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Source link: http://archive.mises.org/5872/the-fiasco-of-the-common-agricultural-policy/

The Fiasco of the Common Agricultural Policy

November 10, 2006 by

From mountains of butter and beef to imaginary cows, the European Union’s Common Agricultural Policy (CAP) proves to be an ongoing wreck, despite perpetual reforms. Yumi Kim writes that auditors refused to sign off the accounts for the twelfth year. The European Union has been reforming the CAP over the last fifty years but unless its existence is seriously challenged, the fiasco will only continue. This relic from the 1950s has met none of its objectives and only produced enormous market distortions. FULL ARTICLE

{ 15 comments }

Bill, EU hater November 10, 2006 at 10:47 am

There is a simple way for tax payers to stop this foolishness. Drop out of the EU. The EU does not have an Army YET? and offers no real benefit. So the easy way is to leave. If a country refuses to leave then it is the stupidity of the citizens of that country.

That is UNLIKE the US where the last action toward independence resulted in the most bloody war in the history of the country. I am sure that if the EU saw several members bolt from their organization that they would quickly mobilize an army to squash the “rebellion”.

The same holds true for that pointless, murderous, evil organization called the UN as well.

Francisco Torres November 10, 2006 at 2:04 pm

Don, your post lacks coherence. What are you trying to say, that farmers need the subsidies, or that they do not? Is the fact that the big agricultural businesses can push out competition with the subsidies a good thing or a bad thing?

Was the point of this diatribe to attack the position of the article’s author, or to agree with him, or to indicate his error, or to just insult him by calling him “urban” (as if being not-urban gave someone a special insight on economic problems in the agro-business)?

Francisco Torres
The Mexican Philosophist

adi November 10, 2006 at 2:32 pm

Does anyone think that limited autarchy can be justified on the grounds of national security ? If one is a minarchist and believes that existence of (limited) state is justified, can he say that some subsidies are needed for farmers to keep some amount of agriculture ready for exceptional circumstances ?

During WWII, food production in Finland was in very bad shape since so many men were serving in our field army against soviets and many needed raw materials were in short supply. Our allies, the Germans used their grants of agricultural products as a political blackmailing device since they could say; “look, dont make peace with the soviets if you want to have a regular supplies coming”.

N. Joseph Potts November 10, 2006 at 7:17 pm

adi, would agricultural subsidies before the Winter War have enabled farm production to continue with the men off in the army? Autarky is one thing. Subsidies to various industries may or may not serve autarky.

What did Germany blackmail Finland into doing by supplying food and perhaps arms and much of the vast quantities of stuff required for waging a war? Maybe they should have contributed farming men, but then, Germany WAS the Soviet Union’s ally

adi November 11, 2006 at 8:38 am

N. Joseph Potts, it’s of course true that the war was such an exceptional situation and normally free international division of labour would be the optimal thing to do, but in Finland limited domestic protection of agriculture was started after WWI since before that Finland imported almost 50% of grains from Russia and Soviet Revolution ended that. Shortage of foods may have even contributed to our civil war so smooth operation of economy is most important thing for civil society.

Could that be true that the British were free traders since they had a Royal Navy and large Empire to protect their trade routes and continental powers needed to pursue economic autarchy since in war situation the maritime trade is not necesserily a viable option?

M E Hoffer November 11, 2006 at 10:47 am

adi,

You ask: “Does anyone think that limited autarchy can be justified on the grounds of national security ?”

To which: Of course. Though why do you presume that “subsidies”, from the State, would be necessary to acheive that goal?

Artisan November 11, 2006 at 2:04 pm

“As already demonstrated by the measures to deal with surpluses and the EU subsidies paid to farmers to meet the EU standards, it appears that the CAP is perpetually being reformed to fix problems that are self-generating.”

Let me elaborate on this. This is a problem I know fairly well for spending much time in that remote region of France called “Charolais”, where the best French cattle (white cows) are actually raised.

So now the PAC wants to subsidize rural “aesthetic”. And indeed, since production has initially been subsidized, the French countryside became rather “ugly”…

Originally, the French farmers were against CAP. Every farmer knew when production of “living products” rises, quality threatens to drop… and so the CAP started with contradicting and destroying the knowledge of hundreds of years of farming science, especially in such fields like fruit and cattle production. It also encouraged the feeding of milk cows with bone powder and other proteins artefacts that lead to BSE epidemics later. So then, Farmers started to cut trees and hedges where animals used to live, and that used to shelter and separate the estates from each other, so the larger trucks could turn around more easily and produce the quantity that soon nobody would want any more. Green and yellow deserts spread all over the north of France.

Then, as the scandal of food destruction became too obvious, the CAP policy shifted towards subsidizing land. Farmers have since then, the priority in France to buy agricultural territory to a privileged sqft price, regardless of the needs of the population or production in general. This also lead the farmer to use the last sq. feet around their land, along the roads, where people used to walk, and to reconquer all the old walking paths in the neighbourhood that the small towns couldn’t hold anymore, just to earn a few more subsidies too. This is the land destruction that the new CAP has to fight again thus indeed.

Today, a French farmer lives with about 30% of income subsidized by the State and in fact, takes about as much of his time filling out requests for subsidies. Don’t think that’s much money though: It’s still a lot of work and don’t make nobody rich from what I’ve seen in the cattle business, except Carrefour supermarket shareholder perhaps, the store that buys at least 50% of the Charolais cows ( yet certainly not the best ones of course… but that’s another story).

From what I know the EU budget was about 100 Billion € in 2002 (before EU enlargement, which is one main reason to reform CAP again, because the level of CAP aid is to stay stable at 44% of the EU budget despite the tremendous rise in the rural population since the enlargement… which contradicts in my mind a bit that 70% figure in the post though). 22% of the PAC budget was perceived by French farmers alone (10 Billion).

aaron November 12, 2006 at 7:35 am

Dear Yumi

A good piece.

You may like to look @ http://www.farmsubsidy.org/

Regards,

Aaron

aaron November 12, 2006 at 7:35 am

Dear Yumi

A good piece.

You may like to look @ http://www.farmsubsidy.org/

Regards,

Aaron

Sione Vatu November 12, 2006 at 10:19 pm

Francisco

Don Robertson “The American Philosopher” (such a grand title) reckons that it is impossible to know anything as absolute truth. In that case everything he states must be untrue. After all, he speaks for & of himself.

There is little more to be said about this somewhat foolish imposter. He has nothing to contribute. Aint that the truth!

Sione Vatu
The Polynesian Philosopher

Paul Marks November 13, 2006 at 2:18 pm

I agree that the way to get out of the C.A.P. is to get out of the E.U. (it is the same story with the other E.U. spending schemes and regulations).

One does not have to get into long debates about whether there has to be a government (the argument about whether “anarchy or anarchocapitalism” has to lead to chaos or not) to know that this PARTICULAR LEVEL OF GOVERNMENT (the E.U.) does should not exist.

Surely even the biggest government lovers should be satisfied with local and national governments without wanting an E.U. level government on top.

As for farm subisidies being needed for national security – total nonsense. In fact the high imput style (chemicals and other such) of farming the C.A.P. has created would not survive some sort of world conflict. Nor are the “food mountains” really available to feed people in a time of troubles (they are mostly book keeping stuff that gets sold off at a massive loss to third world markets).

Actually farmers in Britain are starting to understand that these subisdies hurt them – their are strings attached (endless regulations). And that the money leaves the taxpayers does NOT mean that it reaches the farmers – “late” payments are an increasing problem (there is the thing called government administration).

By the way this claim by the E.U. that it is cutting the share of the budget spent on the farming policy. It should be kept in mind that the E.U. budget is going up and up (although the costs of the spending schemes are still very much smaller than the costs of the vast web of E.U. directive led regulations that control most aspects of life) so OF COURSE the share of the budget spent on the farming policy is falling – the money spent on everything else is going up.

As for the person who said that we can not know anything for sure. Fine then we can not know whether farm subidies are a good idea (or even if you exist) – so we should save ourselves the money. Unless the default position is that “government is always right”.

Actually we can know some things. Place one stick on the ground and then another one – you have put two sticks on the ground. “But the sticks and the ground might be illusions” – even if that was true it is still one phony stick and then another phony stick (one plus one is still two).

Also I exist – the very act of denying one’s existance is a contradiction. “But thought does not mean a thinker” – sorry it means just that.

Then there is “A is A” (the law of idenity) – “this thing is not itself” is silly.

Seeing radical relativism being used to defend farm subsidies is a new one on me, but farm subidies still make no sense.

“Name me a Western country without government farm subsides” – I do not have to (see Ludwig Von Mises “Human Action” for why economics is NOT an empirical subject), however if you insist on an example – New Zealand.

Large scale subsidies and planning used to exist and were got rid of some years ago (in spite of the fact that other nations did not do so and therefore, according to the defenders of statism, farming in New Zealand would be destroyed).

Of course farming in New Zealand would have done better if statism in other nations had been got rid of as well – but farming did survive in New Zealand (it did rather more than survive).

I accept that empirical examples prove nothing either way. But those who reject economic law (which is based on the logic of human action) as despised “theory” demand empirical examples, so I have given one.

Of course it may make no difference – some statists my still decide to support statism.

But at least they can not pretend that they have any honest reason to do so.

Kelvin Duncan November 14, 2006 at 10:49 pm

This is an excellent article, but it does not mention that the major beneficiaries of subsidies are the large agro-businesses, not the small farmers.
Also, the CAP causes untold harm to the Third World. It makes a farce of both the EU attempts to provide aid and the aid initiated by prominent EU citizens. Both the EU governments and their citizens would do far more good than their present aid levels by wiping the CAP for ever.
My country, New Zealand, does not pay subsidies and all farming has to be on a commercial basis. Farmers have flourished under this system and land use, scenery (it is now a business) and tourism has improved. Primary industries account for a huge proportion of the country’s GDP in spite of grossly unfair dumping of produce by the EU and the USA into our markets and the destruction of markets by export and production subsidies.
NZ doesn’t matter as it has proved it can look after itself very well indeed, but the Third World does. In all conscience the EU MUST get rid of the CAP.
Dr Kelvin Duncan

Sione November 15, 2006 at 10:33 pm

Dr Duncan is right. NZ is a fantastic place. There, they have demonstrated how farming should be operated. No subsidies necessary. The EU is a disgrace. What a pack of evil shamateurs.

Sione

Hugo December 9, 2006 at 12:29 pm

Sorry but I disagree with the author of The Fiasco of CAP, because if I am not wrong the main goal of the 2003 CAP reform is that the european farmers only produce if they have profitability form the market. This goal is achieved with the introduction of the decoupled single payment scheme. Besides, the european farmers must comply with a set of rules named cross-compliance that are not only maintenance of landscape…
My suggestion is that the author must read the Regulation (EC) n.º 1782/2003.

Hugo
Portugal

s burgess April 15, 2009 at 6:18 am

yea im from new zealand.if anyone us and eu truely think there policies on trade are fair and balanced.then why does new zealand with no Subsidies or tarifs have so many on our goods..

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