Friday, November 21, 2008

While you were sleeping...

Those wacky Europeans actually went and reformed their farm subsidy program - the infamous CAP.  The nerve of those people!  Now who are we going to compare to when we need to show how neglected we are vis-a-vis government subsidies?
The changes expand on major CAP reforms in 2003, pushing European farmers further into the world of supply and demand with a smaller safety net of subsidies linked to production levels.
The EU's farm handout system has long been an area of heated debate in Brussels and beyond, swallowing up 40 per cent of the overall European Union budget.
It was introduced in 1962 to reduce Europe's reliance on food imports but the subsidy system later helped created the infamous beef mountains and wine lakes of surplus production which reached their peak in the 1980s.
Another major CAP battle looms as the 27 member states are yet to tackle the size of the CAP budget itself, which is fixed up to 2013.
The British and the Scandinavians have already taken up their cudgels on the matter, seeking a substantial reduction of the overall farm subsidy package.
Key measures in Thursday's deal include dropping a rule that farmers must keep 10 per cent of their land fallow and a gradual rise in milk quotas until they disappear altogether in 2015.
Rome, which wanted the quotas scrapped immediately, was given special leave to introduces swifter productions rises in Italy from next year.
There was also agreement on the thorny issue of reducing subsidies directly linked to farm production and switching the funding to projects to protect the environment or revitalise rural areas. [More]
This is going to have an effect sooner or later here as well. The strength of the food movement compared to the farm lobby is growing and the new administration doesn't owe much to deeply red rural states like the old one did.

I could see - in fact, I hope for - watered down direct payments, lower insurance subsidies, and other nips and tucks to help pay for food stamps, etc.  I could also see a shift in philosophy to embrace the agrarian wing with more dollars now sent to industrial producers.

With reform in the EU, one more player at DOHA scrambles to higher moral ground.  As we seek to find a ladder out of this economic hole, the near-unanimous cry from economists against protectionist farm policies will not be lost on an administration whose overwhelming support came from farm customers.

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