Currently, the EU devotes 77 percent of its budget to agricultural subsidies and structural spending on physical infrastructure and the like.
My previous post was about how large agri-business conglomerates capture much of the E.U.'s (and U.S.'s) farm subsidies. But common farmers and vintners get some too. And when you've been capturing rents for generations, being forced to give them up is a bitter pill.
Mr. Jeune, along with most French winemakers, opposes European Union plans to relax strict rules governing the making of rosé, or blush, wines just as they are starting to gain respect — and sales. Currently, red grapes are usually crushed and left to ferment briefly with the skins, the two being separated before the juice colors fully. The E.U. proposal would allow Europeans to simply blend red and white wine to create a pink blend — giving them the freedom to adopt the same, less complex, methods as New World producers.
“If you do this, why not allow people to make wine without any grapes at all?” Mr. Jeune asks, growing steadily more voluble over a glass of his own — “real” — rosé, from grapes grown in Provence. “You could do it in a laboratory, with alcohol, water, artificial flavors.”...
Though the French government seemed to go along with the blending proposal in January, it has since sought to block the measure after a backlash in the countryside. Because of its resistance, a final E.U. vote has just been deferred until June.
In France, a land reliant on agricultural subsidies, tiny producers with distinctive wines have a special place in national affections. Makers of the most exclusive French wines are prospering but, with competition from the New World growing, rosé is a rare midmarket success story — quite something for a product long considered inferior by wine snobs.
In March, La Baume winery in Languedoc suffered a bomb attack — the second in five years — and a shadowy group opposed to the “industrialization” of winemaking is blamed.
La Baume, a large winery once owned by an Australian company, Hardys, but since bought by a big French producer, Les Grands Chais de France, is seen as a symbolic target.
But Anne Sutra de Germa, who runs a small winery, Domaine Monplézy, and also opposes change, is more optimistic.
“In some ways it’s good to have stupid laws,” she said, “because the consumer who wants good wine will, eventually, find us.”
French chicken farmers, Irish pudding makers, and Italian banks. Not at all the small-time farmer that proponents of farm subsidies often champion.
The U.S. is no better, by the way.
Paul Collier says it's possible, but only if we get over our aversion to large-scale corporate farming, end domestic farm subsidies in the first world, and accept genetically modified food. This, he says, will allow us to capture scale returns, alleviate the supply-side shortages, and give farmers in the developing world competitive access to Western markets. These three policy actions can directly address the central cause of food shortages:
The root cause of high food prices is the spectacular economic growth of Asia. Asia accounts for half the world's population, and because its people are still poor, they devote much of their budgets to food. As Asian incomes rise, the world demand for food increases. And not only are Asians eating more, but they are also eating better: carbohydrates are being replaced by protein. And because it takes six kilograms of grain to produce one kilogram of beef, the switch to a protein-heavy diet further drives up demand for grain.
The two key parameters in shaping demand are income elasticity and price elasticity. The income elasticity of demand for food is generally around 0.5, meaning that if income rises by, say, 20 percent, the demand for food rises by 10 percent. (The price elasticity of demand for food is only around 0.1: that is, people simply have to eat, and they do not eat much less in response to higher prices.) Thus, if the supply of food were fixed, in order to choke off an increase in demand of 10 percent after a 20 percent rise in income, the price of food would need to double. In other words, modest increases in global income will drive prices up alarmingly unless matched by increases in supply.
In recent years, the increase in demand resulting from gradually increasing incomes in Asia has instead been matched with several supply shocks, such as the prolonged drought in Australia. These shocks will only become more common with the climatic volatility that accompanies climate change. Accordingly, against a backdrop of relentlessly rising demand, supply will fluctuate more sharply as well.
Each semester I ask my students to look closely at the distribution of US agricultural subsidies. They are often surprised by the realization that most payments go to a small number of high-income "farmers." Today's IHT suggests an identical pattern in the EU.
The most delightful tidbit: the British Royals are among the big winners from the Common Agricultural Policy. "Data from the 2003-2004 farming year indicated that the queen [of England] and Prince Charles received €360,000; the Duke of Westminster €260,000; and the Duke of Marlborough €300,000...The queen and Prince Charles received a total of more than £1 million, or $2.1 million, in EU farm subsidies over two years."
Not surprisingly, recipients of large payments via the CAP have sufficient political influence to block reform.
If you wish, you can track EU recipients and US recipients. I am struck by the lack of transparency in the EU
