Animal agri subsidies and cost to consumer without them?

cormie

Hey folks,
I stumbled upon this: http://www.irishexaminer.com/breakingnews/ireland/latest-unemployed-offered-5k-a-year-extra-to-work-on-dairy-farms-800754.html

And was just wondering, in what other ways is animal agriculture assisted through government subsidies, grants etc, specific only to animal agriculture and not taking into account standard grants available to all business types, startups etc?

Without these, what % increase in RRP would the public be looking at for meat and dairy?

Any feedback appreciated

Siamsa Sessions

cormie wrote: »

Hey folks,
I stumbled upon this: http://www.irishexaminer.com/breakingnews/ireland/latest-unemployed-offered-5k-a-year-extra-to-work-on-dairy-farms-800754.html

And was just wondering, in what other ways is animal agriculture assisted through government subsidies, grants etc, specific only to animal agriculture and not taking into account standard grants available to all business types, startups etc?

Without these, what % increase in RRP would the public be looking at for meat and dairy?

Any feedback appreciated

Would be interesting to put numbers around this alright. I have to laugh when people complain about farmers making a fortune from "subsidies" and a minute later they're buying the cheapest food they can find, sometimes for less than the cost of production.

ganmo

So grain and horticulture prices wouldn't be affected?

That would probably mean a big switch from grazing to feedlot meat and milk production and claim subs on the tillage land.

_Brian

cormie wrote: »

Hey folks,
I stumbled upon this: http://www.irishexaminer.com/breakingnews/ireland/latest-unemployed-offered-5k-a-year-extra-to-work-on-dairy-farms-800754.html

And was just wondering, in what other ways is animal agriculture assisted through government subsidies, grants etc, specific only to animal agriculture and not taking into account standard grants available to all business types, startups etc?

Without these, what % increase in RRP would the public be looking at for meat and dairy?

Any feedback appreciated

How do you put a price on quality traceable food and a clean environment though ??

Subsidies as we see them compensate for the extra costs incurred by adhering to specific regulation..

Non use of hormones.
Improved animal husbandry.
Control of farming activities to reduce environmental impact.
Greening schemes which actively support the ecology but reduce farm efficiency and output.
Tractability beyond what was imaginable 30 years ago.
Increased administration associated with all the above..


Maybe I've missed some of the impositions put on farmers in return for supports.. but its really hard to put a financial value on this stuff...

These are the things missing when meat is sourced from the likes of south america where in truth we have no idea what happens before meat hits EU shores.

kowtow

A huge percentage of the current CAP regime is wasted because the system was ill conceived, particularly with area based payments.

The primary effect of area based payments is a one off increase the price of land, for the benefit of the owners of the land at the time the subsidy is introduced.

Once that has happened, a new generation of farmers has to pay the higher price for that land (either as rent or purchase payments) and the taxpayer is simply subsidizing that cost. The land produces the same regardless of subsidy.

On average Irish land prices in 1970 were 5K / acre (in today's money). Today they are about 9K /acre - that's about forty billion of capital value across Irish land not accounted for by inflation.

What's the net subsidy to Irish agriculture? About a billion a year?

One way of looking at things is that the EU and participating governments "bought" the land from our grandfathers and now we are compelled to farm it according to their rules - whether that is a good or a bad thing is a wider discussion.

20silkcut

But the consumer pays for the cheap meat and pays the farmer to produce the cheap meat. Food would be cheaper without subsidies.

rangler1

20silkcut wrote: »

But the consumer pays for the cheap meat and pays the farmer to produce the cheap meat. Food would be cheaper without subsidies.

I wouldn't be bothered doing it if I wasn't subsidised, wonder what oercentage of farmers think the same ...90+ i'd say

20silkcut

The only thing I'd say about subsidies is if you ever find yourself in an argument with non farming types over them best off avoid it and change the subject.

J.O. Farmer

rangler1 wrote: »

I wouldn't be bothered doing it if I wasn't subsidised, wonder what oercentage of farmers think the same ...90+ i'd say

Well all you have to do is look at the average farm profit compared to the average farm subsidy and it's soon clear that a large percentage will be losing money without them and even the top 20% in any sector will be making very little.

The only sector possibly viable in the absence of subsidies is dairying. By viable I mean that a farmer could earn a living working say sub 60 hours a week on average. I'm taking 60 hours as it's once and a half times the normal working week.

cormie

Thanks for the replies. I'm one of the non farmer heads referred to above, so in simple terms, could anyone even hazard a guess at what farmers would need to charge to make the same profits as they do now, without the subsidies and how this would reflect in the RRP? So consider the wholesaler and retailer make the same as they do, so what would the % increase be in the RRP simply based on the farmer not having the subsidies?

Panjandrums

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Cattlepen

Panjandrums wrote: »

What do loss making enterprises do? They close down. The world needs more food output and I'd argue that if the bottom X% of farms had their subsidies given to the top Y% , we would have more output and cheaper product through economies of scale.

Supporting loss making enterprises with public money is terrible value for the taxpayers.

Well if your prepared to go hungry for the years in between farmers going out of business, giving up theirs subsidised way of life, waiting for world markets in land and commodities to alter there pricing till it pays big business to take over, then train a workforce in animal husbandry, arable husbandry and environmental husbandry then go on!! Do away with subsidies. There would be blood and carnage on the streets thanks to pontificating people with a simplistic, leftist point of view

selectamatic

Panjandrums wrote: »

Supporting loss making enterprises with public money is terrible value for the taxpayers.

Importing tainted or sub par meat from South America etc. Isn't great value either no matter how cheap it is.

It's also less than wise to concentrate food production in areas where it's cheapest to do, especially should the world enter more volatile times. Over reliance on one method of providing sustenance for a nation is nonsensical always has been always will.

In the grand scheme of things it's not that long ago since famine was real issue here so it's probably best we keep ourselves as far from the possibility of that happening again as we can.

Panjandrums

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grassroot1

The current world market price will sustain farming it does so for New Zealand. However it would have a horrific effect on Irish farming and irish society.
Rural Ireland would become deserted job losses would also occur leading to an increase in the social welfare bill. Welfare standards and Q/A would fall along with input costs and farm size would increase.More people would move to the already over populated cities leading to further housing problems. There would also be quite an impact on our flora and fauna as world market prices do not leave room for unproductive habitat
Our current CAP is simply a way to keep farmers farming and away from the social welfare system. It is a product from another time when Europe needed to ensure stable food production for its growing population. How you could unravel the system without major impact I do not know. British farmers will shortly find out.

tanko

Panjandrums wrote: »

This post has been deleted.

True, supporting the Civil Service, the HSE, Irish Rail, Bus Eireann, RTE, Teagasc, Allied Irish bank, Anglo Irish Bank etc etc etc is terrible value for the taxpayers.

Panjandrums

This post has been deleted.

Cattlepen

Panjandrums wrote: »

There's a slight difference between State owned companies/services and farms owned by private individuals. A farm is nothing more than a privately owned business.
Do you not think it would be more productive for smaller unprofitable farms to be sold so profitable farmers can purchase the land and get economies of scale?

Read "
animal farm" to see how that works.

kowtow

Your logic only works if you regard farming as mining, i.e. extracting resources at minimal cost for processing.

I agree that both food processors and large swathes of the population - in the West particularly - regard this as the ideal situation.

Others would say that factory farming on a grand scale, intensive feed lots etc and the loss of family farms and the attendant benefits mean that food is one of those rare and important sectors which the market as presently constructed does not have the means to price properly and in which we must hope consumers make choices which are about more than money.

As they do with sex, health, and death.

Edit: and we don't have cheap food here, we have easily led consumers. How else would people be happy to pay more for a fake cappuccino and a donut from a machine in a filling station than the farmer gets for the milk from a cow - which he must rear, house, feed, calve and and care for 24/7/365.

20silkcut

You would find very few people arguing in favour of big factory style farms in the EU.
Lots of EU citizens had soviet era collectivised farms imposed on them and do not want a return to that.
Thankfully there is a rich tradition of family farming in Central Europe and the EU is happy to retain that it seems. Much more than our U.K. Bretheren who threw their farming industry under the bus back in the 19th century. I said it before it is one positive of brexit that such a country that has an indifferent attitude to agriculture is leaving the decision making table.

kowtow

20silkcut wrote:

You would find very few people arguing in favour of big factory style farms in the EU. Lots of EU citizens had soviet era collectivised farms imposed on them and do not want a return to that. Thankfully there is a rich tradition of family farming in Central Europe and the EU is happy to retain that it seems. Much more than our U.K. Bretheren who threw their farming industry under the bus back in the 19th century. I said it before it is one positive of brexit that such a country that has an indifferent attitude to agriculture is leaving the decision making table.

And yet the UK has many more farm produced products, authentic single breed beef and lamb, much better and more local food, local markets including dairy, a significant and growing volume of organic farming which puts Ireland to shame and a vibrant agri tourism scene?

I'm afraid uk food and farming may split two ways, with small profitable family farms at the premium and and a larger open market for the cheap seats but I don't think for a moment it'll be all bad for farmers or for food.

20silkcut

Of course Britain has many great farmers and farming traditions and industry . It is their government policy that has been indifferent. Never was this more starkly demonstrated than during the foot and mouth crisis of 2001 the contrast between the reaction and urgency of the situation in Britain and Ireland was shocking.

The part time boy

20silkcut wrote: »

Of course Britain has many great farmers and farming traditions and industry . It is their government policy that has been indifferent. Never was this more starkly demonstrated than during the foot and mouth crisis of 2001 the contrast between the reaction and urgency of the situation in Britain and Ireland was shocking.

Your spot on is why I can't understand a lot of UK farmers who voted leave .

UK government could not care less about farming . However uk been in the eu farmers interests were better taken care of by counties who actally want to look after farming

CrabRevolution

Cattlepen wrote: »

Well if your prepared to go hungry for the years in between farmers going out of business, giving up theirs subsidised way of life, waiting for world markets in land and commodities to alter there pricing till it pays big business to take over, then train a workforce in animal husbandry, arable husbandry and environmental husbandry then go on!! Do away with subsidies. There would be blood and carnage on the streets thanks to pontificating people with a simplistic, leftist point of view

Wouldn't cutting off all state support and leaving only the most profitable farms to survive be the opposite of leftist?

Hard Knocks

The part time boy wrote: »

Your spot on is why I can't understand a lot of UK farmers who voted leave .

Know a few, they were fed the money the UK give to EU will be invested into Agriculture.
Today they're in fear of what's to come

maidhc

Panjandrums wrote: »

I wasn't suggesting that we import food that we can produce. I just think farms which are unprofitable should have subsidies stopped.

I think the agriculture system is badly broken. We sell milk at 30c/l and buy an essentially unaltered product for 4x the price in the supermarket.

Things are even worse in the meat and tillage industry. There would be no need for subsidies if farmers were paid properly for what they produce.

Tesco gets the benefit of the subsidies, not farmers, they just get a wage (barely).

cormie

So no hints as to what the RRP of animal agri would rise to without the subsidies?

If it's too complicated to put a price on, maybe another way to look at it, what would be the RRP increase to simply turn a profit if you had to set up a farm by yourself and compete with current farms, but did it all by yourself with no help from anyone.

kowtow

You are oversimplifying it I'm afraid.

The majority of food you buy has been through multiple hands and is often heavily processed and packaged. The farmers share of RRP is tiny for many items.

Are you talking about all farming sectors or just one?

For example, a beef finishing farmer is selling the whole animal... Which doesn't have an RRP as such because few customers... few supermarkets even... buy the entire animal.

20silkcut

cormie wrote: »

So no hints as to what the RRP of animal agri would rise to without the subsidies?

If it's too complicated to put a price on, maybe another way to look at it, what would be the RRP increase to simply turn a profit if you had to set up a farm by yourself and compete with current farms, but did it all by yourself with no help from anyone.

The price would not change one cent. The world price of beef is the world price across countries that subsidise their beef industries and those that don't.
If subsidies were removed EU beef farmers would hit the wall beef consumption would drop due to the spike in beef prices but the yanks and South Americans would ramp up production until price equilibrium is restored.

kowtow

20silkcut wrote: »

The price would not change one cent. The world price of beef is the world price across countries that subsidise their beef industries and those that don't.
If subsidies were removed EU beef farmers would hit the wall beef consumption would drop due to the spike in beef prices but the yanks and South Americans would ramp up production until price equilibrium is restored.

Presumably you'd have to remove the tariffs as well as the subsidies for that to occur?

cormie

I understand the global competition and importing of foods dictate the pricing and this is how government subsidies help keep local produce affordable.

I guess I'm just trying to gauge, without these subsidies, how much more would local animal produce increase in shops, while trying to be as competitive as possible but still turning a profit for a sustainable business.

I don't know who's entitled to the subsidies, is it just the farmer or the slaughter house too etc, but if you were to cut all the animal agriculture subsidies and strip it back to only what any other business can get, say the likes of a tech start up or coffee shop when opening/running a business, and keeping all the cuts the retailer, distributor, wholesaler and whoever else don't benefit from subsidies the same, what kind of % increase would local animal agri products such as dairy, meat, eggs etc be looking at for the consumer?

Water John

I think OP you are looking at the wrong end. Look at the % of the Av Ind Wage being spent on food over the last 50 years.
It has fallen dramatically, over time.
Into that build the fact that the farmer is getting less of the retail price in the same time frame.

NZ is shown as a country producing without subsidy. The environment and animal welfare in NZ is paying the price.

20silkcut

If the Eu was abandoning its beef industry like that and therefore reducing its self sufficiency in beef production then you would imagine that they would remove the tariffs on beef imports. Such a move would probably entail a reciprocal tariff removal on the part of the US/South Americans on some other commodities.

20silkcut

cormie wrote: »

I understand the global competition and importing of foods dictate the pricing and this is how government subsidies help keep local produce affordable.

I guess I'm just trying to gauge, without these subsidies, how much more would local animal produce increase in shops, while trying to be as competitive as possible but still turning a profit for a sustainable business.

I don't know who's entitled to the subsidies, is it just the farmer or the slaughter house too etc, but if you were to cut all the animal agriculture subsidies and strip it back to only what any other business can get, say the likes of a tech start up or coffee shop when opening/running a business, and keeping all the cuts the retailer, distributor, wholesaler and whoever else don't benefit from subsidies the same, what kind of % increase would local animal agri products such as dairy, meat, eggs etc be looking at for the consumer?

There would be no increase in the price of food with subsidy removal.
Subsidies do not lower the price of food.
They have no impact on the price of food. They just allow EU farmers to produce food at world prices.
Food price increases are caused by supply issues.
I repeat it again subsidies have no impact on the price the consumer pays for food.

kowtow

Water John wrote: »

I think OP you are looking at the wrong end. Look at the % of the Av Ind Wage being spent on food over the last 50 years.
It has fallen dramatically, over time.
Into that build the fact that the farmer is getting less of the retail price in the same time frame.

NZ is shown as a country producing without subsidy. The environment and animal welfare in NZ is paying the price.

Yes, having beat our ploughshares into swords in order to conduct the second world war at the end of it we beat them back again into ploughshares - or rather their chemical cousins.

A great deal of what is the agri-food "industry" today came from out of those military / industrial chemical industrial complexes. Chemicals drove (and drive) yield higher and higher and mechanisation & industrialisation drove food prices lower as a component of average family wages - but created a list of hidden costs which continues to grow all the time. The cost of the CAP is one of them (perhaps a particularly wasteful one), but both macro and micro environmental, social, medical costs and farmers who struggle away far below any minimum wage are part of the picture as well.

Water John

Well look at the €4 chicken you buy in the supermarket. The processor pays the farmer less than 50 cent for rearing the chicken. The farmer never owns the chicken, the processor also provides the feed.
This margin is ridicolously tight on the farmer. If you paid €4.50 cent for the chicken and the extra 50 cent went to the farmer, he would have a good living.
Remember the chicken farmer has no subsidy. the 50 cent is little to you but a lot to the farmer.
The same goes for many other goods, bananas, coffee etc. That is where the concept of Fairtrade comes from.
Sadly, in the laws of economics, middle management always has to justify its own existence by squeezing the supplier.
Those along the food chain never decrease their margin, except the primary producer. They are price takers.

If you can put forward a system that ensures the farmer/producer gets a fair return, then I am all for a zero subsidy situation.

heretothere

cormie wrote: »

So no hints as to what the RRP of animal agri would rise to without the subsidies?

If it's too complicated to put a price on, maybe another way to look at it, what would be the RRP increase to simply turn a profit if you had to set up a farm by yourself and compete with current farms, but did it all by yourself with no help from anyone.

I have done a very simple calc on my partners accounts. If he had no subsidies last year he would have needed approx 18% more from the factory for his cattle in order to have made the same money.

He a small herd and has only been going a short while on his own herd no. It would be a much better figure if I could compare it over a few years. I can only imagine that the extra cost would be passed onto the consumer.

20silkcut

Do you honestly believe the consumer would pay double the price for food?? When cheap food can be imported from the four corners of the earth.

20silkcut

Water John wrote: »

Well look at the €4 chicken you buy in the supermarket. The processor pays the farmer less than 50 cent for rearing the chicken. The farmer never owns the chicken, the processor also provides the feed.
This margin is ridicolously tight on the farmer. If you paid €4.50 cent for the chicken and the extra 50 cent went to the farmer, he would have a good living.
Remember the chicken farmer has no subsidy. the 50 cent is little to you but a lot to the farmer.
The same goes for many other goods, bananas, coffee etc. That is where the concept of Fairtrade comes from.
Sadly, in the laws of economics, middle management always has to justify its own existence by squeezing the supplier.
Those along the food chain never decrease their margin, except the primary producer. They are price takers.

If you can put forward a system that ensures the farmer/producer gets a fair return, then I am all for a zero subsidy situation.

If you could wind back the clock and make Columbus un discover America you might be able to create a world where food commands a premium price.
The cultivation of the American plains by mechanised agriculture finished the era of expensive food and we have not looked back since.

Water John

Not at all sure of your point, Silk Cut.
The points I made are, food is now a lot cheaper for the consumer. It takes a lot less of his wage. The farmer is hit by the double whammy of the food chain paying him less of the finished product as the primary producer.

A difference of about 20% on the sale price, would eliminate the need for most subsidies, if returned to the primary producer.

Any premium market products have a much higher mark up, than 20%.
The fallacy constantly reiterated is, the consumer demands it. No, its the inter competition between food marketeers that drives down quality to achieve a lower sale price, without affecting their margin.

Many branded products have a mark up of 50% over generic or own brand.
That is what the professional marketeers believe many consumers are willing to pay. That's just for a brand without any quality difference.

ATM US dairy farmers have a higher price for their milk than us. That despite, their advantages of cheap grain, less environmental control and use of hormones.
The market for food products is much more complex, than just lowest common denominator.

20silkcut

I was arguing that food is cheaper now because its supply has increased dramatically since the 1870 s. There is no winding back the clock on that.

While there is a certain amount of elasticity in relation to branding there is no way the consumer will pay more than they have to for goods and services . If you argue otherwise then every economist and economic theory in the world is wrong

yosemitesam1

20silkcut wrote: »

I was arguing that food is cheaper now because its supply has increased dramatically since the 1870 s. There is no winding back the clock on that.

While there is a certain amount of elasticity in relation to branding there is no way the consumer will pay more than they have to for goods and services . If you argue otherwise then every economist and economic theory in the world is wrong

An awful lot of food is priced according to what the consumer will bare so much of what your saying applies only to how supermarkets etc buy and then they slap on as much as they can get away with.

Water John

I understand macro economics. Lots of variables since the 1870s. Mechanisation has meant more output per labour unit. New varieties, weed control, far more processing of food. Lots more people to feed.

We respond to lots of issues, not just price. I can get 2 fine steaks for €6. Why do we go to a retaurant and pay €30. We don't buy the cheapest car that can get us around.

What I am saying is price is of less importance to the consumer than those who operate the food chain after the primary producer, maintain.

20silkcut

Water John wrote: »

I understand macro economics. Lots of variables since the 1870s. Mechanisation has meant more output per labour unit. New varieties, weed control, far more processing of food. Lots more people to feed.

We respond to lots of issues, not just price. I can get 2 fine steaks for €6. Why do we go to a retaurant and pay €30. We don't buy the cheapest car that can get us around.

What I am saying is price is of less importance to the consumer than those who operate the food chain after the primary producer, maintain.

In fairness the restaurant is value added your paying for the dining experience.
There are lots of factors that determine price you can buy stuff that's a past it's sell by date for way cheaper than stuff that might be a few hours younger but otherwise identical.
Where you have identical products identical experience etc people will choose according to price.
Some people may pay a premium for branded products or healthier products etc but if two of those products are on a shelf identical in every way except price even the more discerning consumer will pick the cheaper one. Why would they do anything else??

Water John

Sure that is not an argument, just logic.
Making sure the goods are visibly equal, eg EU and Other countries produce is the problem. The EU demand certain environmental and welfare aspects, that are not readily discernable, thus the difference cannot be loaded onto the consumer and must be paid by way of subsidy to the producer who adheres to higher standards.

20silkcut

In fairness you were arguing that steak in a restaurant and steak from the shelf were the same thing.
Thats why I went for basic logic.

kowtow

20silkcut wrote: »

I was arguing that food is cheaper now because its supply has increased dramatically since the 1870 s. There is no winding back the clock on that.

While there is a certain amount of elasticity in relation to branding there is no way the consumer will pay more than they have to for goods and services . If you argue otherwise then every economist and economic theory in the world is wrong

I'm not sure that is a strictly accurate interpretation of supply and demand, at least in so far as it's role in setting prices.

No question that aggregate supply of food has increased, but so has population. What has changed most is the cost of production.

It's quite possible to have low prices in a thin market and to have high prices in a busy market, the overall volume has nothing much to do with it, particularly where one side of the market is relatively static compared to the other. Prices are actually set at the margin of the market.

I'd characterize demand for fresh food as relatively static for any given population, and production as more dynamic albeit within a series of somewhat longer production cycles - in which case prices generally (except in times of temporary shortage) are set more by competition among producers than among consumers.

Producers compete against each other by lowering offered prices until they find buyers, with the last producer to hold out too long ending up with the first unsold (and therefore wasted) lot.

Against a background of lower and lower cost of production (i.e. higher and higher yield) producers have scaled up and the prices at which food orders are filled have become steadily lower.

The twelve cow man of fifty years ago with no tractor and no fert spinner can't afford to produce cheaply enough today to find any buyer at all for his milk and continue in business - his 30,000 litres is now in the bulk tank of the 120 cow herd, and being produced by half the number of cows at a significantly lower cost per litre. Same litres, different price.