IMF against farm subsidies

The world economy would gain an annual boost of 128 billion dollars if lavish farm subsidies were scrapped, the IMF said in a report released in late September, report AFP.

Industrialized nations spent more than 300 billion dollars last year on agricultural subsidies – six times the total government aid to developing countries, the International Monetary Fund noted.

“While agricultural support benefits some farmers in industrial countries, it can actually hurt others by increasing the prices they pay for inputs and depressing world prices for those who receive relatively little support”, the fund’s report said.

Furthermore, it imposes substantial costs on consumers and tax payers in industrial countries, and on commodity producers in the rest of the world, many of whom are poor. Support to farmers in rich countries averaged 31 percent of farm income in 2001, said the IMF report, which was contained in its twice-yearly World Economic Outlook. The level ranged from one percent in New Zealand to 61 percent in Switzerland.

“If agricultural support in industrial countries were eliminated tomorrow, there would be significant gains, both for industrial countries themselves and for many countries – particularly commodity producers – in the rest of the world”, the report said.

Calculating the effects, it estimated that industrial countries would increase their real income by 0.4 percentage points of gross domestic product, or 92 billion dollars. Most gains would go to the big producers, Australia, Canada and New Zealand, and to those with the steepest subsidies, such as the European Union, Japan, South Korea, Norway and Switzerland.

Developing countries also would gain from the dismantling of rich nations’ farm subsidies. But they could reap a richer benefit by erasing their own restrictions, the IMF said. “If all countries removed their agricultural protection, all regions of the world would gain 128 billion dollars, with about three-fourths of the gains accruing to industrial countries and one-fourth of the gains to developing countries”.

While noting some reductions in subsidies worldwide, the IMF criticized the US farm bill passed in May, which distributes 180 billion dollars to farmers over 10 years.

Ford to stop EVs

Ford Motor Company has said it will stop selling “Think” electric vehicles in the United States at the end of the year because of lack of demand, reports AP.

“We’re very disappointed about it, but the market for the battery-operated vehicles has turned out to be a business that we really can’t sustain”, Ford spokeswoman Sara Tatchio said.

According to her, the automaker plans to focus on other technologies for cleaner-running cars and trucks, including hydrogen fuel cells and the gas-electric hybrid SUV Escape, due to debut in late 2003. Ford began selling electric only “Think City” small cars in Europe in 1999 and began offering “Think Neighbour” low-speed vehicles, which resemble golf carts, in the United States last year.

Tatchio said the company has sold 1,600 Neighbours and donated 500 to national parks in the United States since its debut. The City has sold 1,000 units, she said.

Growth Around Nepal

Both of China and India, the immediate neighbours of Nepal, have reported healthy growth in their industrial output releasing the latest data for the performance of their industrial sector.

According to a report by Press Trust of India, quoting quick estimates of Central Statistical Organization, July 2002 recorded a 6.4% growth in industrial sector in India as compared to 2.6% in the same month last year. The achievement was attributed to 5.7% growth in manufacturing sector which had recorded 2.9% growth last year.

In China, the industrial output rose by 12.7% in August 2002 from a year earlier on the back of surging production of autos and telecommunication equipment, reported AFP from Beijing quoting China’s National Bureau of Statistics.

Meanwhile, IMF is reported to have forecast a growth rate between 3.5 and 4.0 this year for Sri Lankan economy. But it has also warned that the outlook was fragile and depended on whether the recently established peace in the wartorn economy will be sustained.

The news from Japan reports quoting the cabinet office that the GDP of Japan rose 0.6% in the three months to June from the previous quarter. In the annualized basis, the Japanese growth rate was 2.6% in April-June quarter.