I came up with this and it made me think:
The studies quoted in the link below made me question about the issue, as they claim most poor countries import more than export regarding to food. Personally, I suppose third world countries could export way more without subsidies, thus being able of creating more wealth.
What are your thoughts and opinions on the topic?
It makes sense that the poorest countries aren’t capable of meeting the supply demands for their own food, but that’s not an argument for the continuation of farming subsidies in developed countries. If it’s necessary that we provide some sort of relief to less fortunate countries, in the long run it’ll be cheaper to just give them loans to purchase physical capital so that they can move away from slash and burn agriculture (which is becoming significantly more difficult with increasing population).
Yes, third world countries are hurt by food subsidies. If they did not have them, they might actually devise agricultural methods that work and are sustainable, rather than rely on artificially cheapened western food and agriculture methods,
heres another video http://www.youtube.com/watch?v=TeAYuLB8VTg.
Yes. Yes they do.
In general, yes. For example it’s common knowledge without high tariffs and subsidies cane sugar imported from Brazil, the Philippines or Ecuador would be considerably cheaper than domestically produced beet sugar and corn syrup. Without these artificial impediments it would not be economically convenient to produce sugar in the US, Japan or Europe.
And it also affects domestic food prices: for example Professor Noguchi Yukio of the Waseda University recently published a paper bringing forward the bold (by Japanese political standards) theory that allowing for a freer food market would benefit the Japanese citizens. Right now Japan is the country with the highest subsidies relative to the GDP in the world (together with Switzerland; an astonishing 9%) and has ferocious tariffs in place to protect domestic producers from foreign competition. Rice tariffs are infamously high, making imported rice (often from the US) a luxury good. The same applies to New Zealand: except for food prices, life is otherwise cheap.
Also tariffs and subsidies play an important part in distorting production even outside of Europe, the US and Japan. For example the EU has standing agreements to favor pineapple imports from Costa Rica over Thailand, shrimp imports from Vietnam over China and banana imports from Ecuador over the Philippines, effectively giving a single country a near monopoly in supply. Subsidies from Brasilia and Kuala Lumpur are turning over whole swathes of farmland to monoculture, mostly soy and oil palms and the US seemingly neverending appetite for corn subproducts (ethanol and syrup, both favored by legislation) has convinced Mexican farmers to convert from agave, beans, tomatos etc to corn monoculture. The end result is a dangerous reliance in monoculture in countries with weak economics (meaning a bad harvest can wreak havoc) and skyrocketing fuel prices: after all tequila manufacturers still require agave and people still want to eat tomatos and beans. But with dwindling supply prices are going up.
What is the official justification behind tariffs? I have heard some one say to me before that tariffs on imports encourages local production and gives local production an advantage. In the UK and the USA there is a heavy dependence on imports and they have high import tariffs, so it appears that tariffs do not work.
Developed countries will have more demand for imports especially in developed countries with strong currencies. Currency exchange rate is a main factor with regards to imports.If a developing country with a weak currency has to pay the tariff in uk or usa currency then it is disproportional.
I think that tariffs are realy just another reason for revenue generation for the state and it also gives an avenue to control markets.
It is supposed to help local/domestic industry, cause domestic products to be bought here rather than imports and thus serve to retain jobs. So it does help domestic producers and their employees in the sense that they dont get forced out of business by cheaper imported goods whether from cheap labor, subsidies or whatever else from the exporting country.
The unintended consequences though are that it encourages domestic producers to not push toward more efficient means of production which would lower prices on the goods. also it forces domestic consumers to pay a higher price for these goods basically subsidizing the fact that they cannot produce goods as cheaply as another country. The money paid in higher prices to these producers cannot then be used in the purchase of other goods.
If tariffs were removed yes it may throw some domestic producers out of business but it may also force others to create more efficient means of production. The price of goods without a tariff would also be lower for the consumer allowing them to either save more (investment in capital) or spend it on other consumption (jobs in industries where cost of production is lower than imports).
I don’t think it makes any difference at all except in the short term. The third world is still largely caught in the Malthusian trap. If food prices fall, population levels rise. If food prices rise, population levels fall, and overall living standards remain the same. First world taxpayers are just being forced to subsidize higher population levels in the third world.