What is this? a subsidy by any other name?
Canadian pork producers are being bailed out with $50 Million going to farmers for culling their swine. The goal is to deliberately reduce the supply to the market in an attempt to raise prices.
The program will pay farmers $225 per breeding swine killed after Monday. The meat will go into dog food or be given to food banks. It can’t be sold in grocery stores because that might be considered a subsidy.
Might be considered a subsidy? This is a subsidy. The pork producers can restrict supply all they want. They do not need the government for that. This is a subsidy because the government is paying them to do it. Where the farmers dump their garbage at the end of their work-day is a red herring.
The tax-payer pays for this subsidy and then the tax-payer pays again with higher pork prices. Wonderful!
You know what else is wonderful? You get well-meaning people blaming the “free market” for this when it is not even a free market at all. Too bad. We all need boogey-men, I suppose.
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If I had $50 Million dollars and pork farmers came to me for “help” today — assuming I was so inclined, I would give them money to help them transition into a different industry. I would not help them continue to produce pork.
Shane wrote:
The especially confusing thing about this issue is that they are killing swine because of the costs of feed. The feed costs are through the roof because of incentives both here in Canada and in the USA to produce ethanol. Nobody’s producing feed anymore so costs to produce pork is too high for the current market price of pork.
So you’d think that they would just raise prices on the pork since it is more costly to produce. Especially with demand for pork skyrocketing, especially in emerging markets like China, you’d think that the price for pork would rise sufficiently to make it profitable again. But the article talks about how the pork producers “can’t” ship it over there. Why not? Why is nobody stepping up and exporting more pork, serving the middleman in what is potentially a lucrative market?
I don’t really understand why the government is doing this.
Posted on 16-Apr-08 at 8:07 am | Permalink
Lore_Weaver wrote:
Hog farmers are facing a catastrophe. $105 to feed a pig, $100 to sell a pig. It’s not sustainable.
Furthermore, our future is going to need Pork, so we can’t just let Hog farmers close their doors.
What would you propose to protect a local food supply? Spending a couple million dollars to protect local pork is money well spent.
Posted on 16-Apr-08 at 9:00 am | Permalink
C wrote:
“If I had $50 Million dollars and pork farmers came to me for “help” today — assuming I was so inclined, I would give them money to help them transition into a different industry. I would not help them continue to produce pork.”
Which industry would you help transition them into?
Posted on 16-Apr-08 at 1:17 pm | Permalink
RickB wrote:
No this is not a ‘free’ market but nor would free markets solve this as you aver. Just as society needs laws and regulation so does commerce, it is strange conservatives often back law and order to extremes yet do the opposite when it comes to globalised capital, which just coincidentally is a position that enables the wealthy and more powerful to accumulate more of both and contain dissent of the impoverished. It is no coincidence the implementers of free market restructuring also implement authoritarian measures. Adam Smith made very clear the market must operate under regulation, it is only the extremists of the Friedman school who pretend otherwise, they are also the keenest on state repression while acting as if it were unrelated to their ideology.
This pork move is a muddled measure of protectionism within a globalised market, illogical and stupid. We need food hence we need farmers, we do not need commodity markets transferring massive amounts of capital minute by minute to game that need to make profit, in the process ruining local food production all over the earth (both over and under production). The bogey man is globalised capital, that has caused the price crisis which is being played as a food crisis, there is enough to feed everyone, corporate commerce however causes some to starve while there are more billionaires than ever. The free market will not redress that as it relies on faulty and flawed models of human behaviour at its base and as such it cannot model the irreducible complexity of human culture or its interaction with the environment.
Market adherents have taken a model of transaction and applied it ontologically to human existence with predictably disastrous results. Aware of deficiencies in human cognition, particularly male behaviour (eg. short term gain eclipses judgement of long term negatives) ideologues promote it via tempting tax cuts and other self regarding conceits as long term consequences arise they claim these are because their program has not gone far enough. However no country following free market political reform has ever achieved anything but greater poverty, greater wealth going to fewer people and an increase in authoritarian social control measures. As an organising principle of democracies it is like leaving a paedophile who can’t swim to run a children’s swimming class, bad things will happen.
Posted on 16-Apr-08 at 1:30 pm | Permalink
Charles Anthony wrote:
“No this is not a “free” market but” you keep going on and on and on blaming this on the free market. Pathetic.
I can see it now, a boogeyman dancing with a strawman.
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“Which industry would you help transition them into?”
Irrelevant and you know it.
It is my money, not taxes. I can do whatever I want with it.
Hell, I could even subsidize greenhouses for the production of coffee, sugar and bananas. Sounds just as smart as subsidizing the pork industry, if you ask me.
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“What would you propose to protect a local food supply?”
This is not protecting a local food supply. This is purely protectionist policy to protect the income of the farmers. This is just welfare in disguise.
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Shane,
The other piece of the puzzle is the fact that most pork producers export their product. Not only are we subsidizing the income of Canadian farmers but we are also subsidizing the American consumers. American consumers are getting cheaper meat thanks to the Canadian tax-payer.
As outsiders, we may never know exactly why this market is in “crisis” as they say. [If you and I were still trying to sell cassette walkmans, we could also advocate that our industry is in a crisis too.]
The domestic pork producers are in competition for the consumer’s dollar which could go to foreign pork. However, more importantly, the consumer can also choose beef or chicken or even avoid meat altogether. All of these variables are impossible for an outsider to reconcile.
That is why managed or command economies invariably fail.
Since our domestic farm industry is heavily managed — IN OTHER WORDS, IT IS NOT A FREE MARKET NOR WAS IT EVER — it should be no surprise that it is failing miserably.
By the way, we are also subsidizing the gratuitous killing of animals.
Posted on 16-Apr-08 at 2:11 pm | Permalink
Shane Edwards wrote:
Can someone tell me why, if a producer can only sell pork domestically for $X amount, but sell it for more internationally, they wouldn’t just sell it internationally, instead of waiting for a handout from the government to cull their herds and get money for rotting pigflesh?
Posted on 16-Apr-08 at 2:13 pm | Permalink
Shane Edwards wrote:
Oh sorry Charles. I didn’t see your post until after I wrote mine. Still, you look to be in the dark as to why if demand is so high “internationally” for pork, the price is not simply rising because of demand.
Posted on 16-Apr-08 at 2:15 pm | Permalink
C wrote:
“It is my money, not taxes. I can do whatever I want with it.”
I assumed you brought up the hypothetical millions for a reason, and that the reason was to imply that spending the money on transitioning pork farmers into a different industry would be a better way to spend the money.
This sounds entirely practical, and although it’s too late this time around, it’s possible that more subsidies may be granted in future. Wouldn’t it be sensible try and iron out any problems with the transitioning idea now, rather than at some later date, so that we’ll know exactly what to suggest as an alternative?
Posted on 16-Apr-08 at 4:39 pm | Permalink
RickB wrote:
Nevermind Charles, no one expected you to understand.
Posted on 16-Apr-08 at 8:29 pm | Permalink
Charles Anthony wrote:
RickB,
You do not want to know any economics, do you?
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C,
I was categorically dismissive of your question for two reasons — actually three:
1) I want to hit home the fact that the subsidy-welfare-bailout has no common sense. This waste only exists because it is faceless bureaucrats spending other people’s money.
I trust that if I worded my hypothetical statement differently by saying YOU, C, had $50 Million to spend wisely, you would be able to come up with a better plan than just a supply-suppression bailout — or at least I would hope you would be more astute with your money.
2) Come on, tons of people are able to run businesses in Canada or get a job without the government telling them what they need to do. The last time I went to a bank to ask for a loan, they asked me for a business plan. The bank did not hold my hand.
I would rather let the farmers themselves choose an alternate industry for themselves. If they can not figure out the best alternate, nobody can. If they are too lazy to figure out the best alternate, I do not believe they deserve help.
3) for dramatic effect
Furthermore, I do not believe it is too late this time around as you suggested. Technically, we could still give them the same money and let them keep the hogs alive or let them sell the hogs.
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Shane,
Of course I am in the dark. I do not breed nor sell hogs. We should not be figuring this out. The farmers should. That is the beauty of a market: all you need to know is the price. The butcher does not need to know how to bake bread.
I do not trust the farmers. If they are going to be spending our money, the farmers should be able to answer your questions. Their answer is clear: collusion and cartelization on the public dime.
When was the last time that you trusted suppliers whose business plan involved collusion funded by the tax-payer???
Posted on 17-Apr-08 at 6:03 am | Permalink
RickB wrote:
I think it’s splendid you believe you have knowledge to pass on!
Posted on 17-Apr-08 at 3:22 pm | Permalink
Charles Anthony wrote:
RickB blames the “free market” when there is no free market. Therefore, he is either monstrously stupid or deliberately disingenuous. Pass it on.
Posted on 17-Apr-08 at 4:06 pm | Permalink