Tuesday, August 07, 2007

Farm subsidies: the country's second biggest corporate welfare program

Late last month, the House of Representatives passed a big farm bill. Normally a bipartisan exercise in dolling out pork slop, this year's version is proving fairly controversial.

Farm subsidies are the biggest bone of contention in international trade talks. Developing countries ask why they are ordered by the International Monetary Fund, World Bank, World Trade Organization and western donor countries to have laissez-faire capitalism shoved down their throats while at the same time, North American and European governments lavish generous subsidies on their own powerful agricultural lobbies. Maybe the reason developing countries are skeptical of the free market is because they see that western countries don't seem to believe in them either.

But it's not as though the venerable family farmer, so lionized in American mythology, is benefitting from any of this. Oxfam points out that the 2007 Farm Bill is primarily designed to benefit big agrobusiness.

"Under the guise of saving the family farm, Democrats and Republicans have turned the farm safety net into a slop bucket for American corporate welfare," said Raymond C. Offenheiser, president of Oxfam America.

“The House Farm Bill makes minimal progress for nutrition, conservation, and rural development programs but ignores the rare opportunity to finally overhaul US trade distorting subsidies that benefit large, corporate operations at the expense of family farmers and rural communities," he added.

One of the most egregious subsidies goes to the US cotton industry, which particularly hurts farmers in West Africa. Oxfam notes that 12,500 American cotton producers receive some $3 billion in subsidies. That means that the average cotton farmer receives around $240,000 in taxpayer handout. Yet the typical American is more outraged by a single mother with three kids receiving a tiny fraction of this in welfare benefits to feed her family.

This op-ed piece in The Christian Science Monitor calls for the elimination of farm subsidies. They help giant corporations, not small-time family farmers and result in higher taxes and prices for consumers.

The author notes that yes, some family farmers continue to struggle. But if subsidies were really designed to alleviate farmer poverty, then lawmakers could guarantee every full-time farmer an income of 185 percent of the federal poverty level ($38,203 for a family of four) for under $5 billion annually – one-fifth the current cost of farm subsidies.
Instead, federal farm policies specifically bypass family farmers. Subsidies are paid per acre, so the largest (and most profitable) agribusinesses automatically receive the biggest checks. Consequently, commercial farmers – who report an average annual income of $200,000 and a net worth of nearly $2 million – collect the majority of farm subsidies. Fortune 500 companies, celebrity "hobby farmers," and even some members of Congress collect millions of dollars under this program.


The author also re-states a claim made that farm subsidies contribute to serious health problems and rising healthcare costs by subsidizing corn and soy (from which sugars and fats are derived) rather than healthier fruits and vegetables.

Congresswoman Kirsten Gillibrand represents a major dairy producing area of New York, which actually does have some small farmers. She argues that the Farm Bill represented progress, particularly for those who support organic and local farming.

She points out that provisions in the bill would

-direct the USDA [US Department of Agriculture] to provide loans to businesses that promote buying and distributing within 400 miles of the farms where the product was produced. This provision will specifically help agricultural businesses in the Northeast because of the large markets in Boston, New York and Philadelphia. Promoting local distribution also helps to keep local economies strong and prices low because consumers don’t have to pay the high cost of transporting products long distances.

-offer $50 million in grants and free technical assistance to farmers that want to transition from traditional farming to organic farming. Many of New York’s farmers are operating on the financial edge and can not afford the high investment that is required to transition to organic. This amendment addresses that need and will help keep many of our small farms in business. Further, the organic market has been growing exponentially recently – especially in New York City – and the Upstate economy can benefit immensely from this increased demand.

Organic farmers presently pay more for federal crop insurance, for no apparent reason. There is no statistical evidence that organic crops are any more prone to natural disasters than pesticide laced ones. NPR report notes that a provision in the farm bill would force the USDA to justify this higher rate or else stop charging it.

There is one proposal making the rounds that international charities have wanted for years. When there's a humanitarian emergency abroad, the US government typically ships surplus food from this country over to the affected area. This might seem logical on the surface but it creates many serious problems.

In many crisis locations, food is available locally or regionally, but not in the particular area where the emergency occurs. For example, there was recently a hunger emergency in eastern Kenya. There was sufficient food available in other parts of Kenya but poor infrastructure made distribution of the food difficult. And the government of Kenya didn't have the resources to buy or transport it.

Flooding the area with free food from abroad depresses prices for locally grown food. This causes further hardship for local farmers and thus deepens the cycle of poverty. It also takes several weeks or even months to get the food from the US to the affected areas.

"It does not make sense to the average American, to the average African -- probably to the average anyone -- that the best way to get food to someone who is hungry a continent away is to buy it in the U.S., process it in the U.S., ship it on a U.S. ship and hopefully a couple months later, it would actually arrive to where it's needed," notes Erin Tunney, from the non-governmental organization Bread for the World.

This delay has severe repercussions in emergency situations. Additionally, this hideously inefficient process creates unnecessary greenhouse gas emissions, wastes energy and adds significantly to the cost of the assistance picked up by the US taxpayer.

Furthermore, this practice encourages agricultural overproduction in the US, thus lowering market prices and increasing the dependency on subsidies.

A new plan would set aside $25 million for a pilot program to test buying food in poor countries for both emergency and long-term aid.

In buying food locally, help would reach those who need it faster and thus save lives. It would be a boon to local agriculture and help farmers escape the cycle of poverty, thus reducing their own and their country's dependency on foreign aid. It would also discourage wasteful overproduction in US agriculture.

2 comments:

Mark said...

Bush was actually more in favor of reform that the Democrats. He wanted to lower the income level above which to cut subsidies to like $200k/yr, but Pelosi brought it back up to a million or two. The reason? Gotta support the freshman reps of the 110th congress!

Oh, and Romney claims that his sons are serving the country by campaigning for him: http://news.yahoo.com/s/ap/20070808/ap_on_el_pr/romney_iowa

Renegade Eye said...

Mark is correct, that conservatives are more opposed to farm subsidies than liberals. It amounts to institutionalized protectionism.

Good point about nutrition and subsidies.