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World Economic Forum Davos 2012: Food prices to go up by at least 2-3%, warns Unilever global head ... Is Pakistan's economy heading for another downturn? FTIL gets six-month extension for MCX stake sale China to train key professionals abroad Himachal Pradesh invites industrial investments for new estate
The IMF wants to increase its lending capacity by $1 trillion, to rescue distressed countries in the eurozoneplus those hit by aftershocks from the eurozone.
brought in a Common Agricultural Policy aiming at self-sufficiency in food as a security measure. This led to chronic overproduction. a significant chunk of the new trillion will have to come from the Brics. The US department of agriculture says that 20% of all direct payments go to just 1% of farm businesses. and the next one is due in 2013. Beyond a point. above all. Last year.Japan now has the highest debt/GDP ratio in the world (over 200%). unfair distortion. and not just some additional voting power in the IMF. They remain intact 70 years after the Depression ended. but remains on the table as a possible spending cut. with mountains of beef and butter and lakes of milk. But while this may have checked overproduction. Ironically. based on their acreage and not production. it means that biggest European grants go to the biggest landholders.000 per year. improving the security of the EU's Cold War foes rather than its own security. where all 50 states contribute two senators each to the senate. The chances of this happening will improve greatly if presented as part of a global compact to increase IMF funding and improve global fiscal balances. Farm lobbies are powerful in all countries but especially in the US. They could.farmers got an additional $25 billion through federal subsidies. reforms in earlier years replaced crop subsidies with direct payments to farmers. as in the US. why should the Brics do so? At the very least. and the current version is also due to end in 2013. Farmers have counter-attacked by demanding a quid pro quo in the form of higher crop insurance subsidies. created in the 1950s. The US enacts a farm bill every five years. which have already risen from $1 billion in 2000 to $7 billion in 2011. much of the surplus food was sold at subsidised rates to the Soviet Union and its Warsaw Pact allies. for instance. Clearly. But why should China. arguing that half the benefits went to recipients earning more than $100. This will attain some of the Doha Round aims by other means. and Europe is moving into an austerity phase. demand reforms in the huge agricultural subsidies enjoyed by farmers in the US and Europe. many of whom are giant agribusinesses. One feature of the US farm system is direct payments of$5 billion to a select slice offarmers. Some liberals may hail this as a 'stimulus' but it is better called a gross. President Barack Obama proposed ending direct payments. That means the time is ripe to ask both these regions to slash their agricultural subsidies. His proposal did not go through. Because of booming farm prices. Generous price supports kept European prices well above global rates and encouraged overproduction. and help cut fiscal deficits in Europe and the US. Farm support prices in the US started in 1936 as part of President Franklin D Roosevelt's antidotes for the Great Depression. In Europe. US agricultural income exceeded $100 billion for the first time last year. This means small farming states such as North and South Dakota have as much electoral clout as California or Texas. Yet. India or the other Brics shell out hard currency to rescue Europeans from a folly of their own making? If Germany and Holland are not willing to rescue their southern neighbours. which are needed anyway. China. . US farmers also benefit from cheap crop loans with a substantial inbuilt grant element.But US is struggling with fiscal problems of its own. crop insurance subsidies become a crop support system: the farmer gets a semi-guaranteed income. The European Common Agricultural Policy is reformulated every seven years. they must demand something in return. The European Common Market.
Some have criticised this as excessive austerity.5% of GDP adjusted for the business cycle. In 2009. European farmers have a strong tradition of taking to the streets to protect their subsidies and cow down politicians. angry dairy producers doused hapless EU officials with milk from buckets. surely farmers must share in it. such cold logic has never driven policy in European countries where farmers constitute powerful vote banks. "Small wonder that EU's leaders appear to find it less daunting to ask China for money than irate European farmers. but why should China or India or any of the Brics oblige? The leaders of Europe are currently finalising a new fiscal compact that will oblige all member countries to 'balance their budgets'. Alas." Yes. European finance ministers may actually welcome pressure from the Brics on this score. is the biggest beneficiary of EU subsidies. and paralysed traffic in Brussels by blocking roads with their tractors. that will give European finance ministers additional ammunition to fight their own farm lobbies . since she is the largest landowner! Many so-called 'farmers' do no farming at all. which actually means limiting their deficits to 0. when the EU attempted to abolish milk quotas. believe it or not. But if indeed there is to be grave austerity. and simply collect cash as owners of uncultivated land.Journalist Pallavi Aiyar wrote recently that the Queen of England. If the Brics and others offer additional rescue funds provided Europe gets its agricultural house in order.