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Current UK agricultural policies cannot be justified as a means of ensuring self-sufficiency in food and increasing national security, L Alan Winters told a lunchtime meeting on 2 December, indeed they actually diminish national security. If governments are concerned about food supplies in an emergency, they should institute sensible stockpiling and encourage farmers to set aside land to conserve its natural fertility. Winters is Co-Director of CEPR's research programme in International Trade. His talk was based on research reported in CEPR Discussion Paper No. 287, carried out under the auspices of a grant to the Centre from the John D and Catherine T MacArthur Foundation's International Security Program. Financial assistance for the lunchtime meeting was provided by the Economic and Social Research Council, as part of its support for the Centre's dissemination programme.High subsidy levels for agriculture have been justified in many ways, including as a means of safeguarding national security. Winters argued that government intervention in agricultural markets may be justified on national security grounds only if output in a future crisis depends on maintaining current output at a sufficiently high level and if private agents are unable or unwilling to provide that level of current output by themselves. He argued that it was necessary to analyse the probability of a crisis occurring; whether the economic costs of stimulating current output were commensurate with the benefits this would bring in a crisis; and whether there were alternative, less costly policies that might offer similar levels of security. Discussion Paper No. 287 reports estimates of the welfare costs of reduced food consumption, based on a system of equations explaining consumer expenditure on different goods and services as a function of their relative prices and consumers' income. These estimates revealed that even in the 1960s a 10% reduction in food supplies or an increase in final food prices of 25% implied losses of economic welfare of only around 1.5% or 7% respectively. The welfare loss would almost certainly be lower now, since food consumption takes a smaller share of family budgets than in the 1960s. Winters also considered the likelihood of major disruptions to food supplies. Using nutritional data he showed that Britain currently produces at least 150% of her minimal food requirements once `food-efficient' consumption patterns are adopted. Thus even if all food imports were cut off starvation would not ensue, as long as current production could be maintained. The probability of an effective food embargo, however, is very small indeed, as the 1980 experience of the USSR illustrates. Despite almost worldwide condemnation the USSR was able to maintain reasonable food imports as world markets moved to fill the gap left by the US embargo. In any case, Winters noted, the main instigator of food embargoes has been the United States, Britain's principal ally. Current agricultural policies encourage farmers to make intensive use of energy in the form of oil and chemical fertilizers which, given their countries of origin, appear more likely to be cut off than food. The artificial nitrogen required for today's yields rapidly leaches out of the soil, so that without new supplies crop yields would drop, possibly by as much as 50%. It is also difficult to envisage circumstances in which food would be cut off entirely, but in which oil was available in sufficient quantities both to fight a `hot' war and to run an energy-intensive agricultural sector. Thus current agricultural policies probably reduce food security. They also benefit the USSR and her allies by up to $23 billion per year enough to maintain perhaps 250,000 men under arms! Discussions of the strategic role of food must distinguish between the short and the long run, Winters argued. For periods of less than a year, it is stocks of food that matter, not the rate of food production. Agricultural capacity only matters for crises of longer than a year, during which serious efforts could be made to expand output. A modern war, however, is likely to be short-lived. If it were not, it would depend on military supplies crossing the North Atlantic, in which case at least some imported food should also be available. If hostilities did entail a total embargo of food and oil, the nuclear threat must be prominent, and the ability to grow one's own food seems unimportant. Winters concluded that alternative policies should be adopted to ensure Britain's food security. Governments should maintain stocks to provide two years' food under total embargo, at a cost not above £300 million per annum; stocks could be varied according to the current level of military preparedness. Winters noted that experience during the Second World War proved that output could be rapidly expanded from a low initial level. He quoted studies showing that newly ploughed land that had previously been under grass and clover ley is highly productive for several years without any artificial fertilizers, and that even two or three years of ley offer significant increases in fertility and economies in fertilizer use. A total embargo would also release labour from other tasks, so that cultivating new land need not be very energy-intensive. As well as stockpiling food for short periods, the ability to expand output rapidly in a longer crisis therefore required maintaining stores of agricultural inputs, such as chemicals, seeds, simple implements and, especially, natural fertility in the form of rested land. Asked whether national security arguments were really used to justify agricultural protection, Winters quoted an explicit objective of the Common Agricultural Policy as being to ensure security of supply which could be interpreted as ensuring food security against war, embargo or natural disaster. In other countries, such as Sweden, national security arguments were much more to the fore, and even in the UK such arguments are typically raised in defence of agricultural subsidies when it is proven that they cannot be defended on solely economic grounds. |