|
|
 
|
New York Times seeks to rewrite U.S. farm program history (Tuesday, Sept. 10, 2002 -- CropChoice news) -- This information comes from the AGRIBUSINESS EXAMINER
NEW YORK TIMES SEEKS TO REWRITE
U.S. FARM PROGRAM HISTORY
DARYLL E. RAY, DIRECTOR, UNIVERSITY OF TENNESSEE'S AGRICULTURAL POLICY
ANALYSIS CENTER: Farm policy according to the New York Times: "Twenty or
30 years ago, farm policy actually had something to do with feeding the
country. It was designed to ensure food security by continuing the
Depression-era program to pay big grain farmers to grow food. But today
there is no need to ensure food security. The United States has been
self-sufficient in food for decades."
How's that for informed reporting?
The millions of people who read that story, which showed up August 25 on
nytimes.com, now know less than nothing about depression-era farm
policies. "Depression-era" programs were instituted and continued
because U.S. farmers were producing too much. Never in my
thirty-plus-year career has anyone but this New York Times reporter ever
suggested that farm programs were put in place "to pay large farmers to
produce more food." In fact, large farms were not even that large back
then.
Yet, it is no wonder that this reporter and many others are confused
about commodity policy. We have gone full circle. The Agricultural
Marketing Act of 1929 established the Federal Farm Board, which was
given $500 million to raise and stabilize market prices, but had no
means to stimulate demand or to control supply. During this time in the
late 1920s, the economic problems of agriculture were viewed as
transitory rather than chronic and fundamentally caused the by the
nature of agriculture and its markets.
Beginning with the triple A (Agricultural Adjustment Act of 1933),
production curtailment was a central focus of commodity legislation. The
idea was that while the ability to produce more than is needed is
exactly what we want (and largely a benefit of publicly funded Land
Grant Experiment Stations and Universities), it is important to gauge
output to the quantity demanded at a profitable price.
After all, that is what other industries do. And this process works
automatically for most other industries because if output becomes large
relative to demand, prices decline, consumers buy more, and producers
produce less. It's the magic of free markets and it works great for most
things. But for some things it does not.
Do you think that diabetics would increase the quantity of insulin they
demand just because the price of insulin dropped 20% ? I agree: not a
chance. Which means, of course, an over supply of insulin can not be
corrected from the demand side by user response to lower prices. Food is
nearly as unresponsive to price changes as insulin, not quite, but close
enough for government work.
To make matters worse, farmers do not significantly reduce acreage
planted to crop production as price declines either. Existing farmers
farm all their cropland until their equity runs out or until their
bankers believe their equity has run out. If the existing farmer goes
broke, does his plant, that is, his land, transfer to another industry
as it would if a tire company shuts down a plant? No. Another, perhaps
even more productive, farmer takes over the land. Hence, an over supply
problem of all major crops cannot be corrected in a reasonable number of
years from the production side either.
Given this pervasive understanding of the nature of crop agriculture and
its markets, commodity programs, beginning in 1933, provided crop
agriculture with mechanisms to control supply and expand demand. That
is, commodity programs did for agriculture what it could not do for
itself. It was understood that agriculture's inherent supply and demand
characteristics would cause chronic price and income problems for
major-crop agriculture as long as experiment stations and private
companies pumped out yield-advancing technology at a faster rate than
the combined growth of domestic and export demands.
Beginning with the 1996 legislation, the presumption was that the rate
of export growth would overtake or at least equal the growth in crop
productivity. Additionally, it was assumed-with virtually no
evidence-that the production and utilization sides of agricultural
markets would now respond to price declines just like other industries.
Because of these beliefs, the mechanisms to control supply or expand
demand in previous legislation were eliminated.
None of these presumptions and assumptions has proven to be true, but
rather than admit that, we have gone back to the thinking of 1928: Let's
spend government money to stabilize agriculture because depressed crop
prices and incomes are transitory not chronic problems. The circle is
complete. Now that I think of it, to have come to this point, we
collectively cannot claim to be any more knowledgeable about how
agriculture works and the purpose of commodity programs than that New
York Times reporter.
Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural
Policy, Institute of Agriculture, University of Tennessee, and is the
Director of the UT's Agricultural Policy Analysis Center.
http://www.agpolicy.org.
SOIL CONSERVATION AND DOMESTIC
ALLOTMENT ACT OF1936 HELP REMODEL
AGRICULTURE FROM AN ECONOMIC ISSUE
TO A SOCIAL WELFARE ISSUE
A.V. KREBS, THE CORPORATE REAPERS: THE BOOK OF AGRIBUSINESS: . . . . .
It was shortly after the Supreme Court in January, 1936 ruled that the
Agricultural Adjustment Act (AAA) of 1933 was unconstitutional that
Franklin D. Roosevelt submitted to the Congress the Soil Conservation
and Domestic Allotment Act of 1936.
Not only was this redrafted Act intended to side-step the Court's
objections to the 1933 legislation . . . but it was also designed to
correct the overcentralization of the AAA. Roosevelt's people pointed
out that such changes had been in the planning stage even before the
Court's ruling and that the Hoosac decision simply "precipitated as a
sudden change that which had been planned as a gradual one."
The new Act was "to promote the conservation and profitable use of
agricultural land resources by temporary Federal aid to farmers and by
providing for a permanent policy of Federal aid to states for such
purposes."
When one examines this act closely, however, and compares it with the
1933 legislation we see a fundamental policy change for American
agriculture from a price objective to an income objective. It was a
subtle change, but nevertheless an important one, for it was the first
step in effectively removing agriculture from the economic market place
and attempting to reformulate it structurally so it could be dealt with
as a social welfare issue thereby allowing the taxpayer to underwrite it
in times of need.
In the AAA of 1933 a balance between agricultural production and
consumption was to be achieved by reestablishing, " . . . prices to
farmers at a level that will give agricultural commodities a purchasing
power with respect to articles that farmers buy, equivalent to the
purchasing power of agricultural commodities in the base period."
(emphasis added)
But, in the 1936 Act that balance would be achieved, "at as rapid a rate
as the Secretary of Agriculture determines to be practicable and in the
general public interest . . . the ratio between the purchasing power of
the net income per person on farms and that of the income per person not
on farms that prevailed during the five-year period August 1909-July
1914 . ." (emphasis added)
By basing the parity ratio on the net income of persons on farms as
compared with the net income of non-farm persons rather than on the
purchasing power of farm commodity prices as compared with the
purchasing power of the non-agricultural sector, the Federal government
in fact abrogated the marketplace's moral responsibility to provide
farmers with reasonable prices for their goods.
The move in effect told farmers if they wanted to stay in business and
accept what the market was willing to offer them for their raw materials
then they must be willing to seek outside income or government help to
survive. In the name of Federal assistance for the family farm in
America this new legislation became a neat coup d'etat for corporate
agribusiness. . . . . .
When Roosevelt took office in 1933 the immediate problem regarding
agriculture was to improve desperately low commodity prices while at the
same time trying to domestically dispose of a purported accumulated
stock of farm goods. In enacting the AAA of 1933, therefore, an effort
was made to generate immediate economic relief while reducing
production.
In 1936, after experiencing historic droughts the previous three years
the focus of legislation was on soil conservation through crop cutbacks,
but at the same time continuing the effort to transfer income to
agriculture. The recession of 1937 and 1938, however, gave dramatic
evidence that more permanent solutions were necessary if agriculture was
to become a healthy part of the nation's economic life.
Some historians argue that the New Deal was overly concerned with the
problems of large commercial non-family type farms and avoided in many
cases giving genuine aid and relief to small, subsistence type farms.
This strengthening of corporate style agriculture, rather than
cooperative farming, would have two long-lasting consequences.
First, as University of the Pacific historian Donald H. Grubbs points
out, large-scale, heavily capitalized, tax subsidized agricultural
enterprises of the future, were owned by individuals and/or stockholders
who would view labor simply as an input cost, rather than as a
productive factor. That labor, capable of furnishing both management and
muscle, would thus be progressively weakened in any effort to pressure
middlemen and politicians for equitable compensation for its work.
Second, the New Deal tended to strengthen those established institutions
within agribusiness for political reasons, which in turn allowed these
same groups to solidify their own political and economic power base.
Witness, for example, the ascendancy of the Farm Bureau Federations in
farm politics while the voices of other farm organizations became
fainter and fainter.
Obviously, agriculture's role in the society was quite different in the
eyes of the New Deal than the role of labor, for which the
Administration was openly encouraging an egalitarian future.
The passage of the Agricultural Adjustment Act of 1938 thus became an
effort to forge a permanent and comprehensive legislative package that
would provide for the adjustment of agricultural production at the same
time an adequate agricultural income was being maintained.
Title I of the Act set forth new amendments to the 1936 Soil
Conservation Act; Title II authorized the Secretary of Agriculture to
intervene on behalf of agriculture in cases before the Interstate
Commerce Commission regarding freight rates on agricultural commodities;
Title III concerned loans, parity payments, consumer safeguards and
marketing quotas; Title IV concerned Cotton Pool Participation Trust
Certificates, and Title V was the new Crop Insurance Act.
The most important section of this act was Title III, which spelled out
new policies regarding production control and price supports in addition
to redefining parity prices and honing the parity income definition. As
noted above, the 1936 Act, in defining parity, referred to the "ratio
between purchasing power of the net income per person on farms and that
of the income per person not on farms." In the AAA of 1938 it reads "per
capita net income of individuals on farms from farming operations." The
goal now permanently became an income objective for farmers rather than
the long-sought after price objective.
By refashioning agriculture's major problem --- the receiving of
reasonable prices for goods produced --- into that of proper income
maintenance, the many and long-standing problems confronted by the
"family farm system" of agriculture were now no longer structural
questions, but were rather adroitly being redefined as welfare problems.
Farmers who could not survive in a changing "free market" ceased to be
corporate agribusiness's responsibility, for they now became a societal
problem, to be cared for and protected by the state. . . . . . .
--- The Corporate Reapers: The Book of Agribusiness, "Liberty vs.
Paternalism (Chapter 17)," by A. V. Krebs, Essential Books: 1992 pp
194-196.
INDIAN FOOD AND TRADE ANALYST
QUESTIONS U.S "PRECISION FARMING" AND
"EFFICACY OF THE AMERICAN MODEL OF FARMING"
DEVINDER SHARMA: There isn't a time when an educated Indian doesn't
search for answers from "America --- the dream land" for the problems
that crop up time and again back home. Whether it is hunger, sustainable
agriculture, kick-starting industrial growth, food habits, music, and of
course the successful model of economic growth, India must follow the
Americans.
No wonder, the intelligentsia, the economists and the scientists are
always desperate for opportunities to travel and return with a bag full
of answers to our multitude of problems.
The solutions to India's raging drought --- some call it the worst in
recent memory --- which haunts and ravages 12 States, too rests in the
way America has managed its crop lands. After all, the United States has
put together a drought-mitigation strategy, which has been touted as
something that India needs to follow immediately.
With hi-tech transformation, American agriculture, we all believe, has
become insulated from the vagaries of drought. They apply laser,
information technology and huge machines to crop farm land. They use
satellite data, electronics and now genetic engineering for what is
popularly called "precision farming."
For Indian agriculture, with its fragmented land holdings, subsistence
farming methods, poor productivity and the exploitation of the natural
resource base as a consequence have cast serious doubts over the
sustainability and viability of the farms.
The only escape for the country, we are invariably told by agricultural
scientists, is to follow the American model. Such an approach will
provide an impeccable drought proofing. And it is primarily for this
reason, corporate agriculture is being pushed as the way out from the
crisis that afflicts Indian agriculture.
By a strange coincidence, America too is faced at present with its worst
drought since the days of the great "dust bowl" of the 1930s. As many as
26 of the 50 American States are reeling under a severe drought, with
"exceptional drought" conditions --- the worst level of drought measured
--- prevailing in thirteen states, including New Mexico, Arizona,
Colorado and Utah.
Such is the crop damage that like the drastic reduction expected in rice
production this year in India, the U.S. wheat production is anticipated
to fall to its lowest levels in nearly 30 years. There couldn't have
therefore been a better time to study America's drought coping
mechanisms and suggest its replication in a poor developing country like
India and for that matter in South Asia, Africa and Latin America.
It comes as a rude shock. The American agriculture that we all studied
in the universities and appreciated has crumbled with one year of severe
drought. The drought proofing that we heard so much about the American
agriculture appears to be a big farce. It is a known fact that Indian
agriculture falters because of its complete dependence on monsoons. But
with the kind of industrialization that took place in American
agriculture,
and with the amount of investments made, we were always told that the
U.S. agriculture is not dependent upon rains.
"Precision farming" is the most-efficient farming method that needs to
be adopted on a mass scale. At first impression, news reports appearing
in the American media looks like emanating from a drought-stricken
village in India's hinterland. Till of course you see the dateline. You
continue to read in utter disbelief.
About 100 desperate farmers and rural residents praying for rain at the
St. Patrick parish church in Grand Rapids, Ohio. With hands clasped and
eyes cast downward, they seek divine intervention. "None of us have
control over whether it is going to rain or not," said Sister Christine
Pratt, rural life director for the Catholic Diocese of nearby Toledo
told Reuters, the wire agency. "But the people are praying for one
another and there is some hope."
Another report in the Washington Post states President George Bush was
unwilling to extend anymore finances under drought relief than the
support that can come from $180 billion farm bill he signed in May. The
president however underscored his commitment to helping farmers under
current programs, including the Agriculture Department's decision that
provides $150 million in surplus milk --- "spoiled milk," as Democrats
called it ---
to be made available for use in animal feed in four drought-stricken
states, including South Dakota.
Cattle are dying and crops are shrivelling. Fodder has become scarce,
and therefore the need to feed surplus "milk" instead. There is a
scramble for new water sources as town and city residents are urged to
stop watering lawns and washing cars. In heat-baked fields ranchers have
sold off herds rather than let them starve for lack of pasture.
"I have never seen it like this and I'm 60 years old," said Richard
Traylor, who owns 37,000 acres in Texas and New Mexico but has sold off
much of his cattle herd. Serious hydrological problems with wells and
reservoirs have emerged. Streams have gone dry. The groundwater table
has fallen drastically.
Wildfires have become more rampant, and an estimated 4.6 million acres,
has been scorched this year, twice the average acreage burnt in the
previous decade. "It is pretty dire," said Mark Svoboda, climatologist
for the National Drought Mitigation Center. From southern California to
South Carolina and from Montana to New Mexico, individuals and
industries are suffering, the news agency reports. In India, the total
drought relief demanded by the affected States is around Rs 30,000
crore. In America, the drought relief being sought is in the range of US
$ 5 billion.
In India, the government still hasn't banned watering of lawns. But in
Monticello, Georgia, south of Atlanta, all outside watering has been
banned, because creek levels were so low that the area could run out of
water in 30 to 45 days.
And like the loss estimates being worked out by the Indian Ministry of
Agriculture, the national estimates for drought-related losses are also
being prepared by the U.S. Department of Agriculture waiting for
harvesting of corn and soybean and other key crops to conclude before
loss figures are compiled. Where are the genetically modified crops that
one thought would be hardy enough to withstand the impact of the acute
dry conditions?
Lack of rain is the obvious factor for the prevailing drought in both
India and America. But let us not forget that while India receives
almost its entire rain in 100 hours during the monsoon season, it
continues to rain intermittently in America. And still, water shortages
are prompting battles between "upstream and downstream states and
between individuals and businesses in Dodge City, Kansas." In Jasper
County, South Carolina, a drop in an underground aquifer left households
without water.
Rural residents, like In India, blamed business operators for using too
much water. And as if this is not enough, North and South Carolina are
fighting over North Carolina's refusal to release water from its
reservoirs downstream.
In Colorado, Denver's water reservoir has already hit a historic low.
Colorado Gov. Bill Owens has approved a $1 million emergency drought
fund so that farmers and ranchers can buy water. "People are battling
for water like we've never seen before," said Hope Mizzell, South
Carolina's drought program coordinator. Like Rajasthan in India, which
is faced with its fourth consecutive year of drought, some areas in
America are also
experiencing their fifth consecutive year of drought.
The conditions are near those seen during the country's most devastating
drought in the 1930s --- the "dust bowl" years, when some 60% of the
United States was affected, media reports. Isn't it the same situation
that India is also passing through? After all, if a severe drought some
70 years after the 1930 "dust bowl" years still results in such a
massive devastation, isn't it time to question the efficacy of the
American model of farming?
Isn't it a fact that the hi-tech American agriculture remains as
vulnerable to dry weather as the subsistence farming systems that
prevails in India?
Why then should India follow a faulty agriculture and farming system? It
is time India realizes that it has to develop its own low-cost farming
strategies suiting the needs of the country. It is time Indian
agricultural scientists looked inwards for building up a farming system
that meets the nation's requirements and also addresses problems of
sustainability. It is time the developing countries realized the mistake
of replicating a faulty agricultural system that will further exacerbate
the economic crisis considering the massive investments required.
Blindly aping the industrial farming system would only push the
developing countries into a hitherto unforeseen crisis, much severe than
the recurring drought.
Devinder Sharma is a New Delhi, India-based food and trade policy
analyst
NEW YORK TIMES EDITORIAL DECRIES
CONFINED ANIMAL FEEDING OPERATIONS,
"THE CURSE OF FACTORY FARMS"
NEW YORK TIMES EDITORIAL, AUGUST 30, 2002: Factory farms have become the
dominant method of raising meat in America. Agribusiness loves the
apparent efficiency that comes with raising thousands of animals in a
single large building where they are permanently confined in stalls or
pens. Most of the human labor can be automated. It takes less land,
because the animals live cheek by jowl their entire lives. And it allows
the concentration of enormous stocks of animals in the hands of a few
corporations whose goal is usually complete vertical integration --- the
control of production from birth through butchering and packaging.
These plants, called confined animal feeding operations, or CAFO's, now
exist in 44 states. The question is how to minimize their harmful
environmental effects and prevent them from putting a final squeeze on
smaller farmers, especially those who raise animals in more traditional,
grass-based ways.
Factory farms have taken root mainly where zoning laws were lax or
nonexistent, or in states where citizens were prevented from filing
suits against agricultural operations. The inevitable byproduct of huge
concentrations of animals is huge concentrations of manure, which is
stored in open lagoons and eventually sprayed on farmland, though there
is usually far more manure than local fields can absorb. In such
quantities, manure becomes a toxic substance. Spills are always a risk,
as is groundwater contamination. The bigger danger is airborne
contamination of water from ammonia, which rises from the lagoons and
falls into low-lying rivers and estuaries.
A new report from the Sierra Club, titled "The Rapsheet on Animal
Factories," draws a vivid portrait of the environmental violations
caused by factory farms, many of which are owned by some of America's
largest agricultural corporations, including ConAgra, Tyson Foods,
Cargill and Smithfield Farms. What brought these factory farms to the
Sierra Club's attention was a pattern of violations that resulted in
criminal charges and fines, most often caused by toxic spills.
The federal government should at minimum serve as a neutral umpire in
the fight between big and small farmers. In the case of factory farms it
should try to control their threat to the environment through broader,
more vigorous application of the Clean Water Act, typically invoked only
in the most egregious cases. And it should never use taxpayer money to
encourage a method of farming that works against the public's desire for
open space, biodiversity and clean, non-malodorous air.
Unfortunately, the government has been putting its weight behind big
business. The Environmental Protection Agency has issued basically
toothless rules under which the states give permits to any factory farm
that comes up with a plan for handling manure, mainly by building larger
lagoons to hold it. The new farm bill that President Bush signed in May
adds further insult by paying farmers up to $450,000 apiece to help them
comply with regulations that don't mean much to begin with.
The regressive farm bill also continues the government's policy of
throwing its weight behind the already hefty industrial farms and
helping to drive smaller farmers out of business. In Iowa, for instance,
the number of hog farms has dropped from 64,500 in 1980 to 10,500 in
2000, though the number of hogs, about 15 million, remains the same. The
public's money, in this fight, is going in the opposite direction of the
public interest.
The concentration typical of factory farms extends to the genetic level
as well. The poultry and pork industries depend on just a handful of
different types of turkeys, chickens and pigs, and the beef industry is
headed in that direction too. There has been a precarious narrowing of
the genetic resources that supply most of America's meat.
The danger is that of an inverted pyramid, an enormous number of animals
all resting on the same narrow genetic base, exposing them to the risk
of catastrophic disease and requiring an inappropriate use of
antibiotics to ensure their health. Genetic diversity is no less
important in domesticated animals, like hogs and chickens, than it is
in wild animals. The best way to guarantee it is to guarantee a
diversity of farmers.
ANIMAL FACTORY FARMS REAL BENEFICIARIES
OF "U.S. DEPARTMENT OF GRAVY" SUBSIDIES
GENE LOGSDON, THE LAND INSTITUTE: Journalism practically hemorrhaged
with reports about the billions of dollars in subsidies that grain
farmers were raking in from the Department of Gravy, formerly known as
the U.S. Department of Agriculture. But I still haven't seen the whole
story reported. And I'm not talking about the fact that most of that
money goes right through the farmers to their agribusiness suppliers.
The real beneficiaries of grain subsidies are animal factories. They can
buy grain below the cost of production on the open market while the
government makes up the difference to the grain farmers. This amounts to
a huge payoff to large animal confinement operations.
Let us say you are operating a 50,000-head sow factory, like Farmland
Industries was doing in Missouri until recently. That many sows should
birth about a million pigs a year. A sow needs about five pounds of
grain a day. Five pounds of corn a day is about 30 bushels a year, or
1.5 million bushels for 50,000 sows.
Let's say that the corn cost you $2 a bushel on the market. (It is as
high as $2.35 as I write this in July, because of a drought scare, but
as low as $1.90 in the recent past.) The government sets a target price
for corn, around $2.40 a bushel currently, and pays the farmer the
difference between that and the market price, hoping to keep grain
farmers growing grain in surplus without going broke. So the animal
factory has actually
been saving about 40 cents a bushel on corn for the past few years. On
my calculator, that comes to $600,000 annually for 50,000 sows.
To feed out those million pigs to market weight will require about 12
bushels of corn per pig. That's 12 million bushels times 40 cents saved,
or $4.8 million. Nice piece of cash, and I'm not figuring in a parallel
savings in soybean meal. If you don't agree with my production figures,
use your own. The savings will still be huge. That's why there has been
such a rush to concentrated animal feeding operations, even while on all
sides red flags were being raised because of environmental pollution and
antibiotic resistance endemic to animal factories.
Now hoist another red flag. If drought fears keep the market price of
corn about at the level of the target price, animal factories are going
to take a terrific hit in feed costs. Of course the Department of Gravy
can find other ways to ladle out subsidies to them, like the one that
the giants of animal factoryland --- Tyson, Perdue, Cargill, Smithfield,
Murphy Farms, etc. --- managed to work into the new "farm" bill.
A little-publicized feature allows the Environmental Quality Incentives
Program to pay animal factories as much as $450,000 each for "nutrient"
management. "Nutrient" is a euphemism for manure and dead animal
carcasses. Formerly, EQIP was not allowed to fund "nutrient" management.
Quietly, both the House and the Senate, full of foaming mouths who get
elected by preaching less government, slipped the change into the bill.
Hey, we're lucky. The animal factories were asking for $1 million each.
And then, just to make sure that they could take full advantage of the
Department of Gravy, the factory food monopolists got Congress to drop
the proposal to ban meatpackers from owning livestock. This happened
even though the ban had passed as an amendment twice in the Senate, and
even though bipartisan support for it was growing in the House.
Meanwhile, how much subsidy do farmers get for raising livestock and
hogs on pasture, the environmentally cleaner and less costly way? None.
Well, to be exact, they miss out on most but not all of Gravytrain No. 1
because they feed much less grain. They miss out on all of Gravytrain
No. 2 because their animals are spreading the manure for free as they
graze and do not need any "nutrient" management.
What gripes me about all this is not so much the subsidies. The
situation in agriculture is so impossible right now that government
gravy may be the only answer, all things considered. But I find
downright putrid the way so many agricultural economists continue to
claim that large animal factories are the most efficient way to produce
meat. They can only say that by blithely ignoring the true costs
involved.
Oh, by the way. Farmland Industries? It went broke anyway.
Gene Logsdon is a member of The Prairie Writers Circle, a project of The
Land Institute, a Natural Systems Agriculture research organization in
Salina, Kansas. He is the author of more than 20 books, including The
Contrary Farmer. He farms near Upper Sandusky, Ohio.
THIRD WORLD COUNTRIES SEEK
TO END U.S. AND EU FARM SUBSIDIES
"WHILE THE BIG COUNTRIES ARE FIGHTING,
THE REST OF US ARE SINKING,
WE HAVE NO WAY TO FIGHT BACK"
LAURIE GOERING, CHICAGO TRIBUNE: Over the past decade, as the United
States and other wealthy nations have pushed for free trade and open
markets worldwide, the developing world has found itself in a pinch.
Poorer nations, responding to the world call, have dropped their trade
barriers at a rate three times that of the developed nations, the United
Nations reports. But when they try to sell their own agricultural
products --- the backbone of many Third World economies --- they cannot
find buyers.
Largely that is because, in an effort to protect their own farmers, the
leading industrialized countries have boosted subsidies and tariffs on
agricultural products by more than 20% during the past decade, say
United Nations officials and international trade groups.
U.S. officials charge that Europe is the worst offender, spending up to
$62 billion a year on domestic price supports, compared with up to $19
billion in the United States. Japan spends up to $31 billion a year.
The United States, however, is hardly moving to lift barriers. The 2002
U.S. farm bill, passed earlier this year, boosted farm subsidies and has
been criticized in Johannesburg as a "major setback" to correcting
market imbalances.
Subsidized U.S. corn and European wheat, sold at prices below production
costs, have flooded into African and Asian markets, undercutting local
farmers. In the past ten years, 30 million farmers have gone out of
business around the world, trade analysts say. Third World leaders, long
assured that free trade was the surest path out of poverty, are
disillusioned --- and furious.
As the U.N. World Summit on Sustainable Development focused . . . . on
agricultural policy, dozens of environmental, trade and agriculture
ministers from developing countries demanded an end to farm subsidies in
wealthy nations, calling them hypocritical and a key roadblock to
economic progress around the world.
By warping market prices, subsidies are "imperiling the very survival of
producers in West Africa," said Benin's environmental minister, who laid
out the case of 12 million West African cotton farmers who cannot find
markets for their crops.
And in Zambia "we've liberalized our markets and as a result our markets
have been turned into dumping grounds," complained one of that nation's
ministers.
The focus of the ten-day Johannesburg gathering is implementing the
environmental and social promises made at the 1992 Rio Earth Summit and
moving the world toward sustainable development. But in the early days
of the summit, trade disputes have increasingly crept to the forefront.
In large part that's because trade and development have become
inextricably linked as policy makers have pushed free trade as the
fastest and surest route out of poverty. Now that assumption is being
questioned by poorer nations that find the doors to the world's biggest
markets --- and to their own development --- closed.
"Poor people cannot escape their level of poverty because of subsidies
in the developed world," charged Ian Goldin, a director of development
policy at the World Bank. While developing nations face plenty of other
problems in selling their goods, from a lack of roads to get them to
market to inconsistent supply, agricultural protectionism by wealthy
nations is "particularly disappointing," Goldin said.
Agricultural subsidies in richer nations were never intended to hurt
poorer countries. Europe, Japan and the United States have over the
years adopted agricultural trade barriers largely to protect themselves
from each other. Europe has a long tradition of supplementing the income
of its farmers; the United States has in turn authorized price supports
for key crops and subsidized exports to ensure food security in the
country, keep farmers in business and make its products competitive.
The developing world, however, stuck between battling giants, has
unfortunately taken most of the blows.
While poorer nations are not necessarily the most efficient producers of
food, their lower labor costs should help make their products
competitive. But subsidies spur overproduction in wealthy nations and as
the excess grain floods world markets, prices collapse, leaving
unsubsidized farmers unable to compete.
"The fact is the United States is dumping products into world markets
below the cost of production, which drives farmers all over the world
out of business," said Kristin Dawkins, vice president of the
Minneapolis-based Institute for Agriculture and Trade Policy.
Worst of all, the subsidies don't do much to help small U.S. farmers,
who operate at the fringes of bankruptcy. Instead, "the subsidies
effectively go to highly capitalized farmers and larger corporations,
the Cargills of the world," she said. "The system uses U.S. taxpayer
dollars to subsidize international traders who are grabbing more and
more market share and driving small producers out of business."
Developed-world agricultural subsidies today total between $300 billion
and $350 billion a year, more than the entire gross national product of
sub-Saharan Africa, and six times the amount wealthy countries spend on
development aid to their poorer neighbors.
The Food and Agriculture Organization of the United Nations is urging
wealthy countries to divert $8 billion a year, a small percentage of the
money they spend on subsidies, to fight hunger in the developing world.
The Bush administration has proposed eliminating export subsidies over
five years and eventually phasing out domestic price supports
altogether. But the U.S. says it will do so only if Europe goes along.
"We're not willing to do it unilaterally," one senior U.S. government
official said . . . . .
In July, the administration said it was prepared to seek cuts in farm
subsidies as part of a new global trade agreement and called for global
tariffs on farm products to be cut. But President Bush signed into law a
new farm bill in May that is expected to cost $190 billion over ten
years, $83 billion more than the cost of continuing current programs.
Lifting the subsidies will be tough. In both Europe and the United
States, agricultural corporations and farmers are a powerful voting
bloc, and producing food at home is a proud tradition.
Intermediate measures, however, could help. Dawkins' group advocates a
worldwide ban on dumping agricultural products at prices below the cost
of production, which would effectively curb U.S. and European
overproduction of subsidized food, increase the competitiveness of
products grown in developing nations and help ensure food is produced
where it is needed rather than where it is not, a key to easing global
hunger.
U.S. officials admit that removing agricultural trade barriers would
increase developing-world exports by a quarter, raise agricultural
commodity prices by 12% and boost by $21 billion a year the economies of
developing nations.
Poor countries, hard hit by falling prices for minerals and other raw
materials, and unable to expect much in the way of new international
aid, say they need those improvements now. "While the big countries are
fighting, the rest of us are sinking," said Chee Yoke Ling, a spokesman
for the Third World Network, a nonprofit international network of
organizations and individuals involved in issues relating to
development.
"We have no way to fight back."
| |
