Organic Consumers Association

OCA
Homepage

Previous Page

Click here to print this page

Make a Donation!

JOIN THE OCA NETWORK!

OCA on Why and How U.S. Farm Subsidies Must Be Reformed

July 4, 2005
US Farm Subsidies: Goals, Realities and Prospects
By: Will Allen & Ronnie Cummins
Organic Consumers Association <www.organicconsumers.org>

When US farm subsidy programs began in the 1930s, the goal was to keep
family farmers on the land and provide food and fiber during times of
hardship, depression and war. In the late-1940s, soil and water conservation
subsidies were added to preserve rural resources.

Despite these lofty goals, the Environmental Working Group has shown that
only 36% of US farmers currently receive subsidies while farmers in the
developing world claim that US subsidies to cotton, rice, corn, sugar and
soybean farmers are trade-distorting and unfair. Studies show that US
subsidies depressed prices and allowed brokers to dump commodities in
foreign countries at prices well below the cost of production for local
farmers. Many markets in developing countries are well-stocked with
indigenous foods and fiber, but are seriously disrupted by the dumping of
cheap subsidized crops from the US, EU and Japan.

Since 1995, more than 25,000 bankrupt cotton farmers in India committed
suicide, while more than a million West African cotton growers lost their
farms. More than a million corn and cotton growers in Mexico have been
driven off the land and thousands have been forced to illegally cross the
border, looking for work. Since 1990, almost 20,000 small and medium-sized
US farmers stopped growing cotton and many filed for bankruptcy.

Large farming and brokerage corporations profit handsomely from the $25
billion in annual crop subsidies and more than $20 billion in water
subsidies. Most of the subsidies go to farmers who grow corn, rice, cotton,
sugar and soybeans. Seven percent of US farmers received more than 75% of
farm subsidies and only 2500 farmers received 78% of the cotton subsidies
(more than $9 billion) during the period from 1995 to 2003.

In 2003, Brazil sued the US and the EU in the World Trade Organization (WTO)
over unfair subsidies for cotton and sugar growers and in early March 2005,
Brazil won both cases. Following the WTO decisions the US has agreed to
change its subsidy programs. But how the subsidy system is changed will
bear watching and require pressure to keep it from being business as usual
in a different costume.

Much of US subsidy policy is justified by agribusiness as being essential to
a cheap food policy for consumers and an effective trade policy for farmers.
But, claims about ³cheap food² are largely a myth, since enormous costs are
concealed from the public. In addition to the market price, costs are added
to food and clothing bills by subsidies to farmers and to brokers for
marketing or exporting surplus crops. Also added are subsides for
irrigation programs. Taxpayers make these additional payments for meat,
chicken, cereals, processed food, rice, soybeans, grain, bread, sugar, milk,
cotton and cottonseed on April 15.

Taxpayers pay for the ³external costs² of farming, including the clean-up of
farmland, rivers, lakes and aquifers damaged and destroyed by farm chemical
use and runoff. Taxpayers also pay for the escalating Medicaid and Medicare
costs associated with high cancer and birth defect rates for farmers,
farmworkers and rural residents. Add up the market price, the farm
subsidies and the ³external costs,² and America¹s ³cheap food² becomes very
expensive.

It is the subsidized farmers who are using most of the chemicals and growing
controversial genetically engineered crops. Agribusiness interests argue
that toxic chemicals and genetic manipulation are essential if US farmers
are to stay competitive in world markets. But, this is also a myth. Pew
Institute researchers have shown that since 2000, US farmers lost $300
million per year in grain shipments to the EU due to the EU refusal to buy
GMO corn. The State Department believes US farmers could lose an additional
$4 billion per year with the recent enactment of EU labeling and identity
tracking regulations for all crops.

US interests decry these trends as trade distorting and unscientific.
Research from the EU and elsewhere, however, has shown that GMO crops have
already caused life-threatening allergic reactions, a sharp reduction in
beneficial insects and soil organisms, damage to the vital organs of test
animals, an increase in the use of weed killers and a 75% reduction in this
year¹s monarch butterfly population.

At the same time that America¹s chemical and genetically engineered export
markets are in serious decline, organic markets are rapidly increasing
around the world. Tens of thousands of farmers in the US and overseas have
converted to organic production. Many are looking for new markets, better
prices, and how to farm without pesticides, chemical fertilizers, hormones,
antibiotics and GMOs. While the shelf price for organic food is slightly
more expensive, we would argue that when you consider all the hidden costs
for taxpayer subsidized, chemical-intensive and genetically engineered food,
organic food is cheaper.

US organic farmers have made impressive gains in cleaning up millions of
acres of cotton, corn, rice, soy, and vegetable land that were contaminated
by toxic pesticides and chemical fertilizers. Until now, farmers learned
how to reduce or eliminate toxic chemicals at their own expense, without the
help of subsidies. A revamped subsidy system could assist farmers in making
those transitions, help rebuild rural America, eliminate agricultural
pollution, improve public health, and reduce our escalating medical bills.

The recent WTO decision against US cotton subsidies provides farmers and
taxpayers with an opportunity to implement long overdue changes in the
subsidy programs, and redirect the program towards its original goals.
Subsidies should be available to all farmers (with strict acreage and dollar
limitations) who are willing to make a transition to sustainable farming
practices that promote public health and conserve vital resources for our
children and future generations.

Fortunately, many sustainable farming and resource conservation initiatives
already have been enacted into Federal law, such as the Conservation
Security Program, Environmental Quality Incentives Program, Conservation
Reserve Program, Special Practices Programs and renewable energy incentives.
Unfortunately, Congress and the Administration have consistently
under-funded or not funded these sustainable initiatives. Instead, they¹ve
used our tax dollars on pork barrel subsidies for wealthy farmers and
exporters.

Subsidy programs that help farmers make the transition to less toxic farming
should be the centerpiece of our next Farm Bill. Taxpayer giveaways to rich
US farmers and brokers are no longer acceptable to the WTO. They should no
longer be acceptable to US taxpayers.