The industry might be accustomed to profiting from the subsidy, but that doesn't make them entitled to it! And certainly the industry has had plenty of time to anticipate and adjust to the problems of carbon emissions.
Farming is not a profitable endeavor. There would be a lot less financial advisors in the world otherwise. A carbon tax will either drive up prices or reduce suppliers, increasing prices. Reducing farmland will require more efficient methods which will also drive up prices
The result will be the public pays more for food, not the agriculture industry makes any more or less money. It will require more imports which will come from countries with less regulation and more exploitable resources.
We've seen the story of disruptions to the food supply play out before. The reality is this is a more dangerous gamble than most people realize.
Food prices declined earlier this year for two consecutive months, though that will be a minor consolation after the significant food price inflation in 2022 and persisting, though at a slower pace, through 2023.
All of that to say, "let them eat cake" mentality is unlikely in a country where they have consistently ranked at the top of a world happiness index. Additionally, while I'm not well versed in Danish politics, I am under the impression that the Social Democrats have responded much better to the mass immigration that has been an ongoing issue for many parties throughout Europe. I think this is indicative of a party that adapts rather more quickly to the consequences of their previous policies and is less ideologically stubborn - at least on some issues.
Individuals, by contrast look at the cumulative effect of inflation. If inflation runs hot for several years and then comes back to a moderate level, prices don’t go down regardless of what economists would have you believe. The effect of inflation has memory.
Economists that make monetary policy decisions look at recent inflation trends + projected inflation because they are tasked with price stability, which requires them to often respond to shocks well outside their control (war in Ukraine, massive government spending, tax cuts, covid-19 pandemic, etc.)
I was trading and researching fixed income and inflation markets (and implementing in multi-billion dollar portfolios) years ago when you had inflationistas claiming the Fed was going to cause double digit runaway inflation. At the same time, you had people claiming the Fed was not doing enough to support markets.
No matter what monetary policy makers do, it will be pretty much universally mocked by pundits and especially anyone that wants to talk their own book.
Academic economists don't really focus much on any particular reading of inflation, unless perhaps they have their own axe to grind about how it is measured or responded to.
Monetary policy can't change the past, which is why they evaluate current and expected inflation, not what happened in two years ago. Just because prices increased dramatically in 2022 does not mean the Fed or any other central bank should aim for deflation.
it creates a national dependency on imported food from countries that do not bankrupt their farmers, and suddenly (shocked!) the entire Danish food supply crosses the borders to arrive and is then subject to federal management. this latter case is of course the purpose, and climate change is merely a pretext. I hope european farmers are able to organize a revolt.
Governance is needed, where progress does not occur naturally.
reality is, governments want smallholding farmers out of the business and to replace them with agribusinesses because it's a process of de-kulakizing their subjects. it has nothing to do with science or environment at all. I think maybe a war over this stuff will give us the reset we need.
Similarly, the solar systems on most farms, was a government research project. The satellite recon to analyse the farm - provided by the government to all farmers, including the tiniest hobby farm, is 100% government researched, deployed, and maintained.
Governments do a lot more science than you are giving them credit for.
This is similar in some ways, but not at all the same.
The history of solar, EVs, batteries etc. show these work hand in hand.
Why invent a way to capture methane from slurry, or form a business to sell that idea to farmers if they're allowed to pollute for free?
if you have a problem with farmers, maybe you should just eat less?
Farms, at least in Europe, are in the majority family owned. Same for those working in them, mostly those that are part of the family [1].
It's difficult being a farmer. You are much more at the will of nature than any other industry. Your effort takes a long time to bear fruit (think olives, for example, you do not have fruit for 4~years if you're lucky, and you don't want the oil from a younger tree (lesser phenols, etc...). You have to wait YEARS before you get anything to market. And, there have been many fires in southern Europe...).
All in all, it's indeed difficult to invest in machinery, new technology, etc...
[1] https://ec.europa.eu/eurostat/web/products-eurostat-news/w/d...
Denmark has no ability to impact global CO2 emissions at all. In fact nobody does except ironically the Chinese and their industrial-growth-at-any-cost coal based approach from the 90s and 00s.
Farming is very carbon emission intensive if the farmland is reclaimed wetland. Converting the farmland to forest and stopping draining (making it more wet again) can definitely reduce carbon emissions significantly.
> Denmark has no ability to impact global CO2 emissions
This is such a tiresome and logically hollow argument. Denmark has the ability to reduce a fraction of the worlds emissions. The size of the fraction is proportional to the size of their emissions. Every country has a responsibility to reduce it's per capita emissions to sustainable levels. China has lower per capita emissions than most richer countries.
Let’s split China population in k Denmark-sized groups, plus one smaller-than-Denmark reminder.
None of the k groups has any ability to impact global CO2 emissions (same as Denmark).
We can reasonably assume that a smaller group has even less ability to impact global CO2 emissions than a bigger group. Hence the smaller-than-Denmark reminder has no ability to impact global CO2 emissions either.
Thus China is made of groups that have no ability to impact global CO2 emissions either. And therefore China as a whole has no ability to impact global CO2 emissions. (Otherwise at least one group within China would have to impact global emissions and we just saw that it isn’t possible).
This is known as the CO2 impossibility theorem, loosely based on Arrow’s concept of “(in)decisive” set.
We certainly need international coordination or actors with a minimal set of morals to achieve it.
I'm afraid most people are smaller-than-Denmark groups, and thus unable whatsoever to impact global emissions. It's just math.
That's what your math sounds like to me.
f = lambda x: (1/x) * x
f(1e309)
(So I guess Denmark is at least 1e309-sized in some metric).
The starting point is just wrong that Denmark can't play a role when it comes to climate change. Denmark can make a change. It is like saying that when voting that no individual vote or county matters, when the opposite is true: every vote matters in the same way.
Every kg CO2 saved is good... (obviously we should strive for the most economic way to save CO2).
The reason Denmark can't do anything isn't because there are few of them, it is because Denmark isn't a significant industrial cluster for energy technology and innovation. For example, India has more people than China and they aren't in a position to do much unless there is some sort of tech breakthrough that hasn't made it to my notice.
A lot of those vegetables are produced yet in Almeria. A lot of milk that goes to Italy is produced in France. EU has this issue checked from the first minute and created a supranational agriculture system based on quotes.
One can even argue that the reduction in environmental and climate impact will create room for other industries that already are carbon-taxed.
2. All produce is not of same quality, 15 million people’s produce will probably only produce 11-12 million produce that is marketable in stores after transporting it
3. Economies of scale matters, going from 15 million people’s produce to a 10 or 8 million produce doesnt just means a linear cost reduction, the price per unit for crops also rises, which can potentially make it hard to compete with other agro hubs in the Eurozone, dwindling Denmark’s independent source of food supply over time.
Edit: Genuinely curious what I'm missing..
High carbon farms balance would be: "high carbon" profit + subsidy - high carbon tax
If ["low carbon" profit - small carbon tax] > ["high carbon" profit - high carbon tax] (e.g. if the carbon tax is high enough), farms have an incentive to lower their carbon emissions.
The subsidy is here to make sure ["low carbon" profit + subsidy - small carbon tax] > 0
This gives an economic incentive to use the lower carbon method, funded by those who use more carbon, while not changing the end price or output.
There will be no food subsidy, however, and a rough estimate of the increase of food cost is something like 1.5%, with beef having the highest increase. Take this estimate with a grain of salt though, as it's difficult to estimate. An increase in food cost is expected though.
Of if there is an equivalent subsidy (i.e. the tax is basically redistributed) it would encourage to produce less carbon/methane intensive production
> Governments pay to keep food cheap > A carbon tax will either drive up prices or [drive up prices]
So, this is just number rearranging. The public pays either way. Ok. The comment you replied to says
> Currently the public subsidizes the agriculture industry by paying for the consequences of the industry's carbon emissions.
So the public pays in this case too. More number rearranging. Not at all clear why this makes prices increase.
So why do you think this implies prices increase? Do you think the price of carbon determined by the government is too high? Or do you just want to ignore this externality until we pay it all at once?
Either the subsidies take into account the carbon tax or they don't. If they do then it's number rearranging. Government gives dollars and then immediately takes some of them back, it's a convoluted appropriations bill. If they don't then food prices go up which is contrary to the government's goal of keeping food cheap at the point of sale.
If you want to reward reducing carbon emissions by giving additional dollars or paying for more expensive but better for the environment equipment then that could potentially be effective.
I’m personally of the opinion we should be doing far more tying together of revenue neutral taxes and subsidies within an industry. When you want to reduce a negative externality you tax that and then redistribute the proceeds equitably back across relevant actors. When you want to increase a positive externality, you equally tax actors and then distribute it asymmetrically according to the behavior you want to encourage. Or combine the two approaches to address both negative and positive externalities in one go.
These approaches allow you to be more targeted, while minimizing overall market distortions.
Whether this plays out as intended remains to be seen. I think externalities need to be priced in somehow, the issue is determining the appropriate cost. If you want the market to decide the cost efficiently there needs to be some mechanism to tie the two measures together (increased environmental quality => lower carbon tax rate). I agree however that manipulating the economics of food production is dangerous and needs to be done slowly and carefully.
"The public" isn't one person. Denmark has progressive taxes; getting rid of subsidies so prices of food increases changes who among the public pays.
> Or do you just want to ignore this externality until we pay it all at once?
> So, this is just number rearranging. The public pays either way.
"The public" isn't one person. Denmark has progressive taxes; getting rid of subsidies so prices of food increases changes who among the public pays.
> Or do you just want to ignore this externality until we pay it all at once?
I'm in favor of the carbon tax. I also think that it has complicated side effects and we should try to understand those effects, and see if we need to change something else to compensate for them.
The industry isn't "choosing carbon" but rather it's responding to the immense challenge of feeding billions affordably while dealing with slim margins and unpredictable conditions. Adjustments require viable, scalable alternatives, not just finger-wagging.
I think we focus on supporting innovation rather than vilifying an essential industry.
If the externalities of that carbon generation are priced in I end up paying more for the polluting tractor so I choose the less polluting tractor and make more money.
I can only speak to small and medium farms, but if we're talking large horsepower cultivators / row farming, It's really a choice between keep my old pre-emissions diesel/buy a pre-2006 used tractor from auctions/marketplace for 50k, or double down and lease a 250k-400k new mid-size tractor.
You make it seem like many farmers have choices, but old "dirty" tractors are the only financial options for many without signing up for indentured servitude to JD/Case/etc