Cost and effects of America’s crop subsidies

The Wall Street Journal has called the U.S. farm bill "a 10-year, $173.5 billion bucket of slop." Many other editorialists and critics were even less charitable.

If it passes as expected, only President Bush could save the country from this 70 percent increase in spending on agriculture. But he is reported to be ready to sign the bill – without any fanfare if he is wise, critics warn.

They say the bill is chock full of disasters:

  • Subsidy rates for some commodity crops will jump by some 10 percent this year alone.

  • Conferees ladled out $94 million for an apple programme, $500 million for sugar supports, and $4 billion to subsidise peanuts – all of which are in more than ample supply and don't need taxpayer encouragement.

  • New programmes were created for dried peas and lentils – and dead programmes for wool, mohair and honey were resurrected.

  • The bulk of the bill's new subsidies will go to a select group of wealthy wheat, rice, corn, cotton and soybean growers.

    The one positive measure in the Senate bill – a cap of $275,000 on the amount of subsidies per farm per year – was killed in conference. The cap goes up to $360,000, and corporate farmers were handed tools to circumvent even that limit.

    Finally, the bill is a disaster for trade policy. Only last year, the U.S. convinced Europeans to put their bloated farm subsidies on the table in global trade talks. But as the European Union's Trade Commissioner, Pascal Lamy, recently noted, the U.S. now pays three times more per farm than does the EU. This is a farm-subsidy bill, the Journal points out, that would embarrass even the French.

    Source: Editorial, The Farm State Pig-Out, Wall Street Journal, May 2, 2002.

    For more on Agriculture

    RSA Note:
    Free market proponents in developing countries argue endlessly over agricultural subsidies paid to farmers in the U.S. and other wealthy countries. There is no disagreement over the view that politicians have no right to utilise taxpayer’s money to subsidise farmers, especially considering the fact that the recipients are generally wealthier than the average taxpayer footing the bill. The argument rages over the policies that should be followed by developing country governments. Imports of cheap subsidised agricultural products into developing countries disrupt agriculture in those countries when the products are sold at lower prices than the prices at which the local farmers can produce them. The affected farmers urge their governments to levy tariffs on the imports to protect them from what they believe to be unfair competition. However, such tariffs deprive the poorest inhabitants of the developing countries of the cheap food they could enjoy at the expense of taxpayers in the wealthy subsidising countries. Where should the sympathies of developing country politicians lie – with articulate and possibly wealthy local farmers or with inarticulate and poor consumers?

    Eustace Davie, Director, FMF.

    FMF Policy Bulletin\6 May 2002
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