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Why US Farm Subsidies Are Bad for the World: they make it possible for us to export food so cheaply that farmers in poorer nations can't possibly compete
6 May 2002
Last year, I wrote about a documentary called Life and Debt that examined how globalization had affected ordinary people's lives in one poor country, Jamaica.
Much of the show, which aired on PBS, was devoted to showcasing the troubles of Jamaica's farmers, who find it tough to compete against cheaper food products imported from the United States.
Filmmaker Stephanie Black found it both ironic and outrageous that American imports could be sold on the island for less than home-grown Jamaican food. She blamed the problem on free trade.
As a condition for helping Jamaica service its large foreign debt, international lending agencies demanded that the country keep its tariffs low. The government was unable to bar American sugar, grain, and other food products from the island, so its own farmers were stuck.
But this analysis, which is typical of many "progressive" complaints about trade and globalization, seriously missed its mark. And if you were watching last week as the U.S. Congress moved toward passage of a massive new farm-subsidy bill, the real source of Jamaican farmers' problems became apparent.
The farm bill, which the House of Representatives has approved and which the Senate could vote on this week, calls for taxpayers to fork over some $180 billion to farmers during the next decade. That's a 70 percent hike above the cost of current farm-subsidy programs, most of which represent direct payments to wealthy farmers and agribusinesses.
Those subsidies make it possible to export millions of tons of food so cheaply that native farmers in places such as Jamaica can't possibly compete.
By guaranteeing U.S. farmers a minimum payment for commodities such as corn, rice and soybeans, the government encourages overproduction. That drives down the market price, forcing even higher subsidies and creating surpluses that can be shipped to Jamaica and elsewhere.
For a short time back in 1996, Congress recognized how nonsensical all this is, and passed a bill that was supposed to have begun phasing out the worst parts of the farm-subsidy program.
The idea was that farmers should decide what and how much to plant based on the market, as opposed to what many of them called "farming the program."
Both major political parties had reasons to support this idea - Republicans because they are supposed to favor getting government off people's backs, and Democrats because they are supposed to oppose corporate welfare.
There is no doubt, by the way, that farm subsidies are corporate welfare par excellence. Although the program began as a way to aid poor family farmers in the 1930s, by last year nearly three-quarters of the money went to the richest 10 percent of American farmers.
Recipients of five- and six-figure farm subsidy payments included John Hancock Life Insurance Co., Chevron, banker David Rockefeller, and basketball star Scottie Pippen. Even former Enron chairman Kenneth Lay collected a few bucks.
But in an election year, with Congress closely divided, winning a few farm-state votes trumps everything. Political principle, fiscal prudence, rational economics are all out the window, not to mention the cost of all this rural largesse in urban and suburban America. (The Heritage Foundation estimates that tab at $462 billion over 10 years, or $4,377 per average household.)
A good part of the problem is that we still buy the myth of the family farmer as somehow superior to the family grocer, employee-benefits consultant, or anyone else who struggles to make a living. That gives farm lobbyists a potent hook with which to demand public assistance.
But this myth is costly, and not only for the 97 percent of Americans who don't live on farms. Boosting farm subsidies here will be enormously damaging to the U.S. position in global trade talks, where our negotiators have been trying to get other countries to reduce their own agricultural subsidies.
Europe and Japan, for instance, would buy more American farm products if their own farmers weren't so heavily protected by tariffs and subsidies. And lowering such trade barriers in the world's richer countries would enable poorer nations in Africa, the Caribbean and elsewhere to grow by exporting more of their own products.
The current U.S. farm bill, however, is a big step backward. If it is passed - and signed, as President Bush has promised to do - the world trade climate will get worse rather than improving.
That's not good news for farmers in Jamaica, among many others, whose problems stem not from free trade but from the lack of it.
It would be great fodder for a documentary. Perhaps PBS will run a sequel.