farm subsidies

Issue in Brief

What’s up?

Farm subsidies - in the US and Europe - were at the center of the Doha round of global trade talks. While Doha may now be dead, farms subsidies continue to get attention at home as Congress gets ready to debate a farm bill, which is home to billions of dollars of support for farmers.

Eliminate Subsidies!

Those in favor of ending farm subsidies argue that the market should decide which farms succeed or not - just like it does for all other businesses in a capitalist system. Why should farmers get tax support when other businesses face financial struggles?

Also, we are in a budget crunch. The debt and deficit are at record highs and certain programs need to be cut. Cutting farm subsidies saves tax dollars from being sent to large corporate farms that do not need the support.

Finally, free traders and those involved with the Doha round of trade talks oppose subsidies because they create unfair competition and hurt the farmers in third world nations who cannot afford to sell their crops at the government subsidized prices of European and American farms. They point to the fact that in 2001, the EU spent almost $6 billion in subsidies, and the US spent $2.3 billion. (CBO)
Third world governments are strapped for cash and can't afford subsidies like ours, so their countries' farmers are being forced to sell their crops below world market prices and are losing tons of money in the process. The argument follows that these farmers make up the bulk of their populations and that these farm subsidies are in effect supporting global inequalities of wealth by not giving third world countries a fair chance to grow.

Keep Subsidies!

Subsidy supporters argue that farmers are the backbone of American society. We need there to be food produced domestically and without subsidies our farmers would be out of business because of cheap foreign labor and the even larger subsidies given out by European countries and Japan. (As shown above, Europe gives two times as much money to their farmers as the U.S. The average EU cow is said to receive a $2.20 daily subsidy, more than the wage of 20% of the world's population) (FAO)

Plus, farming is not an ordinary business because the laws of the market don't work so well when supply and demand aren't very flexible (people got to eat and harvest only comes around once a year). Natural disasters such as floods and hurricanes (and even just extreme weather) can also trip up a farm for good. Subsidies work to keep farmers churning out a dependable supply of ag products - in spite of unpredictable commodity markets and weather patterns. Not having subsidies could not only hurt farmers, but could also pose a national security risk as we would be relying heavily on foreign governments to supply the most basic commodity. (Think oil)

Transition!

Moderates believe subsidies should be reduced or maybe removed but only slowly and gently with other help given to farmers. They believe that farmers deserve tax support in years of drought or natural disaster.

Also, for farmers who lose their jobs, an extensive educational program should be started to aid farmers learn new skills for new careers. This way the budget and tax paying majority can be helped at the same time as the farmers.

What's happening now?

Trade representatives in the WTO look like they've failed to come up with a compromise on subsidies under the Doha round of trade talks - and it's unclear if/when those talks will be revived, especially since the president's "fast track" trade negotiating authority expired in July of 2007. (Under fast track, Congress waives the right to tweak any trade deals, giving the president a stronger hand in negotiating a deal. If Congress doesn't renew fast track, which it may not, reaching a Doha deal will be that much harder.)

Subsidies will go under the microscope again when Congress debates the farm bill - but hill watchers are predicting farmers don't have to fear much losing their subsidy cushions.

More information:

  • See cJ's Trade, Food and Doha pages for more background and stats on farm subsidies.

  • A database of facts on farm subsidies - EWG

  • Information on the Doho trade talks - Doha

  • A study on large companies getting most of the subsides - Heritage Foundation

  • The growing pressure to cut farm subsidies - Forbes

  • Government report on agricultural trade policy - Congressional Budget Office

  • A listing of agriculture benefits programs. Benefitsgov

Updated July 8, 2007

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The Farm Bill

This jumbled up mess pretty much reflects the competency of members of congress. A despicable bunch of mostly unnecessary funds that will ultimately serve very few. But the MOC certainly don't care!

 

bdenise1 | May 5, 2008 - 3:53pm