[Scape]

Some lessons from New Zealand

$1:

Life without Subsidies
How the farmer was impacted by lack of government assistance

• Today New Zealand has around 80,000 farm holdings on 15.5 million hectares (38.3 million acres). The number of farms has held steady since subsidies were removed; land area has fallen slightly as marginal land has been turned over to forestry or allowed to revert to native bush.

• Since subsidy removal the agricultural sector has grown faster than the rest of the economy. Agriculture’s contribution to the New Zealand gross domestic product (GDP) has risen from 14.2% in 1986-87 to 16.6% in 1999-2000. Agriculture accounts for 11.4% of the total workforce.

• Rural population has kept pace with national population since 1986. Employment on farms has fallen somewhat, but these losses have been balanced by increased rural employment in tourism-related businesses.

• The number of forced farm sales directly resulting from the removal of subsidies is estimated at 800, or 1% of the total number of farms.

• Agricultural productivity has gone up 5.9% a year on average since 1986. Prior to 1986 agricultural productivity gains were about 1% a year.

• The total number of stock units on New Zealand farms has fallen by 9% since 1987. Sheep numbers are down by 29%, but cattle numbers are up by 35%. Sheep farming was the most heavily subsidized sector within agriculture.

• In 2001 governmental assistance to agriculture was equal to just 1% of the value of agricultural output, compared to an average value for developed countries of 31%. Remaining assistance in New Zealand is primarily in the form of funding for agricultural research.

• Around 90% of New Zealand’s total farm output is exported. These exports account for over 55% of total merchandise exports. Most food consumed in the country is domestically produced.

[Toro]

Good post, Scape.

[bootlegga]

Really Scape, how would our own egg and dairy farmers survive if the import traiffs (about 300% or so) were removed? They'd all disappear and we'd be forced to eat dairy products from some poorly run, uninspected 3rd world farm hell. Do you want that?

Of course I'm being facetious. Canada, sadly like the US, loves to talk about fair trade, but simply won't budge on some issues. I think the best way for our trade to be fair would be to institute a trade mirror act, where our tariffs/subsidies mirror the trading partner. If the US wants to subsidize its farmers/put tariffs on our goods, then we would too. If Zimbabwe does not, then we would let their products in tariff free, and so on.

Fair trade not free trade.

[Scape]

Well we can do it 2 ways: 1 use the GATT and freeze then gradually lower the subsidies over a period of several years OR we can jump off a cliff and remove all subsidies in the North American market in rapid succession. What producers survive that rupture in the markets are then bought up by US producers. What plan do you think we are following?

[Toro]

The negotations over tariff removal is gradual. It wouldn't happen all at once. It usually doesn't.

If it happens at all that is, which looks less and less likely considering the intransigence of France.