The Final Call Online Edition



WEB POSTED 10-08-2002

















U.S. subsidies help big business, but crush farmers from developing countries

WASHINGTON (IPS)—New U.S. agricultural subsidies benefit big business while impoverishing poor  farmers from developing countries and they contradict advice from global institutions like the World Bank and the International Monetary Fund (IMF), says a development group.

"While the United States calls for

‘trade, not aid’ and elimination of subsidies and tariffs, the 2002 U.S. Farm Bill, which boosts spending 80 percent over the 1996 bill, is an example of its policy of ‘do as we say, not as we do,’" said a new report by U.S.-based Food First/Institute for Food and Development Policy.

The report, "Giving Away the Farm: The 2002 Farm Bill," details the law’s impact on small family farmers, trade, and agricultural sustainability and accuses international trade institutions of hypocrisy on the issue of subsidies.

The bill provides two-thirds of $190 billion in new money over the next 10 years to the largest U.S. agribusiness farms that grow export crops such as cotton, rice, soybeans, and wheat, it adds.

"Though American taxpayers foot the bill, the real cost will be borne by family farmers around the world," said the report.

The report came days ahead of annual meetings of the World Bank and the IMF in Washington to discuss a review of debt relief efforts, global trade issues, ways to improve aid delivery and the trade subsidies of industrial nations.

The report also coincided with growing demands from the two international organizations that the world’s rich countries dump their subsidies and that poor countries liberalize trade.

IMF Managing Director Horst Koehler told the Council on Foreign Relations, a U.S. think tank, that it was near impossible for poor countries to escape poverty while wealthy nations maintain their massive agriculture exports subsidies.

"If there is not a substantial change in the industrial countries, I cannot see these countries coming out of poverty through growth," Koehler said Sept. 19.

The same day, World Bank Vice President for Operational Policy, James Adams, told reporters that one of the Bank’s main goals during the coming meetings is to stress to rich countries that they need to cut their subsidies if poor countries are ever to develop.

The World Bank said that rich nations spend some $300 billion on farm support compared to $50 billion on overseas development assistance.

The United Nations Development Program estimates that U.S. farm subsidies alone cost poor countries about $50 billion a year in lost agricultural exports.

"Fifty billion in and $50 billion out," said Anuradha Mittal, co-director of Food First and author of the report.

Her group argues agricultural subsidies damage poor countries primarily by promoting overproduction in wealthy nations. The excess goods, in turn, push world prices down.

"The farm bill bankrolls the nation’s largest farmers, helping them grow surplus crops to dump on the world market. The new farm bill pulls a reverse Robin Hood: robbing the world’s poor to enrich American industrial agriculture," said Ms. Mittal.

U.S. trade representative, Robert B. Zoellick, acknowledged in July that poor farmers in the developing world have been hit particularly hard by rich-country subsidies, but said his nation would slash subsidies only if the European Union and Japan pledged to do the same.

Food First said that the U.S. agricultural system has been designed to give U.S. grain-trading giants like Archer Daniels Midland (ADM) and Cargill an edge in capturing the home markets of developing countries.

With help from institutions such as the World Trade Organization (WTO), Third World countries are forced to open their markets to U.S. agricultural exports. With the farm bill depressing prices to below the cost of production, those firms can out-compete local farmers at the marketplace.

The result is dumping of subsidized imports on Third World countries, which collapses local agricultural markets and destroys the livelihoods of family farmers, while exacerbating hunger and food insecurity, said the report.

It also faults U.S. farm subsidies for hurting U.S. agriculture, saying that the farm bill bonanza for large producers of commodity crops "gives away the family farm."

By subsidizing well-heeled agribusiness interests, the bill also ensures the ongoing exodus of independent family farmers from the land, she argues.

In 1930, 25 percent of the U.S. population lived on six million family farms. Today’s two million farms are home to only two percent of the population, with eight percent of farms accounting for 72 percent of sales, the report said.

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