How much does an EU cow earn?

by on August 18, 2014 at 2:51 am in Economics, Uncategorized | Permalink

This is an old link, from an old blog post, but I believe I missed it the first time around:

A typical cow in the European Union receives a government subsidy of $2.20 a day. The cow earns more than 1.2 billion of the world’s poorest people.

That is from Mark Perry, citing an Australian minister, via Garett Jones on Twitter.  Despite being in the midst of an unprecedented economic crisis, I don’t think these subsidies have changed much in the interim.

Addendum: It may be up to $2.60 a day.

andrew' August 18, 2014 at 2:58 am

That is barely enough to cover groceries.

ThomasH August 18, 2014 at 6:59 am

The cow can hardly ever afford steak on $2.20/day. No wonder the poor beast has to eat grass.

Seriously, the subsidy should never have existed, but now would not be the best time to remove it as, given ECB’s misguided monetary policy, it would run the risk of reducing government deficits and lowering ngdp growth.

Peter Schaeffer August 18, 2014 at 10:44 am

This is just a typical example of “free market” fetishism. According to Wikipedia “In 2010, the EU spent €57 billion on agricultural development, of which €39 billion was spent on direct subsidies”. The GDP of the EU was 13.07 trillion in 2013.

It’s typical of Libertarians and free market conservatives (these days) to obsess over trivial deviations from free market orthodoxy (tiny farm subsidies, minor tariffs, etc.) while conveniently overlooking the vast proliferation of the welfare state. It may be politically expedient and popular, but doesn’t constitute serious policy analysis.

Horhe August 18, 2014 at 8:55 pm

Well, the Common Agricultural Policy is a significant percentage (40%?) of the EU budget, even though the EU budget is roughly 1% of EU GDP. Many individual nations also subsidize agriculture and rural, bucolic living (France), so that is what gets added on top. For people scrutinizing EU activity, that 40% of the budget is a big part of their concern, maybe trivial in the big picture, but important nonetheless in the on-going national vs supranational tug of war in the EU. Full disclosure: rabid Europhile, but, as an Easterner, I’m biased because of the EU funding my country receives. Though, in fact, my country’s absorption rate is so low, because of general incompetence, that we end up being net payers into the EU budget. You can probably guess where I’m from.

Alexei Sadeski August 18, 2014 at 3:47 am

That’s just the value of the subsidy. Of course a cow is actually worth much more.

In other news, a Honda Civic has a higher net worth than 40% of Americans.

dan1111 August 18, 2014 at 5:47 am

The point is earnings, not value. The EU government is choosing to spend a certain amount of money to support cow ownership, money which could be redirected to other, far more worthy causes.

dearieme August 18, 2014 at 6:37 am

It shouldn’t be redirected to worthy causes, it should be left in the pockets of the population.

Alexei Sadeski August 18, 2014 at 6:51 am

The politburo knows who’s worthy better than the filthy capitalists.

Alexei Sadeski August 18, 2014 at 6:55 am

ie cows

Michael G Heller August 18, 2014 at 4:01 am

Leaving aside the state of Missiri, what is the size of the government subsidy received by a typical *person* in the USA? Just asking. In relation to the size of national debts etc. Of course Europe is in a terrible state too…

T. Shaw August 18, 2014 at 8:23 am

I recently saw a post that alleged that federal government expenditures / per family are greater than the US median income / per family.

Some families are more equal than other families.

Peter Schaeffer August 18, 2014 at 11:15 am

TS,

“I recently saw a post that alleged that federal government expenditures / per family are greater than the US median income / per family.”

Probably not. For 2012, Median Family Income was $62,241. The number of families was 80.944 million.

Granite26 August 18, 2014 at 11:57 am

Which is about 5 trillion dollars. 2013 budget was 3.8 trillion dollars in total.

If you wanted to take out taxes (the median families take home pay) then the claim could hold water.

CD August 18, 2014 at 1:36 pm

Not if you mean direct subsidy, the context above. This is just budget/pop, including military spending.

Alexei Sadeski August 18, 2014 at 2:46 pm

Add in local spending, as you should, and it’s about 6T if I recall.

Martin August 18, 2014 at 4:27 am

Der Minister ist Australier, nicht Österreicher!

prior_approval August 18, 2014 at 5:18 am

This is not exactly the sort of place that cares about piddling details.

Martin August 18, 2014 at 5:25 am

Mister Cowen was at Freiburg University for some time, if I remember correctly. He is the one US-American who knows the difference between Austria and Australia (that includes Schwarzenegger). Or so we say in Europe to deal with our inferiority complex (it works).

Brian Donohue August 18, 2014 at 7:56 am

Another shrimp on the barbie, mate?

Axa August 18, 2014 at 7:52 am

http://nyti.ms/1teE7Li There is people who confuse Austria with Australia, there is people with reading skills of a 2nd grader, and there is people who jumps in the bashing wagon without reading at all. Two of them have written today………it wasn’t the type who confuses Austria for Australia.

prior_approval August 18, 2014 at 5:25 am

And taking a more global view of how the game is played –

‘Like in India, where bulk of the farm subsidies (all in the form of cheaper inputs) are cornered by big farmers’, small farmers do not benefit from the huge agricultural support — equivalent to US$ 1 billion a day — the industrialised countries provide. In Europe, only 2000 big farmers receive a subsidy amount that exceeds US$ 60,000 a year. These big farmers only constitute 0.4 per cent of the farming population. And yet, when the European Commission proposed to cap the maximum limit of direct payments at a figure that is still six times higher — US$ 360,000 a year — in what is called as single farm payments, it was met with such a stiff resistance that the proposal had to be withdrawn.

Nearly 65 per cent of the European farmers receive an annual subsidy of less than US$ 6,000. These are the small farmers who are unable to sustain themselves. These are the farmers who are gradually leaving agriculture. In Europe it has been estimated that one farmer quits agriculture every minute.

The real beneficiaries of the agricultural subsidies in the developed countries are therefore not the small farmers. Approximately 80 per cent of the entire subsidy for agriculture goes to the agri-business companies (or big farmers). The sugar giant, Tate& Lyle, received a subsidy of US$ 404 million in 2003-04. Arla Foods of Denmark received a subsidy of US$ 205 million in 2003, In UK alone, multinational Nestle receives an annual subsidy of US$ 20 million. Danish Crown of Denmark received US$ 19 million, 136 dairy companies in Germany receive an export subsidy of US$ 78 million. The list is endless.’ http://www.stwr.org/imf-world-bank-trade/farm-subsidies-the-report-card.html

dan1111 August 18, 2014 at 5:45 am

This raises the question: what is the purpose of the subsidies? Is it to support small farmers, or to encourage farming within the EU over against outside competitors? If the former, then the policy is failing; if the latter, then redirecting more of the subsidy to smaller (less efficient) farms would actually make the policy less effective (I am leaving aside the question of whether there should be any subsidies at all, and simply asking whether it is working according to the internal logic of the policy(.

As someone who grew up in a rural dairy farming area in the U.S., I am sad to see small farms go out of business. However, in the grand scheme of things these farmers are far from the worst off in society. Often the land they own is a very valuable asset. Support for small farmers has more to do with romanticism about a lost way of life than a clear-eyed assessment of their needs relative to others.

dearieme August 18, 2014 at 6:38 am

“what is the purpose of the subsidies?” The usual: to buy votes of course.

ThomasH August 18, 2014 at 12:27 pm

Too simple. What distortions of the vote market makes the price of these votes different from the price of other votes. According to the Stolper-Buchanan voter price equalization theorem, should not the price of all votes be the same?

CD August 18, 2014 at 1:39 pm

Or more simply, I doubt dairy farmers are numerous enough to warrant that big a bribe.

Peldrigal August 18, 2014 at 9:46 pm

Dairy farmers are not that many, but are a vociferous minority, and they are overrepresented by more than proportional allocation of representatives’ seats to rural districts (France) or very concentrated in some districts who can hold the balance to form a coalition government (Italy) or both.

prior_approval August 18, 2014 at 7:17 am

Well, there is a certain German (and more broadly, European) idea of a Kulturlandschaft, of which Tuscany can be considered a fantastic example – http://de.wikipedia.org/wiki/Kulturlandschaft (German only)

It is not really part of how Americans view things, but a substantial idea of why such farm subsidies exist is simply to keep the ‘land’ looking the way one expects. This isn’t an attempt to explain or defend what other societies value, but seeing cows on a pasture is considered desirable in and of itself. And it depends on where one lives – amusingly, when the cows go to pasture in Austria is a really big deal, and when travelling from the Rhine Valley to Vienna, the two Austrians were amazed at how nobody in Baden cared about such an important part of the calendar. It isn’t all about efficiency – much like the way ‘hay fed’ is slapped an amazing variety of milk derived items in Austria.

Brian Donohue August 18, 2014 at 8:01 am

Blunt and boden.

Is there nothing the Germans can’t teach us?

Brian Donohue August 18, 2014 at 8:02 am

*Blut.

prior_approval August 18, 2014 at 9:48 am

Well, those Tuscans have always been famous for being German, haven’t they?

But then, I only deal in two languages and two countries – I’m positive that the French have a term too.

But oddly enough, French or Italian commenters seem to be extremely rare here.

Pierre August 18, 2014 at 5:08 pm

Here I am, the official French commenter of this blog.
Paysage naturel / paysage culturel.
Farmers have obviously a role as countryside gardeners.
Nowadays more and more French farmers are turning their farms into green resorts, hence their need to keep their land as pretty as possible.

ThomasH August 18, 2014 at 7:02 am

Would the subsidy be better if it were distributed more widely? No. That would make it even more difficult to get rid of.

Thomas August 18, 2014 at 5:30 am

The living wage is a parody.

JC August 18, 2014 at 5:51 am

EU could argue that it should be considered subsidy for farmers not cows, but the number is shocking anyway.

Martin August 18, 2014 at 6:04 am

I see you know very little about us and our cows. They smoke, drive BMWs (not the French!), and on Saturdays, they go to the disco and get drunk.

prior_approval August 18, 2014 at 7:18 am

At the Q-Stall, right off the A5.

JC August 19, 2014 at 11:43 am

Indeed!

Charles Butler August 18, 2014 at 6:05 am

The ex-minister cited was actually Australian.

8 August 18, 2014 at 6:13 am

So, if only Europe had open borders, there could be third world peasant women selling their milk? Win-win?

chuck martel August 18, 2014 at 7:00 am

Big deal. An ordinary parking meter in the US produces more income than most workers in the world.

prior_approval August 18, 2014 at 7:19 am

Not to menion a single fire hydrant in Toronto.

T. Shaw August 18, 2014 at 8:19 am

She walks.
She talks.
She’s full of chalk.

The lactile fluid extracted from the female of the bovine species is highly prolific to the nth degree, sir!

download warframe platinum hack August 18, 2014 at 8:55 am

Hmm is anyone else having problems with the images on this blog loading?

I’m trying to find out if its a problem on my end or if it’s the
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prior_approval August 18, 2014 at 9:38 am

Come on – youtube is not the sort of spam people here are looking for. Though the name is perfect for a certain slice of the readership – ‘Warframe Platinum Generator’

prior_approval August 18, 2014 at 9:58 am

‘It may be up to $2.60 a day.’

And even more outrageously, those EU cows – not to mention a number of apparently even more poverty stricken cows- aren’t even entitled use American approved recombinant bovine somatotropin (rBST) – ‘rBST has not been allowed on the market in Canada, Australia, New Zealand, Japan, Israel or the European Union since 2000. Argentina also banned the use of rBST.’ http://en.wikipedia.org/wiki/Bovine_somatotropin

Sounds like a promising area for the Bartley J. Madden Chair in Economics at the Mercatus Center to explore – it sounds like a market that needs to be milked. Maybe Prof. Tabarrok could even apply for funding – or at least, add someone to the name of the endowment, since that sounds so prestigious when one is part of the Mercatus Center, located at GMU.

prior_approval August 18, 2014 at 10:04 am

Well, those Japanese cows are making out like bandits, aren’t they?

Ok, time to point out that the money isn’t going to the cows at all – and the entire way of framing this seems vaguely dishonest.

I’m sure that the people receiving any subsidy, especially the larger corporate groupings, deserve every penny of this largesse – this isn’t a web site that ever wants to see the richer get poorer, after all.

RR August 18, 2014 at 10:25 am

In other news, payment for letting food go down the drain:

http://money.cnn.com/2014/08/18/news/europe-farmers-russia/

Colin August 18, 2014 at 11:05 am

Someone else who read this asked “EU Cow subsidies per cow are higher than per capita income for $1.2B people. I wonder what the US subsidies per corn stalk are?”

Just as a thought experiment, I decided to work it out.

The 2014 Farm Bill clocked in at $956 Billion. Of course, not all of that went to corn, but let’s say 134.2 Million did (all the Crop Insurance & Commodity Support, from Wikipedia – an overestimate, but why not). http://en.wikipedia.org/wiki/Agricultural_Act_of_2014

In 2014, about 91.6 Million acres of corn was expected by the USDA. http://www.usda.gov/nass/PUBS/TODAYRPT/acrg0614.txt

A record corn crop is expected this year at 167.4 bu/acre, resulting in about 15.3 Billion bushels of corn (article says 14 Billion bushels, . http://www.agweb.com/article/wasde_corn_yield_forecast_at_record_1674_bu_per_acre_NAA_AgWebcom_Editors/

A bushel contains 48 ears of corn, and a corn stalk yields 1-3 ears each (we’ll say 1.6, since 1.5 * 14 Bil ~ 1.6 * 15.3 Bil). http://extension.usu.edu/htm/faq/faq_q=96

That results in about 420 Billion individual corn stalks planted in the US.

That means that each stalk was subsidized to less than about 3.2 hundredths of a cent.

Peter Schaeffer August 18, 2014 at 11:55 am

Colin,

You need to read a bit more. The $956 billion is for 10 years. Almost all of the money is for food stamps. Quote

“CBO estimates that direct spending stemming from the programs authorized by the conference agreement would total $956 billion over the
2014-2023 period, of which $756 billion would be for nutrition programs.”

Colin August 18, 2014 at 7:57 pm

Actually, I am off, but by a factor of 100, not 10. I swapped my billions with millions. Shows me for working in words not scientific notation.

nobody August 18, 2014 at 11:22 am

The cows add more value to the economy.

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