Sunday, June 29, 2008

Potato and wheat

Its the international year of the potato, not the international year of the potato producer. In Lebanon, large farmers (30-100 hectares) are irrigating 24 hours a day, and the cost of fuel is $24 per 20 liters. They need about 350 liters per day for every 10 hectares. And that is NOT counting the price of groundwater (free in Lebanon, although the water table has dramatically dropped). The 3 big farmers interviewed in this article are all expecting to all go to jail or to have to sell their lands to repay their loans. They are expecting a disaster: Saudi potatoes (heavily subsidized) will enter the (free) Lebanese market at the same time as their (unsubsidized) crop. But this is only a small part of the story: Large Lebanese traders have rented the potato cold stores. They will buy the crop at low prices and sell it in a couple of months or export it for up to 5 times the price.

Now wheat farmers face another problem: the government does not allow them to export wheat for strategic reasons, but it also wont buy their crops as it always did. As there are no silos, farmers cannot stock, and they have to get rid of their crops and pay back their debts. But the mills won't buy from them at international prices: why should they, as long as the government is subsidizing imported wheat, which they buy at artificially low prices?

Isn't this textbook stuff about "how to destroy your farm sector"?

1 comment:

Anonymous said...

Sounds like law makers and administrators need to go live on a farm for quite some time.