Governments pay to keep food at the cheapest point possible to ensure stability. a fed population doesn't kill their governments. Agriculture is not a regular industry; its a national security issue
Farming is not a profitable endeavor. There would be a lot less financial advisors in the world otherwise. A carbon tax will either drive up prices or reduce suppliers, increasing prices. Reducing farmland will require more efficient methods which will also drive up prices
The result will be the public pays more for food, not the agriculture industry makes any more or less money. It will require more imports which will come from countries with less regulation and more exploitable resources.
We've seen the story of disruptions to the food supply play out before. The reality is this is a more dangerous gamble than most people realize.
Denmark has a population of 5.8 million and currently produces enough to feed 15 million. There’s no need for imports because of 15% less farmland. Besides, all this export only contributes about 1% of GDP. So it’s not economically important either.
One can even argue that the reduction in environmental and climate impact will create room for other industries that already are carbon-taxed.
1. Agriculture is not a machine like consistent harvest giver, especially with more climate change (that’ll happen regardless of emission slowdown), it is good to have produce enough to feed 5.8(=6 million approx), a bad harvest can bring that 15 million down to 7 million very fast.
2. All produce is not of same quality, 15 million people’s produce will probably only produce 11-12 million produce that is marketable in stores after transporting it
3. Economies of scale matters, going from 15 million people’s produce to a 10 or 8 million produce doesnt just means a linear cost reduction, the price per unit for crops also rises, which can potentially make it hard to compete with other agro hubs in the Eurozone, dwindling Denmark’s independent source of food supply over time.
Denmark does not have to stand alone thanks to the EU.
That may change in the future if the populist parties gain more traction in the eastern EU.
As you point out, there are several valid reasons to subsidise farming. But then subsidise farming, not carbon emissions! And while you are at it, use those subsidies to encourage farming that is sustainable, both for the climate as well as biodiversity.
And that can be sustained in international crisis: farming that is a house of cards highly dependent on international supply chains of fertilizer, feedstock and fuel won't help you all that much under blockade.
No-one mentions this when food security is discussed. The farmers here in NL use the security excuse too but absolutely no-one mentions that their food production is directly dependant upon the import of magnitudes higher tonnage of feedstock - soya from Brazil - than the meat / dairy it produces. Then I'm not even looking at the fertilizers / chemicals which are also imported.
Isn't that what they are doing? They subsidize the farmers separately, and charge a carbon tax separately. Even if those are initially the same amount you would think that the incentive structure would encourage farmers to shift to less c02 methods, as that improves profit?
What's the point of a carbon tax if it's balanced by a government subsidy?
Edit: Genuinely curious what I'm missing..
Low carbon farms balance would be: "low carbon" profit + subsidy - small carbon tax
High carbon farms balance would be: "high carbon" profit + subsidy - high carbon tax
If ["low carbon" profit - small carbon tax] > ["high carbon" profit - high carbon tax] (e.g. if the carbon tax is high enough), farms have an incentive to lower their carbon emissions.
The subsidy is here to make sure ["low carbon" profit + subsidy - small carbon tax] > 0
The subsidy could be independent from the carbon emissions (e.g. by subsidies on the produced goods) while the carbon tax isn't, effectively creating an incentive to produce in a less carbon intensive manner.
If I can make 1 unit of food for €50 and use 50 tons of carbon, or make it for €60 and use 10 tons of carbon, a carbon tax and food subsidy would allow me to sell that €60 low carbon food for €50 and force me to sell the high carbon food for €60
This gives an economic incentive to use the lower carbon method, funded by those who use more carbon, while not changing the end price or output.
Just to provide the numbers: in 2030, a tax will be introduced of 120 DKK (~16€) / ton CO2e, which linearly increases each year until it reaches 300 DKK (~40€) / ton CO2e in 2035. However, the farmers can get subsidies for changing their practices and adopting new technologies, in order to reduce their emissions. I.e., the government will give you money to change your production, so you can minimize the carbon taxes you have to pay. There are more technicalities to how it works, but that's the gist of it. The important part is that the goal is to transition to new technologies and production methods, which reduces emissions per unit food produced.
There will be no food subsidy, however, and a rough estimate of the increase of food cost is something like 1.5%, with beef having the highest increase. Take this estimate with a grain of salt though, as it's difficult to estimate. An increase in food cost is expected though.
You tax the carbon (something you want less of) and you subsidise something else you want more of. So you might end up with the average farmer not having a change of costs, but still disincentivising stuff we don't want e.g. carbon emissions.
I am not sure how this responds to the comment you are actually responding to. You say,
> Governments pay to keep food cheap > A carbon tax will either drive up prices or [drive up prices]
So, this is just number rearranging. The public pays either way. Ok. The comment you replied to says
> Currently the public subsidizes the agriculture industry by paying for the consequences of the industry's carbon emissions.
So the public pays in this case too. More number rearranging. Not at all clear why this makes prices increase.
So why do you think this implies prices increase? Do you think the price of carbon determined by the government is too high? Or do you just want to ignore this externality until we pay it all at once?
> So, this is just number rearranging. The public pays either way.
"The public" isn't one person. Denmark has progressive taxes; getting rid of subsidies so prices of food increases changes who among the public pays.
> Or do you just want to ignore this externality until we pay it all at once?
> So, this is just number rearranging. The public pays either way.
"The public" isn't one person. Denmark has progressive taxes; getting rid of subsidies so prices of food increases changes who among the public pays.
> Or do you just want to ignore this externality until we pay it all at once?
I'm in favor of the carbon tax. I also think that it has complicated side effects and we should try to understand those effects, and see if we need to change something else to compensate for them.
We should simply ignore the externality all together because we're all paying for it anyway.
Either the subsidies take into account the carbon tax or they don't. If they do then it's number rearranging. Government gives dollars and then immediately takes some of them back, it's a convoluted appropriations bill. If they don't then food prices go up which is contrary to the government's goal of keeping food cheap at the point of sale.
If you want to reward reducing carbon emissions by giving additional dollars or paying for more expensive but better for the environment equipment then that could potentially be effective.
Trying to reduce a negative by pumping resources into a positive rarely works out as expected and often has surprisingly distortionary effects. (see ethanol and corn production in the USA)
I’m personally of the opinion we should be doing far more tying together of revenue neutral taxes and subsidies within an industry. When you want to reduce a negative externality you tax that and then redistribute the proceeds equitably back across relevant actors. When you want to increase a positive externality, you equally tax actors and then distribute it asymmetrically according to the behavior you want to encourage. Or combine the two approaches to address both negative and positive externalities in one go.
These approaches allow you to be more targeted, while minimizing overall market distortions.
It’s not exactly number rearranging, even if the government increases subsidy payments to offset the cost. E.g. say gasoline costs twice as much per gallon due to a carbon tax, but subsidies are increased proportionally to offset the cost increase so that food prices remain constant. This still creates an incentive for farmers to use “cleaner” forms of energy as the ones that do will increase their profit margins. Ultimately the increased subsidy is a burden on the tax payer, but in a more narrow sense carbon producing farms would be subsidizing some of the costs for farms that produce less carbon.
Whether this plays out as intended remains to be seen. I think externalities need to be priced in somehow, the issue is determining the appropriate cost. If you want the market to decide the cost efficiently there needs to be some mechanism to tie the two measures together (increased environmental quality => lower carbon tax rate). I agree however that manipulating the economics of food production is dangerous and needs to be done slowly and carefully.
give the carbon tax revenue to consumers to offset that the price of food now reflects it's true cost. people can still afford to eat and food producers would actually be incentivized to reduce emissions.
Specifically on reducing farmland. Denmark is intensly cultivated, and the reduction targets the lowest yield land that for various reasons were reclaimed over the last two centuries. Using the high yield land more efficiently is intended.
> A carbon tax will either drive up prices or reduce suppliers, increasing prices
Of if there is an equivalent subsidy (i.e. the tax is basically redistributed) it would encourage to produce less carbon/methane intensive production
So, what are you proposing? Just do nothing about climate change, as we have done before, and have worse social consequences in the near future rather than now? Denmark is more at risk from rising sea levels than other countries (https://cphpost.dk/2023-02-17/news/rising-sea-levels-threate...), so they want to do something about it.
The food needs to be produced somewhere. If denmark exports, then the food will be missing somewhere. So you do not fix "climate change". You only fix local effects of agriculture. I am not saying it is good or bad. But it def makes denmark poorer.
The idea that each country must culture every product to assure the supply chain is outdated by a generation in Europe.
A lot of those vegetables are produced yet in Almeria. A lot of milk that goes to Italy is produced in France. EU has this issue checked from the first minute and created a supranational agriculture system based on quotes.
Yes, and then somene comes and says, we produce too much beef... well yeah, somebody else will have to do it.
not OP, but how about some technology innovation instead of governance and taxation? the effect of taxing farmers as though they were some kind of vanity industry will be similar to what nationalizing farms has done in prior schemes like this.
it creates a national dependency on imported food from countries that do not bankrupt their farmers, and suddenly (shocked!) the entire Danish food supply crosses the borders to arrive and is then subject to federal management. this latter case is of course the purpose, and climate change is merely a pretext. I hope european farmers are able to organize a revolt.
> how about some technology innovation instead of governance and taxation
The history of solar, EVs, batteries etc. show these work hand in hand.
Why invent a way to capture methane from slurry, or form a business to sell that idea to farmers if they're allowed to pollute for free?
if methane were valuable, it would already exist, and there are a number of techs in development now: https://horsesport.com/magazine/farm-management/heating-with...
if you have a problem with farmers, maybe you should just eat less?
What technological innovation do you think farming could adopt, that it hasn't already...? They don't operate with simple machinery. They regularly use some of the most complicated systems that mankind can build, such as satellite systems, chemical analyses, etc.
Governance is needed, where progress does not occur naturally.
invent, not adopt. that's the difference between government and industry, government doesn't invent anything except problems to manage.
reality is, governments want smallholding farmers out of the business and to replace them with agribusinesses because it's a process of de-kulakizing their subjects. it has nothing to do with science or environment at all. I think maybe a war over this stuff will give us the reset we need.
Governments invent things, endlessly. The infrastructure you are communicating with me was invented by a government research department. The encryption we are using to ensure we're actually communicating with HN, is a government research project.
Similarly, the solar systems on most farms, was a government research project. The satellite recon to analyse the farm - provided by the government to all farmers, including the tiniest hobby farm, is 100% government researched, deployed, and maintained.
Governments do a lot more science than you are giving them credit for.
How will converting farmland to forests help with climate change? It seems like it would have no particular impact or make the situation worse w.r.t. climate change for Denmark. If it is a good idea I'd imagine it would also be a good idea if the climate was not changing.
Denmark has no ability to impact global CO2 emissions at all. In fact nobody does except ironically the Chinese and their industrial-growth-at-any-cost coal based approach from the 90s and 00s.
Land use is one of the big topics covered by the IPCC:
> how will converting farmland to forest
Farming is very carbon emission intensive if the farmland is reclaimed wetland. Converting the farmland to forest and stopping draining (making it more wet again) can definitely reduce carbon emissions significantly.
> Denmark has no ability to impact global CO2 emissions
This is such a tiresome and logically hollow argument. Denmark has the ability to reduce a fraction of the worlds emissions. The size of the fraction is proportional to the size of their emissions. Every country has a responsibility to reduce it's per capita emissions to sustainable levels. China has lower per capita emissions than most richer countries.
Note that China has no ability to impact global CO2 emissions either.
Let’s split China population in k Denmark-sized groups, plus one smaller-than-Denmark reminder.
None of the k groups has any ability to impact global CO2 emissions (same as Denmark).
We can reasonably assume that a smaller group has even less ability to impact global CO2 emissions than a bigger group. Hence the smaller-than-Denmark reminder has no ability to impact global CO2 emissions either.
Thus China is made of groups that have no ability to impact global CO2 emissions either. And therefore China as a whole has no ability to impact global CO2 emissions. (Otherwise at least one group within China would have to impact global emissions and we just saw that it isn’t possible).
This is known as the CO2 impossibility theorem, loosely based on Arrow’s concept of “(in)decisive” set.
Your logic is wrong - a Denmark sized group of Chinese people is probably all it takes to operate their solar panel producing factories.
The reason Denmark can't do anything isn't because there are few of them, it is because Denmark isn't a significant industrial cluster for energy technology and innovation. For example, India has more people than China and they aren't in a position to do much unless there is some sort of tech breakthrough that hasn't made it to my notice.
Denmark basically invented modern wind power and still makes a big chunk of it (though China has caught up in that area recently).
Fair enough, but the major point still stands - Denamrk's industrial policies that enable Vestas are the only way they can have a significant impact on climate change. Farmland conversion does nothing; it isn't moving the needle on what is economic and industrially scaleable. Everyone still needs to eat.
Certainly you are just demonstrating the opposite. Everyone has the ability to impact global CO2 emmissions.
We certainly need international coordination or actors with a minimal set of morals to achieve it.
I think he was trying to demonstratea point with sarcasm and a group of one with him in it
> Everyone has the ability to impact global CO2 emmissions.
I'm afraid most people are smaller-than-Denmark groups, and thus unable whatsoever to impact global emissions. It's just math.
1e-10 is reeeallly close to zero, therefore 1e10 * 1e-10 is also close to zero.
That's what your math sounds like to me.
His math is x ~ 0, hence x / 10 = 0, hence x = NaN.
The starting point is just wrong that Denmark can't play a role when it comes to climate change. Denmark can make a change. It is like saying that when voting that no individual vote or county matters, when the opposite is true: every vote matters in the same way.
Every kg CO2 saved is good... (obviously we should strive for the most economic way to save CO2).
Isn't it true?
f = lambda x: (1/x) * x
f(1e309)
(So I guess Denmark is at least 1e309-sized in some metric).
I wouldn’t be surprised if the masses interpret these changes as “let them eat cake” given that inflation is already hammering the middle and lower classes.
in Denmark, inflation is currently running at a 1.6% annualized rate, as of the most recent reading[0]. This is the full basket inflation rate, including volatile categories (food and energy). Core inflation is even lower, with the latest reading at 1.3% (annualized) in October 2024. Food inflation is, of course, volatile. It currently sits at a moderately elevated level of 3.9% (October 2024, annualized).
Food prices declined earlier this year for two consecutive months, though that will be a minor consolation after the significant food price inflation in 2022 and persisting, though at a slower pace, through 2023.
All of that to say, "let them eat cake" mentality is unlikely in a country where they have consistently ranked at the top of a world happiness index. Additionally, while I'm not well versed in Danish politics, I am under the impression that the Social Democrats have responded much better to the mass immigration that has been an ongoing issue for many parties throughout Europe. I think this is indicative of a party that adapts rather more quickly to the consequences of their previous policies and is less ideologically stubborn - at least on some issues.
1.6% is the change in the CPI. The actual inflation is about 8%. There was a huge change in the CPI in 2022 or 2023, mostly attributed to sharply higher cost of energy.
I don't think you understand the numbers I listed. Read what I wrote again and try to think about the parts you don't understand, look them up, then read again.
Economists look at inflation on a month/month or year/year basis. This is not an accident as it purposely ignores the destructive cumulative effect of inflation.
Individuals, by contrast look at the cumulative effect of inflation. If inflation runs hot for several years and then comes back to a moderate level, prices don’t go down regardless of what economists would have you believe. The effect of inflation has memory.
Economists look at inflation in many, many ways. I don't think anyone that's reasonably well informed, especially economists, misunderstands the cumulative impact of price changes.
Economists that make monetary policy decisions look at recent inflation trends + projected inflation because they are tasked with price stability, which requires them to often respond to shocks well outside their control (war in Ukraine, massive government spending, tax cuts, covid-19 pandemic, etc.)
I was trading and researching fixed income and inflation markets (and implementing in multi-billion dollar portfolios) years ago when you had inflationistas claiming the Fed was going to cause double digit runaway inflation. At the same time, you had people claiming the Fed was not doing enough to support markets.
No matter what monetary policy makers do, it will be pretty much universally mocked by pundits and especially anyone that wants to talk their own book.
Academic economists don't really focus much on any particular reading of inflation, unless perhaps they have their own axe to grind about how it is measured or responded to.
Monetary policy can't change the past, which is why they evaluate current and expected inflation, not what happened in two years ago. Just because prices increased dramatically in 2022 does not mean the Fed or any other central bank should aim for deflation.
Denmark is a net exporter of food. In other words a net importer of agricultural pollution. So they could refice food exports without domestic political consequences. In theory.