the attention of readers of the Libertarian Alliance Forum to this leader in yesterday’s Guardian. He is right to do so. It is short enough and good enough to be worth reproducing in full, which he does for LAF, and which I do for Samizdata now:
It is difficult to find anything in the European Union more perverse than its continuing subsidy of sugar. It fails every test miserably. It is economic madness since the EU is shelling out hundreds of millions of taxpayers’ money – that could be used to reduce its growing budget deficit – to grow crops at a loss that could be better grown elsewhere. It is immoral because subsidies prevent poor countries from growing sugar that would create hundreds of thousands of jobs. It is also unhealthy because it is encouraging the subsidised output of a product that the World Health Organisation, courageously – in view of the vested interests attacking it – says we should be cutting back on.
If the figures – published in a new Oxfam report, Dumping on the World, this week – were applied to any other industry, they would be laughed out of court. Oxfam claims the EU is spending €3.30 to export sugar worth €1, an almost unbelievable support of more than 300% – and that is only part of the elaborate welfare package bestowed on the industry. These hugely subsidised exports are dumped on developing countries, snuffing out potential economic growth that could enable them to work their way out of poverty. All they want is a level playing field. Is that too much to ask for? Oxfam – quoting World Bank figures – also claims that sugar costs 25 cents per pound weight to produce in the EU compared with 8 cents in India, 5.5 cents in Malawi and 4 cents in Brazil. The world price for raw sugar is 6 cents a pound. It is bizarre that European governments reconciled, albeit reluctantly, to call centres being subcontracted elsewhere will not let go of sugar output which, left to market forces, would long ago have migrated to the third world. Sugar producers, with twisted logic, use Brazil’s low cost of output as a reason for retaining subsidies on the grounds that it will not be really poor countries benefiting, only the medium poor.
The simplest solution would be to abolish all agriculture subsidies, even though it would, in the short term, hurt a minority of poor countries that might lose out to the likes of Brazil. Once exceptions are granted, then everything is up for grabs, and trade and talks would be dragged down by interminable bargaining. If complete abolition is deemed impracticable in the short term, then at the very least Europe should commit itself at once to the complete abolition of all export subsidies, direct and indirect. Apart from the huge relief it would bring to poor countries, it would also restore Europe’s long-lost moral leadership.
It would take more than one measure of this sort to “restore Europe’s long-lost moral leadership”, but if such an unattractive delusion is what it takes to get rid of these vile and murderous subsidies – yes murderous, because economic failure is a matter of life and death, especially when inflicted upon the very poor, then so be it. Apart from that, I see nothing here to disagree with.
I posted here last summer about this blog. It is still going strong, and the ideas embodied in it still seem to be having an impact.
A cynical attempt to reach out to the pro-free-trade blogosphere, which has to get a nod from the real operation, the Guardian itself, otherwise it just looks ridiculous? Maybe, but who cares? And I am sure that Mr kick-AAS means every word of it. Ancient proverb say: window dressing often take over shop. What matters is that this kind of thing is being said, right across the political spectrum.
I wish the US and EU would now enter a terrible struggle to see who can remove agricultural subsidies the fastest – starting with suger.
The enemy of my enemy is my friend.
Lets create an unholy alliance with the tranzis who are backing an end to these subsidies. If the anti subsidy brigrade can win just one battle, it will set a precedent helping with future battles.
Death to the CAP, life to the third world.
How do you decide the winner in a race where no one crosses the finish line? The EU won’t repeal the subsidy because there are too many other subsidies equally indefensible, and no Eurocrat wants his own pet project put to sleep. The US has been talking about this for decades, but with Florida a political toss-up, no politician will go near this issue now. The governor of Florida, btw, is the president’s brother.
Thank you Mitch. There is alot more to this than “let’s repeal the susidies.” There is not alot of connection between the damage subsidies do and their existence. The truth seems to be that the subsides will go away when they no longer have political significance. And the point also doesn’t seem to be the defensibility of a subsidy. As long as the subsidy has a constituency that is either powerful or has full or partial king making ability it will stay.
Oops. Third sentence should have read “there is not alot of connection in the public mind about……”
Over caffienated.
Jonathan L – Sing it brother!
For god’s sake let them into our markets! (Richard Cook, I know, but it is unjust and it is within our power to correct it.)
It is wicked to keep Third World producers out of our markets. Their participation in our markets would benefit us all. It would give them more advantages than the begging bowls they are obliged to hold out to the World Bank could possibly supply. And it would give those of us in the wealthy West tasty produce. I love bananas from the Ivory Coast and Martinique. Compared with giant cotton wool bananas from Hawaii, there is no contest.
It’s time to recognise the law of evolution. Western producers have bred themselves out of existence with ever-bigger products tasting of ever less. Let us allow them to march to Greed Oblivion and enjoy tasty and cheap produce from the Third World. It is shocking that the faceless rulers of Europe deny them their chance to do business.
Verity
I know that it is unjust. However, we need some kind of organized action. As long as there are voters and they feel threatened by competion subsidies will be there. When voters are willing to accept “free trade” then we will see subsidies threatened. Right now the vibe I get talking to folks is that, while they don’t agree with the subsides, if they where in the threatened workers place they would be pushing for subsidies too. Concering sugar is the margin between what we pay now for it an what it cost for unsubsidized enough so the voters would even care one way or the other. Chicago has lost most of its candy industry due to the cost of subsidized sugar, however, I did not hear anything about the cause being subsidies. The issue made nary a ripple here (I work in Chicago every day).
Personally I’ve never understood why 3rd world countries object to 1st world sugar subsidies. If 1st world taxpayers are fleeced in order to provide cheap sugar to 3rd world consumers, why should the latter complain? It’s no different to Korean taxpayers subsidising their electronics companies to provide cheap electronic kit in Europe. Why should we complain if Koreans want to give us money in the form of cheap tellies?
Just playing devil’s advocate you understood, but still …
The Guardian article and the spurious Oxfam positions it trumpets have siginificant defects.
$300 mil a year for about 300 (?) farmers, that’s what we pay.
Chicago was the candy capital of the US, most of them are gone. Even LifeSavers moved to Canada.
We pay 13 c more per POUND because if it.
And some “experts” think we’re fatter cos we have to use the corn extract in soda, instead of sugar. It’s all under the same bennies.
The real problem with the left’s argument is that it is all wrong. If we remove all European subsidies ( which are designed to reduce production) then some famers will go to the wall – others will buy up their farms, introduce more mechanisation and temporary work ( which is all you really need for most farming) and out farm the third world even more. This is why prices will fall. The west has the best infrastructure, climate, soil, and technology for farming. And the bext access to ports. And the best storage. For Chrissakes this is why we have to pay them not to produce. ( And I should add that political stability helps too)
Ridiculously enough the left ( and libertarians) often argue that the third world is starving, or malnourished and yet has surpluses to sell to the west. With the exception of some crops ( like sugar cane, and cotton) this is clearly untrue. And contradictory.
The point is often made that the “labour costs” of the third world producers are lower. This seems tempting. The majority of the world’s destitute – people who live on a dollar a week – are farmers, or the family of farmers.
Two points. That dollar is not labour cost – it is surplus. These farmers are independent producers, by and large. They eat what they produce, and sell or barter the rest to earn a dollar a week. Profit, not wage.
Also, a hundred thousand acres with a hundred thousand people per acre is clearly not going to produce the same food surplus as a mid-western farm on the same acerage run by one family, much mechanics, and less than a hundred temporary labourers come harvest time.
Not sure if such a large farm exists anywhere – but you get my drift. The way to wealth for a country is to have less farmers and more city dwellers working in the manufacturing sector, or technology.
Which is why every time I read Naomi Klein I giggle. She recently opined that “globalisation” was disruptive of small farmers in the poor world. Which is to cede my point – even though she often makes the opposite point about liberalising farm trade to help the third world farmer.
I want to give her, and Monbiot, a book to read on the industrial revolution – and say – yes, small farmers will be disrupted if a country is ever to become rich. And you do want that, don’t you?
I grew up in rural Ireland , in a class with 25% famers sons, mostly university bound, most to vocational degrees, many to engineering.
As adults they are not now farmers which is why – at least in part – we are richer than we were then, though we grow as much food as we need, export more, and could produce even more if the subsidies were removed.
Good policies are to be encouraged, even if adopted by mistake. I doubt Oxfam and the Guardian are about to reject neo-mercantilism for other purposes, though. Let a newly comfortable tropical sugar farmer choose to use his better income to buy an American tractor, or plant some GM cane, and then see how long their committment to his prosperity lasts.
back40, care to expand on your blog post linked via your signature? You point to some problems but I’m not sure what solution you’re proposing.
Brazil is currently destroying rainforest in an amount equal to the land area of Belgium every year to grow soybeans for export to Europe. The last thing the planet needs is further increase in Brazilian agricultural products for export to Europe. The last thing Brazil needs is further investment in the production of low value commodities. They do not aid development, they support the modern equivalent of the old European slave colony in which land barons grew wealthy at the expense of slave labor. What is worse in some ways is that industrialization of agriculture deprives even the slaves of jobs. They are replaced by machinery leaving them to starve in the favelas surrounding cities, living off the pickings of refuse heaps.
http://www.garyjones.org/mt/archives/000054.html
I should add that back40 wrote a good article against feeding cattle on the superiority of raising cows on grassland as opposed to subsidised grain that should be of interest to freemarketeers.
http://www.garyjones.org/mt/archives/000043.html
I know Pravda comes in for some stick here, and rightly in many cases, but they are running a story on the effect of EU sugar policy in Estonia:
http://english.pravda.ru/world/20/92/372/12522_Estonia.html
Take with a pinch of salt (or sugar if you can still find it in the shops).
EG
Eoin writes:
“The real problem with the left’s argument is that it is all wrong. If we remove all European subsidies ( which are designed to reduce production) then some famers will go to the wall – others will buy up their farms, introduce more mechanisation and temporary work ( which is all you really need for most farming) and out farm the third world even more. This is why prices will fall. The west has the best infrastructure, climate, soil, and technology for farming. And the bext access to ports. And the best storage. For Chrissakes this is why we have to pay them not to produce. ( And I should add that political stability helps too).”
Ridiculously enough the left ( and libertarians) often argue that the third world is starving, or malnourished and yet has surpluses to sell to the west. With the exception of some crops ( like sugar cane, and cotton) this is clearly untrue. And contradictory.”
At last, a breath of intelligence on this issue! I quote at length because Eoin’s posting should be read twice, three, many times until Samizdatarians know it off by heart.
People in the Third World starve partly because they are ruled by exploitative despots, and partly because there are too many of them — they reproduce too rapidly. They have boom-burst population patterns. Improving their agricultural productivity as such may not even do much good in the long run, just as the introduction of the potato to Ireland merely increased the number of people earmarked for starvation when the potato famine occurred, as it inevitably had to.
The book to read is Garrett Hardin’s ‘Living within Limits’ — reviewed here.
More here.
Even if Charles et al were correct about the negative repurcussions of expanding developing world agricultural exports, I would still argue against subsidies because compulsory taxes pay for what consumers will not.
Just read the Oxfam report and it advocates a policy of managed quotas, restricted market opening and redistributing of subsidies. I see this as merely tinkering with a corrupt cartel subsidised for the benefit of billionaire sugar barons at the expense of tax payers and family food budgets. The benefits it denies Third World farmers are enormous and immoral, altering the system at the margins is not the answer, ending the cartel is imperative.
Oxfam’s own report admits as much “Free-market purists will object to this approach. They will argue that it perpetuates the distortions of the current regime – and they are partly right. However, the proposal does offer major advantages, including the elimination of export dumping, the creation of a stable market for some very poor countries, and support for adjustment in the ACP group. Countries as diverse as Mozambique, Mauritius, and Brazil all stand to gain. Corporate lobbyists in the EU will reject the proposal on different grounds, notably that it is bad for large-scale beet growers and processors. They too are right. But there will be major advantages for EU taxpayers and consumers, and – if the proper measures are put in place – for small farmers and the environment. More broadly, our proposals would enable the EU to contribute in a meaningful way to global poverty-reduction efforts – and to a resumption of the WTO ‘development round’ negotiations. The EU is part of an interdependent world – and sugar is one of the commodities that link Europeans to poor countries.”
Oxfam concludes that “Interdependence brings with it the potential for shared prosperity. But it also implies shared responsibility, including the responsibility to put public interest and a commitment to global poverty reduction before private vested interests in the sugar sector.” Well, if as they say, Globalisation can bring shared prosperity, is there any point in tinkering, we should be advocating the complete opening the EU’s markets to the Third World.
Paul d s – Right on! Throw our markets wide open to the Third World and let all our boats rise on the tide of prosperity! Also, their produce tastes better. It would be to our advantage, not the advantage of the EUSSR CAP.
Ha Ha. The last two comments convince me that libertarians are as nutty as marxists. in fact, I strongly suspect many of you are ex-Marxists, and are looking for a new utopia. If we repeal the CAP then we will be awash in food from starving Third World Nations. There will be lots of “Prosperity!!” It would be to “our” advantage ( we proletarians, no doubt) And. AND!! Their produce tastes better. Well, except for tropical produce, and exotics which can’t be grown in the West – how would we know that? It doesn’t get in
Read my last comment. This alliance between Guardianistas and the Libertarian nutty fringe must end in tears.
Eoin,
Really? Which ‘starving’ Third World nations would be food exporters? India and a lot of Africa have untapped potential for food exports, India has food supluses and is eager to export, the fertile parts of Africa could be abundant suppliers of agricultural products. They just have not as yet got a market to supply. Brazil, Thailand, Australia, much of Southern Africa, South America and South East Asia would have easily exportable food surpluses.
I hardly think advocating free trade is extremist utopian nonsense. The Guardian advocates managed fair trade,Tony Blair and Gordon Brown advocate free trade explicitly, Clinton gave the world NAFTA, Bush wants the Free Trade Area of the Americas, even the EU pretends to support the principle of free trade.
The problem is the huge vested interests of Agri-businesses fattened on subsidies and protectionism have a lot of political clout.
Oh on a small point, if you have been to Africa, you’ll have discovered what a tomato is supposed to taste like – rich in flavour.
Gary Jones (back40) has another post entitled Useful Bickering, arguing that pursuing farming is a waste of time and a colonialist fantasy as a means of development. Typical Spiked! irritation/enlightenment mix, blasting authoritarian lefties and naive libertarians as a “loony alliance,” then suggesting they might cooperate more constructively.
“It is also possible that the authoritarian left will remember that thread of their beliefs which abhorred authoritarianism. It isn’t a necessary component of their world view. It is also possible that libertarians will remember that there are situations in which they would voluntarily expend their resources on an individual basis to avoid certain loss in the near future and enable possible benefit in a more distant future. It is possible that economists would realize that the apparent comparative advantage of agricultural production in developing countries is a fiction based on the inability to value natural resources due to immature markets for ecological services. It is possible that politicians would realize that gaining power at the expense of society earns you a place in history’s hall of shame.“
Paul D
None paul, which is my point. The left makes the argument that the developing world is starving and has food to export, not me.
India and a lot of Africa have untapped potential for food export! India has food surpluses? Does it? Well they won’t be anywhere near the food surpluses in Europe when the subsidies which are designed to reduce food production, are removed. Remember the food mountains?
As for Africa – like a Guardianista – you assume that only ( if ONLY!) the tarriffs were removed that all political infighting will disappear, all corruption cease, all roads mend; and tomatoes will be grown at such low prices that they could out-compete market gardened food grown locally in Europe. Not so. As for that – Ireland and England have a lot more potential for food production than they produce already – it is just not needed. So farmers mostly grow grass.
And of course India may have surpluses now, but it won’t in the future as it’s population – and Africa’s – are growing, and Europe’s is stagnating, or falling. The European surplus will grow in the future, and the assumed African surplus , and small Indian surplus will dissipate, and fall into deficit. We already feed the Middle East which has a massive food deficit.
Eoin,
You wrote:
Then you wrote:
So which is it? Contradicting yourself so explicitly and immediately is odd.
You refer to subsidies to reduce food mountains. By which I assume you mean ‘set-aside’ subsidies, well, yes they should go as well. If there are no subsidies to grow unwanted produce and no subsidies to not-grow unwanted produce I think we can assume the following with some certainty:
1. We will have neither type of subsidy.
2. Farmers will decide to grow products which people want or else they will lose money.
3. Farmers will stop growing unwanted products. Food mountains will not be the result.
Your mindset seems to be as distorted as the EU & US agricultural markets.
When you said that I “assume that only ( if ONLY!) the tarriffs were removed that all political infighting will disappear, all corruption cease, all roads mend; and tomatoes will be grown at such low prices that they could out-compete market gardened food grown locally in Europe. “ I wonder where I suggested anything of the sort. Could you point that out to me? I assume that if tariffs were ended consumers would be able to make rational choices in a free market. Farmers would make rational choices based on freely determined price signals, rather than Kafkaesque price subsidies.
I don’t know if African tomatoes will outsell Spanish tomatoes, I leave it to consumers to decide.
Finally – what do you suggest? What policy do you recommend, because the current situation is a disaster.
Paul,
The reason we had food mountains is because European agriculture, as inefficient as it is, over-produces food. Much of the developing world underproduce food, hence their shortages. This is why prices would drop if we removed the subsidies – either for set-aside, or for intervention ( the food mountain thing). NOT because african farmers would compete, I don’t think they would, but because European farmers would produce more if subsidies were removed. The left complain about export subventions, but there would need be no export subsidies if European farmers were allowed to produce to capacity. Prices would fall, and I believe that European, American and Australian and New Zealand farmers would produce even more of the worlds farming surplus.
Why? Best land. Best infrastructure. Best political situation. Best skills. Best mechanics. Best storage. Best soil. Best climate. Best productivity. Letting the free market decide will not have the effect the left wants, as a libertarian you may just accept that, of course, but the Guardian article assumed the best for the third world.
Of course the original article was about sugar, and in that case – and in some other comodities like cotton – they are right. The clumate in Brazil suits sugar cane production more, but Brazil is a middle class country with less problems than the third world proper. In a full free trade environment, I believe that most third world countries would see their small, under-capitalized farms, go to the wall.
(BTW the comment about us being awash in food from staring nations was meant as irony. although I could imageine a situation where food was exported from poor countries with food deficient cities – if better prices could be had elsewhere)
i have no solution to this. I would leave the situation alone, or fix the obvious flaws like the sugar and cotton subsidies.