European farm subsidies are becoming a burden, says analyst Dennis Avery, and the aging population in the United States will compete for public dollars with farm subsidies.
“The problem will be how to feed the public pension system without bankrupting our kids,” said Avery, director of global food issues for the Hudson Institute, a public policy research grou-10-P. “What that means is America can’t afford farm subsidies.”
Avery outlined his views last week during the annual meeting of the Manitoba Seed Growers’ Association.
He said the European Union is spending $150 billion a year on farm subsidies and is struggling with a major farm surplus.
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“Europe cannot stand it. They cannot afford it and their leadership knows it.”
The EU has agreed to take in at least 10 new members in the next few years, said Avery. That could add to the difficulty of keeping subsidies high among the current EU countries.
“They can’t afford to subsidize all the farmers of their new membership so heavily.”
While forecasting a decline in farm subsidies, Avery also expects trade barriers to diminish around the globe.
The phasing out of farm price supports in the U.S. will help remove one of the big obstacles to farm trade liberalization, he said. The inauguration of Republican George W. Bush as U.S. president would reinforce that effort.
“America is working to reduce domestic farm subsidies,” Avery said, although he conceded the political will on that issue is “somewhat erratic.”
Meanwhile, a food gap is emerging in Asia, a region that has little land left for farm expansion other than tropical forest.
That could mean more food imports to emerging economies such as China. There could be further opportunities for North American producers if India’s farm import obligations are held to the standards of the World Trade Organization, he said.
When it comes to trade barriers, Avery reserved his sharpest criticisms for the European Union. He said the U.S. and Canada, and its partners in the Cairns Group, must help the EU see the need for farm trade reform and the opportunity to export rising yields to a hungry and increasingly affluent Asia.
“We don’t have a surplus of farm product in the world. What we have is a surplus of farm trade barriers.”
