US Farm Bill 2007: Cat among pigeons
As a child I had always wondered as to why pigeons shut its eyes when it sees a cat. After all, how naÃƒ¯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. 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. The only difference being that while pigeons meet a gory end, whereas the 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.
It sure is an unequal world. Giving a damn to the outcome of 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. This prompted the House Agriculture Chair Colin Peterson 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 means that over the next five years the American farmers will receive a federal support of US $ 286 billion. 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 Vidharba 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 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. 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 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.