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What would America be without garlic farmers?
For decades, the fiercely independent fruit and vegetable growers of California, Florida and other states have been the only farmers in America who shunned federal subsidies, delivering produce to the tables of millions of Americans on their own.
But now, in the face of tough new competition primarily from China, even these proud groups are buckling. Produce farmers, their hands newly outstretched, have joined forces for the first time, forming a lobby group intended to pressure politicians over the farm bill to be debated in Congress in January.
Most of the current $15 billion in direct subsidies goes to five commodities: corn, cotton, rice, wheat and soybeans. Now Chinese garlic sells for about half the wholesale price of American garlic. One garlic manager commented:
“The Chinese garlic totally caught us off-guard and knocked us down,” Mr. Mantelli said recently as he checked on newly planted garlic bulbs. “I think our industry has hit rock bottom. Maybe now we can figure out how to make it a level playing field.”
Here is the full story.
Posted by Tyler Cowen on December 3, 2006 at 09:34 AM in Economics | Permalink
Comments
Listening to the Maryland economists remarks about how the American farmers are perfectly justified in their lobbying for protection makes me want to puke all over myself. I cant believe that the times went out and quoted the one economist who probably supports trade protection in America. The times really showed their true colors with that piece. Over ninety percent of economists advocate abolition of all farm subsities however, the times does not feel it is journalisticaly prudent to quote someone from that group. Presenting the infintile minority opinion as though it is the dominant opinion in the field is irresponisble at best, if not down right sinister.
Posted by: John Pertz at Dec 3, 2006 9:54:47 AM
hey, in case of a mass attack of vampires do YOU want to have to rely
on timely imports of chinese garlic (and the ensuing hold-up problems)??
Its a strategic industry essential to this nation's security and
well-being and should at the least be protected,if not nationalized.
Posted by: kevin at Dec 3, 2006 11:22:02 AM
A world without garlic would be hardly worth living in, especially for those Chinese living in California. http://www.thestinkingrose.com/
Posted by: Yan Li at Dec 3, 2006 11:37:29 AM
I have to give the times credit for at least including this one paragraph:
"Although some farmers may be suffering, American consumers have been big beneficiaries of cheap food imports. On the United States wholesale market, for example, Chinese garlic costs almost half the price of garlic that is grown domestically."
Posted by: Bob at Dec 3, 2006 11:47:42 AM
Now, the chinese garlic threatens domestic farmers in US.Glbalisation makes them to say that"The Chinese garlic totally caught us offguard and knocked us down".If this is the case of US farmers,imagine the plight of thousands of hapless farmers in developing countries.For example,in the State of Kerala in India, hundreds of poor farmers cultivating pepper,ginger,arecanut,coconut, other spices like clove etc in the Wynad district in the Western ghats committed suicide due to steep fall in prices as a reult of liberal trade policies.
Posted by: G.Visakh Varma at Dec 3, 2006 12:36:33 PM
Hey, John Pertz. I read the Times article, and I'm not quite as outraged as you. The farmers at least claim that they want subsidy money for export promotion and marketing and not price supports and protective tariffs. And that economist guy from Maryland doesn't seem to be plumping for those disastrous price supports and protective tariffs, either.
Now, I agree with you that subsidies for export promotion and marketing may be a bit of cheesy corporate welfare. After all, can't you just form a tarde association to do that, like the trade association you're using to lobby Congress?
But export and marketing subsidies aren't the all-out economic malpractice of price supports and protective tariffs.
But I will say this: Anybody who takes obesity-related issues seriously should welcome inexpensive foreign produce. Wouldn't it have been nice of the Times had interviewed somebody about the health effects of inexpensive foreign produce?
Posted by: Keith at Dec 3, 2006 12:39:34 PM
Chinese garlic prices are so low - in part- because China pegs its currency to the dollar at artificially low exchange rates. Were that not the case, its products would be competitive probably, but not half of US prices. Most US economists don't understand something basic - that supply and demand in the US can only "clear" through the price mechanism and the Invisible Hand when China and others don't put a thumb on the price scales. Which they are doing openly.
If the dollar were cheaper, as it should be in relation to many currencies, we wouldn't need to subsidize export promotion either. The US is being subjected to overt predatory exports with artificially low prices. You guys need to go back to school and study supply and demand again.
Posted by: OldVet at Dec 3, 2006 2:13:45 PM
"Most US economists don't understand something basic - that supply and demand in the US can only "clear" through the price mechanism and the Invisible Hand when China and others don't put a thumb on the price scales. Which they are doing openly."
Actually, OldVet, it is your education that is highly deficient. Economists have extensively studied the implications of foreign subsisidies in trade, and they have found the following (short version). By the way, this analysis is likely available in any undergraduate trade textbook...:
If markets are competitive, Chinese subsidies to Chinese producers essentially transfer wealth to American consumers at the expense of Chinese taxpayers.
If markets are imperfectly competitive, Chinese subsidies to Chinese producers benefit Chinsese producers at the expense of Chinese taxpayers, and harm American producers but benefit American consumers. On net, American consumers gain more than American producers lose and Chinese producers gain less than Chinese taxpayers lose. On net, Americans still gain and Chinese still lose.
Now, there are also some other interesting analyses of subsidies when there are spillover production effects and network effects. I doubt these analyses would apply well to the garlic industry.
OldVet, it's always funny to me when people who know very little economics think they have some brand new insight that economists have never thought of. I certainly think some non-economists may have some great insights that benefit economists, but maybe you personally would benefit more from learning more economics, before you go talking about what economists know and what they don't know.
Have a nice day.
Posted by: Keith at Dec 3, 2006 2:43:15 PM
As this site should know, these growers already receive a huge subsidy because of politicians' widespread support for illegal immigration. In that case, the growers get low-wage labor, and the true cost of that labor is passed on to others: public schools, healthcare, etc.
Posted by: IllegalImmigrationIntroduction at Dec 3, 2006 3:19:27 PM
Indeed. The public pays for the growers' illegal immigrants' health care at emergency rooms, educating their children, policing, imprisoning, disability, etc etc.
The Age of Ideology when people debated the Big Picture ideas like Socialism vs. Capitalism is over. We're now in the Age of the Fine Print when various interests constantly try to shift costs to others.
Posted by: Steve Sailer at Dec 3, 2006 5:24:29 PM
Ah, the Garlic fest in Gilroy isn't that cool anyway. Thi is really a dropped ball by Mexico. If they had made more investment in infrastructure, even just a decade ago, they could be providing a lot of the fresh produce we eat, including garlic. The fact that U.S. garlic (and other produce producers) are competing with China, accross the Pacific and not Mexico is very telling.
Posted by: ElamBend at Dec 3, 2006 5:30:26 PM
You all laugh about this now, but once China has destroyed our domestic garlic market it will then jack up the prices on garlic to huge levels, leaving our culinary future at the mercy of a godless foreign mass!
Posted by: Matt at Dec 3, 2006 7:18:56 PM
If the Chinese garlic being sold in the U.S. is the same as the Chinese garlic being sold in Japan, there is still hope. Large bags of garlic from China can be had cheap here, but it goes dry and soft really fast. I don't know how old it is when it hits these shores, but it sure goes bad quickly.
Garlic from Aomori in Japan is really fresh, hard, _juicy_, and with a long shelf life. We've grown our own garlic (easy to do, just put cloves in the ground), and it's not much fresher than Aomori garlic.
Posted by: Stephen at Dec 3, 2006 8:58:51 PM
What about SUGAR price supports?
All the money goes to one family in Florida.
Disgusting.
http://www.fapri.org/bulletin/Oct2000/ImpactsOfTheFederalSupportProgramForSugarOn.htm
Posted by: Dave Barnes at Dec 3, 2006 9:33:00 PM
Produce in California may not itself be subsidized, but much of the water in California is heavily subsidized by federal money (mostly in the form of large construction projects on which costs aren't recouped). Of course, on some level one can label everything as taxed and subsidized if one goes five levels deep, but in this case the subsidy is quite significant; if water projects for California agriculture were carried out only when the investment could be recouped from water consumers, a lot of California's agriculture wouldn't exist.
Posted by: dWj at Dec 4, 2006 12:22:18 AM
"Thi is really a dropped ball by Mexico. If they had made more investment in infrastructure, even just a decade ago, they could be providing a lot of the fresh produce we eat, including garlic. The fact that U.S. garlic (and other produce producers) are competing with China, accross the Pacific and not Mexico is very telling."
From
http://ffas.usda.gov/scriptsw/bico/bico_frm.asp
US imports of fresh vegetables from Mexico increased from 1.6 billion dollars to 2.3 billion from 2001 to 2005.
US imports from China and Hong Kong increased from 18 millon to 72 millon dollars during the same time period.
Although China has much greater grown from its small base, Mexico hasn't blown it.
Posted by: bertram at Dec 4, 2006 2:34:57 AM
Doesn't it seem that whenever someone uses the phrase "level playing field" they are arguing for the exact opposite.
Posted by: sourcreamus at Dec 4, 2006 12:42:41 PM
Hi Keith, looks like mean minded goes well with small brained. I've forgotten more economics than you'll ever know. Anyhow, manipulation of the exchange rates as is the case in China is not a subsidy to Chinese producers. I doubt their producers get any great profit off their garlic exports. What Chinese producers get is more employment. The "benefits to US consumers" in a freely priced market would be whatever they are, but in this case the benefits are offset by Chinese government claims on the US taxpayers when the Chinese buy bonds which pay interest, in large quantities, back to the Chinese government.
I love it when Small Brains try and figure out why Ricardo's theorem on the benefits of trade no longer apply, and fail. Mainly for lack of understanding of how trade actually works these days, and the relationship of exchange rates and trade flows. I'll bet you think a transfer of factors of production (capital, labor, technology) is part of the traded goods that Ricardo went on about in his circa 1800 treatise.
The frustration of the basic market mechanism is measured directly by a readily available number: the US trade deficit, which has risen continuously for about 30 years. Under the self-correcting force of prices seeking equilibrium (absent FX interventions) trade deficits like that would be an aberration rather than a pattern.
Morons need to think rather than repeat rules of thumb.
Posted by: OldVet at Dec 4, 2006 1:13:11 PM
"I've forgotten more economics than you'll ever know."
Since the amount that you've forgotten appears to be 100%, I totally agree.
Again, you still don't seem to realize that everything you're discussing is covered by fairly plain vanilla conventional economic analysis. China may be following some employment policy by keeping their exchange rate low, but it's not a very smart policy. By keeping their currency low, hey're paying us to consume their goods, and they're even giving us cheap capital by aborbing our debt at lower interest rates than we would otherwise have to pay. This is bad for China and good for us. But I agree with most macroeconomists that this isn't sustainable, which is why we want to make major changes to our fiscal policy, to make a gradual correction and avoid a major and sudden correction. But China's policies are essentially hurting China and benefiting us.
Really, OldVet, go learn economics, especially the parts about trade and financial flows, before you go talking about what economists know and don't know. You can call me mean-spirited and small-brained, but all I did was call you out. You're the one who wrote checks you can't cash.
I think some other commenters have made some great points, especially about the water subsidies that California farmers receive. Ideally, some of the secondary effects of trade in agricultural products may be the weakening of the political forces that push for disastrous water and agricultural subsidies. This would be a very good thing.
Posted by: Keith at Dec 4, 2006 1:36:17 PM
Bah, I buy local organic up here because garlic has a bad habit of picking up minerals and contamination from the soil.I got tired of both the China and America garlic turning blue in pickling.The quality of bulk import just sucks and is not worth the few pennies saved.
Posted by: TW at Dec 4, 2006 3:33:38 PM
But do those Chinese growers sell varietal garlic? Don't laugh. The Fang family orders from those guys, and the garlic is fantastic.
And do those Chinese growers sell green garlic (the garlic equivalent of green onions)? Mmmm, green garlic.
Posted by: Cardinal Fang at Dec 4, 2006 4:17:28 PM
I wonder if agricultural products from China (or other emerging countries) are tested for heavy metal concentrations and the like. Given what I have seen in China - crops grown next to industrial sites with no pollution controls - I would worry about what you are actually injesting by eating the imported garlic.
Posted by: asiequana at Dec 5, 2006 9:22:03 AM
Let Garlic farmers go under? Unthinkable. Haven't we been told time and time again that we must allow Open Borders (in spite of the dreadful economics) to keep labor intensive agriculture in business. If it's worth importing a new underclass to save garlic farmers, we sure can't let the Chinese put them out to pasture.
Posted by: Peter Schaeffer at Dec 5, 2006 11:05:34 AM
yes,Gentleman.I came from China MCCORMICK, I know more than anyone here about garlic in China,I am so astonished by someone say vampire attack.
Posted by: Richard at Jun 28, 2007 2:16:00 AM
I grow top quality gourmet top-setting garlic which must be hand-crafted,and not industrialized.I also sell it personally to those who care about quality.We welcome the no-taste junk as it makes our product even more desirable.
We do not compete on price,but on quality.INDUSTRIAL GARLIC DOES NOT REPELL WEREWOLVES,VAMPIRES,OR EVEN WIMPS. Go to a "farmers market" and find out what real garlic is all about.
Posted by: William J. Van Foeken at Jul 18, 2007 12:23:38 PM
