Let’s apply the free markert to farming

I must stress that there was farming in the UK well before the creation of the EU.

There have been long-established trading relations all over the world particularly within the commonwealth . It sounds blistering obvious, but it is worth iterating this point as some articles published sound as though we would be left without food altogether.

Many companies here in the UK go to great lengths to state their food is made here in the UK , I can not imagine that this will go away anytime soon, perhaps some canny businesses will continue to leverage this one further.

The loss of farming subsidies and price controls understandably would be a worry to many farmers especially when their existence can be so precarious , but with ingenious thinking and  some changes in regulation these are problems that can be solved.

What would farmers do apart from farm….?

Some of the land could be moved over to housing as much as NIMBYs protest about excessive house building over the UK , such a small percentage of the country is built on “The urban landscape accounts for 10.6% of England, 1.9% of Scotland, 3.6% of Northern Ireland and 4.1% of Wales.” (http://www.bbc.co.uk/news/uk-18623096) .First on the build list should be farms adjacent to existing housing projects, second on the build list would be the plots of land that were kept profitable due to subsidies or price controls these were most like to have been marginal in the first instance.

The government could also push to remove all the unnecessary administration and regulations that are currently coming from the EU. This would free up farmers to do what they do best which is farm and seeks new markets for goods or to use the land in a new and novel ways.

It is possible to remove all farming subsidies and produce more food at less expense to the taxpayer , who in fact get stung twice one through their taxes and the second through higher food prices. A real world example of this NZ where all farming subsides were removed 34 years year ago ,if anything it seems to have reinvigorated their farming industry (http://news.bbc.co.uk/1/hi/programmes/from_our_own_correspondent/3747430.stm) , if an economy the size of New Zealand can perform such a change , there is no reason why the UK which is much larger economy could also not survive with out farming support

What about making all the food that we need here in the UK ? I don’t want to get into the meat (pun intended) of comparative advantage you can look that up yourself , but needless to say it makes no sense trying to make watermelon here in the UK considering our climate the amount of energy required would not be a good use of scarce resources. It makes much better sense for us to produce where we have an advantage such as making potatoes/financial services/design and engineering etc and trade them for watermelons from a countries where they make them with relative ease .

This sort of trade also allows developing nations to trade their way to prosperity as opposed to waiting for grants from first world nations . Which will come with inevitable strings attached. Trade is much simpler and bottom up way of helping individuals and nations out of poverty. As opposed to the top down method which is fought with money leaking a way to pay bureaucrats with very little making its way to the those most need it. We could do away with departments such DFID and have that money spent here at home or left with the taxpayer.

If we were to be true to our Cobden (google corn laws for more on this much forgotten British free marketeer) core ,then we would also not worry about who makes our food the UK would have the ability to trade outside of the customs union with everyone. The whole world would be able to trade food with us in return for all the goods and services where specialise . As many of the countries outside of the EU would be able to send us food more cheaply (not in all cases I conceded as they may not have scale but that could happen over time as the developing world would accumulate capital from the goods they have sold to us) .

A post Brexit Britain (or just Britain returning to nation-state which is self-governing like most other countries in the world) we need to this as an opportunity to allow all areas of the economy to flourish and experiment (one of the reasons not to integrate all EU law into UK law IMHO) with new ideas and solutions you never know what we may just come up with.

First published on stopflyingtheflag.com.

Lee Rotherham on the Common Agricultural Policy, Food, and Trade

Lee Rotherham says that the Common Agricultural Policy is a major disaster. And he blames the French, their working population was dropping relative to other countries and they desired a subsidy to maintain the French countyside.

The costing he did demonstrated that the policy costs each family £398 anually (3.1% of a living wage) and an additional cost of £2.81 per week (1% of a living wage) stems from the Common Fisheries Policy. Dr Rotherham pointed out that other EU policies add additional costs on top of those two.

The mechanisms at work are the direct draw by the EU on UK tax payers and the indirect effect of higher (not lower, higher) prices for food products.

Ian Dunt complimented the French lobbying that lead to the CAP but pointed out that the upward trend in food prices is a more recent phenomenon. Combined with the fact that other countries have similar policies he contended that this policy does not fully explain the problems since 2008.

Kristian agreed after a fashion, and added that there was a historic downward trend in food prices. However although the problems of the crisis post-date it, he argued it is no longer reasonable to endulge French farmers. Times are tough and we would prefer food prices were lower than they are now. Kristian refered to global market forces to explain the more recent rises.

Yaron agreed that it is not proper to endulge French or any other farmers. This is form of central planning and Yaron believes that plannning creates unwelcome distortions in every area that it is attempted. Recalling his knowledge of US food markets he mentioned subsidies to leave land uncultivated (not unheard of here) and bio-fuels subsidies that raise the price of corn globally. He went on to repeat his observation that there are so many state interventions in various markets that it is difficult to clearly observe the effects, but he said that if you look at the areas where the state has kept largely out of the way you see prices come down and quality go up.

Yaron throws in an interesting extra point here, not specifically related to food but related to the price of every good, and that is the effect of regulating banks. Banks, he says, are the engine of the economy (I assume he refers to their heterarchical, and therefore free, role in allocating capital to where it is most productive – something Yaron has spoken about before). This drop in productivity is a cost that is passed on to all of us.

Kristian picks up on a passing remark Yaron made about the lack of a parrallel universe to demonstrate what he is arguing. Kristian refers to the recent deregualtion of agriculture in Australia and New Zealand as an example of market mechanisms restoring the productivity of the economy in a previously regulated sector. The panel appreciated that this was largely reponsible for the flood of good wine from those countries.

Returning to Dr Rotherham, I ask him what can be done to solve the problems that have been talked about. Lee was skeptical that this would be possible without a fundamental change to the nature of the EU treaties. Returning to the “Hobbits” he mentions that farmers in New Zealand are now so persuaded that the market-liberal approach is the right one that they are advocating in favour of the policy, having seen only small numbers of farms getting into difficulty at the end of their subsidy system.

Lee concluding by describing some of the flaws of the CAP, with subsidies flowing to golf clubs and airports and inner London councils rather than to farmers. He said that despite those flaws, if you kept the same system but ran it nationally you would still be £5 billion better off – that’s becuase the CAP is costing UK tax payers money and is sending that money abroad. For him this highlights the ethics of the situation which is that there are much better cases of marginal businesses offering social value in the UK and we ought to focus, if we are to have a CAP, on helping them.

That would certainly be a step in the right direction.

Discussion Point: Animal Rights

Two recent news stories inspired this one, first Mark Prichard’s private members bill to ban wild animals in circuses, second the Dutch parliament voting to ban ritual slaughter of animals.

The logic behind these acts of legislation is that we should treat lesser,non sentient creatures in a humane way regardless of religious belief.

Now this may sound callous, but I place the highest value on human freedom.  Furthermore I put humans before other species, and while I personally don’t like to eat it myself it doesn’t bother me if others wish to eat animals that were killed using kosher/halal methods. Therefore I oppose these bans for restricting our freedom of choice.