The Trouble With Subsidies

In subsidy-rich Switzerland, farmers have little motivation to produce for the marketplace

We just got back from a great visit with Swiss farmers Ruth and Hansruedi Langhart, a farm couple my wife and I have known for 30 years or so, dating back to the days when Molly was an exchange student on their farm north of Zurich. Each time we go to this beautiful country I learn a little more about the challenges of European farm life - particularly in Switzerland where farmers get 54% of their income from government payments or supports, according to the Organization for Cooperation and Economic Development.

I was invited to talk to a group of Swiss farmers on the future of global food, along with journalists from Switzerland and Germany. The invitation came from another good friend, Markus Rediger, president of the International Federation of Agricultural Journalists, and CEO for LID, Switzerland's Agricultural Information Service. LID was celebrating 75 years of sharing the farmer's story with the Swiss consumer. Pictures of the event, held at the Olma, can be found here. The Olma is a large food and consumer exhibition held in St. Gallen each year. Above you'll find a video of a Belgian team of horses driving a beer wagon at the exhibition.

LID is a little bit like the U.S. Farm and Ranch Alliance. It puts together publicity campaigns and provides information on the value of Swiss agriculture. One of LID's campaigns had national celebrities endorsing farming on billboards and television ads.

In a rich country like Switzerland there's still a lot of support for agriculture. It exists not merely to produce food, but to preserve the countryside and to ensure that rural and mountainous regions remain inhabited.


Now, anyone who visits Switzerland often admires the bucolic scenes of rustic small farms grazing cows on the mountainside. Those farmers are getting hefty government payments to keep Switzerland looking, well, like Switzerland.  Mixed livestock and grain farms average 50 acres in size, so they also survive thanks to government payments. Planting decisions are not made based on market signals but rather which government programs or incentives look best that year.


Farmers here produce only 60% of what the 8 million Swiss citizens eat. Farmers want to produce more, say the Langharts. But in Switzerland agriculture may not be structured to do much more. Taxpayers – not the marketplace – generate the income that pays for over half a farmer's paycheck. As a result, taxpayers, including misled consumers, have a big say in imposing regulations on agriculture. And without robust market incentives pushing farmers to produce more for higher profits, agriculture can become stagnant.

 

Anti-biotech

Like the European Union, Switzerland is anti-biotech – a point made clear after my speech when I suggested we would need advancements from GM seed technology to help feed 9 billion people by 2050.


This is oh so ironic, given one of their country's leading scientists, Dr. Ingo Potrykus, helped develop 'golden rice' many years ago. Golden rice is a GM crop that would help offset iron and vitamin A deficiencies in poor countries – a miracle for poor children around the world. Potrykus, now retired, tells the story of Golden rice in great detail here.


"In fighting against 'Golden Rice' reaching the poor in developing countries, GMO opposition has to be held responsible for the foreseeable unnecessary death and blindness of millions of poor every year," he says.

 

Our own problems

This is not intended to sound harsh, considering the problems we also face in this country. I got a chuckle from the Swiss delegation when I mentioned that American farmers suffered one of the worst droughts on record – and will be making record incomes this year thanks to federally-subsidized crop insurance and high prices supported by a federally-mandated renewable fuel policy.


There's no getting around the fact that government intervention in agriculture – here and in Switzerland – plays a role in how we produce food for our citizens and the world. Both countries need to take a hard look at this uneasy relationship.

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