The joke is on you, Europe!

The Economist is reporting an interesting story on the situation in Europe and their milk quotas. These restrict how much the farmers can produce in order to keep prices high and "protect" farmers.

Here is the history behind Europe’s quota system:

"They were designed in 1984, when low market prices and high subsidies were filling EU warehouses with surplus "butter mountains" and mounds of milk powder at even greater cost to the EU budget. Liberal-minded types wondered naively if cutting subsidies might be an idea. They were outvoted by the farm lobby, which chose to curb production via quotas so as to boost prices."

Obviously the better idea would have been to cut subsidies but that is beside the point now.

"Today, the conditions of 1984 are reversed. Steady growth in demand for cheese, yogurt and so on, whether in Europe or Asia, has pushed up world prices. Surpluses are long gone: last year the EU undershot its milk quotas by 2m tonnes. But because quotas cannot be traded between EU countries, go-ahead farmers in places ideally suited to dairy farming-the coastal areas of north-western Europe, such as the Netherlands, Denmark or Poland-cannot produce as much as they would like."

What a waste. Why don’t they just let the free market rule? If they did this would allow the farmers to compete on the world market and actually increase there profits. Pretty soon the Europeans will stop buying from these guys because they are charging way too much.

Advertisements
Published in: on March 18, 2008 at 3:51 am  Leave a Comment  

The URI to TrackBack this entry is: https://pccapitalist.wordpress.com/2008/03/18/the-joke-is-on-you-europe/trackback/

RSS feed for comments on this post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: