Saturday, May 17, 2008

Food parcels in the thoughts

The US Congress has just passed the final version of the $US307 billion Farm Bill, a signal to the rest of the world of the real meaning of ‘Free Trade’. Seems to be, “we are free to screw anyone we like, including our own consumers…”

This bill is guarantees to piss off the rest of the world while it apparently throws a lifeline to US agribusiness. At the same time it drops the rest of you into the shit pit! Just look at the sort of provisions and keep an eye on your grocery bills:

Continued subsidies on cotton, barley and rice for five years.

Extension of a dairy levy on imported dairy products - until now foreign dairy has not had to pay a marketing levy to promote US dairy products within the US by region of origin, such as Wisconsin cheese.

A new rule that requires 85 per cent of sugar used in the US to come from US sources. Any extra US sugar will be turned into ethanol. This is on top of sugar quotas already limiting Australian imports.

Labelling of country of origin for meat.

So who is going to subsidize this Democrat inspired Farm Bill? I guess the American consumer. It is a big world out there and countries like Australia will find other markets for their produce, but be careful in future negotiating trade deals with the US.

The US drove the concept of global markets, of swapping the production strengths of various countries and regions. Ok, the concept was always problematic, but it made the rest of us get off our butts and find markets. Lose one we find another.

In the meantime US consumers will start paying more for ant product with sugar or other domestically mandated ingredients. Much of Australia's meat ends up in hamburgers and will be mixed with other sources of meat. Australian beef producers say the bill will increase the cost of US ground.

Eat well friends, if need be I will start organizing food parcels, though I’m not sure if there are tariffs on them yet. Free trade is increasingly proving to be a crock of shit.


lindsaylobe said...

It interesting to note most commentators who criticize free trade don’t realize most of the economic troubles in the world are due to its distortions, not free trade itself since free trade is usually advantageous providing human rights are observed amongst trading partners.

These distortions you point out in the latest bill passed by Congress not only reduce efficiencies by propping up non viable farming but also have the effect of exporting poverty to the developing countries who as consequence of such practices are unable to sell their produce at a profit or at best at reduced prices, unable to ever invest in the future. The combination of the yearly USA and European farm subsidies paid directly by governments to farmers exceeds the total African debts.

Consequently for a long time the developing world competed against some western producers, notably the USA and Europeans who’s artificially induced lower prices was only made possible due to huge taxpayer funded subsidies.

For the past 5 years demand has exceeded supply in many farm products with prices up 50% for grains in just the last year, due to shortages. How any goverenment in such a current day environment would need to subsidize the farming sector beggars’ belief but it just goes to show how strong the Lobbyists are in Washington. The big losers are the USA citizens.

Cart said...

Ah Lindsay, you always express it so much better, but the bottom line is “The big losers are the USA citizens.” I don’t have an issue with free trade per se, only the way the term has been bandied about without any real intent to fulfill the meaning.
I have to say I liked everything about Paul Keating, except for his economics – that bloody level playing field. Now I’m wondering if he didn’t believe his own rhetoric.
Living in Canada for a while really was a wake up call on the meaning of free trade to the US, there were two issues during that period, one obviously Australian:
The first I was living in the rural hinterland behind Vancouver. The effect through the Fraser Valley and beyond from US protectionism was a constant source of concern there. Of course most Canadian agriculture is dangerously close to the US border.
The AWB issue was subsidiary, but showed up that trade with the US is dependent on a range of issue, and Canada was the first country to tip the bucket on that rort.
Even the free trade agreement between the US and Australia, finalised after my return, was highly qualified. Even Howard wasn’t willing to face the Australian people after giving up the pharmaceutical benefit. It was not so much the benefit as having one major buyer, nationally the US objected to.
I doubt there really is an ideal free trade scenario, and I like the picket fences my favourite countries tend to erect. No need for a wall, just reminders that we need to protect from the avarice of some, and ensure we won’t need food parcels.

Lysander Cadwalader said...


Dont worry,,, my friend Bush will veto this Democrat hunk of feces.

Cart said...

Lysander, great to see you over here. Seems to be the same discussion... Not sure whether George W is going to be much of a block.

lindsaylobe said...

I' m not so sure about either party! As I noticed John McCain wants to ban toy imports from China and is highly critical of their lack of free speech and religion. Barack Obama and Hillary Clinton both want to punish China for their currency manipulation, presumably they assume it should be either floated or allowed to further appreciate. But the China economy is still not as will developed with as mature currency markets as western nations markets and I personally think a slow but measured appreciation is not such a bad thing. Allowing the currency to float in China or suddenly increasing its appreciation could cause widespread dislocation and unrest in my view. The candidates’ rhetoric in recent weeks in the U.S. predictably suggests a toughening stance towards China under any new administration.
But former Presidents Bill Clinton and George W. Bush uttered the same verbiages, only to soften their stance once in office as the realities became apparent. Now I ask you given China is now the second-largest foreign owner of U.S. debt, (an increase of 800% in the past 10 years) and as the USA is in need of an ally in the region, particularly given the stance of the North Koreans, what odds will give me all of this banter will come not come to pass ? If I’m proved incorrect this will be disastrous for the USA economy, especially if the Chinese Creditors and Sovereign wealth investors went on strike! Who’s’ going to pay the Bills? Best wishes

Cart said...

Lindsay, thanks again. “..want to punish China for their currency manipulation.” Funny coming from the country which coined: “You pays your money and you takes your chances.” Still, I would have thought taking your chances comes with some measure of analysis and forethought.
I am still convinced that the US is a corporate oligarchy, as opposed to a democracy. The latest evidence of that is GE who apparently believe it is better to let China have the manufacturing while they (GE) concentrate on lending to borrowers who are almost guaranteed to default.
I understand the Ag lobby spent upward of $US100 million this year, about 35 cents for every citizen they are screwing over. I’m also told that the five crops for which agribusiness will receive the bulk of the subsidies—cotton, soybeans, corn, rice, and wheat—have seen massive price run-ups. Anywhere from 105% to 254%.
The average US voter really isn’t in the position to buy a vote in congress…

D.K. Raed said...

Don't worry, we'll all be mad-cowed by our own bad meat industry practices soon. Jeez! Maybe that has already happened? Maybe that accounts for the crazy way we act? I think the symptoms go on for years before actual death.

Cart said...

mad cow sounds more appetizing than the ground up earth worms allegedly used by a major US burger joint.

D.K. Raed said...

well earth worms may be unappealing to western tastes, but I don't believe they are too harmful? Mad cow on the other hand, kills. hmmm, which major US burger should I be avoiding?