Can Farmer Producer Organisations ((FPO) increase the incomes of small farmers as policy thinktanks and the government are suggesting?
For answering this we have to first study the economics of the farm sector in the USA. The farm gate prices offered to farmers by the market in the USA do not cover their costs of production. Therefore, the government there gives a subsidy of $20 billion to farmers. Now there are only 250000 actual farm owners left in the USA as small farmers have gradually exited due to the unviability of farming and of these 25000 are big corporations and tycoons like Cargill and Bill Gates who own hundreds of thousands of hectares of farmland. However, even after practising industrialised agriculture with high levels of mechanisation, they are all running in losses as far as farming is concerned, and are compensated to the tune of $20 billion annually by the government through various subsidies.Not only in the USA but markets worldwide do not remunerate enough to cover the costs of production of farmers and so governments provide hefty subsidies to keep farming afloat. When the likes of Bill Gates and agri-businesses like Cargill can't make profits out of farming it is farcical to expect FPOs to do so without substantial government subsidies. I have tried to get a few FPOs to reveal their audited financials so as to analyse their economic performance but have not succeeded so far 🙂.
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