Monday, June 30, 2008
EU Farm Subsidies
"With global food prices soaring and arable land in short supply, the European Union finds itself at loggerheads over how to overhaul a subsidy system that frequently pays landowners not to grow crops. The subsidies, dreamed up when overproduction was a greater concern, have gone to people like John and Gitte Abrahamson. They get $1,500 a year from the EU for renting out 37 acres in rural Denmark to a riding club. ... Last month, the EU suspended a requirement for farmers to keep 10% of land fallow and raised quotas that limit the amount of milk each EU nation is allowed to produce. It's proving much tougher for nations to agree on removing individual subsidies or figure out how to use EU farm money to lower food prices. ... U.K. officials believe high EU subsidies have depressed global food production because the EU dumped its surpluses on developing markets at low prices, discouraging local food production. ... Economists say subsidies of any kind are unlikely to bring down global food prices. 'The only proven way of bringing down prices is increasing productivity through research,' says Hafez Ghanem, director of economics for the Rome-based Food and Agriculture Organization", WSJ, 18 June 2008.
I agree with the Brits, EU food dumping hurt third world agricultural development, particularly in Africa. Disagreeing with Ghanem, you can decrease food prices by increasing real resources devoted to food production at our current level of knowledge.