Price of incentives


What happens when agriculture goes back to the free market?
There's a really great article at TCS Daily.

Once upon a time, in a country way, way down under, the government dismantled its system of agricultural subsidies and supports. Initially, cries of outrage and disbelief were heard from farmers all across the land.

For more than 20 years, farm assistance had steadily increased, peaking at 33 percent of total farm output (about double the level of assistance in the U.S. today). Then, with one swift and decisive decree, all subsidies were eliminated.

The transition period, which lasted about 6 years, was not easy, but it was less painful than expected. The government predicted a 10 percent failure rate, but only 1 percent of farms went of business. Government assistance during the transition period was limited to one-off "exit grants" for those leaving their farms, financial advice, and the same social welfare income support afforded to all citizens.

The fortune of farmers now depended on their ability to meet consumers' demands. Overproduction no longer occurred. One year, under the subsidy regime, six million lambs were rendered into fertilizer because no one wanted them; sheep farming had been the crown prince of the subsidy king. Without subsidies farmers were forced to diversify and produce those goods that were most sought after in the marketplace. Sheep stock decreased, while the number of dairy cows increased. Over time, the agricultural sector diversified into not only new crops and livestock, but also rural tourism.

Worth your time and thought.

— NeoWayland

Posted: Wed - May 23, 2007 at 03:37 PM  Tag


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