Farming Is Different

The average cow in Europe earns more per day in subsidies (around $2) than the total daily income of the average cattle-owner in West Africa.

America's 25,000 cotton farmers received over $3 billion in subsidies last year, and can therefore undersell the 11 million people in West Africa who depend on cotton for their main source of income. Why is it farming, rather than mining or manufacturing, say, that makes the governments of the rich countries go into ultra-protectionist mode and spend money like crazy?

Listen, for example, to the European Union's agriculture commissioner, Fritz Fischler, defending the $2 per-day subsidy for cows in Brussels last Thursday. Criticisms of the $700-a-year cows "may be a nice PR stunt, but unfortunately this argument is not only intellectually dishonest, it is factually irrelevant. Yes, in the developed world we are spending our money on many things. Not because we are all stupid, but because our standard of living is higher."

He wasn't finished. "What next? Criticizing governments for spending public money on hospital beds, costly noise protection walls or fancy trees in parks rather than sending it all to Africa? Societies around the world must have the right to choose which public goods and services are important to them." And what's really important to Mr. Fischler is very high-maintenance cows.

Going into the Cancun summit, the rival proposals on agriculture from the rich and the poor countries are poles apart. The European Union and the United tates, which together spend $370 billion a year on farm and food export subsidies while blocking food imports with tariffs as high as 350 percent, talk of modest cuts in subsidies and tariffs, but refuse to discuss actual figures at all. The developing countries demand deep cuts in rich-country subsidies and tariffs, and do not want to make equal cuts in their own tariffs against agricultural exports from the developed world.

Fritz Fischler dismisses this position with his customary tact: "If I look at the recent extreme proposal sponsored by Brazil, China, India and others, I  cannot help getting the impression that they are circling in a different orbit....If they choose to continue their space odyssey they will not get the stars, they will not get the moon, they will come up with empty hands."  One assumes that Fischler is ranting like this on behalf of a domestic audience that wants him to defend the interests of European farmers -- but given that farmers are only a tiny proportion of any Western population, why are they the tail that wags the dog?

Ending all agricultural subsidies in the US and EU would save the average Western family of four close to $1000 a year in taxes.  Ending import tariffs would let developing countries earn between $30 billion-$100 billion a year by expanding their food exports to the rich countries, while cutting consumer prices in the rich countries. 

When Western factories shut down and shift production to Mexico or Taiwan, Western governments generally accept their arguments about competitiveness and efficiency, so why not apply the same logic to the farming industry?

Because it's not just an industry. Farming is what has shaped the landscape that people know and love, and it's a big part of what shapes them culturally as well. No more than two or three percent of the population live on the land in any Western country these days, but it's only a century since more than half of them did. So of  course people in the West feel differently when family farms go under than they do when a textile mill closes down or a telephone call centre move its operations to India.

Farmers, naturally, play on this sympathy for all it's worth, And the subsidies grow and grow.  This creates artificial opportunities for large-scale agro-business, so soon most of the subsidies are going to big businesses, not to family farms.

Meanwhile, the global trade in food gets more and more distorted:  European farmers produce sugar from beets at over twice the average cost of production of sugar cane in Brazil or Zimbabwe, but dominate the European market thanks to tariffs of up to 140 percent.

What is wrong is not the wish to preserve the countryside and the rural way of life in the developed countries; it is the obsessive, doctrinaire insistence on doing it by a market model. The rich countries want to preserve the family farms because they make cultural, ecological, and even aesthetic sense. But they don't make economic sense in a global market, and all the subsidies in the world will not change that. So just acknowledge that your real goal is to preserve the rural society and landscape, and change the system.  Subsidize the farmer, not the food.

It's not as simple as it sounds, of course, but it couldn't be more complicated and expensive than the current system of subsidies. It certainly wouldn't be as harmful. And at one stroke it would remove the biggest obstacle to a world of freer and fairer trade. Maybe in twenty years....

MS/SM

END

MNA