If we spend so much on CAP, why is food expensive?

Discussion in 'Politics & The Economy' started by pragmatic, Mar 13, 2013.

  1. pragmatic

    pragmatic
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    As the title if we spend so much on CAP, why is food expensive?

    Surely food/wine lakes and butter mountains etc should mean that the EU is less likely to feel shocks in the international food market, we've got all these subsidies and over production after all?
     
  2. karkus30

    karkus30
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    Its to prevent competition both externally and internally. If you subsidise anything and protect it from competition it keeps prices higher. The subsidies, just like in the US are in different forms. Some are to prevent the producer putting their produce on the open market. Effectively supply rationing in order to command higher prices. The mountains being the produce that is kept from the market place. Also, the rules and regulation of the EU effectively keep out produce that would create lower prices by ensuring the rules are adhered to results in greater cost for the producer and that has to be passed on.
     
  3. pragmatic

    pragmatic
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    So we are producing food, to deliberately throw away aiming at keeping prices high?
     
  4. pandemic

    pandemic
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    It's largely demand that has increased worldwide as developing nations see their middle class grow i.e. the BRIC nations. Also I don't believe the CAP is in place so we can have low prices in the EU, it's there so EU producers can compete with non-EU producers. Other factors to costs is transport too, a barrel of Brent oil has seen its price increase roughly 50% in the last 3 years.
     
  5. karkus30

    karkus30
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    They dump it on other states and call it aid. Its been going on for a lot of years now. France is one of the biggest receivers, but our land owners don't do so badly. They can be paid not to produce crops. The whole EU is about negotiated bribery really. The buying public and tax payers bare the cost.
     
  6. Wild Weasel

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    The French blocked British entry into the EEC until the CAP had been sorted out. They knew we'd never agree to it.

    They used to sell off the stuff cheap to the Soviet Union, which despite all that land couldn't feed itself due to incompetence.
     
  7. karkus30

    karkus30
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    But surely the land of socialism and the sickle couldn't have been bad at that. No nasty capitalists, libertarians or free markets to interfere with the social astute collective.
     
  8. fluxo

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    The Pound has fallen rougly 30% against the Euro. I know, it's hard to believe: the markets have more confidence in the Euro than our beloved Pound :--)

    We import most of what we eat, so a falling Pound pushes up prices. Moreover, there are other factors at work, including speculative activity pushing up food prices and, in my opinion, a lack of real competition between some supermarkets - in a time of austerity the supermarkets have been making larger profits than they were in the boom years.

    Inflation is much lower in Germany than it is in the UK, but there are other countries even worse than the UK. E.g., Iceland.
     
  9. pragmatic

    pragmatic
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    Thx fluxo and others, I understand the food market is international, I had the naive hope that the famous Food mountains could be helped to buffer the raising costs to aid the European people.
    Also farmers who are currently paid not to produce, could have their terms reversed so they are paid to produce.

    I'm 'sure' there are plenty of reasons at the EU level why this wouldn't be sensible ;) .
     
  10. karkus30

    karkus30
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    We are working hard to destroy our pound. Apparently with the idea that we should give everything away to the rest of the world for much cheapness. I'm told that exporting is good and importing is very bad.
     
  11. karkus30

    karkus30
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    By the way. While we are on the subject of subsidies for farming, most of us are thinking about food I suspect.


    How about tobacco farming in Greece ? Yes, the EU is subsiding Tobacco farming so we can sell more to third world countries. While its considering banning smoking in all vehicles because of the damage that might be caused by secondhand smokers cars.

    Yes folks, this is where the money and time goes.
     
  12. fluxo

    fluxo
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    There's no contradiction there. Smoking is still legal in other places. Tobacco growing is legal. Third world countries also grow tobacco.

    If you oppose tobacco production on health grounds, that's one thing. If you oppose algricultural subsidies, that's another. Opposing either one is something you are perfectly entitled to do. But please do not conflate the issues.
     
    Last edited: Mar 14, 2013
  13. karkus30

    karkus30
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    I do not oppose production, I oppose agriculture subsidies for producing tobacco particularly when the EU is creating laws preventing smoking. On the one hand.....and on the other... Why not allow other countries to export their cash crop to the EU and that way they benefit.
     
  14. MikeTV

    MikeTV
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    I haven't seen any significant change in food prices for years. So I disagree with the premise. A typical bottle of wine might cost £5 - and always has, as long as I can remember. You can easily buy a banana for 20p in any major supermarket, despite the fact that this produce has flown half way around the world. Milk is laughably cheap, unless you get organic (like me) but that's always been the case. In fact, dairy farmers are hemorrhaging because the supermarkets pay them so little for their milk. And we've got historically low inflation, on top of all that.

    The value of the pound has barely changed since the beginning of the crisis (either against the euro, or the dollar). Although it has strengthened slightly against the Euro in the four years. And oil prices have remained steady.

    So all in all, I just think you are having a little rant about the EU! Or perhaps you just need to change how you shop.

    :)
     
  15. pragmatic

    pragmatic
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    Well mike your obviously weathly enough not to worry about the cost of your shop. This is well documented and been occurring for the last few years

    How rising food prices push up inflation in the UK - MoneyWeek

    There have been times when stables like grains where into double digit inflation.

    One a little older from the Gardian
    http://www.guardian.co.uk/business/2012/apr/04/uk-food-inflation-higher-brc-neilsen

    There is a crap load from specialist papers like the FT, but gotta be a subscriber to read more than the headline.
     
    Last edited: Mar 14, 2013
  16. kav

    kav
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    Just a few years ago it was a little over £1 for a pound of butter, now it's well over £2. Plenty of other examples but that one jumped out at me recently.
     
  17. IronGiant

    IronGiant
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    more likely mike doesn't do the shopping, or he'd have noticed the massive increase in the price of bread in the last few years ;)
     
  18. MikeTV

    MikeTV
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    Actually I bake my own, which maybe why I haven't been affected so much. I admit grain prices have gone up though. Sugar went up for a while, because of bad weather, and similarly for grain.

    So actually, I do now accept gaz's correction that some food prices have gone up. But it's a mixed picture, and I was just relating my experience.

    But I still don't think it has anything to do with the EU, in any case.
     
  19. MikeTV

    MikeTV
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    Unimaginably.
     
  20. karkus30

    karkus30
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    Ah, its all coming out now. The rich property owning Gardner ( capability Siette) and the Lordly MikeTV who sends his servants to do the shopping. I would not be surprised if it turned out they were both bankers and are just here to wind the rest of us up. :)
     
  21. pragmatic

    pragmatic
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    And I thought he was a bender like bot that lived on cheap bananas :p

    Re-read my argument Mike, I'm not having a go at the EU, just confused at the point of CAP.

    The link I provided showed that over all food inflation has been high enough to raise general inflation, some items have reached much higher as we've both agreed, those things are usually the components of most meals, like breakfast cereals, anything involving rice, or potatoes too (as they rose) and obviously this affect feed for animals and meat has shot up over the last few years. Fruit and veggies seemed anecdotally to have been on the high side too.

    Ready meals and processed foods don't seem to have taken a massive hit, there are more 'luxury' ready meals about these days though. I wouldn't be surprised if they did a switcheroo repackaging the existing gloop and keeping the price point with poorer quality gloop.
     
    Last edited: Mar 14, 2013
  22. karkus30

    karkus30
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    Well have a go at the EU at the same time. We force countries to adopt the EU standards, straight bananas, cucumbers grown only in European soil and Horse meat substitute. There are plenty of stats showing that he EU does cause us to pay more than we need to in order to benefit certain groups.
     
  23. rockmonkey1973

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    So you asked why is food more expensive... Well EU subsidies do indeed cost me and you a small, very quite small, per cent of our income through tax but they have very little if anything to do with the price... although this does have a slight effect on the cost. Even competition isnt going to see the price come down any time soon and all you have to do is look at the futures markets to see why. That said i personally believe subsidies should be removed and the farmers either grow stuff that is profitable or get another job. Or even better some reduced subsidises could be used to pay for the food we ship to the African continent, the same one that the main imperial European powers cleaned out a century or two back.

    Now in the last ten years on CBOT the price of a bushel of wheat has gone up and down but it is now more than double what it was in 2003 which is roughly what the price of a loaf has risen in the same time frame. So the price of your loaf closely follows the price on the financial markets. The problem with price rises in the shops is that even if the cost of a bushel of wheat falls, the shop price has set a precedent and the retail price will most likely never drop back down to the level it was, even if the futures market does drop that low. An important thing to consider in this fluctuating price is that often the market does not follow fundamentals and instead, the reason the price increases is simply because more people are buying. This is not an absolute but if you have ever sat and watched a bull run on any given day/ month/ year then you will see that the only thing driving it is money (the free market in all its glories).

    So why is food so expensive... well because me and you and everyone else who sits down to a meal at night has to pay for all the winning and losing on the markets. The problem only gets compounded when we take into account the retailers profits which are astronomical. Tescos profits are more than Eritrea's annual GDP which should tell you something... like who is ultimately paying for this huge income! Also the supply chain is quite long with lots of companies all needing to take a slice of the pie and all of this adds up. Still its all good after all this is what being successful is all about.

    My suggestion is hit up the links below that will take you to the historical data from the wheat futures markets and look at any given year but espicially noteworthy are the years 2003, 2008 and 2012 and then compare it to the cost of a loaf of bread which can be found on the BBCs website. In fact, if you take a gander at any commodity you will see much the same pattern (including oil which forces up the cost of transporting the food) but of course this could be just a convenient coincidence. However unless you want to deliberately delude yourself the facts are plain to see and i suggest you take a look at them.


    Wheat Historical Prices Charts - Historical Commodity Futures Charts' : CBOT

    BBC News - A tale of two breads
     
  24. MikeTV

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    I'm not so sure about the bendy banana stuff - that sounds more like Daily Mail nonsense. But I'm with you on the EU protectionism stuff. It's about protecting the EU agricultural sector from johnny foreigner, undoubtedly. But I rather suspect everyone else is doing the same. I think we are also deliberately preventing competition from the developing world, which is causing famine and starvation in those regions, unfortunately. But this has all been going since the EEC was originally founded (and probably much longer before).
     
  25. MikeTV

    MikeTV
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    When I go to that BBC article, it says a standard white loaf is £1.29 in 2012. But on the Tesco website the same kind of medium white loaf can be bought for £0.79. Although there is a "value" option for 50p. According to the BBC article, the price of a medium white loaf was 57p in 2002.

    So the difference might be because we're buying fancier loaves these days. Because we're worth it. ;)
     
  26. IronGiant

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    Good man for making your own, I "a prove" :D :smashin:
     
  27. IronGiant

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    Come on mike that BBC article you quote has this:

    Oct 2002 - 57p
    Oct 2003 - 60p
    Oct 2004 - 65p
    Oct 2005 - 75p
    Oct 2006 - 83p
    Oct 2007 - 91p
    Oct 2008 - £1.26
    Oct 2009 - £1.21
    Oct 2010 - £1.20
    Oct 2011 - £1.19
    Oct 2012 - £1.26

    the brand name loaves that are relevant to that list, bought singly, are now £1.35 - £1.45

    your 50p value loaf was only 28p a few years ago and your 79p was less than 50p, you have to compare like with like. :)
     
  28. pragmatic

    pragmatic
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    I think the point has been missed by a few members again ...

    Usually a surplus is used to balance or buffer a market, 'we' the EU pay the majority of the budget to farmers to build these surpluses (and also leave land 'available for agriculture'), so in a time when austerity is hitting every dinner plate in Europe why isn't CAP providing us with cheaper food?

    The EU being a grand socialist institution should be liquidating some of mountains to keep prices down, and asking farmers receiving subsidies for leaving land fallow to be growing stuff, to further keep the price of food affordable. Otherwise (and this is why I created this thread) what is the point of CAP, if not to ensure EU citizens get feed in times of need?
     
  29. domtheone

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    LMAO.

    You could easily make a case for food costs increasing more than anything else over the last 5 years.

    Many things have near doubled in price.

    I'd say food price inflation has bern running at double digit figures for the last few years.
     
  30. rockmonkey1973

    rockmonkey1973
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    Which if anything goes to show how much purchasing power the big supermarkets have or alternatively sell thing at less than cost to attract customers. It has though very little to do with the cost of food for most people who would only tend to buy the basics range if they are forced to... or like me tight and i just couldnt resist... a huge tin of potatoes for 15p... from sainsburys... total bargain but that said i havent tried them yet!

    If you havent noticed the price of food increase then i would guess you have gone from buying brand name foods to the basics range, your partner does the shopping or you simply have a bad memory. Hell even a mars bar has more than doubled in price and a can of tuna has simply sky rocketed. A lot of it will be either as a direct influence of the commodity market, the cost of transportation (oil rising on the market) or simply other prices dragging up the rest, as retailers look to increase profits (what we call inflation). Sure there are other factors after all its a complicated world but i would say they cover the main factors.
     

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