Young Economics.

The Strategic Bean Reserve

with one comment

James and I recently had a very rational debate about ideal agricultural policy. I was smashing beer bottles and screaming that subsidies were an abomination, and he was holding me back with a chair and saying that they were a justifiable cost to ensure that our food supply cannot possibly be interrupted. He makes a good point, and now that I’ve sobered up I’ll admit that there are some rare subsidies that aren’t nightmarish shambling horrors.

Still, it seems to me that the fact that there is a reasonable argument in defense of ag subsidies actually makes things worse. What happens is that the reasonable argument goes to Parliament and gets ambushed by interest groups who savagely irradiate it. It gets cancer and grows to grotesque, unhealthy dimensions far beyond its original proportions. Then it destroys Tokyo. That’s bad policy.

(I’ve heard other justifications for agricultural subsidies of course, but they’re mostly along the lines of preserving ways of life. I’ll back those up as soon as I get my first subsidy for preserving the lifestyle of the ‘smart-alecky drunken irishman.’ The other one you hear a lot is that agricultural earnings are highly uncertain and variable. That’s true, but no more so than prostitutes, prospectors and used car salesmen.)

So let’s say our objective is to avoid a food shortage, what then would be the best policy? First, it would be best to trade with other nations. Otherwise we’d be subject to the vagaries of our own food supply. There’s no justification for protectionism.

Even within a global trading system, subsidies are not the cheapest way to preserve a constant food supply. In the unlikely event that all our trading partners close their borders because of war or their own domestic famines, we of course would want to ensure that we don’t starve to death. Just like the US has a strategic oil reserve, we could have a strategic bean reserve, stored in massive weevil-proof silos.

The bean reserve would be sufficient to feed the nation long enough for more farms to become operational. To speed this process up, we might want to have a farm equipment reserve and some cryogenically frozen farmers kept in storage. (If the technology doesn’t work out, we can eat them too.)

The best part is, you wouldn’t even need to keep the bean reserve filled (which is for the best, because no silo is truly weevil-proof). Theorizing that subsidies are keeping us out a famine situation is already far-fetched (no democracy has ever, ever had a famine), but to expect that such an eventuality would come about without any advance notice is even unlikelier. If you accept that, we could keep the bean reserve below capacity until certain conditions are met. For example, if agricultural production in Canada drops below 60% of domestic consumption, fill the beanery to 50% capacity. Or, if a trade war starts brewing with a major food trader, fill the beer silo an additional 10%. By increasing demand in times of low production, this would also serve as a temporary subsidy to farmers, though it wouldn’t be restricted to domestic farmers. In fact, since other nations would probably still be subsidizing their farms, we would get our strategic bean reserve filled at bargain-basement prices.

What’s clear to me is that across-the-board agricultural subsidies are not the solution to any problem other than a shrinking agricultural sector. But I don’t consider that to be a problem.

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Written by manopoly

March 22, 2009 at 9:39 pm

Posted in Uncategorized

One Response

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  1. Most countries already keep a grain reserver (see http://www.answers.com/topic/grain-reserves) sufficient for ~ 4months. In terms of caloric quantity both the US and Canada produce more than we need. Food supply doomsayers would be credible if the subsidies went to ensure we had sufficient diversity of products. This could be a boon to the local food movement as well.

    bequw

    March 22, 2009 at 10:20 pm


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