Farm Trade Liberalization   Term Paper ID:27913 Click to get this paper

Essay Subject: Discusses the challenge posed by liberalization of trade in agriculture, & seeks to identify the root causes of the difficulties posed by trade liberalization in agriculture.... More...

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Paper Abstract: Discusses the challenge posed by liberalization of trade in agriculture, & seeks to identify the root causes of the difficulties posed by trade liberalization in agriculture. Paper Introduction: Farm Trade Liberalization: A Struggle Against Mythology Every recent effort to achieve liberalization in international trade has demonstrated that it is exceptionally difficult to liberalize trade in agriculture. Whether it is French cheese or Japanese rice, agricultural tend to appear as the stickiest issues in trade talks. More than other industries that provide many more jobs and a much larger share of GDP, agriculture seems able to command the sort of domestic support in many countries that makes political leaders shy away from liberalization. This paper will discuss the challenge posed by liberalization of trade in agriculture, and seek to identify the root causes of the exceptional dif Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. The political economy of agricultural trade and policy. E. More than otherindustries that provide many more jobs and a much larger share of GDP,agriculture seems able to command the sort of domestic support in manycountries that makes political leaders shy away from liberalization. "As I interpret the letter . "Industrial countries need never go short of foodbecause of crop failure, since they can always afford to buy enough onworld markets . "While direct income supplementsmay be the most efficient way of raising farmers' incomes, governmentsalmost invariably try to do so by means of agricultural price supports orcost-reducing subsidies" (World Bank, 1986, p. C. London: Collier Macmillan.Michelman, H. The policy of maintaining comparatively high domestic prices must be continued if the large number of small, marginal farms in the EC are to keep even a semblance of viability. J., Stabler, J. or Canada can speak against the prairie sodbuster,in France against the peasant, or in Japan against the rice farmer? In 1985, farmers in the EC received eighteen cents a pound for sugar that was then sold on the world markets for five cents a pound; at the same time, the EC imported sugar at eighteen cents a pound. The question is, why do policymakers endorse these policies, andabove all why do the consumers and taxpayers accept such transfers ofwealth from themselves to a particular industry? G. provided farmers elsewhere in the originalnorthern states a similar vested interest" (Michelman, Stabler, & Storey,199 , p. . As in North America, the concept of viability is infused with and motivated by the desireability of maintaining the family farm. Anyone familiar with American popular culture will beaware of the "Little House on the Prairie" connotations of the struggling,hard-working family farmer, embodying the bedrock virtues of society. Such a threat, however, seems purely theoretical. Once established, of course, such measures are difficult toremove, even when the original justification has largely evaporated. Agricultural policies and world markets. In the United States and Japanalike, though their agricultural sectors have little else in common, thesmall full-time farmer thus is squeezed out in favor of the more prosperouspart-time farmer, for whom farming may be largely a kind of hobby, anexercise in identifying himself with the semimystical virtues of the land. A century ago, most of the population of all countries lived on theland. Policymakers areaverse to dismantling an administrative machinery that has been laboriouslyconstructed. & Storey, G. 11 ). This does not sound much like theowners of U.S. To some degree, the seemingly contrary character of farm policy maybe explained simply by a sort of political and administrative fiction. 113).Farmers in the United States or Canada, commanding a hefty share of worldmarkets, do not feel themselves in as much need of overt protection fromimports as in net-importer countries, though as noted earlier they dosurround themselves with domestic supports of various kinds. (1981). Measures that might not be justifiable onpurely economic grounds are therefore needed in the Japanese view--to avoidthe threat of being held hostage to foreign food supplies. . In Europe, however, thiswas not the case. The specific difficulties posed by agriculture in international tradetalks are, as suggested above, simply one facet of the array of specialmeasures enacted to support agriculture in most developed countries,measures that have few if any equivalents in other industries. farm land" (Horwich & Lynch, 1989, p. Payment in Kind (PIK) cropsubsidies had precisely reverse effects upon wheat and corn respectively,driving actual wheat prices down, while corn prices were driven up nearlyto the price of wheat, with resultant dislocations not only for themarkets, but for growers (in the U.S. In agrarian societies, it wasindeed one of the most fundamental of questions: would the majority ofsociety be broadly free, or reduced to some form of serfdom. J. . TheCanadian imagery is nearly identical, and it is found with variations incountries such as France and Japan as well. (1987). In other respects, farm policies frequently fail to takeinternational markets (or weather fluctuations, always an important factorin farming) into account. The idealized image of the small farmer has thus taken form over manygenerations, and it retains its popular hold. New York: Macmillan.Hallett, G. In fact, however, the "smallfarmer" is frequently not the beneficiary of contemporary farm programs.Writing of a Catholic Church pastoral letter on agricultue, George Horwich(1989) wrote that "The Catholic bishops' blueprint for Americanagriculture, as summarized by Bishop O'Rourke, embodies a pastoral visionof farm life containing many appealing elements--at least to nonfarmers"(Horwich & Lynch, 1989, p. Farm interests, we willsuggest, are extremely adept at harnessing this emotion in support ofmeasures that serve their interests, even though they may not in fact domuch for those farmers who most the yoeman virtues that supposedly justifyprotectionist agricultural policies. 116). "For some time the British were inclined to hold the Frenchresponsible for the protectionist aspects of the Common Agricultural Policy(CAP); 'inefficient French peasants' were supposed to be at the root of theproblem" (Michelman, Stabler, & Storey, 199 , p. 11). Wemay suggest that this "something deeper" is the cultural symbolism offarming. 17 -71). It must . In other respects, agricultural policies are not entirely able toescape the real world. (World Bank, 1986, p. The family farm, with all that it embodies in symbolism, is likewisepredominant elsewhere in the developed world. Whether it is French cheese or Japanese rice, agriculturaltend to appear as the stickiest issues in trade talks. 17 ff). 234). L. The international farm policies followed by nations are frequentlycontrary to what normal economic logic would appear to dictate. Farmers in Canada pay as much aseight times the market price of a cow for the right to sell milk from thecow at the official support price (World Bank, 1986, p. EEC farm price policies were originally set to be adequate forrelatively inefficient German farmers, a decision which coincidentallyprovided a substantial export market for the more efficient French farmers. Farm Trade Liberalization: A Struggle Against Mythology Every recent effort to achieve liberalization in international tradehas demonstrated that it is exceptionally difficult to liberalize trade inagriculture. This paper will discuss the challenge posed by liberalization oftrade in agriculture, and seek to identify the root causes of theexceptional difficulties posed by trade liberalization in agriculture. 235). Moreover, the part-time rice farmers--who, for the mostpart, derive less than half of their family income from rice farming, haveincomes that are on average twenty percent higher than those of full-timerice farmers (World Bank, 1986, p. Ingeneral, exporters would prefer a high world price for their products inorder to be more competitive, while importers would prefer a low worldprice, so as to ease their balance-of-payments drain. InJapan, restrictions upon farm acreage, intended to preserve the Japaneseversion of the "family farm," have had the effect of causing the variousmeasures designed to support domestic growers to benefit primarily part-time growers of rice. Remarkably, this feature of agriculture is scarcely mentioned inmost of the literature in agricultural policy. Ageneration or two ago, when many farm policies were originally instituted,agriculture accounted for a far larger share of employment and GDP than atpresent. In its origins, however, European farm policy was driven by Germany.A 1977 article in The Economist, noted that much of the blame for Europe'sbyzantine farm policy fell upon the Germans, and pointed to the strongposition of farmers in German politics, where the Bauernverband has stronglinks to the Christian Democratic Party (Michelman, Stabler, & Storey, p.11). 111). Thus, in 1983, U.S. He starts with the familiarpremises of rational economic behavior, but fails to consider thepossibility that other forces are at work. . 275). "Thelegacy of past policies weighs heavily upon current ones. (Michelman, Stabler, and Storey, 199 , p. "The family farm is theusual form in most countries of the 'free' world--including the USA,Canada, Australia, and New Zealand--and the cases in which farms with morethan two or three hired workers predominate are exceptional" (Hallett,1981, pp. Thus, farm-support policies can sometimes have adverse effects. In Britain, urbanization won the race withland reform, and rendered the latter irrelevant. Protective measures aresometimes justified--notably in the case of Japan--on grounds of strategicsecurity. The Corn Laws were abolished a century and a half ago, when thevictims of agricultural free trade were perceived as being a fox-huntingsquirearchy, not sturdy yoemen. The beneficiaries are sometimes corporate "farmers," and sometimespart-time farmers, who may have something of the quality of "gentleman-farmers." "In the United States, net farm income as a proportion offarmers' total income fell from 58 percent in 196 to 36 percent in 1982.In Japan, where small-scale farming is more important, farm householdsderived 75 percent of their income from nonfarm sources in 198 " (WorldBank, 1986, p. Suchmeasures extend beyond direct crop subsidies to agricultural infrastructureinvestments and, notoriously in the United States, subsidies for notgrowing crops. not be forgotten that the CAP has a social policy dimension. 11 ) It is difficult to imagine that any other industry could command sucheconomically irrational forms of support, but the examples of such policiesin the farm sector are seemingly endless. . . Lynch (1989). Japan, the argument goes, is a small and largely infertilecountry with a large population. Food, policy, and politics: A perspective on agriculture and development. If the goal of farmpolicy is simply to support farmers, direct income supplements would indeedbe more efficient. Land reform and the protection of small farmers was historically acentral issue, from ancient Greece and Rome to the American Civil War,where the expression "free soil" conveyed the small farmers' fear of beingoverwhelmed by slave-worked plantations. Something deeper is plainly at work, however, in creating andmaintaining the distortions both in developed nations' agricultural tradepolicies and the related distortions in their domestic trade policies. and elsewhere) of the two crops(McCalla & Josling, 1985, pp. From the inception of the European Economic Community, the effort toconstruct a common European economic structure encountered no more complexobstacles than those raised by agriculture. But such an overt "dole," we may suggest, wouldundercut the image of the hardworking, virtuous farmer. World development report, 1986. In the United States, the government pays farmers not to grow grain; in the European Communities, farmers are paid high prices even if they produce excessive amounts. In agriculture,however, the tendency is the opposite--exporters seek to drive world pricesdown in order to maximize exports (while perhaps using other measures tohold up domestic prices, while agricultural net importers prefer a highworld price, in order to protect their own farmers (World Bank, 1986, p.111). 2nd ed. 274). Thissentiment does not so much win them direct allies, perhaps, as it disarmscritics; who in the U.S. The economics of agricultural policies. 123). These obstacles have been mostfrequently associated with France, in part perhaps because of the readinessof French farmers to demonstrate their grievances in a public and dramaticmanner. London: Westview.World Bank (1986). Wewill argue that the root cause of protectionism in agricultural products,as with the many other exceptional measures which governments take withrespect to agriculture, is the emotional power of agriculture as symbol andsupposed repository of traditional values. This state of affairs goes far to explain the difficultiesencountered by proponents of farm liberalization. Apart from their directpolitical power, exerted through representatives of agricultural districts,farm interests are able to call upon a deep reservoir of sentiment. & Josling, T. It should not perhaps surprise us to learn that"Japanese and European farmers are more highly protected than farmers incountries that rely on agricultural exports" (World Bank, 1986, p. Full-time rice growers find that an acreagesufficient to permit them their full productivity falls above the limit forvarious subsidies. One writer on the subject,for example, attempts to apply the theory of welfare economics toagriculture (Gardner, 1987, p. (199 ). The EEC's Combined Agricultural Policy was formulatedagainst a background of peasant farmers, not large estates. F. In Japan, rice farmers receive three times the world price for their crop; they grow so much that it has to be sold as animal feed--at half the world price. "The United States subsidizes irrigation and land clearingprojects and then pays farmers not to use the land for growing crops (WorldBank, 1986, p. . Let us take one indicative example. 111). The production offood, unlike that of petroleum, is not concentrated in a single unstablepart of the world. . Giventhe deeply-rooted nature of the imagery of agriculture, we must anticipatethat it may be generations before agriculture will be treated in domesticpolitics or in trade negotiations as simply another industry. . 11 ). 123). This image may perhaps be less obvious in Britain than in othercountries. A policy was thus established that "became France's 'Ark of the Covenant'in the community and . Oxford: Oxford University Press. The general effect of these measures is scarcely in doubt."Agricultural policies in developed countries transfer income fromconsumers and taxpayers to farmers and landowners" (World Bank, 1986, p.119). The economics of agricultural policy. the goal of strategic security is illusory" (WorldBank, 1986, p. 25-26). London: Westview Press.McCalla, A. (1985). . ReferencesGardner, B. London: Basil Blackwell.Horwich, G., and G. Farm interest groups are adept at defending gains fromprevious policies." (World Bank, 1986, p. thebishops' preferential option [is] the inner city underclass and theunschooled, unskilled rural poor. . If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.