Cover of MoneyWeek Magazine issue no 416, 24 December 2008

What our experts predict for 2009

24 December 2008 / Issue 416

Top tips for 2009... PLUS: 

  • Two oil services stocks to buy for the year ahead
  • Investment tips from John Maynard Keynes
  • Bill Bonner on the fall of the Anglo-American empire

Excerpt

Why bail-outs are wrong

It’s amazing how quickly a recession makes you rethink your priorities. The organic food industry has fallen on hard times. Even though total food sales rose 6% in the 12 weeks to the end of November (according to researcher TNS), sales of organic goods fell 10%. As belts tighten and purses empty, people just don’t have the cash to spend on the hand-reared, corn-fed, sung-to-sleep duck breasts that they used to consider an indispensable part of the weekly shop.

That’s bad news for organic farmers. Their produce now sells for the same price as ordinary food, but their costs are higher, as organic animal feed is dearer than the bog-standard stuff. So what’s to be done? You’d think that farmers would have to find cheaper ways to produce organic goods, or just opt out. But no. This is bail-out Britain, so instead they want to change the rules. The Times reports that organisations including the Soil Association want government approval to let farmers use non-organic feed. They could no longer label their food organic, but it would allow them a little “holiday” until the good times returned. Others in the movement are up in arms. Richard Sanders of the Organic Research Centre told the paper that proper organic farmers should be growing their own feed anyway, so the “vagaries of the feed market” shouldn’t matter.

Why am I telling you this? Because this little spat sums up what’s wrong with the government stepping in to ‘save’ any company.

Read the full editor’s letter here: Why bail-outs are wrong.