Wednesday, 14 December 2011

Why agricultural protectionism is stupid....


All of it - tariffs, quotas, bungs to farmers not to farm, subsidies for growing, protection of "local" specialities, fines for overproduction and the whole rigmarole of corrupt rent-seeking. And by way of example - the Norwegian butter famine:

As a result of the perfect storm of: a) a craze for a popular "fat-rich, low-carb" weight-loss diet, b) a shortage of animal feed that caused a drop in milk production, c) a butter monopoly that controls 90 per cent of the butter supply and d) is protected from foreign competition by trade barriers that prohibit imports from European countries, there is now a butter shortage in Norway as the festive baking season approaches.

In a world crammed full with butter there's a shortage in Norway because the government wants to keep out nasty foreign butter. There's even butter smuggling!

As Tim Worstall puts it:

In order to get people to farm, thus providing local food (you know, local is good, right?), in a place which is snow and ice for half the year it is necessary to put up huge trade barriers to food coming in from places with more grass and more cows.
These trade barriers raise the internal price of milk and butter, which is the whole point of having them so as to encourage people to farm in such a frozen wasteland. However, now that you’ve got these incredibly high prices for milk and butter you find that every roadside verge supports a cow or two as the locals cash in on the incredibly high prices. Thus you now need to fine people for producing too much milk.
The fines reduce the amount of milk produced, there is now a shortage of milk and butter and you need to lift the import restrictions so that the citizenry can have a butter biscuit at Christmas time.
Barking mad. But that's government for you!


[ JDR ] said...

So true !

Spent days looking for somewhere that still had butter for sale - eventually found some imported French stuff - bought 5 Kilos - Xmas here we come

Weekend Yachtsman said...

I believe the New Zealanders abolished all that subsidy nonsense pretty much overnight, and their agricultural sector (even though it screamed blue murder at the time) flourished like a green Bay tree as a result.

But of course, New Zealand is an independent country so they can do things like that if they want to; we'd never be allowed to.