Friday, June 24, 2005

The cost of nostalgia: 40% of EU Budget goes to farmers

According to No End to Subsidies in Sight By Julio Godoy

The EU spends roughly 40 percent of its budget (some 50 billion euros/60 billion dollars) in subsidies for farmers.

The 230 billion dollars in subsidies that OECD countries pay to their farmers -- at a conservative estimate -- is the main bone of contention in the Doha round and in the World Trade Organisation (WTO).

A new report to be published by the OECD later this year confirms that most developing countries have long ceased to pay out heavy subsidies to their farmers. The report's preliminary findings, to which IPS had access, underlined that the producer support estimate (PSE) in France and in the United States amounts to 31 and 16, while the Brazilian value is less than 10.

More optimisitcally The Economist acknowledges that progress may occur at the WTO with regards to this issue as long as countries find domestic support for change. But at the national level, the issue isn't as clear.

[For many on the domestic level agricultural subsidies, says the Economist,] provides social benefits not valued by the market: environmental protection, food security and the maintenance of rural communities, for example. The most important (and the least cited) factor, however, may be psychological.

Forging a common vision isn't easy when nostalgia or some sort of "psychological" reason captivates developed countries for the time being. And it isn't just the farmer lobby that is captivated by the scent of cow dung, consumers fancy the homegrown enough to be willing to pay more for it through their taxes.

Since it is not the pocketbook that rules the consumer in their compliance with the farmer lobby, it is more viably their vision of the nation. Yet, at what cost does support for this vision come? It costs the consumer more and it hurts foreign farmers that depend monetarily on agriculture. It is my suspicion, therefore, that this issue will not be addressed unless the nostalgia of nationalism is somehow substituted for a captivating notion of the Next.

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