The economics of agriculture

Merrion

It strikes me that there is a problem in the basic economics of agriculture :- basically if it's a good year then everyone has a good year so yields rise and prices fall, if it is a bad year then nobody has a good year and income falls. Any margin is shared unequally with lenders, governments and inputs providers (fertiliser, fuel) and any profits tend to be plowed back into capital costs.

Without grants could any European farmer make a living?

Markcheese

Well yes-ish , in a local market...
But theres a world market and cheap transport out there ,
So you could have a phenominal year... yields through the roof ...as have all your neighbours .. but if the world price is high then happy days...
Conversely ,crap weather ,crap yields and can still have crap prices because someone can bring in a shipload from somewhere cheap..
Then your into the whole subsidys,quotas intervention,storage supports,marketing supports ect ect , skewing markets long and short term ,as well as energy policies, oil prices ect..
But yeah farmings a mugs game

Waffletraktor

Any farm in western Europe producing basic bottom end of the market products is wasting their time be that cheap meat/grains/dairy products/veg/fruits. Our costs for everything are too high these days with land values ridiculously inflated as a store of wealth rather than potential earning ability. The Eu has changed its mind from food which was over produced to a disjointed formula of environmental methods but sooo many people in charge noone really knows whats going on.
Main reason for low incomes is global overproduction, with record levels of grains in store and a number of record harvest in the last 6 years... The exact same in dairy for a few reasons but also the above. Its just our produce costs too much for poorer folks to buy and we cant produce for much less, go figure.

Merrion

Markcheese wrote: »

But yeah farmings a mugs game

There's grey jobs or green jobs, and a penny grown is worth more than a pound "relocated" but yes, the economics are a mugs game.

Timmaay

Markcheese wrote: »

Well yes-ish , in a local market...
But theres a world market and cheap transport out there ,
So you could have a phenominal year... yields through the roof ...as have all your neighbours .. but if the world price is high then happy days...
Conversely ,crap weather ,crap yields and can still have crap prices because someone can bring in a shipload from somewhere cheap..
Then your into the whole subsidys,quotas intervention,storage supports,marketing supports ect ect , skewing markets long and short term ,as well as energy policies, oil prices ect..
But yeah farmings a mugs game

This is the bones of it. Unfortunately as standards of living continue to increase in the western world, food has gone in the totally opposite direction, 30/40years ago the majority of our diet consisted of freshly prepared meals, and were reasonably balanced. However nowadays both parents tend to work fulltime, and alongside us living busier faster paced lives, the time give to preparing food has diminished. Proper healthier freshly prepared food where you know all the exact ingredients have been replaced by processed foods where the company who makes them are substituting the raw ingredients for sugar, salt, maize starch etc, which are all tasty but much cheaper than real food!

The only real solution. As ya said get back to buying locally, and we all need to start cooking real food and not accept the twice weekly take away, frozen pizzas, lasagnas with 15% "pork".

And as for the whole "subsidies, market supports, security of supply" etc, the more I look at the world today the more I realise this whole
"we'll need to feed 9billion people in the future so farmers get busy pumping out food" is a totally fallacy, we have well enough land that is well underutilised in the world at the minute as is...

(ok sorry that was my dawg/kowtow style rant for the night)

_Brian

my father had a cousin who grew up with him as a sister. She's vegan for 40/50 years now and whilst she mostly keeps her opinions to herself she has always said for as long as I remember that modern agriculture was going nowhere, and that people were being served lower and lower quality foods as time went on.
Scary thing is I'm starting my to think the same over the last three years I've grown to detest the interference that the corporate supermarkets have had on the food chain and people's perception of "good food". People have been brainwashed into thinking that these supermarkets know best and have the consumers interests at heart when the opposite is true.

When you have supermarkets and processors dictating to both consumer and farmer on what people what and what is best, this is a recipe for poor food, poor margins for farmers and obscene profits for them.

The whole more units at lower margins line that is being fed to farmers is rubbish and farmers are the loosers. All that happens is the multiples have more cheaper raw material to make more profits for their shareholders. Farmers are more endebetted too which increases their reliance on the multiples, perfect for them.

I'm turning into the whack job who thinks that farming is broken, busier industrial farms lead to less well looked after animals, which results in poorer foods. Just what has happened across in America.

For so long we laughed at America for their poor food, poor relationships with foods and their obesity epidemic. Well the smile is well wiped off our faces now when you see 25% of children classed as overweight or obease. Not that long ago my wife met a young mother in a clinic for overweight children and she couldn't see anything wrong with giving skips to her 4 month old baby, what chance has that child of eating properly, the mother of course was bordering on obese.

patsy_mccabe

I know a guy that has being obese all his life. Heard it from someone who was in his house recently, that he was giving glasses of Coca Cola to his 2 year old son.
You only have to look at the rubbish bin of any given house to see the huge amount of food wrapping that fill them every week.

_Brian

I'm not down on obease people and I'm no slim Jim myself with few back up lbs in case of emergency.

But I do have distain when I see obease people feeding their kids crap and so passing on the legacy of ill health with no consideration at all for the poor future they are giving their kids.

davidk1394

Agriculture is the only economy going where you buy at retail and sell at wholesale. Any economy that is based on this model is completely unsustainable and at the moment looks like it's a race to the bottom

Buford T. Justice XIX

Merrion wrote: »

It strikes me that there is a problem in the basic economics of agriculture :- basically if it's a good year then everyone has a good year so yields rise and prices fall, if it is a bad year then nobody has a good year and income falls. Any margin is shared unequally with lenders, governments and inputs providers (fertiliser, fuel) and any profits tend to be plowed back into capital costs.

Without grants could any European farmer make a living?

Just a clarification, firstly, the BPS money isn't a grant.

It's compensation paid to farmers so they can compete with imported no/low tariff foods allowed into the EU in return for EU no/low tariff access to those countries markets for the EUs products. Those exported products supply a large number of jobs directly and indirectly in the EU and the cost of the BPS is approx. 10c/person/day.

So, essentially, farmers are competing with low cost of production countries while in a high cost of production market.

Basically, without the BPS, rural Ireland would be massively depopulated with urban Ireland suffering with even more transport/housing and large areas of the countryside would be abandoned 'to God and the curlews' as the saying goes.

But essentially an equilibrium would be reached and some very big farms would compete with world prices and some very small farms would compete with niche products on a part-time basis.

Limestone Cowboy

patsy_mccabe wrote: »

I know a guy that has being obese all his life. Heard it from someone who was in his house recently, that he was giving glasses of Coca Cola to his 2 year old son.
You only have to look at the rubbish bin of any given house to see the huge amount of food wrapping that fill them every week.

Very true, the girlfriend was working in a shop while she was in college a few years ago. There was 2 litre bottles of Coke on special offer one week and a local lady came in and bought 16 bottles of it! She has a fairly young family and they are all seriously overweight aswell along with her husband. Madness.

Timmaay

Limestone Cowboy wrote: »

Very true, the girlfriend was working in a shop while she was in college a few years ago. There was 2 litre bottles of Coke on special offer one week and a local lady came in and bought 16 bottles of it! She has a fairly young family and they are all seriously overweight aswell along with her husband. Madness.

We were talking about birth control etc in developing countries in another thread this morning, I think it's needed much closer to home in some cases But the above 2 examples show why a properly implemented sugar tax is a necessity, one that directs the funds straight back into marketing of how to eat healthier. Win win in terms of obesity puts people out of jobs, onto the dole, and puts pressure on the health service.

_Brian

Buford T. Justice V wrote: »

Just a clarification, firstly, the BPS money isn't a grant.

It's compensation paid to farmers so they can compete with imported no/low tariff foods allowed into the EU in return for EU no/low tariff access to those countries markets for the EUs products. Those exported products supply a large number of jobs directly and indirectly in the EU and the cost of the BPS is approx. 10c/person/day.

So, essentially, farmers are competing with low cost of production countries while in a high cost of production market.

Basically, without the BPS, rural Ireland would be massively depopulated with urban Ireland suffering with even more transport/housing and large areas of the countryside would be abandoned 'to God and the curlews' as the saying goes.

But essentially an equilibrium would be reached and some very big farms would compete with world prices and some very small farms would compete with niche products on a part-time basis.

can you imagine the turmoil if it was pulled !!

I wonder though if Brexit goes ahead the CAP budget would be seriously hit, I think after refunds the UK are contributing something like €200million + per week to the EU coffers, I can't see the other contributing nations covering that hole in the budget. And if they make a success of leaving who's to say other countries won't follow ?? By 2019 and the next CAP renegotiations Europe could look quite different.

Imagine the situation where Ireland were expected to become a net contributor ??

Buford T. Justice XIX

_Brian wrote: »

can you imagine the turmoil if it was pulled !!

I wonder though if Brexit goes ahead the CAP budget would be seriously hit, I think after refunds the UK are contributing something like €200million + per week to the EU coffers, I can't see the other contributing nations covering that hole in the budget. And if they make a success of leaving who's to say other countries won't follow ?? By 2019 and the next CAP renegotiations Europe could look quite different.

Imagine the situation where Ireland were expected to become a net contributor ??

Our biggest export and import market going from the EU would open a discussion on whether we should consider Irexit.

At the very least, the Ag budget would face a 10% cut I imagine. That on top of 2 modulation cuts and an inflation adjusted c.50% drop in the value of the BPS in the last 15 years would make a considerable case for leaving as well, for me anyway.