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Industrial Ag Model Is Broken, Says Ag Economist

It’s just a matter of time before small towns humming with diversified, locally based economic activity surrounded by a thriving countryside filled with hardworking farm families start making a major comeback on the rural landscape.

Why?

There’s simply no other choice going forward, according to John Ikerd, a retired U. S. agricultural economist and author of numerous books on rural economics.

Not only is the global financial system in tatters, but Peak Oil – the point where demand for petroleum permanently outstrips supply – is set to sink its teeth into any hope of a normal recovery by making cheap oil, the lifeblood of modern economies, a thing of the past.

BIG PROBLEMS

“There’s also environmental problems, climate change and Peak Oil. At no time in human history have we been confronted with problems of this magnitude,” said Ikerd, in a rousing speech that was met with thunderous applause from the 200 delegates attending the recent Western Canadian Holistic Management conference in Russell.

“There’s general agreement in the petroleum industry that we’re either at, past, or very near the peak in global production. From here on out, there’s going to be less petroleum every year, and it’s going to be more costly than it was the year before.”

Alternative energy sources such as coal, biofuels, or solar will help with the transition, he added, but they will never be as plentiful or as inexpensive as high-quality, easy-to-extract crude oil – the ultimate fossil fuel – was in past decades.

“What we are doing in our industrial, economics-driven

Total EU farm subsidies reached their highest level for 10 years in the 2006-07 marketing year, according to an analysis of domestic support figures just notified to the World Trade Organization.

But the most trade-distorting forms of subsidy, known in WTO jargon as “amber box,” fell to a record low, according to the analysis by the International Cent re for Trade and Sustainable Development (ICTSD).

The trends reflect a pattern in which rich countries are repackaging agricultural subsidies to ensure that they come under “green box” categories that will not be restricted under a new WTO trade deal, while cutting back on “amber box” subsidies that will be reduced or eliminated.

In the case of the EU, this results from the 2003 reform to the bloc’s common agricultural policy (CAP), which continues a process of decoupling farm support from production.

The approach has led some exporters to charge that the EU and other rich countries are following the letter rather than the spirit of the new deal to keep overall farm subsidies high.

The ICTSD analysis shows that total support in 2006-07 reached 90.7 billion euros ($125 billion at current rates), up from 75.6 billion in 2002-03, the lowest level in the last 15 years.

The 2006-07 data, the latest available, were notified to the WTO on Feb. 4. Marketing years vary by product, with most running July to June or mid-October to mid-October.

But amber box subsidies were only 26.6 billion euros in 2006-07, falling to half their level a decade earlier.

Green box payments, which include subsidies that are not linked to production but which help farmers in other ways or promote the rural way of life and help preserve the environment, rose to 56.5 billion euros from 40.3 billion the previous year and over twice 2004-05 levels.

Under the latest agriculture draft for the WTO’s Doha round, the EU would have a ceiling of 22 billion euros for overall trade-distorting support, comprising amber box payments and some other distorting categories, the ICTSD noted.

The latest notification shows that the EU’s OTDS was running at 34 billion euros in 2006-07, but the centre said this was likely to fall close to the proposed ceiling by the time the Doha round actually kicks in, as a result of CAP reforms.

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