International trade was a hot topic in Germany during that country’s monster farm show, Agritechnica.
In addition to the technology exhibits, the event has other features such as seminars on trade.
No free marketer I have ever known has been able to convince me that the market is always right and will thresh out the inefficient so well that a new, more effective system is created.
Generally, the lucky and the large survive the best.
Farming is one of those games where a few well-thought-out subsidies or import and export protecting tariffs can go a long way to stabilizing a society and an economy.
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I heard both free market and protected market defences at Agritechnica, and a case can be made for both.
A new combine or tractor plant is not likely to be built in a country that didn’t restrict imports. The cost of a factory versus the diesel economics to deliver equipment anywhere on the globe means that it will be built where a plant already exists or where production costs make it most profitable to do so.
Import restrictions create production opportunities domestically, provided the country’s internal demand is high enough.
German machinery maker Claas recently built a complete combine factory in Russia, where demand is strong and domestic production is protected with a 420-machine annual restriction on imports.
It’s good for Claas and good for Russian jobs and taxation, but do farmers get a lot competitive choices in Belarus, Kazakhstan and Russia? No, but the country does see additional foreign investment and workers’ skills development that would not have happened otherwise.
Rice is the most heavily protected crop on the planet, and tariffs are standard fare at 320 percent in Japan, 35 in China and 75 in India. In those cases, protecting farmers from market swings and consumers from shortage or unaffordability keeps societies more stable. Efficient no, but mostly stable.
Canada is a major exporter, and I understand that market subsidies and tariffs make our production less competitive. However, not every country has evolved equally and from their perspectives, it might be the free marketers that are behind the times.
michael.raine@producer.com
