The historic roots of agricultural protectionism in Europe
The historic roots of agricultural protectionism in Europe are deep - going back to the 19th century. Agriculture is not special in itself but a classical example of special interests defending their rents to the detriment of collective welfare.
Great Britain went through a protectionist phase in agriculture after the defeat of Napoleon in 1815, lasting for three decades until the repeal of the Corn Law in 1846. In food-importing Great Britain, the interruption of trade through Napoleon’s Continental Blockade had driven up food prices and farmers resisted the subsequent resumption of trade in peacetime. But the historic roots of continental agricultural protectionism, I always thought, were somewhat more recent, namely the transport cost revolution of the second half of the 19th century. As it became economically efficient to transport grain by train from the US Midwest to the East Coast, and then by ship to Europe, agrarian interests defended the higher rents on scarcer European land against the international convergence of factor prices.
However, I stumbled upon an intriguing paragraph by Findlay and O’Rourke (Power and Plenty, p. 374) that dates some continental agrarian protectionism back to Napoleonic wars: ‘in 1811, faced with the growing scarcity of sugar, Napoleon issued a decree promoting beet cultivation through a variety of means, leading to a rapid growth in the number of factories. This new industry, which eventually spread to several other Northern Hemisphere countries, would soon become dependent on government subsidies and protection, since tropical producers retained important underlying cost advantages. Indeed, government production and export subsidies became so prevalent that in 1902 nine European countries … signed the first international primary commodity agreement, the Brussels Convention, which aimed at abolishing sugar subsidies. In this sector, therefore, war time import substitution had not only a long-run effect on subsequent trade policies, but also a large negative impact of tropical sugar producers, particularly from the 1870s onwards … Between 1860 and 1900, European countries increased their share of world trade in sugar from zero to 60%. … By 1902, free-market sugar prices had declined to little more than a third of their 1880 level.’
What an outstanding example of policies’ path dependence! There is a dangerous tendency in man to rationalize the past and call for continuity. Generally it feels better to say: ‘We have done what we had to do. Now times are changing and we need to adapt by building on what we have already achieved’, than to admit ‘We have seriously messed up in the past and now we need to start again with a clean slate.’ It would be preferable to be honest and concede that agricultural protectionism – including but also antedating the CAP – was a big mistake and that we need to move on to an entirely different policy targeting sustainable land use.
Another thought that comes to mind from this historical perspective: both causes of agricultural protectionism, from the early and late 19th century, are classical examples of special interests defending their rents to the detriment of collective welfare. The idea that agricultural subsidies/protectionism originated with the food shortages of the Second World War is clearly a myth. Whilst this experience facilitated the creation of the CAP, the real driving forces of the second half of the 20th century have remained the same as ever: the sectoral interest of agriculture.