kickAAS

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.