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Farm subsidies wrong


EDITOR: Recently I had discussions with an economist and three fellow banana producers.
The issue: the subsidies on fertilizers being paid by the Government of St. Vincent and the Grenadines to enhance banana production. {{more}} To my mind, this form of subsidy will have little or no effect on the levels of banana production.
I came to the above conclusion based on the effects of similar subsidies in the past, and my readings of similar patterns of subsidies the world over and in Trinidad in particular with respect to subsidies in farming.
I am of the view that, as in Europe with respect to milk and beet sugar and the farm subsidies of the United States, the subsidies should be placed on the price of the commodity rather than on the cost of input in producing that commodity.
Here in St. Vincent, the Banana Association had subsidies on fertilizers, nematicides, diothene and pesticides in the 70s and early 80s. All was to no avail. Production did not move.
It was not until 1986, after the then Board had a radically different approach, did farmers’ enthusiasm and production change. Subsidies were removed from all inputs and profit was the motive at the inputs warehouse. At the same time, a budgeted subsidy was initially placed on the price of good quality bananas.
The result? Both quantity and quality shot up to such an extent that despite natural disasters in both 1986 and 1987, the Banana Association generated annual surpluses in each year such that one prominent farmer called for the formation of a Farmers’ Bank. But that is another story.
Mr. Economist, you are wrong. And I await your response.

Hugh Stewart