The French government wants to support the labor force. Since the 1930's, the percentage of french people living and farming the land for a living has decreased from 50 percent to about 6 percent. This translates into a job loss. Since 1970, there have been 1 million farm jobs lost. The number of farms has decreased from 1.6 million to less than 900,000. Before the end of the 1990's another 200,000 to 400,000 farms are expected to be out of business. The farmer, in France, has not had an increase in real income since 1970. During this same period, non-farm incomes rose approximately 50 percent in France. This is true despite the fact that productivity quadrupled in the last four decades. France is a socialist country and as such does not like to see unemployed workers. Continuing to keep the labor force working is a public good which is not counted in the cost of production of farm products.

The agricultural section of the economy of France accounts for four percent of France's GDP. France agricultural exports account for 16 percent of all of France's exports. This is a significant proportion. One sixth of all voters in France have ties to the agricultural sector. It is not wise to be a politician in France and upset the farm lobby. A major reason for the farm sectors prevalent place in the French

Inefficiencies in the marketplace distort the value of the product. In this case, the subsidy distorts the point of equilibrium where cost and price are equal. The farmer is willing to plant more crops than the community is willing to absorb at his cost of production. The government by supporting the higher prices paid to the farmer encourages the farmer to increase his production. The consumers are not willing to purchase the available supply of agricultural products at the artifically high government set price. Therefore a surplus develops.

The increased production of farm products has associated public costs. The increase in production required an increase in the use of chemical fertiliser, water, land, and labor. These inputs could have been used for other product which the consumer might have preferred. A lowering of the quality of the environment also results which is a public cost. No one individual is able to bear the cost of the environmental degradation. The over-use of chemicals, and the use of marginal land for fields with low productivity both contribute to the environmental cost by increasing the level of pollution.

Common Agricultural Policy needs to be reformed along the lines of a free trade policy. The current policy advocated subsidies which cause inefficiencies in the global marketplace for farm related goods. Decreasing the amount of subsidies that farmers receive will remove the incentive to over produce. Over time, decreasing the amount of goods that producers receive direct subsidies for will lower the budget for farm subsidies. Production will be reduced and the natural market equilibrium will become established. Implementing a policy of direct supports can ease the transition into a full free market economy in the agricultural sector. The fear that the French farmers have that they will be ruined by falling prices is possible