But it is not only subsidies but other forms of government support that lead to unfair competition. Limits on imports, tariffs and actual overproduction caused by government created incentives instead of free market forces distort true market prices.
And when it comes to sugar, regardless of the source (beet or cane), does the US sugar industry receive any government support? Does the US consumer pay more for this product because of these supports? Is that type of protectionism “free trade”?
1= In my first comment, I was replying to "I don’t know about Mexico, but I have read that subsidized grain hurts West African farmers who could probably out-compete us if there were no subsidies. and the OP " I recall reading about how NAFTA hurt Mexican farmers because it allowed import of cheaper **grain **from America". We have always been talking about grain, until you tried to hijack it to Sugar.
2; from your article “President Barack Obama’s pledge to cut subsidies to big farm businesses in his first budget …” In other words, the Prez plans to end subsidies. Your cite completely backs up what I said.
If you read my cite you’d see "In 1996, the U.S. government sought to alleviate farm subsidies and loans altogether. The 1996 Farm Bill called for the freezing and gradual reduction of agricultural loans and subsidies over a six-year period, resulting in termination of the program in 2002. Government assistance had been especially important to sugar producers because of the market’s volatility. Though the bill met stiff resistance from sugar producers and lobbyists, it eventually passed, leading to some closures. In 2002, however, President Bush signed into law the 2002 Farm Bill, which extended farm subsidies for an additional six years. Which means they are expiring soon.
Yes, subsidies etc can be unfair. So? It’s hardly like the USA is the only nation that uses them, and in the case of sugar- where they are used solely to stabilize prices in a very erratic commodity- the net long terms effect doesn’t unfairly support the industry. In any case, you tried to hijack the OP from grains to sugar and now to “are subsidies bad?” and “free trade”. Try to keep on target, OK? The OP asked “how does cheap/subsidized food from the West hurt poor subsistence farmers?” accepting that subsidies happen. A debate about the evils of subsidies is GD fodder, not here.
Yes this has turned into a debate but I am not the sole participant.
You made a claim that subsidies would end by next year. You have showed absolutely nothing to back up your claim.
You made the claim that farmers in other parts of the world could not compete with American farmers because they produce 5x the yield. You have shown nothing to support that claim.
If you would like to argue solely “grains” and not all farm commodities then you will run into the same argument. Subsidies are not conducive to fair or free trade. Whether it is corn or sugar or beans or cotton. Manipulating the market always has an affect on world commodity prices. The whole concept of free trade when it comes to agriculture is a joke.
The OP assumed that the majority of crops in México were produced by subsistence farmers. This is far from the truth. Subsidies and other price controls in the US have harmed many Mexican farmers. Your government basically guarantees your farmers a profit through artificial market manipulation. This in turn affects farmers throughout the world. The US wants other countries to open their borders to cheap American commodities while they close their markets to foreign competition. Why is cheaper foreign sugar not freely allowed into the US while American grains have free access to foreign markets?
Can you say “protectionism”? The US needs to start practicing what they preach.
I said “In any case, subsidies have been deeply cut and frozen since 1996, and will likely expire completely in a year or so.” and both my cite and *your own cite *backs that up.
Here’s one cite wikipedia "In 2007, over 150 million hectares of maize were planted worldwide, with a yield of 4970.9 kilogram/hectare. Production can be significantly higher in certain regions of the world; 2009 forecasts for production in Iowa were 11614 kg/ha.[25] Now, that’s USA vs the average (not subsistence farmers in Africa) and it’s 2.33X higher yield per acre/ha. According to "Climate Variability and Maize Yield in South Africa"the average yield there is 1237kg/ha which means the USA yield is **9.38X. **
It doesn’t matter for this purposes how evil or “conducive to fair or free trade” subsidies are or are not. That’s a GD question. But here, I have shown that* US farmers can out produce subsistence farmers by almost 10-1. *
I have yet to read where the USA has legislated an exact date to end subsidies much less in a year or so as you claim. Seems like it is all talk and no action. Seeing is believing.
Apparently you can’t comprehend that there are many different “foods”. And that also yield isn’t the cost per unit. The important factor is the cost per unit. It doesn’t matter if your yield is 100 tons a hectare if your cost per ton is higher than someone who produces 10 tons a hectare at a lower cost per ton. The fact is subsidies are still in affect and they allow US farmers to sell their products BELOW market valuewhich is how they put others out of business. The English word for this is “dumping” and the US always screams when they find a foreign competitor dumping a product in the US.
Probably not much if you didn’t have to pay rent, taxes, maintenance on your equipment, and seed purchases for the following year. Subsistence does not imply self-sufficiency. Small farmers are typically tenant farmers who market their products to pay their rents. The lower the price, the greater quantity they must sell to meet their obligations. When all small farmers encounter this problem, they all make more or less the same decision which further depresses the price. It is a vicious equilibrium.
incidentally, my question has to do specifically with the plight of the subsistence farmers (such as in Mexico) and it implies no assumptions about the rest of Mexican agricultural sector, such as their more advanced commercial grain production farmers. On a meta-level it ties into the claims made by some people that the economic devastation wrecked on these farmers by the cheap grain is what causes the Mexican migration into America. While I can easily see how Asian competition running the maquiladora manufacturing out of business might wreck havoc on poor people in Mexico, the case of the grain imports from America is to me less self-evident. Not that anybody should need a better reason than being able to make ten times more money for the same amount of work, but left wing sources seem to prefer the more convoluted explanations.
It isn’t just the cheap subsidized grain (CSG) imports that affect food prices. Other examples are American beef, pork and chicken producers that also benefit from the CSG. Because their feed costs (along with other supports) are subsidized they can also export these foods at a cost lower than many small farmers can equal. This lowers the income for products that many subsistence farmers traditionally market. When it becomes unprofitable they quit farming and look for another source of income. In México’s case either in other parts of the country or the US.
At this time there are many migrant Chiapaneco farm workers harvesting the jalapeño crop on the Jalisco coast. These are mostly whole families that travel together.
No, but apparently (like I said), the people who ironed out the details thinks it brings balance. Of course, the focus is on commercial farming. There’s not much room for subsistence farmers. Everything’s corporate, or at least still getting that way. (An even better reason to dump subsidies altogether.)
For the sake of completeness, let me point out that when I say “subsistence farmer,” I’m not talking about a poor, migratory farm hand. I’m talking about someone who owns his property, maybe even jointly. He has his equipment, and maybe he’s part of a selling cooperative. He’s a business man. Whether in the USA or Mexico, he’s got a middle class income and lifestyle. Maybe he has bad years, but in the end and overall, he’s maintaining a respectable lifestyle).
True “subsistence farmers” are relics of the third world.