Cheap Food Policy

[cakadu]

Does anyone have any idea where this came from and where it is written? We seem to have bought into this notion to the nth degree and it certainly is driving how we are trying to do business in agriculture these days. I'm not sure there is anything we can produce where we can be the lowest cost producer. Can any of you think of anything? Our growing seasons are short (and these days dry) and we have to feed and house our animals which drives our costs up tremendously.

I was at a rural conference last week and Charlie Mayer (former Ag Minister) was speaking at it and he made a valid point when it comes to the subsidies being given in the EU and the US. Those countries, especially the EU, keeps pointing to the fact that at one stage there was a shortage of food, but that hasn't happened in 50 odd years and they are still producing at 135%. What they need to do is quit overproducing like that and glutting the market.

Thoughts anyone?

[cowman]

There are a few good sites on the internet on the cheap food policy. Just punch in Cheap food policy and you will get lots of info.
The "cheap food policy" isn't anything official, at least not in North America. The whole idea is if food is cheap then labor is cheap and therefore industry can flourish. This is exactly how America became the powerhouse she is today. The whole "policy" relies on tax structures and subsidies to basically keep the peasants down on the farm(hopefully at the lowest prices possible without breaking them). This way the public gets food below the cost of production and can therefore afford to work for less money. Manufacturers get cheap labor and therefore more profits. Business booms and with the extra taxes the country can "afford" the luxury of subsidies for farmers.
The other side of this policy is taxation. Tax imported food enough that it doesn't ruin the agricultural sector.But if the price of an agricultural commodity rises too high then bring in the imports to lower the price down to subsistant levels. You can see this happening all the time in the beef business with meat from Australia,New Zealand, and Costa Rica. It was very blatant in the 70's with Irish beef. Another example would be U.S. corn this past winter.
Now in Europe and the U.S. this unwritten "social contract" called the cheap food policy works fairly well. But when you get into banana republics like CANADA, where the dictators can no longer afford to hold up their end of the bargain, then you see it start to break down. The government tries to cheap out on the subsidies and as a result the farmers eventually won't grow anything they can't get real money for. I suspect very soon feedlots sending their calves south will want to be paid in American dollars as our monopoly money is fairly shaky.
It is difficult for a government like ours. They have to still keep playing the game so they can get their own personal money down to the Cayman islands before the whole rotten mess caves in! We are Argentina five years ago!