Friday, June 16, 2017

How Farm Subsides Work in Europe

I know some folks are fairly naive....but this is the simple narrative about how farm subsidies work.

Farmer Joe runs a farm in Europe.  Farmer Joe has three things that he produces in some fashion.....which relate to a profit situation and a sustainable business.  Farmer Joe has roughly 300 acres to manage and produce these products.

To make Farmer Joe's empire work.....he spends around 100,000 Euro a year on equipment, fuel, fertilizer, etc.  The sad thing is that if you went and added up the profits from all of Farmer Joe's three production an average would only add up to around 100,000 Euro....showing no real profit or the ability to support Farmer Joe and his family.

So, the government.....unwilling to let agricultural prices escalate and make things really cost a lot more than normal (like five Euro for a container of milk).....simply taxes the public to some degree, and like a hundred other things that are fake in terms of make up the lack of profit for Farmer Joe, with a yearly or quarterly subsidy payment.  Farmer Joe is happy.  The public is happy.  And the political apparatus is happy.

A fake reality?  More or less.

How many western countries use subsidies?  Most all now use it.

If farm subsides were to suddenly cease?  Then prices at groceries would have to move up in a very short period, or you'd sit and watch farmers who refuse to produce with their acreage.  Would you pay the actual price?'s the might find that Spanish or Italian farmers might actually produce at a lesser cost, than Dutch or German farmers.....if everyone had their subsidy dumped.

The sad thing about this current system is that it's all locked into place and you have no way of ceasing this, or proceeding onto a more realistic system.  The necessity of the EU managing this whole subsidy thing?  It's the only way to keep all 28 nations lined up and 'fair'.

No comments: