guaranteed pricing for fruit and vegetable producers

joe sod

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this summer has shown us how precarious the supply of both indigenous and imported fruit and vegatables is. The summer drought has affected not just ireland but most of europe so the supply of fruit and veg will be significantly down. Ireland is more dependant on imports of fruit and veg than other european countries so we are actually more exposed. The supermarkets have concentrated their supply of irish fruit and veg to a few very large producers in the north dublin , meath areas. This is the area worst hit by the drought as it is the driest area in the country. If there were more small producers of fruit and veg scattered evenly over the country the effects of drought would not be as severe as areas in north west ireland have got adequate rainfall. Also if you are a small producer it is easier to manage the situation and get water onto crops from a farm well or from a river. This is too difficult for large producers.

Therefore the blunt market works most of the time and we benefit from lower prices until a year like this comes around and then we see how dangerous and precarious the supply of food is. So I think there needs to be guaranteed pricing for vegetable producers and other market supports. Growing fruit and veg is a very difficult job, after a year like this there is a danger that even the large suppliers in north dublin/ meath will quit the game and do something easier.
 

llgon

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Is it the case that the price of this fruit and veg is expected to rise this year, due to lower production, thus reducing loss to the growers? If a guaranteed price had been agreed would it not be to the disadvantage of growers?

This type of model could be applied to lots of sectors that are affected by the weather, economic conditions etc but would need a change in competition laws.
 

dub_nerd

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The problem with guaranteed pricing is the perverse incentives when there is a glut. EU-wide price supports gave us food mountains and produce wastefully ploughed back into the ground. Concentrating food production near the area where a third of the population lives also sounds like a sensible way to reduce food miles. Maybe what is needed is an insurance scheme rather than price supports. It's true it can only save producers from going under in bad years -- it doesn't give any additional security of supply during the bad year itself. But bad years are much rarer than bumper years and the alternative is to have almost permanent over-supply.
 

joe sod

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The problem with guaranteed pricing is the perverse incentives when there is a glut. EU-wide price supports gave us food mountains and produce wastefully ploughed back into the ground. Concentrating food production near the area where a third of the population lives also sounds like a sensible way to reduce food miles. Maybe what is needed is an insurance scheme rather than price supports. It's true it can only save producers from going under in bad years -- it doesn't give any additional security of supply. But bad years are much rarer than bumper years and the alternative is to have almost permanent over-supply.
yes the cap of the 1980s produced this market distortion , but that was more to do with the european union and its politics then(or EEC as it was then), France was a beneficiary and the UK and Germany were contributors, also the cold war and the closure of huge parts of the eastern bloc to european exports. The 1980s was much more benign period in weather terms (no global warming effects) and the european population was alot lower then. They allowed these massive surpluses to build up before the politicians got around to reforming it.
Most developed countries have market protections in key items of food production, Canada and the US also have protections for dairy and fresh produce. If the market is left to its own devices as now fresh food will not be produced and there will be shortages, we are now facing shortages. Once producers of fruit and veg go out of business , they will not return. It is much more skilled than livestock and cereal production, and is very important as we are only now realising
 
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Clamball

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I think the issue is the large multiples want to purchase from large producers, they really do no want to purchase from small one or two people outfits. So multiple local producers, doing a variety of fruit or veg are not going to supply the local Aldi or Tesco or Dunnes. They cannot compete on price, volume or supply with large international producers.

I think the only answer is to request local potatoes, carrots, onions every time you shop and then eventually sway the buyers, through a groundswell of requests.

It is not just weather that can send producers out of business, the mushroom growers practically closed overnight due to currency fluctuations between Ireland and UK.
 

T McGibney

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your contribution is not worthy of a reply, a one line smart alec reply to a looming crisis, whats your alternative shortages
"Not worthy of a reply" usually means "I'm stumped but won't admit it"

What part of "price fixing doesn't work" do you not understand?

Basic economics.

And price fixing is illegal too.
 
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Purple

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We should remove all price supports and trade openly with developing countries who could produce most of our food for us. That would cause a consolidation in the agricultural sector which would eventually lead to far fewer but much larger producers. Globally we'd reduce real poverty and lift the incomes of millions of families. Our current model (the CAP) is immoral and economically nonsensical.

As for water shortages for producers; invest in contingency plans and stop expecting the general public to prop up your business. Who do you think you are, a farmer? Oh, yea, sorry; scrounge away.
 

Jim2007

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We should remove all price supports and trade openly with developing countries who could produce most of our food for us. That would cause a consolidation in the agricultural sector which would eventually lead to far fewer but much larger producers. Globally we'd reduce real poverty and lift the incomes of millions of families. Our current model (the CAP) is immoral and economically nonsensical.
Absolutely not. It would have environmental consequences, land management, reduced job opportunities for unskilled workers, social impact in the country side. Economics is a very poor argument when all is considered.
 

Purple

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Absolutely not. It would have environmental consequences, land management, reduced job opportunities for unskilled workers, social impact in the country side.
What environmental consequences? About 5% of the workforce is in agriculture. The number of low skilled job losses would be minimal. The social impact would be significant but does that justify subsidies and trade barriers which cause so much poverty, suffering and death in developing countries?

Economics is a very poor argument when all is considered.
It's not just an economic argument, there is very little to support the massive subsidies paid to keep totally un-viable businesses afloat and plenty, besides the strong economic argument, against.
 

cremeegg

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We should remove all price supports and trade openly with developing countries who could produce most of our food for us. ... Globally we'd reduce real poverty and lift the incomes of millions of families. Our current model (the CAP) is immoral and economically nonsensical.
+1

Looking at Irish agriculture, it is very inefficiently organised. And why would it be otherwise given the subsidy regime.

The few farmers who do step away from subsidy farming show what can be done.

Keelings fruit farms are a world class business. The Foods of Athenry is a family farm showing what can be done. Keoghs or O Donnells in crisps. Glenillen Farm in dairy produce. There are many more. However there are too many that will not do anything except what their grandparents did and put their hands out for a subsidy. A free market would put them out of business and let real farmers, as opposed to subsidy junkies, get on with business.
 

T McGibney

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No not like Larry Goodman, he is so far as I know primarily a meat processor.
He's also the biggest farmer in the country and the biggest EU subsidy recipient. If there was no subsidies in the meat trade, he probably wouldn't be at that either.
 

cremeegg

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That too, but don't cod yourself that doing so would hurt the likes of Goodman though.
Wha ? First you tell me that he is the biggest EU subsidy recipient, now you are suggesting that scrapping subsidies would not hurt him. Confused is a good word.

Subsidies distort Irish agriculture, if they were removed, farmers would have to produce and market their wares in a more efficient way. The examples I cited above could serve as an inspiration.
 

T McGibney

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Wha ? First you tell me that he is the biggest EU subsidy recipient, now you are suggesting that scrapping subsidies would not hurt him. Confused is a good word.

Subsidies distort Irish agriculture, if they were removed, farmers would have to produce and market their wares in a more efficient way. The examples I cited above could serve as an inspiration.
Not confusing at all. If subsidies were removed, the likes of him would hoover up half the country's agricultural land at knockdown values and we'd be halfway to a national food production oligopoly and all the joys that would bring.
 
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