farm subsidies good?
July 26, 2006 10:22 PM   Subscribe

Africa does not need more expensive food. As the Doha trade rounds collapse largely due to disagreements about farm subsidies, Daniel Davies challenges the conventional view that farm subsidies hurt the poor.
posted by afu (28 comments total) 1 user marked this as a favorite

 
Farm subsidies made sense when 30% of the work force worked on farms, but these days they're kind of silly. Nothing particularly bad would happen to our economy if farm subsidies were ended. Prices would go up, but they're so cheap now no one would really notice.
posted by Paris Hilton at 10:31 PM on July 26, 2006


If biofuels prove successful, farm subsidies will no longer be necessary. As it is, the US is such an incredibly efficient food producer that without the subsidies the ag sector would shrink to levels that would threaten our national security. Once we start driving our cars on soybeans and corn (if it can be done) then domestic demand for farm products will rise, along with prices.
posted by Crotalus at 11:07 PM on July 26, 2006


I'm not sure I understand how farm subsidies relate to things like long term droughts. Are they keyed to some sort of sliding scale that reflects agricultural productivity, or are they just based on some sort of theoretical "ideal" productivity?

I guess the point I'm trying to make is, would subsidies sometimes be beneficial in Africa, and be damaging at other times? Can you even make a generic policy about whether they're any good or not in a continent as complex as Africa?
posted by slatternus at 11:15 PM on July 26, 2006


The biggest US farm subsidy goes to cotton, not edible food. The US dumps subsidized cotton on the world market and African cotton-growing nations subsidize their own farmers in order to compete. That money could go a lot of other places (like AIDS prevention). Further, the US dumps subsidized agricultural products in the rest of the world. Rice and sugar are two dumped products that have created serious economic problems in Asia and the Caribbean, respectively. Finally, when the US does open a country to "free trade", that nation may have to put up with ten years or more of continued American protectionism, so trade is free only one way. The idea that subsidized American agriculture does not harm other economies is ridiculous, but it is only one part of the serious economic bullying done by Americans.
posted by CCBC at 11:45 PM on July 26, 2006


There are basically two kinds of subsidies. One: they pay you not to produce food. This is one thing that helped people out during the depression. As the price of food crashed, farmers planted more crops, which resulted in even lower prices, so the government paid farmers not to produce, and prices stabilized. This was good for the economy, but bad for poor people who had trouble paying for food.

Later we switched to a new kind of subsidy. The "who gives a fuck" subsidy. We just pay people. The more they produce, the more we pay them. This makes food prices really cheap, because there is a ton of food available, and farmers don't need to worry about those low prices because their costs are covered before they even sell their food.

This second method hurts people in other countries because American food is almost free. There's no reason for anyone to pay local farmers because they can buy American food at a cost lower then what it costs to produce the food locally.
posted by delmoi at 11:59 PM on July 26, 2006


Davies is right that agricultural subsidies create somewhat lower food costs for Africans. But it is a very inefficient trickle down effect with Archer Daniels Midland, Big Sugar and Big Cotton taking the biggest cut. It would be much better to save the taxes wasted on subsidies and give a portion to needy African nations as direct grants and allow them to buy commodities from the cheapest producer. This would eliminate the distortions in the market that cause Americans to over-produce and rob third world nations of the opportunity to sell their own products. While he might have an argument about Africa, subsidies are without a doubt detrimental to the rest of the third world, especially Mexico, Central and South America.
posted by JackFlash at 12:00 AM on July 27, 2006


Hasn't Bush said that he is prepared to drop all agricultural subsidies as long as Europe (especially France who subsidise a ridiculous amount) do the same?
posted by PenDevil at 12:14 AM on July 27, 2006


PenDevil, apparently the talks broke down over bickering about how much each side should give up. But that is really beside the point. Economists universally agree that subsidies are bad for the U.S. no matter what. There is no reason that the U.S. shouldn't just give up its tariffs and subsidies unilaterally for its own good, regardless of what the EU does. Bush is just appeasing the agribusiness lobbyists and the red farm state voters and using the EU as an excuse.
posted by JackFlash at 12:35 AM on July 27, 2006


He doesn't address the fact that as long as Africa's food dollars are flowing out of the countries, they will lack the means to modernize and make their food production cost-competitive with our taxpayer-subsidized, unsustainable, energy-intensive, resource and soil-depleting farming practices. This arrangement hurts both parties -- it's a lose-lose proposition.
posted by George_Spiggott at 12:50 AM on July 27, 2006


Aren't Africans better off with slightly more expensive food and jobs, than cheap food and no way to pay for it? Because the moment the EU drops subsidies, all those EU farmers are going to sell up and go to law school, and the African farmers are going to step in.

That there are no good roads in Africa is irrelevant. The market will demand them, and they will be built. Except if there isn't a market, they won't.
posted by hoverboards don't work on water at 1:38 AM on July 27, 2006


If biofuels prove successful...

There's no guarantee that other countries won't outgrow/underprice the US on those crops, too, so I don't think farmers can count on biofuels for an easy living.
posted by pracowity at 1:50 AM on July 27, 2006


Hasn't Bush said that he is prepared to drop all agricultural subsidies as long as Europe (especially France who subsidise a ridiculous amount) do the same?

Wouldn't it be easy for the US to drop subsidies at home and not allow the import of food that was subsidized elsewhere? Then let French people pay too much for their food while the US imports cheap unsubsidized food from elsewhere.
posted by pracowity at 1:56 AM on July 27, 2006


One: they pay you not to produce food. This is one thing that helped people out during the depression. As the price of food crashed, farmers planted more crops, which resulted in even lower prices, so the government paid farmers not to produce, and prices stabilized. This was good for the economy, but bad for poor people who had trouble paying for food.

That's opinion, not fact, as I'm pretty sure that Cole and Ohanian (and of course, the usual suspects like Friedman and Greenspan) would disagree.
posted by Kwantsar at 5:29 AM on July 27, 2006


Davies is right that agricultural subsidies create somewhat lower food costs for Africans.

Yes, and everything would be hunky-dory if the Africans could count on such subsidies (and the consequent cheap food) continuing forever. But they can't; eventually the US will realize how idiotic and expensive the subsidy programs are and will end them. By then African farmers will have been driven off the land because they can no longer make a living at it. What then?
posted by languagehat at 5:48 AM on July 27, 2006


see also The End of Poverty from JD Sachs on this topic..
As far as I understood The EU is already pretty much changing course towards supporting farmers on income instead of subsidizing crop.
posted by borq at 6:05 AM on July 27, 2006


Davies ignores the way first-world subsidies turn African farmers into monoculturists. Why should Africa waste its cash importing grain from another continent when it's large enough to tend to all of its own food needs? The argument assumes that the global market is really the best thing for Africa (an assumption shared by many African heads of state.) Once you've assumed that, most of what Davies argues is true.

What happens when peak oil hits and transport costs become prohibitive? What's Africa going to do with all it's high-value-added foodstuffs that it can't eat?
posted by anotherpanacea at 7:01 AM on July 27, 2006


I'm not particularly knowledgable about this issue - but it seems like he's framed it as one of importing American food vs exporting local food for the African countries. Wouldn't self-sustainingly producing their own food (without necessarily exporting it, but also without using hard currencies to buy it from outside the country) be a laudable goal of its own?
posted by jacquilynne at 7:19 AM on July 27, 2006


Jacquilynne -- exactly. Davies is ignoring, as a couple folks have mentioned, that cheap food with no way to buy it helps nobody. Since a lot of folks in Africa make their living in agriculture, if they can't sell their product they can't buy food. Whether they're trying to sell locally or globally, as long as other people's product undercuts theirs, they're stuck.
posted by nickmark at 7:45 AM on July 27, 2006


“it seems like he's framed it as one of importing American food vs exporting local food for the African countries.”

No, Davies has framed the issue as importing cheap western staple crops and exporting cash crops thus growing the economy vs. inefficiently growing staple crops at home and doing nothing for the economy.

In the article he specifically points out that cotton subsides are harmful because African countries could grow cotton on a competitive level with the west, but staple foods like grains, milk products and sugar would be cheaper to produce in the west even without subsidies. I don't think food independence is really that important compared to developing a countries economy and raising living standards.
posted by afu at 9:13 AM on July 27, 2006 [1 favorite]


I don't think food independence is really that important compared to developing a countries economy and raising living standards.

This needs to be repeated. These economies lack basic infrastructure, basic food supplies, and basic health facilities, and the response is, "If they farmed it themselves, they'd feed themselves"? Come on...with the massive amounts of corruption in the African governments along with a complete lack of basic education (you can't farm anything unless you know how), this idea that somehow subsistence will lead to the promise land is ridiculous. Subsistence will only lead to continued underdevelopment as the rest of the world continues to evolve technologically.

Some basic solutions are to offer manpower and resources to build infrastructure. Offer to build and run hospitals for an extended period of time. Offer to construct and manage industries that Africans can work for. But all of these solutions require direct involvement and a massive commitment of time and resources. Any offers of cash, direct or otherwise, are simply a waste of money.
posted by SeizeTheDay at 9:28 AM on July 27, 2006


BTW, borq's suggestion to read Sachs is a great one. Along the same lines, here's a book by William Easterly that should be read by anyone who is truly interested in understanding how to help impoverished countries.
posted by SeizeTheDay at 9:34 AM on July 27, 2006


with the massive amounts of corruption in the African governments along with a complete lack of basic education (you can't farm anything unless you know how), this idea that somehow subsistence will lead to the promise land is ridiculous.

And yet somehow, the notion that the profits from monoculture will bring them to the promised land is less absurd? You don't think they might not be gobbled up by elites or spent on militias? Davies is making a first world argument and trying to pry apart the solidarity of African elites. It's absurd to think that Africa will become a promised land while trying to compete with the same folks that raped it for three centuries and propped up these corrupt dictators in order to outsource their oppression. I won't even go in to the whole patents/intellectual property issue.

And here's a different book. Here's another.
posted by anotherpanacea at 9:45 AM on July 27, 2006


You can argue that trying to compete against the West is wrong for Africans, but all you'd have to do is look at success stories like India, Brazil, and the East Asian Tigers to realize that engaging in trade, liberalizing government, and developing solid institutions all work together as components of a stable and successful economy.

I'm not arguing that trade is the ultimate panacea. As I mentioned in my post, there are several real reasons for Africa's continued underdevelopment. But my argument does hinge on the fact that trade trumps subsistence.

And feel free to go for (further develop) any other arguments you might have. I'd love to read them. I'm not suggesting that any one decision will ultimately lead to good fortune.
posted by SeizeTheDay at 10:06 AM on July 27, 2006


Oil subsidies = agricultural subsidies

For every calorie consumed as food in the US, ten calories of fossil fuel are expended.
posted by nofundy at 10:53 AM on July 27, 2006


Eh. This guy should reread his copy of Poverty and Famines. Some in this thread need to realize that food security just isn't that important but entitlements are and as some others have mentioned in this thread, depending on foreign subsidies is frightening. In a short-term currency crisis, subsidized EU crops could be significantly more expensive than local crops as markets took time to adjust. Furthermore, abruptly cancelled subsidies could cause massive problems if dependent countries didn't have time to adjust.

At the same time, domestic production is not the answer either, as Sen showed. Davies is right that cheap food isn't bad, but lack of policy space is.

Also, forget Easterly.
posted by allen.spaulding at 12:03 PM on July 27, 2006


Also, forget Easterly.

Why? (I'm genuinely interested)
posted by SeizeTheDay at 12:14 PM on July 27, 2006


all you'd have to do is look at success stories like India, Brazil, and the East Asian Tigers to realize that engaging in trade, liberalizing government, and developing solid institutions all work together as components of a stable and successful economy.

Development-types always shift their examples to suit the argument. It's telling that your examples aren't Argentina or Thailand. No doubt, someone's always growing in the global market, and so there will always be success stories. But this is like an argument for capitalism that says: "Look at Bill Gates! That could happen to anyone, if they work hard enough and have the right trade policies!" Capitalism may be the best system we've got, (and global trade may be Africa's only realistic option) but utopianism like this ignores the flaws.

My point above is simply that Davies is making a specious argument. It sounds like he's only got Africa's best interests at heart, but the plan is suspiciously self-serving. That said, I don't know what will help the continent. Frankly, I think we get ourselves into trouble the second we start talking about the whole continent's well-being, as if Eqypt, South Africa, and Nigeria could be lumped in with Sierra Leone, Sudan, Somalia, or DRC. Africa's a really big place, after all, and there are lots of different interests and lives at stake. Too bad they'll never get a say in these decisions; the US will do with subsidies as it please, and when it does it'll likely help us more than it does anyone else.

I do know that our agricultural subsidies have hurt African nations in the past. Hell, our famine aid has caused more devestation than it helped, destroying local agriculture in a rain of free rice and grain! One year of that, and there aren't any farmers left to plant next year's fields. But these are truly the unexpected effects of America's industrial agriculture. I'm not so certain that subsidies are as innocent.

Another good read.
posted by anotherpanacea at 12:27 PM on July 27, 2006


Agricultural subsidies (for food, maybe not so much for cotton) are a necessary part of our national defense. Producing food in a first-world technologically advanced country is generally not competitive with producing it in third-world countries with cheaper labor. However, if we don't produce enough food for ourselves and maybe a few allies, in the event of a war or some breakdown of trade with the food-producing nations, we'd be screwed.

This is especially true when you consider outsourcing food production to Africa. A lot of the continent is controlled by radical Islam, and all of it is extremely unstable politically and not terribly advanced technologically. There are all kinds of events that could cut off food exports; internal or external wars, governmental collapse, things like agricultural plagues and locust swarms, etc. I don't want famine or extreme food prices to sweep across the US because some African country did something like kicking all the previous farmers off their land and giving it to a bunch of people who have no idea how to use it. That's happened how many times already?
posted by Mitrovarr at 1:18 PM on July 27, 2006


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