EU and US free-trade talks launched

[Jacob]

Yeah, this is definetly a pot and kettle scenario.  This is one of the reasons I had hoped the Canadian EU deal could get done before the Americans joined in the fun.  The two of you are going to be arguing about who is more protectionist for decades.

Disagree.  The US protects niche markets like can sugar and cotton, not staple commodities like wheat, corn, soybeans and meat.

I was under the impression that the US does subsidize staples:

http://farm.ewg.org/progdetail.php?fips=00000&progcode=corn

http://farm.ewg.org/progdetail.php?fips=00000&progcode=soybean

http://farm.ewg.org/progdetail.php?fips=00000&progcode=wheat

[Admiral Yi]

My understanding is that production subsidies got phased out a Farm Bill or two ago and farmers now just get straight welfare checks.  Your links seem to support that understanding.

Also keep in mind that total US ag payments are around 15 (5?) billion a year, which is not very much when you compare it to the total value ag sector output.

[MadImmortalMan]

Even if it's straight welfare checks, that still contributes toward offsetting the cost of farming and thus counts as a subsidy.

[Admiral Yi]

Even if it's straight welfare checks, that still contributes toward offsetting the cost of farming and thus counts as a subsidy.

As long as it doesn't impact a farmers output decision it's not a production subsidy. 

The obvious exception I noticed in Yake's link was the crop insurance subsidy.  That will operate as a production subsidy.

[crazy canuck]

Even if it's straight welfare checks, that still contributes toward offsetting the cost of farming and thus counts as a subsidy.

As long as it doesn't impact a farmers output decision it's not a production subsidy. 

But that is the problem.  Corn farmers can sell their product below the cost of production flooding both domestic and international markets with cheap US grains with all the accompanying distorting effects both within your nation and abroad.

[Barrister]

Even if it's straight welfare checks, that still contributes toward offsetting the cost of farming and thus counts as a subsidy.

As long as it doesn't impact a farmers output decision it's not a production subsidy. 

The obvious exception I noticed in Yake's link was the crop insurance subsidy.  That will operate as a production subsidy.

Except it does impact a farmers output in that it encourages them to have an output (i.e. encourages them not to quit farming).

[Admiral Yi]

But that is the problem.  Corn farmers can sell their product below the cost of production flooding both domestic and internatial markets with cheap US grains with all the accompanying distorting effects both within your nation and abroad.

Why should farm welfare induce farmers to sell below the cost of production?

If you're a farmer getting a welfare check of, say $20,000 a year, why would you bother waking up in the morning to plant, knowing that year's worth of labor will cost you $10,000 of that free money?

[crazy canuck]

But that is the problem.  Corn farmers can sell their product below the cost of production flooding both domestic and internatial markets with cheap US grains with all the accompanying distorting effects both within your nation and abroad.

Why should farm welfare induce farmers to sell below the cost of production?

If you're a farmer getting a welfare check of, say $20,000 a year, why would you bother waking up in the morning to plant, knowing that year's worth of labor will cost you $10,000 of that free money?

Because they have to plant to qualify

[crazy canuck]

Put another way Yi, the American food manufacturing system relies on cheap corn for much of its output.  Take that away and the whole system has to remake itself.

[Admiral Yi]

Because they have to plant to qualify

I don't think they do.  If they did, it would be a production subsidy.

[crazy canuck]

Because they have to plant to qualify

I don't think they do.  If they did, it would be a production subsidy.

It is 

[Admiral Yi]

I'm glad that's settled.

[crazy canuck]

What would you call it when farmers can sell for less than the price of production and still stay in business?

[jimmy olsen]

Yeah, this is definetly a pot and kettle scenario.  This is one of the reasons I had hoped the Canadian EU deal could get done before the Americans joined in the fun.  The two of you are going to be arguing about who is more protectionist for decades.

Disagree.  The US protects niche markets like can sugar and cotton, not staple commodities like wheat, corn, soybeans and meat.

Sugar and Cotton are niche products?

[Sheilbh]

Disagree.  The US protects niche markets like can sugar and cotton, not staple commodities like wheat, corn, soybeans and meat.

From a CRS report:

U.S. farm support consists of programs that provide both direct and indirect support to producers and consumers and to the agricultural sector in general. The core programs provide price and income support for selected commodities, including corn, wheat, cotton, rice, soybeans, dairy, and sugar. Grains, cotton, oilseeds, dairy, and peanuts generally are eligible for both fixed "decoupled" payments (payments not tied to production or crop yields) and "counter-cyclical assistance" payments (payments tied to per-bushel or per-pound target prices); the total producer subsidy is based on past production. Producers of these and other commodities also are eligible for crop loans and loan-related subsidies that provide further support. Dairy and sugar are supported through various minimum pricing systems, and some commodities are subject to quotas to limit imports.

I'm not sure the link with production has been so entirely severed, or that the focus is niche products. But EU subsidies are available for a far wider range of commodities including fruit, veg, livestock etc.

Also keep in mind that total US ag payments are around 15 (5?) billion a year, which is not very much when you compare it to the total value ag sector output.

OECD has US producer support at around 10% of total agricultural output. The EU's almost three times that. But part of that is because of the different structure of agriculture - the US has twice the farming land, but the EU has 6-7 times the number of producers.

Both systems are slowly, slowly creeping to a system that's not that linked to production and generally reforming in the same direction.

Edit: It seems both systems have about a third of support that's not tied to production at all.