Gordon Couger wrote in message
news:JgVO9.470662$WL3.125217@rwcrnsc54...


I expect that the subsidy in the EU is always going to be higher than
anywere else becuse they can't employ the economies of scale that new
wold
can or get the cheap labor that Asia can. One the theory behide a
subsidised
system is to level the playing feild with the trading partners that
can
produce for less cost. IMHO it should be a direct subsidy and not a
price
support. Price supports just screw up the system. But I don't run the
show.
I expect that subsdies will always be with us because the respective
countries can't afford the results of high food prices it is cheaper
to
subise the farmer than to be put out of office becuse of high food
prices.
Food prices are very inelastic. A very small shortage results in a
very
large increase in price. So unless they go to price controls I don't
think
the market can adjust to a moderate price for food. It is either high
or
low. It can only be mantined in the middle by artificial means.

Gordon

the economies of scale argument are very important. PR and popular
perceptions are also important here. I suspect it would be politically
impossible to set up a really big US style feed lot in the UK. Similarly
can you imagine the situation in Denmark if they opened some really big,
US style, pig feeder units.

Also important is government attitude to agriculture. I can remember US
politicians equating missile silos and grain silos as equally important
strategic weapons. Similarly I have heard perfectly respectable
commentators on this side of the Atlantic point out that some at least
of the impetus behind the current US farm plan is that US might lose
it's primier position as world source of soya to Argentina and Brazil.
American has, probably since the war, done sweetheart grain deals etc
with countries it has decided are friendly, and while I can see the need
for this sort of thing, US grain going into (for example) Jordan and
Egypt does unbalance the concept of the world market.
Personally I can see the arguments on both sides, and am willing to
agree that the advantages gained by this policy in the political arena
outweigh the dislocation to world trade. But it does mean that other
countries have to take steps, normally by offering subsidies, to cope
with this sort of US policy.

--
Jim Webster

"The pasture of stupidity is unwholesome to mankind"

'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami'