At a time when massive tax cuts, a costly war in Iraq and a
prolonged economic recession are pushing deficit spending in the
coming federal budget to over $500 billion, action needs to be
taken to help offset these staggering costs.
Eliminating all U.S. agricultural subsidies would save the
government hundreds of billions of taxpayer dollars, would benefit
U.S. consumers, and would also go a long way toward fighting rural
poverty in poor countries.
Agricultural subsidies were first created in the early years of
the United States to help the large portion of the population that
lived as small farmers. Still, the reality today is that the small
farmer is going the same route as the small rancher ““
extinction. Large agribusiness corporations dominate the American
agricultural sector and have a stranglehold on many politicians in
Washington D.C.
Just last year, President Bush pushed a staggering $170 billion
farm subsidy bill. In his speech supporting the bill, Bush stated,
“Our farmers and ranchers are the most efficient producers in
the world. “¦ We’re really good at it.” If our
agricultural sector is so efficient, then does it really need so
many hundreds of billions of dollars in subsidies?
The answer is a resounding no. American agribusiness does not
need subsidies at all and eliminating them would not hurt our
farming industry. In fact, it could benefit the industry.
Chris Edwards, the director of fiscal policy at the Cato
Institute, and Tad DeHaven, a research associate at the Cato
Institute, use New Zealand as an example of successful agricultural
reform. New Zealand eliminated all agricultural subsidies in 1984.
Since the reforms, just 1 percent of New Zealand farms had declared
bankruptcy. Additionally, the country’s agribusiness
productivity has experienced an average growth of 6 percent since
1984 compared to 1 percent growth before. The numbers from New
Zealand are clear: Eliminating subsidies resulted in better
productivity with relatively few side-effects.
Such a model should be applied to U.S. subsidies. Current U.S.
subsidies have many loopholes that allow people who do not own real
farms to be able to meet certain requirements that allow them to
receive federal subsidies. Among the list of 2.8 million recipients
of agricultural subsidies last year were businessman Ted Turner and
basketball player Scottie Pippen. These people clearly do not rely
on selling crops for income, but they still qualify for subsidy
payments by keeping a certain number of farm animals on their
property.
Eliminating subsidies would be extremely beneficial to U.S.
consumers because it would lower the artificially inflated prices
of food and force the American farming industry to compete with
overseas imports. Additionally, it would save the federal
government hundreds of billions of dollars that it badly needs in
its current deficit-ridden state
American agricultural subsidies also do an innumerable amount of
damage to Third World agricultural markets by dumping cheap surplus
food stocks on foreign markets. Every year, the United States buys
up huge quantities of surplus food stocks from the agricultural
sector to keep domestic food prices artificially higher. The
surpluses it buys end up getting dumped on Third World markets
overseas and devastate the farming industry of the Third World.
The so-called “subsidy superpowers” of the west have
utilized World Trade Organization trade talks to allow rich
countries to use subsidies and force poor countries to accept their
demands. This system is perpetuating unfair competition in
agricultural markets and reinforcing rural poverty in the
process.
Eliminating subsidies would lead to improved access to western
markets and an end to dumping surplus food stocks on Third World
markets, potentially lifting many people out of poverty. If real
reform in the WTO’s agricultural policy is made, then it will
go a long way in the fight against rural poverty in Third World
countries.
For example, if Africa could increase its share of world trade
by just 1 percent, it would approximately earn an additional $80
billion a year.
Recent WTO trade talks in Cancun were not enough to solve the
problem of farm subsidies. More must be done to create a real
chance for the world to eliminate western agricultural subsidies
and take a big step forward in developing Third World
economies.
Bitondo is a third-year political science and history
student.