fisheries without subsidies craig k. harris department of sociology food safety policy center...

FISHERIES WITHOUT SUBSIDIES

Craig K. Harris

Department of Sociology

Food Safety Policy Center

Michigan State University

Presentation at the International Sociology Association (ISA) Research Committee 40 (RC-40) on the Sociology of Agriculture Miniconference on “An Agriculture Without Subsidies? -- Visioning the Challenges of a Market Driven Agrifood System” at Keszthely, Hungary, 21 August 2005

WHAT ARE SUBSIDIES?• Government policy or program that

maintains or increases the profitability of an economic sector– Public– Profitability in context of current economic

structure• Free market capitalism

– Economic sector will usually be industrially defined, but may be geographic• Can the target of the subsidy be the whole economy?

– Industry may be entire sector, or horizontal segment, or vertical segment

WHAT ARE SUBSIDIES?

• Government policy or program that maintains or increases the profitability of an industry

• Subsidies operate in one of three ways . . .

• Government policy or program that alters the costs of production, by altering the cost of any factor of production

WHAT ARE SUBSIDIES?• Government policy or program that alters

the costs of any factor of production

–Supply factor of production at no charge as public good

•Development of new technology

• Enable industry to comply with (new) environmental regulations

• Public efforts of discovery and location

•Development and enforcement of national and international regulations

WHAT ARE SUBSIDIES?

• Government policy or program that alters the costs of any factor of production– Supply factor of production at no charge as

public good– Reduced import duty on factor of production

WHAT ARE SUBSIDIES?


public good– Reduced import duty on factor of production– Increased import quota for factor of

production

WHAT ARE SUBSIDIES?


public good– Reduced import duty on factor of production– Increased import quota for factor of

production– Reduced taxes on real property related to

production

WHAT ARE SUBSIDIES?


public good– Reduced import duty on factor of production– Increased import quota for factor of production– Reduced taxes on real property related to

production– Reduced excise taxes on factors of production

WHAT ARE SUBSIDIES?



production– Reduced excise taxes on factors of production– Reduced income tax


the costs of any factor of production– Supply factor of production at no charge as


production– Reduced excise taxes on factors of production– Reduced income tax– Reduced cost of industry organization


the costs of any factor of production– Supply factor of production at no charge as


production– Reduced excise taxes on factors of production– Reduced income tax– Reduced cost of industry organization– Allowing non-competitive forms of organization

for purchasing inputs

WHAT ARE SUBSIDIES?• Government policy or program that alters the

costs of any factor of production– Supply factor of production at no charge as


production– Reduced excise taxes on factors of production– Reduced income tax– Reduced cost of industry organization– Allowing non-competitive forms of organization

for purchasing inputs– Government guarantee of loans for equipment

or operations

WHAT ARE SUBSIDIES?

• Government policy or program that maintains or increases the profitability of an industry

• Subsidies operate in one of three ways . . .

• Government policy or program that alters the costs of production, by altering the cost of any factor of production

• Government policy or program that alters the price received for a good or service

WHAT ARE SUBSIDIES?

• Government policy or program that alters the price received for a good or service– Controling/influencing the supply of the good

or service itself affects the price that can be obtained• Domestic quotas• Import quotas

WHAT ARE SUBSIDIES?

• Government policy or program that alters the price received for a good or service– Controls on the supply of the good or service

itself– Availability of competing goods/services

influences the price that can be obtained• Domestic quotas • Import quotas• Standards of identity• Public efforts of discovery

WHAT ARE SUBSIDIES?

• Government policy or program that alters the price received for a good or service– Supply of the good or service itself– Availability of competing goods/services

influences the price that can be obtained– Price of competing goods/services influences

the price that can be obtained• Tariffs on imported goods• Lack of subsidies for competing goods/services• Negative standards of identity


the price received for a good or service– Supply of the good or service itself– Availability of competing goods/services


the price that can be obtained– Payments in addition to sales . . . • Can increase net income directly• Can lower the selling price and thus increase the

quantity sold and thus increase net income

• Price supports, loan deficiency payments




the price that can be obtained– Payments in addition to sales– Identification and publication of novel

positive attributes• Health




the price that can be obtained– Payments in addition to sales– Identification and publication of novel

positive attributes– Allowing non-competitive forms of

organization for marketing and distribution


maintains or increases the profitability of an industry

• Subsidies operate in one of three ways . . .• Government policy or program that alters

the costs of production, by altering the cost of any factor of production

• Government policy or program that alters the price received for a good or service

• Government policy or program that maintains the ecological sustainability of the industry


maintains the ecological sustainability of the industry

–Maintain the ecological conditions of production and reproduction of the industry


maintains the ecological sustainability of the industry

–Maintain the ecological conditions of production and reproduction of the industry

–Maintain the ecological sustainability of the aquatic ecosystem

WHAT IS THE PURPOSE OR FUNCTION OF SUBSIDIES?

• Purpose or function for whom?

• Coincidence of interests


• National security



• Perpetuation of capitalism




• Foster/facilitate accumulation of wealth by particular sectors/firms– Create source, and ensure supply, of

inexpensive imported seafood for processing




• Foster/facilitate accumulation of wealth by particular sectors/firms

• Legitimation– Buffer sectors against excessive harms of

capitalist competition– Create source, and ensure supply, of

inexpensive imported fish for consumption





• Legitimation

• Keep land in farming– Environmental benefit of open space (as

opposed to urban development)





• Legitimation

• Keep land in farming

• Keep families in rural areas–Maintain rural communities– Agrarianism





• Legitimation

• Keep land in farming

• Keep families in rural areas

• Environmental sustainability– Fishery itself– Aquatic ecosystem in total

ISSUES WITH SUBSIDIES

• Domestic issues


• Domestic issues– Distortion of development• Create “excess capacity” that leads to

harvesting more than environmentally sustainable yield, and thus to depletion of fish stocks


• Domestic issues– Distortion of development– Inequity between sectors


• Domestic issues– Distortion of development– Inequity between sectors– Inequity within sectors• Between units with differential access in the

same segment• Between vertical segments


• Domestic issues– Distortion of development– Inequity between sectors– Inequity within sectors– Burden and constraint on national budget


• Domestic issues– Distortion of development– Inequity between sectors– Inequity within sectors– Burden and constraint on national budget– Relevance to national security• Function as a “reserve navy”


• Domestic issues– Distortion of development– Inequity between sectors– Inequity within sectors– Burden and constraint on national budget– Relevance to national security– Use of policy in one sector to accomplish

other purposes


• Domestic issues– Distortion of development– Inequity between sectors– Inequity within sectors– Burden and constraint on national budget– Relevance to national security– Use of policy in one sector to accomplish

other purposes– Nostalgia for lost “Golden Age”


• Domestic issues

• International issues– Impede development of raw commodities

sectors in developing countries because cannot compete on world market


• Domestic issues

• International issues– Impede development of raw commodities


– Impede development of food processing sectors in developing countries because can import processed foods more cheaply than producing them locally


• Domestic issues• International issues– Impede development of raw commodities



– Equity – level playing field in international economics

ISSUES WITH SUBSIDIES• Domestic issues• International issues– Impede development of raw commodities




– Transparency - duplicity within development establishment

ISSUES WITH SUBSIDIES• Domestic issues• International issues– Impede development of raw commodities sectors

in developing countries because cannot compete on world market



– Transparency - duplicity within development establishment

– Subsidies facilitate dumping – selling at a price that is less than the cost of production

WHY DO SUBSIDIES PERSIST?

• Subsidies are able to mobilize and attract uniquely powerful coalitions of political support that transcend party lines and political ideologies

SEAFOOD COMMODITY SYSTEM

CAPTURE FISHERIES

SEAFOOD FARMING

FRESH / FROZEN

PROCESSORS

MANUFACTURERS

LABOR

LAND

INANIMATE ENERGY

BOATS ENGINES

NETS

FOOD SERVICE INSTITUTIONS

ESTABLISHMENTS

RETAIL STORES

CONSUMERS EATERS

GOVERNANCECITIZENS

TECHNOSCIENCE

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Supply factor of production at no charge as

public good• Access to public trust (public property)

resources at no charge or only minimal charge–Most capture fisheries have access to

national seafood stocks at no charge, or only a minimal permit fee–Some nations provide coastal land for

aquaculture ponds at no charge–Some communities provide land for docks,

wharves, stages, sheds, and drying racks


public good• Maintain and enhance availability of seafood

species–Some nations support fish hatchery

programs to maintain/enhance stocks of commercially harvested fish–Some nations support fish hatchery

programs to provide seed for aquaculture


public good• Public infrastructure for common wellbeing–Many countries provide devices and

infrastructure to assist safe navigation (e.g., lighthouses, marker buoys, charts)–Some nations provide safe, accessible

harbors

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?–Supply factor of production at no charge as

public good

• Development of new technology

–Hull design for fishing boats

–Transgenic species of fish for aquaculture

–Research on optimal pond and pen management


public good

• Enable industry to comply with (new) environmental regulations

–U.S. provide turtle excluder devices to domestic Gulf of Mexico shrimp fleet, and then to Mexican and Asian shrimp fleets

–U.S. government provides by-catch observers at less than full cost on smaller vessels

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?–Supply factor of production at no charge as

public good

• Public efforts of discovery and location

–English Navy discovered large cod stocks off North America


public good

• Development and enforcement of national and international regulations

–200 mile limit of territory of national sovereignty

–Illegal gear on high seas

»Canada took enforcement actions against Spanish boats

–Defense of the harvesting fleet

»Cod wars between Iceland and U.K.

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Reduced import duty on factor of production• The riparian nations of Lake Victoria reduced tariffs

on boat motors/engines and nylon netting to foster the development of the Lake Victoria fisheries• Peru reduced the tariff on steel imports to foster the

development of the anchoveta fishery• Senegal reduced the import duty on fuel if it was

used for fishery purposes • Some countries reduce the import duties on

processing machinery in order to foster the development of a processing sector, and to capture some of the potential value added in the seafood sector

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Increased import quota for factor of production• The fish processing and manufacturing and retail

sectors in the U.S. have benefited from increased quotas for shrimp and salmon• The Norwegians were severely hurt by a reduction in

the quota for salmon imports to the U.K.

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Reduced taxes on real property related to

production• In Newfoundland, reduce local property taxes on

docks, and wharves, and stages

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Reduced excise taxes on factors of production• U.S. reduces federal tax on fuel for fishing boats

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Reduced income tax

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Reduced cost of industry organization

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Allowing non-competitive forms of organization

for purchasing inputs• On Lake Victoria, fishers were encouraged to form

cooperatives to purchase nets and other gear

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?–Government guarantee of loans for

equipment or operations• U.S. and E.U. have guaranteed loans for new

boats–Seen as a major contributing factor to excess

capacity of fleet, and thus depletion of fish stocks

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?–Government insurance of exports and

guarantees of loans to cover exports• U.S. program of insurance and guarantees

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Controling/influencing the supply of the good or

service itself• Domestic quotas– In U.S., regional fisheries councils are

allowed to set total allowable catch to approximate maximum economic yield

• Import quotas–U.K. is perceived as having a quota

(acceptable level of market penetration) for Norwegian salmon

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Availability of competing goods/services influences

the price that can be obtained• Domestic quotas –??

• Import quotas–E.U. uses food safety issues to restrict supply of

fish from Lake Victoria in order to support price for fish caught by European fleet

• Standards of identity–U.S. uses standards of identity to discriminate

against catfish from Vietnam–U.S. requires country-of-origin labeling for

seafood

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Price of competing goods/services influences

the price that can be obtained• Tariffs on imported goods–U.K. impose tariff on salmon from Norway

• Lack of subsidies for competing goods/services–??

• Negative standards of identity–U.S. requires country-of-origin labeling on

seafood

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Payments in addition to sales• U.S. alleges that Chinese and Thai

governments provide support payments to shrimp exporters that make possible the dumping of shrimp from those countries on the U.S. market

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Identification and publication of novel positive

attributes• Government supported research identified health

benefits of omega-6 fatty acids, and determined their prevalence in fish

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Allowing non-competitive forms of organization

for marketing and distribution• Various fleets in Canada have formed fishers’

cooperatives for the sale of fish

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Government policy or program that maintains the

ecological conditions of production and reproduction of the industry

• Regulate catch (total weight, age, size) and/or effort (boats, engines, gear, frequency, duration, location, time of year) in order to maintain harvestable fish stock

• Regulate activities in the biophysical environment – both fishing (gear, location, time of year), and non-fishing (shoreline and estuarine development) in order to maintain ecological conditions supporting fishery (e.g., forage base, spawning grounds, nursery areas)

WHAT KINDS OF SUBSIDIES DO FISHERIES CURRENTLY RECEIVE?– Government policy or program that maintains

the ecological sustainability of the aquatic ecosystem• Regulation of fishing activity (gear, location,

time of year) to protect endangered species –U.S. government developed spatial

restrictions to protect Steller sea lion in North Pacific– If not develop effective pattern of

restrictions, industry would have been shut down by courts for violation of Marine Mammal Protection Act

CONCLUSIONS

• With the exception of the WTO finding with respect to the Byrd Amendment, none of the restrictions on subsidies currently under discussion in the WTO Doha Round is likely to affect fisheries subsidies.

CONCLUSIONS• With the exception of the WTO finding with

respect to the Byrd Amendment, none of the restrictions on subsidies currently under discussion in the WTO Doha Round is likely to affect fisheries subsidies.

• In the U.S., contestation will continue between fisheries subsidies that benefit the producing and harvesting of fish, versus fisheries subsidies that benefit the processing and manufacturing and retail segments of the fisheries sector.

fisheries without subsidies craig k. harris department of sociology food safety policy center...

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