India Together: Protection at home, preaching abroad

OPINION: US FARM BILL 2007
Protection at home, preaching abroad
In clear disregard for the ongoing multilateral negotiations, the United States is attempting to protect its already heavily fortified agriculture further. The House of Representatives passed the US Farm Bill 2007 in July, proposing 286 billion dollars of support for American farmers over the next five years. Devinder Sharma on the implications.

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25 September 2007 - As a child I had always wondered as to why a pigeon shut its eyes when it sees a cat. After all, how na�ve or stupid depending on how you perceive the act, can the pigeons be to think that a visible threat to its life, which is as sure as death, can be simply warded-off by keeping eyes wide shut.

I gave up as I grew up. But now I realise that the educated elite, especially if they happen to be macro-economists or trade negotiators are a step ahead of pigeons. While pigeons meet a gory end, trade negotiators and economists are clever enough to escape by ensuring that the axe falls on the poor and marginalized.

No wonder, as the trade negotiators from 150 member countries of World Trade Organisation (WTO) assemble at Geneva to resume negotiations, I am told the 'mood' seems to be upbeat and 'just right'. There are enough indications that developing country negotiators will brush aside all threats to agriculture and industrial sector and instead join the rich and industrialised countries to sing paeans of virtues in favour of what is known to be an unequal and unjust multilateral trade regime.

Those of us who follow the negotiations know that the stage is getting ready for the aceptance of Doha Development Round. India is looking for a face-saver and the only bottleneck is to what extent will the US give in.

If US agrees to bring the cut on trade-distorting agriculture subsidies to less than $13 billion or $14 billion, the deal will be through. Either way, it will not mean any real cut in trade distorting subsidies. America's real trade distorting subsidies are at present $11 billion.

It sure is an unequal world. In clear disregard for the ongoing multilateral negotiations, the United States has thrown yet another protective ring around its heavily fortified agriculture. Knowing that the developing country negotiators are weak-kneed and lack the courage to even raise their voice, the House of Representatives has passed the US Farm Bill 2007 on 27 July. This prompted the House Agriculture Chair Colin Peterson (Democrat) to say: "I want to write a Farm Bill that's good for (American) agriculture. If somebody wants to sue us (at the WTO), we've got a lot of lawyers in Washington."

Although the notorious Bill awaits clearance from the US Senate, it proposes that American farmers receive a federal support of US $ 286 billion over the next five years. Irrespective of the volatility of the global markets, and the advantages of 'free market' economy that the macro-economists in the developing world never feel tired of reiterating, the US farmers have preferred to rely on government support. While the US is forcing the developing world to turn its agriculture 'competitive' by removing all safety nets for farmers, it does exactly the opposite at home.

Let me make it clear. The 'comparative advantage' in agriculture that the US flaunts about is actually because of subsidies. Remove the subsidies and American agriculture falls flat. It is because of these heavy subsidies that farmers in the suicide-belt of Vidarbha in Maharashtra or cotton farmers in western Africa are priced out. And despite the outrage against monumental cotton subsidies, for instance, the US has made no effort to make even a nominal cut under the proposed Farm Bill 2007.

Traditionally, the US farmers have survived all these years on government support. Under the Farm Bill 2002 (which expires on Sept 30, 2007), the US government had till March 2007 spent US $ 271 billion. Which means that in just 10 years - between 2002 and 2012 - US agriculture will receive approximately US $ 557 billion. This is more than the total gain of US $ 539 billion that was anticipated for the 110 developing country members from full trade liberalisation in agriculture at the beginning of the WTO negotiations. It is however another matter that the total gain for developing country agriculture is now estimated at a paltry US $ 6.7 billion.

It is not as if the US farmers were dependent upon free trade earlier. Since 1993, Farm Programmes have been in place. It was, however, the US Farm Bill 1996 that was expected to bring about a structural change. It actually required most farm subsidies to be phased out by 2001. By bringing in the concept of 'decoupled' farm payments, which meant that farm payments were de-linked from production, the expectation was to rectify a historical mistake. "Decoupling" however resulted in price collapse thereby bringing in "emergency" payments. Call it 'counter-cyclic' payments it has now become a permanent feature of the farm policy.

And that reminds me what a former World Bank Chief Economist Nicholas Stern, while travelling through India, denounced subsidies paid by rich countries to their farmers as "sin ...on a very big scale" but warned India against any attempts to resist opening its markets. "Developing countries must remove their trade barriers regardless of what is happening in the developed countries."

Much of government support in the US is for six primary commodities: corn, wheat, soybeans, cotton, rice and grain sorghum. In addition, the 2007 Farm Bill provides US $ 1.1 billion for vegetables.

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Much of the government support is for six primary commodities: corn, wheat, soybeans, cotton, rice and grain sorghum. In addition, the 2007 Farm Bill provides US $ 1.1 billion for vegetables. For biofuels, the subsidy support will heighten investment by 600 per cent. To give a boost to organic cultivation, the Bill provides US $ 5 million as cost-sharing component with 17 states to bring in organic certification. It will help defray the cost of certification for farmers to the tune of 75 per cent, to a maximum of $750 per farmer. Subsidy provisions also exist under the conservation programmes for not growing anything.

And yet, the real beneficiaries of the US government support are not the family farms. Much of the support goes to increase the profits of agribusiness majors like ConAgra, Cargill, ADM and Tyson. Among the beneficiaries are big landowners farmers, including Ted Turner and David Rockefeller. It is primarily the agribusiness corporations that have gained the maximum since the US Farm Bill 1996. The Farm Bill results in over-production of the six major crops resulting in price slumps, which makes it easier for the food corporations to dump the commodities in world markets.

The Minneapolis-based Institute for Agricultural Trade and Policy has estimated that dumping of wheat has increased from an average of 27 per cent per year before Farm Bill 1996 to 37 per cent after that; soybean from 2 to 11.8 per cent; maize from 6.8 to 19.2 per cent; cotton from 29.4 to 48.4 per cent and rice from 13.5 to 19.2 per cent in the consecutive period.

Cheaper imports in developing countries pushes small farmers out of production thereby accentuating unemployment and hunger. ⊕

Devinder Sharma is a food and trade policy analyst. He also chairs the New Delhi-based Forum for Biotechnology & Food Security. Among his recent works include two books GATT to WTO: Seeds of Despair and In the Famine Trap.

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Comments (3)

Posted by ramabadhran,
Removal of subsidies benefiting rich corporations that dump farm products is a measure one should agree. 1.Will removal of subsidies have negative growth on output of farm products and result in Global shortage of farm output?2.If all Governments vie to grant agricultural subsidies or adopt their own protectionist policies taking America as a cue ,will this not nullify one against the other? We should encourage global increase in farm output, reasonal price for end users and of course remunerative price for farmers. Are these mutually conflicting notions?

Posted by Laxmi Narayana Paladi,
Us farming is not small farming, which is mostly a subsistence farming in developing countries. It is a capitalistic farming with huge investments by the individual farmers. It is something like the Government is getting its requirements, through, farmers. There is very close relationship in between farmers and the Government. Farmers oblige the Government in many issues.

The overproduction problems in US are from 1970s. America is the food giant of the world. It can feed the whole world if necessity arises. Their farm policies can neither be compared with that of India nor criticized. We need to search another means for the total welfare of Indian farmers.

Posted by Mitesh Damania,
Support the indian farmers. Buy Indian. Buy at a higher price to support the Indian farmers. Buy organic. Boycott unfair US goods and practices. Support for Indian farmers illegal under WTO? Who agreed to WTO in the first place? The consumers nor the farmers.

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