The Common Agricultural Policy (CAP)

This post is about the European CAP policy from an Irish perspective, 

aka agricultural/food subsidies.

I was having dinner out at a restaurant  recently with friends when the topic of food prices came up. 

My hears pricked, this is a topic I am very  familiar with. Each person was complaining about raising food prices and that they had decided to cut back on buying over priced meat and dairy.

Each person came from a rural farming background and they were shocked when I tried to explain to them that 'expensive' meat is actually already subsidised heavily. That in fact it is produced at cost or below by the farmer.

And that European tax revenue is used to subsidise the farmer using CAP payments. 

They were all aware that farmers received payments but had assumed it had no effect on the markets and that farmers are just lucky.

I spent much of the evening explaining how subsidies lower food prices and therefore produce a stable market that can supply consumers with reasonably price food. These factors became very important after World War 2 when the payments were originally production oriented. They later moved to flat rate per hectare to focus on environmental and animal husbandry standards and prevent the build up of food mountains that occurred in the eighties and early nineties. 

I am not sure that I am a fan of CAP payments. I think they produce a very artificial market and they do not encourage innovative farming practices but encourage 'grant' farming instead. 

In Ireland it has resulted in hyper inflated land prices that have no bearing on the lands yield/production  rates. This is a massive barrier to new entrance. 

It has given larger farms a greater advantage over smaller family farms. This makes me very sad that family farms lose competitiveness and has produced a trend of them being bought up by their larger neighbours. This has such a negative effect on rural communities long term. 

I have also noticed that many elderly farmers have tended not to pass the farm on to their family upon retirement. They choose to hold on to the farm and work it  at a minimum level in order to continue to receive payments. They either keep a small amount of cattle during the summer months to keep the herd register active and sell these on in autumn at none/little profit as the market is flooded as everyone buys/sells at the same time or  they choose to sell the summer grass as fodder. They see it as an increase in their pension payments. 

This have a negative impact on the next generation who are 40-50 years themselves before they can take over the farm. During this period they would have had to seek a livelihood elsewhere and some are reluctant to move back to the farm, uprooting their own families and careers, and choose to sell the farm instead. And who could blame them!

In Ireland the average farm is 80 acres (32.7 hectare) with a growing trend of elderly farmers.

It consists of:

80% grassland

11% rough grazing & marginal 

9% crop production

With the average farming farming recording a profit of €17,771 including €9,285 in subsidies in 2010. 

The important of food security and resilience

Food security refers to the availability of food and one's access to it. A household is considered food-secure when its occupants do not live in hungar or fear of starvation. 

Food prices on the global stage are rising. While there are speculations of this being due to factors such as population growth, energy costs and climate change, much of this is due to the markets trading commodity futures. Staple commodities such as corn, wheat, rice and cotton.

The ethics of gambling on future world food prices is questionable at best. 

In developing countries, large tracks of land are being bought up by large multi national companies from previous wild habit and subsistent farmers.

I find this trend very worrying, as it displaces more people from agriculture and into city slums. It enforces food proverty by removing the oppunitity of local food production by its people.

It produces helpless and deskilled people who have no control over such basics as water, food, heat and shelter.

I feel it is very important to encourage small farming families to remain on the land similar to how the Swiss government  do this and to provide oppunitities for people to excercise a right to produce some/all of their food, water and heating needs regardless of whether it is a developed or developing nation. 

In the future, he who controls the food and water supply will control the world. I'm sure seed companies like Monsanto figured this out decades ago. 

The value of heritage seeds can never be under estimated. The right to save your own seed varieties from season to season is still under pressure from hard lobbying from seed companies. 

The person that has a ( debt free ) small parcel of land and with that the means to provide the four basics for his family is truly free.

Population Ageing and Retirement Planning

 

 Population ageing is a shift in the distribution of a country's population towards older ages. This is usually reflected in an increase in the population's average age, a decline in the proportion of the population composed of children, and a rise in the proportion of the population that is elderly. Population ageing is widespread in developed countries.

 
The ratio of workers to pensioners (the "support ratio") is declining in much of the developed world. This is due to two factors: increased life expectancy coupled with a fixed retirement age, and a decrease in the fertility rate. Increased life expectancy (with fixed retirement age) increases the number of retirees at any time, since individuals are retired for a longer fraction of their lives, while decreases in the fertility rate decrease the number of workers.

These are examples of support ratio for selected countries in  1970, 2010 and projections for 2050.^[1]

Country	1970		2010		2050 (projected)
United States	5.3		4.5		2.6
Japan	8.5		2.6		1.2
Britain	4.3		3.6		2.4
Germany	4.1		3.0		1.6
France	4.2		3.5		1.9
Netherlands	5.3		4.0		2.1

Last year in Japan, the sale of adult nappies out sold baby nappies.

For us when we consider our retirement and pension planning we are all but too aware that there will not be any meaningful pensions available  in 30-40 yrs for us. Health services will not be affordable and with larger numbers of older adults, there will be an increased need for geriatric care and multi-generational living.

The state funded services that are available now will cease to exist as there are less and less tax payers to support the system and the retirement age will increase and increase until it may well be abolished!

This will move the value of family and community back to where it should be; ahead of everything else!