Wealthy nations should help farmers, not subsidize food
Gwynne Dyer, Columnist, London
The average cow in Europe earns more per day in subsidies (around US$2) than the total daily income of the average cattle- owner in West Africa. America's 25,000 cotton farmers received over $3 billion in subsidies last year, and can therefore outproduce and undersell the 11 million people in West Africa who depend on cotton for their main source of income. Why is it farming, rather than mining or manufacturing, say, that makes the governments of the rich countries go into ultra-protectionist mode and spend money like crazy?
On Sept. 9-14 the World Trade Organization brings together the trade ministers of 146 countries in Cancun, Mexico to try for a new deal on liberalizing global trade. There has already been progress on various fronts -- last week there was even a deal of sorts on making cheap generic drugs available to poor countries -- but on one critical issue they remain deadlocked: Agriculture. As usual.
The rival proposals on agriculture are very far apart. The European Union and the United States, which together spend $370 billion a year on farm and food export subsidies and impose tariffs as high as 350% on agricultural imports, talk of modest cuts in subsidies and tariffs, but refuse to discuss actual figures at all.
Brussels and Washington do offer to cap direct payments to their farmers at 5 percent of output, but that is just a shell game: Much of the subsidies now come as payments linked to other factors like land ownership or past production levels. U.S. President George W. Bush's $180 billion increase in government spending on export credits and 'food aid', for example, would not even be treated as an export subsidy under the current Western proposal.
The developing countries, led by Brazil, India and China (which contain two-thirds of the world's farmers), used to talk about leveling the playing field, but now they are not just demanding deep cuts in rich-country subsidies and tariffs. They also insist that poor countries should not be required to make equal cuts in the tariffs they themselves raise against agricultural exports from the developed world.
The more subtle among them argue that this is still a win-win proposition, because cutting out the U.S. and EU agricultural subsidies would save the average Western family of four close to $1000 a year in taxes, while cutting the import tariffs would let developing countries earn between $30 billion-$100 billion a year by expanding their food exports to the rich countries. That is far more than the poor countries currently receive in aid each year, and by providing a direct flow of income to their rural areas it would do far more good.
So what's the problem? Why haven't Western countries (and Japan, which has very similar sensitivities about its farmers) all climbed aboard this bandwagon? When Western industrialists shut their factories down and shift production to Mexico or Taiwan, most Western governments accept their arguments about competitiveness and efficiency, so why not apply the same logic to the farming industry?
Because it's not just an industry. Both literally and metaphorically, farming is a big part of the landscape in every industrialized country. It is what physically shapes the countryside that people know and love, and it's a big part of what shapes them culturally as well.
No more than two or three percent of the population live on the land in any Western country these days, but it's only a century since more than half of them did. If you go back two or three centuries, almost everybody did, and beneath the metropolitan, post-modern veneer a lot of the old peasant culture is still alive. So of course people in the West feel differently when family farms go under than they do when a textile mill closes down or a telephone call center move its operations to India.
Farmers, naturally, play on this sympathy for all it's worth, and the subsidies grow and grow. This creates artificial opportunities for large-scale agro-business, so soon most of the subsidies are going to big businesses, not to family farms. Meanwhile, the global trade in food is getting more and more distorted: European farmers produce sugar from beets at over twice the average cost of production of sugar cane in Brazil or Zimbabwe, but dominate the European market thanks to tariffs of up to 140 percent.
It doesn't make sense: European farmers grow sugar beets nobody needs, European consumers pay far too much for their sugar, and more efficient farmers in poor countries starve. But what is wrong here is not the wish to preserve the countryside and the rural way of life in the developed countries; it is the obsessive, doctrinaire insistence on doing it by a market model.
What is needed in Germany, Japan, the United States, France -- all the rich countries -- is a forthright admission that we want to preserve the hill farms, the marginal farms, the family farms in general not because they make economic sense, but because they make cultural, ecological, and even aesthetic sense. So kill all the export subsidies, import tariffs and production subsidies on food, and subsidize the farmer not the food.
It's not as simple as it sounds, of course, but it couldn't be more complicated and expensive than the current system of subsidies. It certainly wouldn't be as harmful. And at one stroke it would remove the biggest obstacle to a world of freer and fairer trade.
Maybe in 20 years....