kickAAS

Helping to end the global food crisis

What's the best way to help the current crisis? Abolish subsidies, that's what according to a report in Global Nation, the Filipino online journal

A hunger for subsidies

The food riots in parts of Africa, Asia and the Caribbean have multiple causes not least a long-overdue surge in demand from people in developing countries eating more as they lift themselves out of poverty. But, as an editorial in the Washington Times reminds us, agriculture subsidies are also to blame. The diversion of corn crops to produce ethanol particularly in the US is a big contributor to the crisis while at the same time subsidised overproduction by the West has removed much of the financial incentive for  poorer countries, particularly in Africa, to grow their own crops.

Planting next year's subsidies

Here is an interesting post from The Harvard Crimson on the craziness of agriculture subsidies - even though it doesn't even mention the huge boost to developing economies that would result if US and other subsidies were withdrawn.
For what is happening in Africa now read this  article.

Sample:
Farmer’s need subsidies almost as much as hedge fund managers do. In an era of gaping budget deficits, it seems quite clear that the billions of dollars dumped into lining the pockets of America’s already affluent farmers could be better spent elsewhere. "In 2005, the government doled out $25 billion to farmers, which was 50 percent more than the amount received by welfare families."

The great agriculture welfare state (cont)

When 75 acres of Texas farmland was recently converted into a housing development, the new homeowners on these $300,000 properties became eligible for annual farm subsidies for their lawns, according to an article on Boston.com. Why? Because agriculture subsidies in the US are based on historical use so they continue after a change of use even if the new owners don't ask. And that is only one of the minor madnesses of US agriculture policy. You couldn't make it up.

Silence is golden . . or is it?

We haven't been blogging because nothing has been happening of late in the endless negotiations  over international tariff reform and the reduction of agricultural subsidies. But now the silence has reached another place: The President's State of the Union address.
I hadn't noticed it until I read this and I still don't know what it means. Does this silence mean the President is going to stand up to the farmers over subsidies or does it mean that he, um, just forgot. Any silence analysts out there with a take on this?

Farmers keep their snouts in the trough

As the Doha international trade talks rumble on between stalemate and inertia, it is business as usual for farmers in the United States. Once again the most powerful lobby in the world - farmers - has flexed its muscles and politicians have crumbled. As caller.com reports, the Senate has rejected measures that would merely put a cap on the rich subsidies that  farmers enjoy in the US and which prevent developing countries from growing similar crops economically.

Elimination of subsidies wold not only return money to US taxpayers it would also give an unprecedented boost to Third  World agriculture. It is not often that politicians are offered such a free lunch but once again they have bowed to the self-interest of a tiny minority of their constituents. What next? We will have to wait another five years before the issue is debated again . . . unless President Bush uses his veto on the bill. And pigs will fly.

World Bank discovers the agriculture problem. . .

Welcome aboard . . .

For the first time in 25 years, the World Bank’s annual report on development puts agriculture and the productivity of small farmers at the heart of a global agenda to reduce poverty, according to a report in the New York Times. Three-quarters of the world’s poor still live in the countryside.

The report found, the NYT adds, that "if European countries, the United States and other wealthy nations removed all tariffs and subsidies for cotton, soybeans and other oilseeds — practices that reduce the world price of those commodities and make it harder for unsubsidized farmers in poor countries to compete — developing countries’ share of world trade in cotton and oilseeds would be more than 80 percent in 2015 instead of only about half".

Meanwhile, the international round of trade talks to tackle this problem have all but ground to a halt because politicians are too scared to stand up the powerful lobbies that want to hang on to these subsidies. Could someone please post a copy of the World Bank's report to the key  negotiators . . .

Subsidies: dig a hole and bury them

The US has just revealed new figures showing that it spent $16 billion in  subsidies to its farmers every year between 2002 and 2005. Who cares? Very few people apparently. It's only money after all. Yet the truth is the US (and all the other  subsidy junkies) would be doing the world a favour if, instead of handing out taxpayers money to farmers, they simply buried it in a big hole in the ground. The US would be no worse off but millions of people in developing countries suddenly would be able to grow crops such as sugar beet and cotton that they are prevented from at the moment because of subsidised competition.. But, of course, if they didn't bury it the US would have  $16 billion more to spend on things that really matter.

Procrastination is the name of the game

Sorry for not posting recently. I think I must have caught the procrastination disease that is inflicting all the participants of the Doha international trade talks as they keep waiting for others to make a move, a game that could go on forever. The latest is China which, like everyone else in turn, has called for more flexibility. Rather than repeat the same thing every day I am lying low until something happens.
What is desperately needed, of course, is to get public opinion mobilised to abolish agriculture subsidies which, at a stroke would revive agriculture production in poorer nations while giving the rich countries a cash bonanza to spend on something else.
One way to achieve this is to use the new social networks that are springing up that, in theory, could spread the word to millions of people. I have set up a sister site (ASS - Agriculture Subsidies Suck) on Facebook. So far it has almost 100 signatures. Please add yours. Only a few hundred million to go . . .

A tale of two planets

The world produced enough food to feed 12 billion people last year - almost twice the world's population according to UN official Jean Ziegler,  yet 854 million people went without food. The reason? $350 billion dollars are being spent on agricultural subsidies by industrialised countries.

So what is being done about it? It's business as usual in the US where a subcommittee of the House Agriculture Committee unanimously rubberstamped an extension of existing commodity farm subsidies for the next five years, according to Taxpayers for Common Sense, an organization that monitors excessive government spending.

The Wilder side of subsidies

Arise Maurice Wilder, newly crowned  king of the subsidies. He received $2.5 million in farm handouts from 2003 to 2005, according to the Environmental Working Group, making him the single biggest single recipient. Even the Bush administration is becoming embarrassed by the welfare state created for farmers. The president is thinking of limiting handouts to farmers to an adjusted $200,000 per household.
This is a step in he right direction but per household? If this goes through stand by for a rush of downsizing among farmers as they split into smaller units owned by other family members or newly created companies to get round this. There is only one way to avoid abuse - abolish all farm subsidies now releasing  billions of dollars for the exchequer and giving poor countries a level playing field from which to export.

Name and shame . . .

The US administration is making it easier to discover the individuals who are the main recipients of America's massive distribution of subsidies to farmers according to CBC news. The trouble is they don't seem to have any shame.

Is there life after subsidies?

Amid all the drip fed rumours of eleventh-hour brinkmanship in the international trade talks - ranging from the new French government demanding bigger US concessions to US thoughts about replacing direct subsidies with "self support" schemes, let's remind ourselves  what life without subsidies could be like. Thanks to Azeem Azhar for the link.

Subsidies fatten the land . . . and you

Thanks to Carl Oberg for pointing out this article in the New York Times that I had missed linking the bad effects of agriculture subsidies and developed world obesity. In other words if richer countries got rid of subsidies they would not only save billions of pounds in financial support - they would also be much healthier. This problem is a no brainer even before you factor in the hugely beneficial effects of allowing developing countries to have a level playing field in their trade with the West.
And the Doha talks? With weeks to go before the final, final, final deadline, there is renewed speculation about a deal being cooked up.

Beating about the Bush

There have been no posts recently because, tragically, there is nothing to blog about let alone blag about. The world's leaders continue to go through a ritual dance of "I'll do something, but only if you do something first" as instanced by President Bush parroting for the umpteenth time that the US will cut tariffs but only if other nations agree to make tariff cuts. Meanwhile in the Third World . . .

What a good idea . . .

Farmers in Cyprus are up in arms about government proposals to tax farm subsidies. But why not? Nearly all of the economic research shows that subsidies are a hopelessly inefficient way of  organising agriculture and they have the disastrous side-effect of pricing developing countries out of products such as cotton where - without  subsidies - they would have a competitive advantage . They are in effect a benefit in kind - so why not tax them accordingly. May this idea roll and roll . . .

Meawhile a reminder for new readers of the extent of the problem. OECD figures show, according to the Times of India , that in 2004 countries spent more than four times their official development aid budgets on support for domestic farmers.

The long, long wait

While we are waiting for the seemingly interminable moment when there might be progress in the international trade talks here is a reminder why it is in the self-interest of countries such as the US to give up agriculture subsidies even before considering the galvanising effect it would have on the economies of developing countries.
Sample: "Agriculture is the most destructive land use in America".

The melting ice at Davos

The ski slopes of Davos in Switzerland are witnessing a melting of hard line attitudes against agriculture reform as trade ministers make a final attempt to get agreement before time runs out. Seasons observers of trade talks have seen the waves of optimism crash so often against the rocks of self-interest that they are trying not to be too optimistic this time.
That said there does appear to be some genuine movement. Robert Zoellick, former US chief negotiator says the US should offer deeper cuts while EU Trade Commissioner Peter Mandelson is busy droping hints that a breakthrough may happen in the coming weeks.
  Meanwhile the crucial G-20 alliance of developing nations, which has India, Brazil and South Africa as key members, is seeking a steep reduction in agriculture subsidies in return for US demand for deep reduction in customs duty. My view? Clearly something ambitious is being cooked up but the chances of a beleaguered US administration and a strongly protectionist French farming lobby from rolling over are still slim. But doomsday does concentrate the mind.

While the rich people ski . . .

Next month's US trade bill doesn't look like doing anything radical to cut US subsidies, unless the newly enfranchised Democrats unexpectedly get the bit between their teeth. According to Agriculture Secretary Mike Johanns, subsidies will be a bit lower and  involve some  redistribution from large to small farms (60% of which don't receive any subsidies) and towards projects that are good for the environment such as energy conservation.
Meanwhile attempts to revive the Doha international talks to reduce subsidies are continuing and will now switch to the upcoming gathering of rich nations on the Davos ski slopes. Not an obvious place to help the world's poor, but strange things can happen.

How subsidies screw small farms

Smaller, family  farms, far from benefiting from America's vast agriculture subsidies, actually get screwed according to an article in the Washington Post {picked up by the Idaho Business Review).

Sample quote: “The very policies touted by Congress as a way to save small family farms are instead helping to accelerate their demise, economists, analysts and farmers say. That's because owners of large farms receive the largest share of government subsidies. They often use the money to acquire more land, pushing aside small and medium-size farms as well as young farmers starting out.”

US subsidies: a whiff of garlic

While the rest of the world is trying to persuade the US and Europe to cut agriculture subsidies, a new problem is riding over the hill. There is a fresh group of farmers that so far has received no subsidies that is now demanding a share of the pie. The include garlic growers who have seen their market undercut by imports from China at half the price. If a Republican administration facing re-election caves in then the money will either have to come from the existing $15bn a year war chest  (which mainly goes to cotton, rice, wheat, corn and soya) or somewhere else. No one said subsidy cutting was going to be easy.

How subsidies undermine the efficient use of water

Everything is still pretty quiet on the subsidies front as the rest of the world waits to see whether the Democrat victory in the  Congressional elections translates into more effective action to reduce farm subsidies. It might if only because the Democrats are likely to take a harder stance on reducing the overall budget deficit but they will still be  subject to the enormous power of the farming lobby.
Among the most interesting recent publications is a report on water by the OECD, a fount of common sense, in the subsidies world. In theory the OECD reflects the views of its paymasters - including Europe, the US and Japan. If only they would listen! The report points out that subsidies to the farming sector, including lower water charges and financial help for irrigation undermine the efficient use of water.
  In the OECD Observer, the organisation's house magazine, there is a  good article analysing the adverse economic effects of agriculture subsidies which reminds us that "average agricultural tariffs are in the region of 60% of the price of imports, whereas industrial tariffs are rarely above 10%." Maybe that should be  stuck above the bedpost of every member of Congress lest they forget.

Why doesn't Oxfam do more to help African farmers?

Well, it is still ominously quiet on the subsidies front - so maybe this is an opportunity to be reminded of some basics. A good place to start is Oxfam's question and answers about European farming and about the mindbogglingly uneconomic system of cotton subsidies in the United States. Oxfam is sometimes criticised for engaging in politics by calling for the abolition of most (but not all) agriculture subsidies - but, as these articles show, if it could achieve that end it would do more for developing countries than any other single action.

The blame game (cont)

Susan Schwab, the  top US trade official, has told a Canadian audience that Europe is to blame for the collapsed trade talks because it didn't put enough cuts on the table. (The EU, of course, says the opposite). She says the US is prepared to make even deeper cuts but as this article points out, even if the US government did it wouldn't mean much because of fierce opposition by the recipients (large farmers) and by Congress. Meanwhile, subsidised US corn is flooding the Canadian market where there is a shortage.

What the US giveth with the right hand . . .

The United States hypocritically muddied things up during the international trade talks by purportedly agreeing to a 97% opening of its markets to the developing world. In fact says Stephen Lendman, US intentions, however, were quite different. "While using market-opening language, the US, in fact, proposed just the opposite by claiming the right to choose a different 3% exclusion for each country to rig the deal to end up allowing developing countries the right to freely export everything but what they produce." In an interesting article Mr Lendman goes on to explain how developing countries can fight back.

Time to mobilise against subsidies

The collapse of the international trade talks continues to produce some interesting analysis such as this one by Nobel laureate Joseph Stiglitz - but we are nowhere near a solution. Maybe it is  time to try to mobilise consumers and taxpayers so their voice can be heard against the all powerful farming lobbies that are already preparing their plans to milk yet more subsidies during the passage of the upcoming Farm Bill in the US.
One way of mobilising opinion is to use the potentially very powerful web site PledgeBank. You can use this site to say that you will write to your Congressman to complain about farming subsidies as long as 100 (or 1,000, or 10,000 or whatever) will do likewise. This site, which is spreading around the world has already scored some successes. Tony Blair is among the people who have pledged to do something.  Any offers out there to get the ball rolling?

In response to the interesting comments made two blogs below may I say two things. First, what will happen to farmers if subsidies `are reduced or eliminated? Some, I guess,  would go out of business but the vast majority would thrive if they started redirecting their entrepreneurial spirits to producing what people want not to what gains the most subsidies. It is worth remembering that over 60% of US farmers don't get any subsidies at all and manage to survive. New Zealand abandoned subsidies unilaterally some years ago and its farming industry has thrived. Second, yes, I am angry about porn spam on the site  as well and try to do something about it from time to time, but sometimes it gets it of hand. Sorry.

The answer may be a Swiss cheese

What can one say? The international trade talks - designed to help developing countries - have crashed amid mutual recriminations with everyone blaming everyone else. Even a week later it is not easy to pinpoint exactly who should shoulder most of the blame: the US because of fear of losing  the support of farmers in the upcoming elections? or Europe's failure to face down its own farmers? or the reluctance of richer developing countries to accept that they too must throw something meaningful into the pot. In the end it was a tragic collective failure of will.

Maybe it is time for reflection, to go back to basics and try to figure out why rich countries, having got rid of subsidies in most other activties stubbornly cling on to them in agriculturural products even though their elimination would reduce budget deficits and free resources for more urgent uses. John Madeley gives a thoughtful response here. Why, why, why, for instance, does Switzerland, one of the richest countries in the world subsidise its farmers to the tune of 68 per cent of their incomes?

The booming welfare state for US farmers

Amid reports that the G8 summit in St Petersburg has urged last minute concessions on subsidies to prevent the international trade talks from collapse, the Washington Post has an interesting series examining how America's farm subsidy bill has soared to $25 billion despite high revenues. Comment: If President Bush removed that he would be doing everyone a favour: the US budget deficit would fall and developing countries would be able to compete on a level playing field. The trouble is common sense is no good when you are dealing with entrenched producer lobbies with deep wallets.

Raising Doha from the dead

Just when the Doha trade talks about reducing farm subsidies looked dead and buried after the impasse at Geneva, up pops the irrepressible EU trade commissioner, Peter Mandleson to suggest that all is not yet lost. Even though the "final" deadline of June 30 has passed, he says that trade ministers may resume  talks in the corridors of the G8 summit in St Petersberg later this month.

Mandelson blames the US for not offering any serious concessions on domestic subsidies. There was an interesting letter in the Guardian from Peter Power, EU trade spokesman ex[plaining some of the underlining issues and a familiar rant from me on the Guardian's web site.

Milking the poorer nations

The international trade talks - originally designed to give developing countries a better deal - are still in stalemate according to the Financial Express. The US is still taking an uncompromising stance according to Reuters with the Senate insisting on tit-for-tat concessions all along the line.

Comment: while one applauds President Bush's pledge that the US would abolish all agriculture subsidies if other countries did the same, the  actual  tance is that the US , and other rich nations, are insisting that developing countries get rid of industrial tariffs (which some can ill-afford to do at this stage of their development) as a quid pro quo. He should be reminded that this was supposed to be a round of development talks to help poor countries. The existence of agriculture subsidies - whereby rich countries bribe their farmers to produce food that could be more economically done by developing countries - is an economic evil that benefits no one. It should be got rid of without pre-conditions and everyone would benefit. Rich countries could spend more tax revenues on more productive things and poor countries could produce crops currently made uneconomic by the subsidies of rich countries.

Still the world's biggest free lunch

The OECD has now posted its authoritative report on agriculture subsidies on its website. Remember, the OECD is the club of the richest industrialised countries in the world, the same people who are currently refusing to cut a deal in the international trade talks with developing countries. Yet, if they halved trade protection and  domestic support for farm and manufactured goods, they wouldn't lose out, they would GAIN $44 billion a year.

The largest part of the gain, according to the OECD, is expected to come from agricultural reform. About 80% of the benefits in agriculture would result from cutting tariffs and export subsidies.

The report finds that almost all countries gain overall. Those with the highest levels of support and protection would benefit most from such reforms. The most efficient agricultural exporters would also gain significantly. But for many developing economies the immediate benefits would be relatively small and would be concentrated more in manufacturing than in agricultural trade.

It is a tragic failure of governance that OECD members can't reach agreement on measures that would give a big boost to most (though not all) developing countries while benefiting themselves by $44 billion a year.

The biggest objector would be the biggest beneficiary

A world trade deal that cuts trade-distorting farm subsidies and tariffs in half would boost global income by $US26 billion a year, with more than one third of the gains going to the European Union, according to a new OECD study reported by Reuter.
The gains for the EU. it adds, would come through lower taxpayer payments to support Brussels' 44 billion euro annual farm program and cheaper food prices for European consumers as tariff walls come down. Both would free up resources for more productive uses.
Isn't this ironic? Europe, the biggest obstacle to a trade deal being done (because of the political power of French farmers), would turn out to be the biggest gainer. C'est la vie.

Green boxes that flash red

There is a growing danger that rich nations will try to end the impasse in the international trade talks by dumping a lot of trade-distorting measures into the so-called green box which was designed for subsidies that do not distort trade. The G20 group of developing nations has cottoned on to this, as the Financial Express reports.

Jacques Berthelot who is connected to the (French) site Solidarite has sent me his comments on the G20 report the gist of which is that the distinction between amber, blue and green boxes is now obsolete and that subsidies should be banned if they support exports but otherwise allowed.

What can be done about France?

Everyone shares part of the blame for the continued failure of the international trade talks which passed yet another "final" deadline on Sunday without any agreement over the crucial issue of reducing agriculture subsidies. But it is difficult to disagree with Rob Portman, U.S. Trade Representative that ultimately France is the stumbling block.

In a rare moment of self-criticism Mr Portman admitted that the US offer was not perfect but insisted that the real problem was French politics. Anyone driving through France (as I did over the weekend) can see the scale of the problem - mile upon mile upon mile of agricultural land, including seemingly unending vinyards, all held together by antiquated subsidies. When the French government tried to introduce a well-meaning measure to reduce youth unemployment a few months ago, people took to the streets. Goodness knows what would happen if they announced the end of agriculture subsidies even though politicians know in their heart of hearts that they are all wrong.

What I find difficult to grasp is whether there is anything the rest of the world could do that would induce France to introduce serious reforms (beyond its time-lagged acceptance of de-coupling subsidy payments from actual production) or is the problem simply too explosive for politicians seeking re-election to tackle. Any thoughts out there?

How can 75% of US farmers exist without subsidies?

While the world trade talks grind on towards oblivion, an increasing number of people - sadly, outside the negotiating circuit - are talking horse sense. Here is the latest from ex-congressman Cal Dooley.

Sample: “Allowing a minority of farmers in the United States to refuse to give up our archaic farm policies is holding hostage the 75 percent of U.S. agriculture that is willing to compete and win in the global marketplace.”

The golden black hole

You want a quick, graphic reminder about why farm subsidies are bad for America? Read this and ask yourself what other industry is given an open cheque book to produce as much as it likes - at a loss - in the knowledge that the taxpayer will pick up the tab.

The road from Doha

As if in a parallel universe, the Doha world trade talks drag on and on in the background seemingly without a connection to the real world despite a deadline of April 30. Today's Financial Times has a good summing up of where they are  going (nowhere) and an editorial  warning that a deal cannot wait much longer  (NB subscription needed after a time tag).

Key quote: "In a fair and sane world, the Doha deal would involve the EU undertaking much bigger cuts in farm tariffs, given the extraordinary high levels at which some are maintained, than the US's reductions in farm subsidies or the developing  world's opening up of goods and services markets".

Catch: Can you imaging what would happen in France - where young people took to the streets this month  to prevent modest measures (already in place ion the UK) to reduce youth unemployment - if subsidies were taken away from farmers however justified? It's the politics, stupid.

Japan enters the poker game

Could Japan be the missing link that could unlock the deadlock in the World Trade Organisation talks? In an interview with the Financial Times (registration needed after a timelag) Shoichi  Nakagawa. Japan's farming minister,  hints that Japan might make  substantial concessions (such as slashing the huge protection granted to the rice industry?) if Brazil and other maturing developing countries open up their industrial markets.
If there are enough countries willing to do similar "I will do x but only if you do y" deals then maybe the stalled talks could climb out of the land of the dead. But don't bet on it.

The call of duties

Here is a tricky problem: India is reducing import duties on wheat. That's good isn't it because we at kickAAS believe in the abolition of duties and subsidies as the single best way to kick-start the eeconomies of developing countries?
But hang on. This is part of a political deal with the US as a result of which hugely subsidised American grain could flood the Indian market and destroy the livelihoods of small-time  farmers. Not so good.
Answer? Uncle George should first remove the totally unjustified subsidies showered on US farmers (which would help to reduce his budget deficit). Then he would have some moral as well as political authority.

IOUs from IOWA

Nothing much happening still on the negotiations front - so here are some facts to chew over: Iowa drew what is described as a jaw-dropping $12.5 billion in agriculture subsidies betweeen 1995 and 2004. Only one state could top this - yes, George Bush's Texas

Fanning the Bush fires

Dear President Bush,

                               Congratulations on your plans to cut dependence on foreign oil by 75% by 2025 through investing in crops to produce cellulosic ethanol. That is thinking Big. Now thing Laterally as well. Abolish agriculture subsidies (which you will have to do eventually under the international trade talks) as well excepting only the growing of cellulosic ethanol and other approved biomasses for, say, five years. Then just sit back and watch the animal spirits of America's farmers do the job for you.

  At a stroke you will reduce  foreign oil imports, rescue the trade talks and give developing countries the biggest economic lift they have ever had because they will be able to grow traditional crops without the debilitating effect of having to compete against US subsidies. Oh, and I migt get a Nobel prized. Go to it.

Best wishes

Kickaas

Prophet in his own country

A  British farmer and former government adviser, Lord Haskins has called for the abolition of farming subsidies - and for an unusual reason: he says he can make more money without them. He comments: "On my arable farm this year we will lose money on the three subsidised crops - wheat, barley and oilseed rape."But we will more than make up for that on profits from the two unsubsidised crops - potatoes and vining peas. Our pigs are also profitable."

Honed thoughts from abroad

Was the almost universally panned world trade summit in Hong Kong last month quite as bad as it seemed? Among the second thoughts is this one from India arguing that developing countries will get duty and quota-free access to western markets for 97% of their exports . . . eventually.

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Life after subsidies . . .

Now that members of the World Trade Organisation have recoiled once again from taking radical action over subsidies it is good to be reminded of the experience of New Zealand,a country that, so to speak, took the bull by the horns.

The gravy train rolls on

The world trade summit in Hong Kong ended with what the BBC described as a "modest deal" being struck. What that means is that rich western countries have agreed to end what should never have been there in the first place (export subsidies on agricultural exports) but only by 2013 leaving other worse distortions, such as import tariffs and direct subsidies as they are. It is good that the show is still on the road not least because it looked at one stage that they would break down completely but let us not pretend anything other that it is a continuing scandal that rich industrialised countries refuse to allow developing nations to operate on a level playing field. The biggest scandal of all is US farmers being given gargantuan cotton subsidies which prevent third world growers from exploiting one of the few crops where they actually have a competitive advantage (or would have if it were a level field). The US made no further concessions despite the fact that cotton subsidies have been declared illegal by the World Trade Organisation.

Of course, as Pietra Rivoli reminds us, the abolition of subsidies is not of itself a panacea for poor countries but - removing obstacles which prevent them trading fairly is an absolutely vital first step.

When the cream turns sour

Oliver Walston is an unusual farmer. Every year he publishes a frank balance sheet of the effect of subsidies on his activities. Most of the time he admits to creaming it on the back of hand-outs worth up to £200,000 a year (say thank you to Europe's common agriculture policy). But now? The times they are a changin. The first year of the EU's new single payment policy - which decouples subsidies from production - is having a potentially devastating effect. And what is happening to Mr Walston could be replicated all over Europe.

As protesters and ministers gather in Hong Kong . . .

Thoughtful piece in the Wall Street Journal today by Rob Portman, US trade repeesentative.Shame it requires registration (Why can't the WSJ exempt issues of public policy for a limited period?). He repeats the US offer which would, he says, eliminate all export subsidies by 2010 and cut, and eventually eliminate, trade -distorting domestic support programs and open markets as never before.His article includes a World Bank stat I haven't seen before - that "agricultural products face a practically insurmountable global average tariff rate of 62%". For my own paper's take on the Hong Kong talks read  Guardian leader which repeats a suggestion from New Zealand that to rescue the talks the main parties should all make  conditional offers.If you do this then we will do that . ..

Screwing the poor ( . . . part 94)

If you want to be reminded why axing agriculture subsidies is still worth fighting for despite the stalemate in the trade talks then read this in the New Statesman.
Burkina Faso in West Africa, the third poorest country in the world, depends on cotton for 70% of export earnings and 30% of its entire GDP. This year, despite a record crop, the country is on its uppers because of a slump in the price of cotton caused largely by US farming subsidies amounting to — wait for it — an astonishing $4.2 billion. This is more than the entire GDP of Burkina Fasso which employs 3.5 million people in cotton compared with only 28,000 in the US.
US subsidies amount to $142,000 per person involved. If the US government decided to withdraw subsidies it could give an annual pension of $42,286 to all the people involved in cotton growing to help them do something more productive and save $100,000 per person for investment elsewhere. Meanwhile Burkina Faso, and other cotton growing countries in Africa would get a huge boost that would enable them to sell more exports and employ millions more people. Where's the catch?

Farming facts

While praying for an unexpected breakthrough in the international trade talks ahead of next week's crucial meeting in Hong Kong, let's give a warm welcome to a new web site enabling European citizens to get details of the 43.5 billion euros of their money handed out in farm subsidies every year under the Common Agricultural Policy. What a tragedy that facts don't seem to figure very highly in these negotiations.

Epitaph for the trade talks?

The international trade talks are still at an impasse. Unless some kind of compromise is conjured out of the air it is unlikely one will happen when 149 ministers gather in Hong Kong in December. France and, even more so, Ireland have dug their heels refusing to give up their disproportionately juicey subsidies. Unless something dramatic happens - such as the UK offering to give up its rebate to woo the French or Brazil and India offering rich countries access to their industrial markets – the talks could run off the road.
Then it starts to get messy. Oxfam says countries might take each other to court because, it claims, the EU and the US are illegally paying $13 billion in subsidies.