Life After Subsidies

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The EU is gearing up for an ugly fight over subsidy slashing. New Zealand, on the other hand, scrapped its major farm subsidies way back in 1984. According to this enthusiastic International Herald Tribune report, farmers are much better off for it:

"It was a cold turkey time, and smaller farms with a lot of debt, they really suffered," recalled John Acland, patriarch of the Mount Peel sheep station, now farmed by his family's fifth generation.

"It was very awful for some people. But as a result, New Zealand agriculture is in a much, much better situation today. It's a prime example of what happens when you leave farmers to make their own decisions."

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16 responses to “Life After Subsidies

  1. For those of you with tinfoil hats; peak oil is going to end up rewarding countries that maintained their agribusinesses, whether or not it was via subsidy…

  2. And New Zealand has shown that it’s possible to not only maintain, but grow your agribusiness without subsidy.

  3. M1EK: can’t quite see how. Ethanol is a very inefficient fuel. Also modern agriculture is heavily oil dependant. Of course I guess it’s easier to turn existing farmland into non oil intensive farms than it is to turn suburbs into farms … perhaps.

  4. I am not convinced of “peak oil.” It may very well be that we are using our oil at an unsustainable rate, and in any case, I’m for conservation, increased fuel efficiency, and the use of alternative fuels. Still, what we don’t seem to know (at least, no explanation of “peak oil” I’ve read has ever discussed it): Is any CURRENT process producing oil for FUTURE consumption? The current peak oil scenario seems to be based on the notion that dinosaurs and other contemporaneous organic residue were converted into petroleum in a one-time event. Once the oil is gone, say the “peak oil” mavens, it’s gone, never to be replaced (at least in our lifetimes!). Again, maybe this is practically true, but I am curious to know whether ours is a case of draining the reservoir dry before the rains come again, or simply draining the last drop from the canteen we found under a rock.

    If petroleum is continuously being created (in a resource purification and recycling scenario reminiscent of, but happening on a much longer timescale than, the rain/water cycle), then our problem becomes, at worst, how to adapt our demand to the sustainable flow. If petroleum is not being replenished, however, it would help to know this with certainty so that we can wean ourselves with all deliberate speed.

    Vulcanism and continental subduction would seem to be possible factors in any ongoing process of petroleum creation. I have read ideas about river deltas and ocean basins as collectors and concentrators of fine organic material that eventually seeps into the crust, to begin the transformation into oil.

    If such processes exist, we don’t know how much oil they produce globally per unit of time, or how quickly oil migrates to or collects in places that allow for economic recovery of the resource. In other words, we don’t know the replenishment rate. Maybe that rate is so slow (relative to our demand, at least) as to be irrelevant, but maybe not. Until we know more, “peak oil” is a guess. It may prove to be an accurate guess, perhaps coincidentally so. But just the same, from everything I’ve seen so far, it’s a guess.

  5. Whaaaat? How can this be? People, left to their own devices and told to make money from their land, can actually do so?

    Why, this flies in the face of all common sense!

    It’s unheard of and incomprehensible. We should invade New Zealand; they clearly have some kind of technology that involves stem cells hopped up on illegal marijuana operating nanobots to make something like this work.

  6. I am not convinced of “peak oil.”

    It’s not really very convincing, no.

  7. James –

    Of course, the process of making oil still is happening today, you are correct. But, we’ve been drilling for it for the past what, 100 years? (At least in any significant terms anyway.) The oil that exists today has been a process in the making for MILLIONS of years. If the experts tell us we’re beginning to use it all up, we’re not getting it back anytime soon. Even the most liberal estimates of how large our supply will last is still on the order of a 100 years. We;re still orders of magnitude off in terms of how we will be able to create what we’ve already used.

    Nuclear power is the way to go! Throw the waste into the sun, that’s what the sun is anyway, nuclear fusion happing over and over again.

  8. Wikipedia has a very good article on Peak Oil right here:

    http://en.wikipedia.org/wiki/Peak_oil

  9. I know it’s been brought up around here before, but I had a geology professor tell me that there was enough shale rock underneath the rockies that contained oil to make sure we had plenty of time to come up with alternatives.

    I don’t know his politics, so he could have been an oil company plant for all I know. But based on some other things he had to say, I think he leaned toward a moderate/libertarian attitude.

    He did say that it would be a lot more expensive, of course. And I wasn’t intelligent enough to consider the possible environmental impacts of this information, but he seemed quite sure of it.

    This was probably 10 years ago, as well, so maybe he’s changed his mind. But I did like his class because he was always so matter-of-fact.

    And he loved to rip on the people who build things on geologically unstable places. Like some homes here in AZ, or nuclear power plants on/near the San Andreas fault line.

  10. “It was very awful for some people. But as a result, New Zealand agriculture is in a much, much better situation today. It’s a prime example of what happens when you leave farmers to make their own decisions.”

    Of course.

  11. The question I’d like answered is why do farms needing subsidies exist at all? Obviously, those people weren’t using their land for the greatest public benefit so why wasn’t it taken from them through E.D. and replaced with a Wally World? Clearly their legislators need to be recalled for allowing such a condition to occur. Besides without subsidies the wrong developing nations might be able to pick themselves up without help, that, and the Live 8 people would have nothing to do.

  12. Agricultural subsidies are the sort of government program that exists to deliver highly visible, concentrated benefits to a politically powerful class while imposing only very dispersed, hidden costs on everyone else. Everyone has a pet government program he thinks he couldn’t live without, but when they actually have to do without it, most people find ways to make money.

  13. Let’s not forget that eliminating subsidies in the US would not be possible because of the detrimental impact it would have on interstate commerce.

  14. Eddy – bwahahahahaha! That’s priceless.

  15. If the general welfare isn’t served by pork barrel programs designed to serve special interests, interstate commerce that doesn’t constitute a business transaction can’t be regulated.
    If the courts interpreted the 1st Amendment the same way they interpret Article I, Sec. 8, they’d rule taxation unconstitutional because money you spend paying taxes can’t be used to make campaign contributions and pay for newspaper subscriptions.

  16. Off-topic, but…re Peak Oil, naturally occuring processing probably are creating more oil as we speak, but suspect the rate of creation is per year is miniscule compared to our current rate of consumption. Indeed, the rate of creation is probably miniscule even compared to the lowest imaginable consumption rate (after conservation, conversion where possible to non-fosile energy use, etc.) BUT – if we could understand how fossile fuels are created naturally, we might be able to bio-engineer a way to create fuel at a rate that is in the ballpark of today’s consumption rate. Hmmm…

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