Poor farmers pay price for subsidies


Beyond the negotiations and protesters that highlight agricultural trade talks lies a simple reality: In the end, each nation must feed its own people.

Ideally, trade can help, but inevitably, a nation’s farmers must be guardians of the food supply and the ecosystems upon which we all depend. In September, nations negotiating in Cancun, Mexico, took one step closer to accepting that reality.

Depending on who you listen to, that World Trade Organization Ministerial Conference in Cancun was either a total failure or a positive development in the maturation of international trade negotiations.

For the United States, the European Union, Japan and Canada, certainly, the meeting was a shocking failure, because the Big Four returned home empty-handed. As London-based journalist Gwynne Dyer wrote following the meeting, “The shock was the fact that the Europeans and Americans did not get their way at Cancun — the usual divide-and-rule tactics of the rich suddenly failed.”

Instead, 22 developing nations, lead by Brazil, China and India, stood together and refused to consider any other trade issues until the Big Four agreed to reduce the massive subsidies they pay their own farmers. The so-called G22 encompasses more than half of the world’s population, but the Big Four refused to budge, and the meetings stalled. As one observer noted, “The many derailed a trade agenda for the few.”

It is no surprise the Big Four froze like deer caught in headlights. According to Jeffrey J. Schott, a trade specialist speaking to The Washington Post, the United States and the European Union “had very little to give, except the most politically sensitive areas that have survived the previous [negotiations].” These sensitive areas are the powerful farm lobbies and the huge subsidies they demand.

Although subsidies have decreased in recent years, according to the Washington-based Worldwatch Institute, in 2001 the Organization for Economic Cooperation and Development nations, which include the Big Four, spent $311 billion on agricultural subsidies. The same year, OECD farmers received an average of 31 percent of their income from government subsidies, though these vary greatly among nations: from just 1 percent in New Zealand to 60 percent or more in Iceland, Japan, South Korea, Norway and Switzerland.

Meanwhile, U.S. subsidies are increasing. “The United States — that is, the ‘free market’ Bush Administration — has increased farm subsidies and steel tariffs over the last two years,” said Fareed Zakaria in the Sept. 29 issue of Newsweek (which printed “increased” in italics).

So what’s wrong with subsidies? Aren’t they necessary to protect small farmers and ensure the vitality of a nation’s food supply? Theoretically, yes, but in practice, they often do just the opposite, according to Vital Signs 2003, a Worldwatch publication.

“Although politicians generally argue that these subsidies provide a social safety net for rural communities and assure domestic food security, the way in which subsidies are distributed can actually undermine rural areas. Moreover, economists argue that these payments distort production and trade, since they encourage farmers to produce more than the market demands,” explains Vital Signs.

Unfortunately, Worldwatch notes that the most beneficial subsidies, those “targeted at poorer farmers or payments to encourage farmers to improve their environmental performance, remain just 1 and 3 percent of [total subsidy] support in OECD nations respectively.”

Take cotton for example. In the United States there are 25,000 cotton farmers who, in 2001, “received roughly $3.9 billion in subsidy payments for producing a cotton crop that was worth only $3 billion at world market prices,” reports food and trade policy analyst, Devinder Sharma. He notes that one grower in Arkansas received $6 million — “equal to the combined annual earnings of 25,000 cotton farmers in Mali.”

But it’s not just African farmers who are suffering. U.S. farmers, too, are victims, because their government does not subsidize farmers equitably. Rather, the United States has a “very complex system of rules by which it distributes the subsidies,” according to a report in the October issue of The Ecologist. “The 10 percent largest farms get three-quarters of the subsidies; many smaller farms get nothing.” So, while the massive monoculture estates get richer, farmers working several hectares or several hundred, barely make ends meet.

Industrial agriculture has other ills as well. The cotton-farming industry “accounts for a staggering quarter of the pesticides used in the U.S.,” reports The Ecologist. “Cotton is sprayed eight to 10 times per season with pesticides and fertilizers that incorporate 15 toxins known to cause birth defects and at least nine carcinogenic chemicals.”

And since farmers in developing nations cannot compete with highly subsidized farming in the industrialized nations of the North, their governments are forced to seek financial support from the World Bank and the International Monetary Fund. A key condition for loans, however, is that borrowers primarily cultivate cash crops for the global market. Thus, in one stroke, farmers in the developing world give up the staple foods they need for family and community food security, and become slaves to the vagarious global marketplace. Inevitably, global markets become glutted and prices tumble, leaving these farmers without income — and without food.

“If the WTO has its way, and the developing countries fail to understand the prevailing politics that drive the agricultural trade agenda, the world will soon have two kinds of agriculture systems — the rich countries will produce staple foods for the world’s 6 billion-plus people, and developing countries will grow cash crops like tomatoes, cut flowers, peas, sunflowers, strawberries and vegetables,” warns policy analyst Sharma.

In Cancun, the G22 proved that they understand the politics; but can they stop the North from bifurcating agriculture and controlling the world’s food supply? If the G22 stands united, the Big Four may well be forced to deal with the developing world on equal terms. The danger remains, however, that caught up in all the sound and fury, negotiators will continue to ignore the essential truth: that the welfare of farms and farmers must always take priority over the success of trade.