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Summary:
Economic trade theories show that rational governments would not subsidise their farmers but would support free trade and ensure that comparative advantages were exploited. Despite this, governments all over the world choose to subsidise their agricultural sector. We must recognise that agricultural food production is different from other types of production. No country can afford to put an end to the environmental, cultural and national identity issues associated with domestic food production. International systems for trade and economic cooperation must take into account that conditions vary greatly between countries, and room must therefore be left for domestic adjustments that suit nationally defined goals, values and conditions. Norway has particularly challenging conditions for agricultural production with a harsh climate and low population density Still the multifunctional values of agricultural production are goals in themselves and in certain cases these values cannot be produced without agricultural production itself. Theorists must take this into account in developing useful theoretical models that will help us politicians develop good policies. This is also true for values and costs that future environmental challenges, like climate change, will offer. Economic researchers are faced with the challenge of including both non-tradable values as well as environmental concerns when shaping future economic models.
The author is Minister of Agriculture and Food in Norway.
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