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<pre>I am always interested to hear people say that the European olive oil
industry could not survive without subsidies. That is certainly the
viewpoint of many European growers. As an Australian living in Italy I get
both points of view. The Europeans believe that prices would collapse to the
lowest level. The Australians believe that all the Europeans would go out of
production and prices would rise .. and rise and...rise...


Obviously there would be some rationalisation at the bottom end but
before the European industry is written off as hopeless remember that almost
all the top priced olive oil, wine, cheese, ham, vinegar and a host of other
agricultural products come from Europe. Has anyone out there in the "New
World" considered that they might be doing something right?

Of course the subsidies do help the production of low grade commodities.
The greatest proportional subsidy goes to the "barely edible". While it
makes good politics to rant and rave about the unfair competition any grower
in the "New World" who aims to produce at the "barely edible" level of
quality has rocks in his/her head.

An important benefit of subsidies for those outside Europe that goes
totally unnoticed is that it distracts local growers from producing at the
middle level of quality. It creates two classes. Top producers who survive
with virtually no subsidy and bulk producers who aim for the barely edible
market where the subsidy is a large part of the final income. This leaves a
nice gap in the middle for New Zealand and Australian wine and many other
products - at least for those clever enough to market them.

Cheers Brian Chatterton
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