I've looked for a quick reference that explains this, and this one will have to do. Canada has administered supply management in its dairy and poultry sectors for decades. As W.T. Stanbury writes in "The Politics of Milk in Canada":

Canada's dairy policy is an example of a policy that may be "bad" in economic terms, but is quite successful in political terms, and so is very difficult to change in ways that would please most economists. By a "bad" policy, I mean one that has two main characteristics: it causes substantial economic inefficiency (allocative, technical, dynamic), and it redistributes income by imposing taxes or other costs on many persons whose average income is far less than that of most of the beneficiaries of the income transfers. Further, it is possible to provide the same amount of help for the beneficiaries at less cost to society by other means. "Bad" policies also usually involve stealth--their important consequences are not widely known among electors. This appears to be the case with Canada's dairy policy.

...

At present, the complex structure of incentives faced by the set of actors directly or indirectly involved in Canada's dairy policy is such that it is unlikely that the policy will be changed in ways that would seriously reduce the value of milk quotas.73 Worse, the value of these quotas may well continue to rise. In 1998, milk quota in Ontario sold for about $15,000 per kilogram of butter fat sold daily. In May 2002, the price was up to $22,950, while in Quebec it was $29,900 (Fagan, 2002). Thus, if it is necessary to pay near full compensation to the owners of the quotas, it will become politically more difficult to reform Canada's dairy policy. It is, as Owen Lippert (2001) suggests, "a perfect mess." Unfortunately, other supply-managed agricultural products also have high quota values that make reforms very difficult to achieve. For example, the average value of quota for a chicken farm (28,000 birds is $1.5 million. For the average turkey farm it is $1.4 million, and for the average egg farm (13,000 hens) it is $1.75 million (Fagan, 2002). The federal Minister of Agriculture calls these supply management schemes "a unique Canadian achievement." Heaven help us--Ottawa won't.

Incumbent farmers often love the idea of supply management, because it will enrich them. But consumers -- who will have to pay higher prices -- are rarely consulted, and future farmers -- who will have to pay an entry fee to join the system -- have no vote.

It's a bad idea: don't do it.

These are only my personal opinions.

A. That these corporate agribusiness types were actually consistent with their free-market ideology and therefore eschewed most, if not all, government interventions in agriculture (except for insistence, environmental controls to make sure that the externalities are addressed)

or

B. That they were consistent with their desire to milk government in every way possible so as to maximize profits for their constituencies and they dropped the pretense of being free-market types

I think your answer will be instructive as to the direction environmentalists should pursue.

J.S.

Economic Illiteracy Harms The Planet! www.voicesofreason.info.

http://www.newrules.org/journal/nrfall00farmer.html

for dairy, Canada is acknowledged among dairy farmers as having the best system. type in the words "Dairy farmers" and "Crisis" and you will see reference to dairy farmers around the world suffering and going out of business like mad. it is a very sad state of affairs. last year was the WORST year on record for dairy farmers in the US since the great depression. and what happens is these farmers give up their precious land and it is then developed, and all we are left with as consumers are dairy CAFOs with 10,000 cows in ID as our model and no local production.

See here how Canada benefits from price stability and consumer benefit from price stability as well.

http://www.tradeobservatory.org/library.cfm?refID=99957

Milk prices are higher for now in the US, but that could change at any time, which is what causes so much mental anguish for dairy farmers trying so hard to survive. the volatility of the market serves no one. the tendency towards factory farm dairies hurts the environment, is abusive to animals and further fuels sprawl as farmland is eaten up in formerly pristine places like upstate NY and PA.

I do not mind paying fairer prices for my food is i know it is enviromentally sustainable, humanely raised, and helps family farmers stay on the land.

there is a problem with the quotas being so high in Canada. they are working on that problem. but look here in the US--land costs are so high, prices are so unstable and the work is so excruciatingly hard that you very rarely see young people who want to go into dairy. very few of the dairy farmers i know have children who want to take over their farm. so who will produce the milk for us? i'll guess US consumers will have to make do with India/Chinese imported milk!

and for poultry, those poor farmers are just serfs to the corporation, very few to no rights. the US Senate farm bill has a livestock title that finally gives them some due process (like being able to sue a company if they just cancel their contract for no good reason. right now, they are forced into arbitration on the company's terms.)

as a consumer, i much prefer having a domestic, safe, diversified food supply made up of family farmers and not factory farms. and if i have to pay $.50 more for my $.99 cent tyson chicken, i will.

http://news.yahoo.com/s/ap/20071027/ap_on_sc/un_food_vs_b ...

   A UN official suggests bio-fuels are a crime against humanity.

   Dear Farm Bill Girl,

      It is great that you have so much money that this doesn't bother you.  The question is (since food is really a world commodity, not just a national commodity), what do you and others expect the poor to eat?  cake?

patrick in Beijing

   The trend is reflective of the fact that most self described environmentalists (and I am not picking on ANY individual, since I don't know you) make much more than the median income, and very few show much concern for the poor in the policies they advocate (very few, not all).

   Sorry if it came across as a "cheap shot", but the pun was irresistable (sigh)....

   However the concern remains.

patrick in Beijing

Besides treating consumers as dumb sheep, incapable of making rational purchasing decisions on their own, how reasonable is that assumption? Perhaps there are consumers who would prefer to pay a premium for reduced price volatility, but I doubt they count for the majority of the population -- else we would see consumers eschewing stores that routinely put select items of their merchandise on sale.

Because of its geography (and a long tradition, until recently, of high barriers to trade between the Provinces) and dispersed population, it makes sense that more of Canada's fresh dairy and egg production takes place locally.

And I'm sure that the Canadian dairy farmers (existing ones, not potential entrants) love their supply-management system, as it protects them from rises in feed costs and ensures high prices. Whether the system benefits consumers is arguable.

By the way, while Canada seems to be stuck with its system, the EU is planning to abolish theirs. To quote Agricultural Commissioner Mariann Fischer Boel (hardly an enemy of the farm sector), the EU's milk quota system:

[S]eems to have as many lives as a cat. Time and again in the past, we were on the verge of abolishing it; time and again, it lived to fight another day.

My view on this issue is a matter of public record. There should not be another "life" for milk quotas. They are due to end in 2015, and we should let them end.

Milk quotas had their uses in a different time. But times have changed and today milk quotas are acting as a brake on the competitiveness of the milk sector.

Quotas made sense when the CAP was essentially about price support. We wanted to guarantee dairy farmers' incomes through high prices. But our price support mechanisms encouraged over-production and put a heavy strain on the European budget. So we limited the right to produce milk. This put a cap on milk-related budgetary spending, ... budgetary control that we [now] don't need. And it ties the hands of dairy farmers who could profitably raise production -- just when we are telling other farmers to go and put their new freedom to good use.

Therefore, in the era of decoupled payments and a more market-oriented CAP, milk quotas stick out like a sore thumb.

Like a very sore thumb, in fact - from the point of view of some Member States. The quota system has never been popular in some parts of the European Union. But even the popularity that it once had is weakening. It seems unlikely that there would be a qualified majority in favour of extending it beyond 2015, even if the Commission proposed such an extension which it will of course not do.

If market structure is the issue, there are better ways to address that problem, such as strengthen the application of anti-trust rules to the agri-food sector, and eliminate regulations that prevent farmers from selling directly to consumers. With that caveat, if people want to pay more for milk or eggs from their local farmer, they should be free to do that. But they should not force that preference on the rest of society.

These are only my personal opinions.

For every 10 gallons of E15 you need to buy an extra gallon to go the same distance.  And a gallon and a half of oil was used to grow the corn and transport and process it into ethanol.

By passing fuel standards that force ethanol on consumers, agribizz representatives (elected and unelected lobbyists) serve their corporate masters.

Informed consumers prefer plugin hybrids that run on 60 cent per gallon electricity for most driving.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

If you're thinking of the global poor, I don't see how maintaining cheap chicken prices in the US is going to help anyone anywhere.

But to go beyond a defense of Farm Girl's excellent post I think your accusation of lack of concern amongst environmentalists for the less privileged is as wrong as could be, or at least way out of date. I think it's fair to say that the days of environmentalism being associated with the protection of exclusive domains at the expense of the common folk are long gone. Certainly those who post in Grist are almost by definition comfortably off - but I see their concerns for global social equity in environmental policy overwhelmingly in evidence throughout this arena.

The true meaning of life is to plant trees, under whose shade you do not expect to sit.

It turns out that farmers don't respond very well to price signals, especially when prices drop. They tend to ramp up production when prices drop, hoping to make up on volume what they're losing in price. But everybody else makes the same calculation, putting yet more downward pressure on prices.

Agribusiness has learned to profitably soak up these excesses by conjuring up dubious products like corn-based ethanol and high-fructose corn syrup. But as I and others have shown ad nauseam, the situation is extremely hard on the environment and the public purse. Subsidies are a symptom, not the cause, of overproduction. Absent some sort of supply management scheme, we're likely to see them perpetuate.

Those with long memories will recall the free-market fervor that surrounded the passing of the '96 Farm Bill, cheekily titled the Freedom to Farm Act. It marked the final evisceration of supply management, and the triumph of Earl Butz's produce-as-much-as-possible-all-the-time ideology.

Foreign markets -- rammed open by Nafta and other mechanisms -- were going to soak up any excesses, obviating the need for subsidies or any other government interventions.

What happened? Farmers produced like mad, prices plunged, and the government paid out more in subsidies than ever. And ADM and other grain buyers made out like bandits. Mexico soaked up enough U.S. corn to knock hundreds of thousands of smallholder farmers off the land, but not quite enough to keep the price of corn above the cost of production.

When the ethanol bubble bursts, we'll again be looking at literal mountains of corn in the Midwest. It will be interesting to see what happens then.

Patrick's claim that our cheap-food monstrosity somehow serves "the poor" is of course imbecilic. Mass quantities of cheap, low-quality food, zipping around the globe as inputs for low-wage, low-skill food factories (including meat factories), perpetuate poverty; they make poverty profitable.

Victual Reality

And as for tenant farmers, what happens when commodity prices rise? Land rental charges rise. So the tenant farmer experiences rising costs as well as rising prices.

Let's consider a real-life example, involving rising land rents, family farm workers, and the availability of locally grown organic produce. In the text block below I've shortened the article to save space, but the full article can be accessed here.

How ethanol is hurting the state's Hmong farmers

Their small farms on rented land are profitable but vulnerable to a growing demand for corn.

Laura M. Kerr and William G. Moseley

Published: 18 May 2007, Minneapolis-St. Paul Star Tribune

The ethanol boom has led to the greatest expansion of corn farming in the Midwest in years. ... But rising corn acreage is now displacing environmentally savvy Hmong vegetable growers, who primarily operate on rented land at the urban fringe of the Twin Cities.

When they arrived here from Laos after the Vietnam War, many Hmong began tending to personal gardens given their previous experience as small farmers. Some sought to make a living producing vegetables.

...

Rather than work large fields of a single crop supported by heavy pesticide and chemical fertilizer use, most Hmong employ traditional techniques, such as the mixing of crops and manual weeding, to maintain soil fertility and manage pest problems. While many Hmong growers can't qualify for organic certification because they are farming on rented land, they have bolstered organic production in the upper Midwest and provided added vigor to the local agriculture and farmers' market scenes.

Most Hmong farmers in the Twin Cities area have been renting land from grain farmers. Gaining access to such land was not usually an issue until the recent ethanol boom spurred the demand for corn.

Schemes to artificially prop up commodity prices generate rents that become capitalized into the prices of fixed assets: land and production quotas. That phenomenon has been recognized since the days of David Ricardo, and continues to be valid.

These are only my personal opinions.

   There is no American social welfare system which will help poor people if food prices rise.  The center right President Bill Clinton, working with a far right Republican Congress (and the usual cowardice on the part of the merely greedy Democrats) eviscerated the already weak American welfare system during the 1990's.  So Spaceshaper, I am not sure what country you live in, but you comments that price rises are okay for the poor is pretty far off the mark.

   As to comments by anyone here that the majority of environmentalists care about the effects of their proposals on the poor, I ask only for evidence.  I have never seen any.  It just ain't so.  As the old lady in the BK commercial once said "Where's the Beef?".  

   Ironically, one of the reasons that environmental groups get nowhere is their inability to reach out to groups involved in issues such as social justice.  Claiming that one cares is not enough, the evidence would show if proposals for reform carefully included analysis of their impact on those who aren't wealthy, and serious proposals to deal with those impacts.  They don't.

   Mostly people say "oh, we'll rebate the tax increases to the poor" or some such.  Anyone see why this is a problem?  Why it doesn't really work?

   Tom, I may be an imbecile, but I am not the one you are criticizing.  Where on earth in what I have posted do you find the words or ideas attributed to me?  ROFLMAO.  I can't even argue with you, since I don't have any of the beliefs you suggest I do.

   Perhaps you are referring to postings elsewhere where-in I point out that for many developing countries that lack abundant natural resources to sell to rich Americans, the only means they have of attracting capital is by selling food.  THESE countries have asked for more access to western markets as the only means they see for lifting their populations out of poverty.  But none of them have ever suggested that you should pay as little as possible, au contraire, pay more!!! (grin).

   Tom, if you have any ideas for how else they can lift themselves out of poverty, please feel free to put these forward.  We imbeciles await your enlightenment!!

   Generally speaking, I am all for family farms and support the ideas of buying locally.  But I do note that most of the discussion includes nothing about how to help reduce poverty among farm workers.  (Just as the discussion about temporary immigrants includes nothing about protecting the rights of such immigrants..... no... oops... the latest proposals by agricultural interests want to WEAKEN those protections.... me bad).

   The current system has problems.  But raising the price of food (as advocated by bio-fuel supporters) is not helpful.

   In terms of the global food market, there are many different things happening, some positive, some negative.  But Tom's description of it is not accurate.  

   Sharply elevated corn and wheat prices are hurting the poor.  America faces a growing income gap, with increasing stress on the lower middle class (and some segments of the middle class).  Environmental or Agricultural policies that don't take this into account are not reality based, and are less likely to find the broad support they need to be implemented.

   patrick in Beijing
   

Would that help?

Economic Illiteracy Harms The Planet! www.voicesofreason.info.

    Certainly Universal Health Care helps!!  The problem with any kind of tax credit is that it provides money not on a week to week basis, but in a lump sum.  Most poor people don't have the resources to manage money in such a manner that these are useful.

    For "tax rebates", the problem is that money is taken "now" and given back in maybe 18 months.  For people living on or close to the edge, even losing the seemingly (to those not poor) sums can be disastrous.

   There may be better methods.  When the Chinese government raised the gas price, it kept a special lower price for cab drivers.  This kind of response keeps the money flow even, which is critical for the poor.

   Standard tax deductions no longer reach the poor generally (except for children).  There is no renters deduction (or a very small one), and most of the others don't apply.

   The Earned Income Tax Credit is good.  But I wonder how many people actually use it (as opposed to being eligible for it?).  I will look for this information when I have time. (smile).  Off to class!!

patrick in beijing