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"Green Box" Subsidies?

Greetings Readers

WTO news below gives some hope that the ag subsidising nations are willing to consider alternative means of supporting their rural populations. Overproduction and its subsequent depression of market prices has been the bane of the efficient agricultural producers since countries recovered from the devastation of the 2WW.

New Zealand tended to take a purist view on agricultural subsidy and tariffs - they are all bad.

However the reality is that if the advanced economy nations do not support their rural economies they will become a waste land because the effect of advanced industrialisation draws capital investment away from primary production into the newer sectors of the economy where returns are greater.

The proposal called the "green box" - aimed at conservation, rural revitalization and other ways to funnel money to farmers that don't pump surpluses onto global markets has much to reccommend it. But management of such a system then becomes the issue. The first being how farmers will accept the custodian or 'gamekeeper' role and second what effect will this have on employment and services that currently support the flow of subsidised production from these farms.

Germany's movement to a more éco friendly farm production systems may be an early indication of an attempt to change direction but it is of little benefit of more equatable world trade if it continues the practise of direct subsidy per unit of production.

The seemingly simple removal of subsidies so important to NZ farmers is fraught with consequences and without political will, will not be initiated. The narrow margins held by governments in these subsidising countries means it is unlikely that these matters will move quickly.

Good farming

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