Post AcPCXfwqB5oVM18IzY by bluGill@kbin.social
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(DIR) Post #AcOcVp3pjGj0giDkuW by kravietz@agora.echelon.pl
2023-12-02T10:27:02.949716Z
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As another farming row between EU and #Ukraine is rising,[^1] this time on the sugar-beet market, I think it’s important to clarify the core principles of EU farming policy to avoid disappointment over what is essentially misguided expectations. In both EU and Ukrainian discussions I see a lot of voices like “our grain is cheap, so what, that means cheaper sugar, bread, whatever, why they don’t want it?” But that’s the core misunderstanding.If you have an established market and you bring a cheaper product from outside at lower price, consumers will naturally buy it because it’s cheaper. And if they buy the imported one, they naturally won’t buy it from the local supplier. If they do that long enough, the local supplier goes out of business. Dead simple.Free market? Well, that’s largely what happened on EU energy market. And EU photovolatics market. And EU steel market, and a dozen of others that I don’t even know about. Local producers went out of the market, unable to compete with much cheaper imported goods… which ultimately led to a situation where #Russia happily bullied everyone with arbitrarily set gas prices and #China is now happily “selling us the rope with which it will hang us” (paraphrasing Lenin). Free market isn’t, when you compete against lower wages, poor labour protection and environmental standards, not to mention state subsidies and exports used as economical weapon.EU farmers weren’t as dumb or weak as EU industry and energy producers. This is why EU has Common Agricultural Policy:The CAP is a partnership between society and agriculture that ensures a stable supply of food, safeguards farmers’ income, protects the environment and keeps rural areas vibrant.[^2]It’s not merely a nice-sounding mission statement, it’s a carefully crafted, literal list of CAP stakeholders: consumers, farmers, environment, rural areas. There’s millions of actual working people behind each of these words.The problem which CAP solves is extremely complex, because EU farming production had been already too cheap for decades due to progress in technology. When farmers produce too much of food, but have constant costs driven by strict requirements (e.g. labour and environmental protection), it creates an economic imbalance. Here’s the paradox: the food sold to consumers not only doesn’t have to be as cheap as possible, it cannot be as cheap as possible because it would kill the farming - but it has to be affordable. It would be very cheap, for a while, and then it would get very expensive, as Russian gas in 2022.EU has a number of very non-intuitive instruments to deal with it.One is of course to allow farming industry follow the steps of energy industry and disappear, getting replaced by imports. That means unemployment and reliance on external actors as it comes to the most basic human need: food.Another one is protectionism, so basically keeping your production shielded from imports by high import tariffs. Then there’s subsidies so basically paying farmers so that they don’t go out of the business. This includes land subsidies so paying people to maintain land as arable or meadow or forest. And there’s self-limiting production so that the prices don’t go down too much. Some are proposing return to pre-industrial methods (for marketing purposes called “organic farming”). Sometimes this includes proposals to explicitly ban them (the anti-GMO campaign).CAP does all of these, in a dynamic manner, setting production quotas for EU producers and limiting imports, flexibly responding to changing market and climate situation year by year. That’s an extremely complex mechanism, involving negotiations between all Member States happening all the time, which however does deliver: EU hasn’t faced any major food crisis for decades while maintaining a competitive farming industry.As I said before, if you want to see how it could have looked otherwise, look at EU energy sector and what happened with energy prices in 2021-2022. Now imagine the same happened if EU food was mostly imported.Now, reading about Ukraine’s sugar beet exports to EU, I have a déjà vu… but I also need to start a new post due to character limit :)[^1]: https://www.bloomberg.com/news/articles/2023-11-28/eu-tensions-over-ukraine-crop-imports-spreads-to-sugar-market[^2]: https://agriculture.ec.europa.eu/common-agricultural-policy_en
(DIR) Post #AcOco4eoTrKGGvDl4a by kravietz@agora.echelon.pl
2023-12-02T10:30:20.934251Z
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Now, about the déjà vu with #Ukraine sugar beet exports to EU - we already had exactly that conflict when #Poland joined EU in 2004. And it was also about production of sugar beet, which had to be limited on accession, because Poland’s overproduction would kill producers from then 17 (if I’m counting right) Member States. That self-limiting of course did result in people losing jobs in already disadvantaged rural areas, which fueled once powerful populist party “Samoobrona” (“self-defence”). The atmosphere of these times can be seen in articles from 2000’s in the tone of “Germany ruined Polish sugar industry” (except CAP was of course agreed by Polish government).[^1]The best evidence however that it worked in long term can be now ironically seen once again in Poland: “Samoobrona” long disappeared as Polish farmers prospered and no longer needed their “defence”. Now Polish farmers have a strong position in the EU, carefully guarded by CAP, and their main concern… is the competition from Ukraine’s farming industry.Ukrainians in turn come to a new prospective market and simply don’t understand why someone is complaining about their cheap production when “everyone just wants it cheaper, “true competition is a dog-eat-dog game of kicking your competition out of the market, forever” and all these neo-liberal statements of faith. No, under EU CAP it doesn’t work this way.And I hope after reading this lengthy post you will understand the fundamental difference between short-term “we want it cheap” thinking and careful management of a complex system like CAP that ensures long-term affordable food supplies and economical prosperity of mutually competing producers. I very much hope Polish farmers will recall where they were in 2000’s, while Ukrainian farmers will draw lessons for themselves from that part of history of Polish farming…[^1]: https://www.bankier.pl/wiadomosc/Kto-zrujnowal-przemysl-cukrowniczy-w-Polsce-1930251.html
(DIR) Post #AcOlSxVWldS1bTsrUe by kravietz@agora.echelon.pl
2023-12-02T12:07:23.755578Z
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A careful reader will certainly pay attention to the “self-limiting of course did result in people losing jobs” piece. And of course, self-limiting does mean your prospering business becomes less competitive that it potentially could, but it’s only in short-term. Firstly, Polish farming industry in 2000’s was still largely based on former state-owned collective farms leftover from Soviet times. They had very low costs due to many factors, including state subsidies and no environmental standards, which doesn’t change the fact they were the only source of income for thousands of people.Ultimately, all these regions have now GDP per capita way beyond what they had in 2000’s but macro-economy often loses focus on individual human tragedies. But in EU the production capping self-imposed by CAP comes along with structural funds, whose purpose is exactly that: harmonising levels of development between different regions.https://commission.europa.eu/funding-tenders/find-funding/funding-management-mode/2014-2020-european-structural-and-investment-funds_enIdeally, the closure of the (figurative and literal) sugar plants should be preceded by massive inflow of funds to allow creation of new, competitive businesses and re-qualification of the people working there, renew local healthcare and cultural centers etc.But these funds work by drastically different principle than most national government funds, which are simply allocated to specific tasks that local authorities are required to do anyway. EU funds need to be actively sought for and requested, and this works from the very bottom (local authorities, NGOs) up to the highest level (Member State ministers need to go and ask for them). Some funds are allocated to governments, some are allocated to NGOs, there’s hundreds of them.In many cases that worked and entrepreneurial local authority representatives gained some media presence by cleverly using various grants and funds and restructuring their regions (e.g. Wadim Tyszkiewicz). In other cases equally entrepreneurial but less caring representatives used funds to build local empires for their nephews, friends and political supporters (e.g. Tadeusz Rydzyk). And of course they blamed everything on mythical “Brussels”.But in many cases what happened was simply… nothing. Local authorities who were imprinted by the principles of Soviet command economy were simply unable to use the funds which were merely made available, not rigidly allocated in “now you do that” style. And these too blamed everything on “Brussels”.So once again, the whole point of CAP is once again about long-term prosperity across EU, not just today and here. But CAP isn’t alone, it is being coupled by dozens of other EU funds whose join purpose is essentially reducing the income gap between Member States below the threshold where dog-eat-dog competition happens.And it makes sense, because trade wars and real wars in the past broke out in the past between EU countries specifically due to unconstrained competition for resources. As we are right now seeing on the Polish-Ukrainian border, by the way.All that makes a complex, but sound economic and social mechanism, which generally works on strategic scale. There was a number of strategic mistakes made, such as delegating energy sector to external actors with drastically different systems of values. And there’s a lot of tactical issues, where mechanisms designed to reduce tensions and income gap didn’t works… simply because nobody even tried.In summary, I believe it’s important to understand how the whole system works in order to set your expectations right and have the right perspective when things don’t work.
(DIR) Post #AcOzYXMMIQEHbS9Jlw by dsc@mastodon.scot
2023-12-02T14:03:29Z
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@kravietz thanks - this toot actually has helped reshape my own perspective on CAP
(DIR) Post #AcP63MbourIyxkSols by kravietz@agora.echelon.pl
2023-12-02T15:58:04.882223Z
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In Ukrainian — today's interview with Pavlo Klimkin, #Ukraine ex foreign minister, who speaks exactly of these challenges I highlighted above in the context of integration of Ukraine and EU. The interview is obviously intended for the internal audience and the most important message Klimkin tried to deliver is: there's a lot of compromises you are not going to like.https://www.youtube.com/watch?v=sNKfrmrJMC0
(DIR) Post #AcPCXfwqB5oVM18IzY by bluGill@kbin.social
2023-12-02T15:57:52+00:00
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@kravietz all at the expense of consumers who have to spend more on food and thus either work more or have less other things.EU could compete much better if they didn't saddle farmers with anti science policies. (GMO and roundup bans for example)
(DIR) Post #AcPCfHKBbxLdIog6Gu by kravietz@agora.echelon.pl
2023-12-02T17:12:09.521997Z
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@bluGill I intentionally barely mentioned the subject, but GMO plants have plenty of other benefits such as reduced herbicide and pesticide usage.