29-03-2002 13:11									#61
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my bottom line, Gatekeeper. If you want to pay more for your food, fine. I don't.

	29-03-2002 13:16									#62
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quote: Originally posted by Urban Ranger The ag sector seems to be not working along free market principles due to subsidies. I don't know where the money is going to, but farming in developed countries are killing farming in developing countries that opened their markets and draining their foreign exchange reservers as they now need to import food. This is not a pretty picture.

Actually subsidies of this sort are a wealth transfer. While the farmers in the 3rd World are hurt, the 3rd World country overall benefits (wealths is transferred from rich country to poor one, when goods are "dumped". Most extreme example would be getting free stuff.)

I would love it if US could get more steel and other stuff like that "dumped" on us.

	29-03-2002 13:38									#63
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Gatekeeper,

I think the line most of the 'hardline' economists on this thread are taking is that farming right now is a bad business to be in. This is due to two factors:

1) Increased productivity of the individual farmer

2) The tendency for farming to be a 'traditional' occupation which tends to stay in families.

Combined, this means that the flight of people from traditional farming families has not kept up with the increased productivity of farmers, which has crushed commodity prices for a long time. Excacerbating this is the political pressure by farmers all over the world for government subsidies, which keep more farmers in business (at a cost to everyone) and ironically commodity prices low. Until there is an impressive increase in demand, or an equally impressive decrease in supply prices are going to remain low.

People should get out of farming if there is a viable alternative for them. By doing so they will have a chance to make money in a sector of the economy that is experiencing a labor shortage, and in the long run they will make farming more profitable for those who remain. This is just the latest chapter in a saga that has gone on for millenia, ie the increases in farm productivity not only allow but force people to move into other occupations.

	29-03-2002 13:40									#64
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quote: Originally posted by GP Gatekeeper, I'm probably wasting my time...but let's try.

Actually, you are wasting your time. Not because your contributions were ignored or unworthy. No. It's because I simply just decided to stop giving a damn on this particular issue at this junction in time. One thing I'm learning is that it hurts too much to really form attachments with anything in this world. I guess agriculture is another item I can add to that list for the time being.

quote: If farmers want more dependable paychecks, they should sell out and sharecrop or become ag workers for larger corps.

That is indeed what is happening.

quote: 2. Americans have a right to try to get ag products as cheap as possible. Same with any other product. The consumer doesn't owe the farmer anything. It is a business transaction.

I guess those black South Africans got lucky in the 1980s then, huh? At least their cause was more visible in that apartheid world they inhabited.

quote: Don't worry some farmers will always remain to meet the demand from the market.

I would imagine so. The corporations need somebody on the ground, you know. Can't farm from those office towers in Chicago and Kansas City. Well, not yet. Robotics might change that in time (seriously).

quote: 5. If they collude to raise prices, they will face anti-trust action. Not everybody goes out of business. Concentrate on being better than the next guy, not on fixing prices.

Too bad ADM executives ignored that advice.

quote: 6. You may have a point regarding large food processors. I would like more data on this. But even if this problem is fixed, it will do little for farmers. Consumers will reap the reward, not farmers.

I think farmers would benefit from locally-owned value-added ag processes that disrupt the grip the corporations have on foodstuffs. That's where my hope currently resides.

quote: One last point: I've known some very wealthy farmers. Nobody owes them anything...

I think I know about the "farmers" you refer to — the absentee landowners, the celebs and those farmers who are *guaranteed* an income (tobacco comes to mind immediately) — but they are hardly representative of the soybean, corn, wheat and sunflower farmers that mostly populate the area I live in.

Gatekeeper

	29-03-2002 13:49									#65
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Gatekeeper,

I can tell that this issue is more than abstract to you. That you care about the people near you.

I was in consulting and we had a 50% contraction. Many of my friends, including me were laid off. But it made sense overall. Too many damn consultants running around anyway. Not enough demand for their services. I am now working as a ski instructor...

	29-03-2002 15:45									#66
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Funny game going around....

Anyway:

- Dubya's steel protectionism has little chance to hold up under GATT/WTO law. If anyone want to debate this, please quote the invoked provision.

- It's incredibly dumb economics. Most damage will be to US steel users, as this measure aims to raise prices. To provide a rent to... well, steelmakers ? Steelworkers ? Add on that trade retaliation. Add that the dems are still pushing a steel bailout package (12 billion $ ?) on top of it. Have fun.

- The EU's measures on the steel market seek to keep imports and prices stable vs the effects created by US tariffs. Whether opening up unilaterally would be better would be a nice debating issue.

- The EU tariffs are also targetted on easily substitutable consumer goods, so there should be only limited damage economy wise on our side.

- The US has targetted "constituencies" in the banana war as the banana agenda was mostly pushed by France and Britain. Other way round it's just fair. Especially if your little political games are played on the back of other countries. Keep your "government on sale" system at home, please.

- The EU can hurt the US just as much as the other way round. Both markets are roughly equal size, and this was the reason why we got to the WTO: The standard US trade policy of blackmail (aka "fair trade") just didn't work on the EU.

- Oh and yes, we can slap 4 billion $ worth of sanctions on US exports anytime we want, perfectly legally, as long as you maintain those export tax subsidies.

- Of course it would make more sense to open markets, esp to developping countries. Dubya's idiotic steel policy has essentially killed the Doha round. Congrats and thanks to the Dumbass in Chief.

- And as the "Roland is an EU apologist" whiners will sure come around now: Until recently the EU member states have sunk billions in the steel industry. Our agro markets are a regulation-induced mess. We should still be ahead of you in the agro-subsidy game. I'm not sure the constituencies-targetting is a good idea. Did I mention that I'm still disappointed my plea to drop the entire austrian government on the Taliban has not been heeded ? Fine now ?

	29-03-2002 15:53									#67
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Oestie?

	29-03-2002 19:58									#68
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Retaliate baby

Plus, boycott! Everyone read the labels, if it says Made in USA, don't buy Hit'em where it hurts

BUT the ones who are really going to pay for all this Bush started is the countries that are not US or in the EU (which already have enough trouble as it is)

	29-03-2002 20:18									#69
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quote: BUT the ones who are really going to pay for all this Bush started is the countries that are not US or in the EU (which already have enough trouble as it is)

probably sadly.

thank God the EU at least made sure that the world's poorest countries will be excluded from the proposed tariffs.

	29-03-2002 20:28									#70
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quote: Originally posted by Saint Marcus thank God the EU at least made sure that the world's poorest countries will be excluded from the proposed tariffs.

	29-03-2002 20:29									#71
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The idea is that free trade is the best as long as it doesn't hurt me. Free trade in the history of man has usually been the result of a power strong enough to enforce it in some way. When the US and/or EU feel that free trade are hurting them there's no problem enforcing protectionism under a layer of fine words.

This reminds me of Hitlers speach on 1st september '39 when german forces started to "shoot back" on the "polish aggressors"

	29-03-2002 20:31									#72
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" - It's incredibly dumb economics. Most damage will be to US steel users, as this measure aims to raise prices. To provide a rent to... well, steelmakers ? Steelworkers ? Add on that trade retaliation. Add that the dems are still pushing a steel bailout package (12 billion $ ?) on top of it. Have fun."

Well, not incredibly dumb economics. But the economic factor argues against it.

" - The US has targetted "constituencies" in the banana war as the banana agenda was mostly pushed by France and Britain. Other way round it's just fair. Especially if your little political games are played on the back of other countries. Keep your "government on sale" system at home, please."

I still want to know why you think a government doing the will of the people is "government on sale"...

Anyway, targeting constituencies is a little dangerous precedent, but I guess it's OK, if your end-game is the removal of the tariffs. It's really not smart if you believe that the tariffs will stay in place.

" - The EU's measures on the steel market seek to keep imports and prices stable vs the effects created by US tariffs. Whether opening up unilaterally would be better would be a nice debating issue."

Let me translate that for everyone. It's OK if this stuff is dumped in the US, but not OK if it's dumped in Europe.

	29-03-2002 20:41									#73
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Oh Dan...

"Well, not incredibly dumb economics"

Yes, that was too mild. Republicanomics ?

" still want to know why you think a government doing the will of the people is "government on sale"..."

The will of the people ? Where did they vote for the steel tax ?

"It's OK if this stuff is dumped in the US, but not OK if it's dumped in Europe."

We aren't even talking about "dumping". Not even in the funny version used in US trade laws. "Safeguard" is against disruptions, even when caused by perfectly "fair" trade.

But the artificial glut of maybe 15 million tons flooding into the EU is a bit much - although there is a case for just letting it happen.

	29-03-2002 20:59									#74
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GP, I don't know any specific studies, I just haven't seen any part of chain that could boast about fat margins. (Tyson can't either) Both food-processing corps and super-market chains survive on volume AFAIK.

	29-03-2002 21:05									#75
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"Yes, that was too mild. Republicanomics ?"

That doesn't even make sense.

"The will of the people ? Where did they vote for the steel tax ?"

It was a Bush campaign promise to steel workers that he would look into the steel issue in a sympathetic light when he got into office. So yes, everybody voted for a steel tax.

Now you can argue that Bush fulfilled his campaign promises too well...

"artificial glut"

Artificial glut? Doesn't that mean Europe is being dumped on because the US was tired of being dumped on? I think you're trying to split hairs.

	29-03-2002 21:16									#76
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"That doesn't even make sense."

Such is the purpose and nature of Republicanomics.

"Now you can argue that Bush fulfilled his campaign promises too well..."

Overdelivering... unbeliavable.

"Doesn't that mean Europe is being dumped on because the US was tired of being dumped on? I think you're trying to split hairs."

The EU is not taking anti-dumping measures. There are essentially 2 import markets for steel in the world: the US and the EU. With the US government further manipulating the US markets (higher prices, lower imports), you get higher imports and lower prices in the other one. Dumping isn't an issue here - the EU and the US have all kinds of anti-dumping measures already.

	29-03-2002 21:47									#77
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"Overdelivering... unbeliavable."

I don't know all of the deals that went on, but the internal politics are quite interesting.

These steelworkers are a pretty conservative lot, even though they are union members. For instance, most probably keep a gun or two around the house and don't like abortion. However, they are not free traders, making them not quite fit into the Republican party on more than a temporary presidential coalition basis.

These cross-currents are important to keep in mind. The workers had absolutely no problem splitting their tickets between GWB (center-right) and one of the strongest leftist advocates in the Senate, Robert Byrd. A classic swing constituency. In Byrd's mind, he is in Washington to see to the interests of his constituents, narrowly defined. Everybody cuts him some slack because the area he represents is poor.

On this issue, you have a really bizarre coalition. The center-right allied with industry, the unions, union members, and the lefties.

What does this have to do with Europe? Well, it means that when Europe attacks this constituency, the result might be totally different than what Europe expects. They are attacking the left as much as their attacking GWB. Also, this is why your "Republicanomics" comment makes me scratch my head with bewilderment. It makes no sense.

Last edited by DanS on 29-03-2002 at 21:53

	29-03-2002 22:12									#78
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Wasn't it possible to help the steel workers directly, through re-employment schemes or early retirement? Couldn’t Bush instead have intervened in the industry directly, by merging the integrated steel-mills first-hand or releasing them of their pensions-burden one way or another?

	29-03-2002 22:19									#79
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Yes.

	29-03-2002 22:27									#80
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So why wasn't it done?

	29-03-2002 22:40									#81
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Please retaliate EU. Those US bastages deserve what they get for crippling the Canadian west coast economy with their lumber tariffs. And, of course, our politicians are too inept to do anything about it

	29-03-2002 22:55									#82
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Colon: I don't know. Like I pointed out, this is an odd coalition, each part having ideas of its own. Maybe this was the least worst approach that could be agreed upon by everybody.

But that's just speculation.

vM: 40% of Canada's economy is directly tied to US exports. Don't let the lumber stuff overshadow the other benefits that Canada enjoys.

	29-03-2002 23:05									#83
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quote: Originally posted by vonManstein Please retaliate EU. Those US bastages deserve what they get for crippling the Canadian west coast economy with their lumber tariffs. And, of course, our politicians are too inept to do anything about it

sure

	29-03-2002 23:06									#84
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Our tariffs and other trading barriers are totally wrong, of course, but that hardly justifies the EU's. The EU is hurting everyone's economy in the long term, just to "win" an idiotic pissing contest.

	29-03-2002 23:30									#85
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Dan, maybe the steel bosses felt it smacked too much of European style socialism?

	29-03-2002 23:40									#86
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No, the steel companies asked for the pension stuff, but the final course of action didn't include it. I seem to remember that the cost for the pensions is quite substantial.

	29-03-2002 23:50									#87
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Yes, quite quite substantial.

The strange thing, is that with both the steel and lumber deal, the more right leaning newspapers are trashing Bush on it. Normally Bush walks on water in these papers. I was pleasantly suprised.

RAH

	29-03-2002 23:52									#88
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quote: Originally posted by Sikander Gatekeeper, I think the line most of the 'hardline' economists on this thread are taking is that farming right now is a bad business to be in.

Well, they won't get any argument out of me in regards to that. It *is* a mostly bad time to be a farmer. It wasn't that way back in the mid-1990s, though. Well, not as bad at any rate.

quote: This is due to two factors: 1) Increased productivity of the individual farmer 2) The tendency for farming to be a 'traditional' occupation which tends to stay in families. Combined, this means that the flight of people from traditional farming families has not kept up with the increased productivity of farmers, which has crushed commodity prices for a long time.

Hmm ... I know that people are becoming concerned that there aren't very many younger farmers following the older (and, now, dying) farmers. It costs too much to start-up, between acquiring land and equipment and infrastructure ... start-up costs (if you don't inherit) can run well in the hundreds of thousands of dollars.

BTW, I agree with you 100 percent in terms of productivity. American farmers are good at that, too good. And, yes, sometimes they shoot themselves in the foot when they take land out of the Conservation Reserve Program (CRP) and put it back to crops or simply till up more land to plant said crops. It seems they do this to get more bushels to make up for the low commodity prices, but it's a vicious circle, one that won't raise crop prices as more and more bushels flood the market.

Cut the production and try to bring processing and distribution back to the farm states themselves via value-added ag ventures. That might do the trick.

quote: Excacerbating this is the political pressure by farmers all over the world for government subsidies, which keep more farmers in business (at a cost to everyone) and ironically commodity prices low. Until there is an impressive increase in demand, or an equally impressive decrease in supply prices are going to remain low.

Perhaps the magic bullet is cutting the supply and investing in locally-owned value-added ag ventures. I could settle for some family farmers remaining rather than none.

quote: People should get out of farming if there is a viable alternative for them. By doing so they will have a chance to make money in a sector of the economy that is experiencing a labor shortage, and in the long run they will make farming more profitable for those who remain. This is just the latest chapter in a saga that has gone on for millenia, ie the increases in farm productivity not only allow but force people to move into other occupations.

A number of farmers work the fields by day and go into town at night to work at a factory. Or vice-versa. I guess my main worry is that too much corporate control over the food supply's source, processing and distribution will put a bit much power in the hands of a few people. Efficient, perhaps, humanity, no. It's sort of ironic that the value-added ag and local ownership ventures I mentioned above are throwbacks to the days before the big corporations, but that these very things might be what saves a percentage of family farmers from tilling their last field.

Gatekeeper

(P.S. I meant to post this around 3 a.m. CST Friday, but Apolyton wouldn't respond for some reason.)

(P.P.S. Yes, I am somewhat affected by what happens in the nation's breadbasket, GP. I think the future will have to revolve around locally-owned value-added ag ventures in order to keep any famly farmers on the land. That's where we're heading today; hopefully it isn't a case of too little, too late.)

	30-03-2002 00:12									#89
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I am posting from home, so I don't have any numbers in front of me, but here are a couple of ideas on why prices may be falling on the farm but rising at retail.

1. Food production and distribution have historically been pretty competitive. Margins have been reasonably low when measured as a percentage of sales.

2. Farm products are only a percentage of the final price of food, so a one percent reudction in the price of farm products will translate into a less than one percent reduction in the price of food sold.

3. IIRC, production and distribution costs have been rising the last few years in spite of just in time delivery practices. Part of this has to do with higher energy prices, part with higher processing costs eg., costs of ergonomic regulations for chicken processing plants, and part with tighter labor markets.

4. Another factor is that an increasing percentage of food sold is more highly processed. For example, less fresh vegetables, and more frozen meals ready to eat. As peoples incomes rise they are demanding more convenience. This requires more processing, driving a larger wedge between comodity prices and final food prices.

	30-03-2002 00:21									#90
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Dan, the integrated steel plants are funding the pensions of more people than they have active employees. Can't remember exact numbers though, but I'll try to look them up.

AS, excellent post.