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While we were sleeping (farm subsidies)

6 February 2007

They’re not going away… but Mexican farmers are.  Anyone who still believes the tortilla crisis and continued exodus of the Mexican farmer are not related to subsidies is frankly delusional. 

The ultra conservative Heritage Foundation notices who really benefits:

Growers of corn, wheat, cotton, soybeans, and rice receive more than 90 percent of all farm subsidies, while growers of most of the 400 other domestic crops are completely shut out of farm subsidy programs. Further skewing these awards, the amounts of subsidies increase as a farmer plants more crops.Thus, large farms and agribusinesses–which not only have the most acres of land, but also, because of their economies of scale, happen to be the nation’s most profitable farms–receive the largest subsidies. Meanwhile, family farmers with few acres receive little or nothing in subsidies. In other words, far from serving as a safety net for poor farmers, farm subsidies comprise America’s largest corporate welfare program.

Left-leaning “Common Dreams” focusing on the impact in one country, Jamaica, noticed the same problem:

But this analysis, which is typical of many “progressive” complaints about trade and globalization, seriously missed its mark. And if you were watching last week as the U.S. Congress moved toward passage of a massive new farm-subsidy bill, the real source of Jamaican farmers’ problems became apparent.The farm bill, which the House of Representatives has approved and which the Senate could vote on this week, calls for taxpayers to fork over some $180 billion to farmers during the next decade. That’s a 70 percent hike above the cost of current farm-subsidy programs, most of which represent direct payments to wealthy farmers and agribusinesses.

Those subsidies make it possible to export millions of tons of food so cheaply that native farmers in places such as Jamaica can’t possibly compete.By guaranteeing U.S. farmers a minimum payment for commodities such as corn, rice and soybeans, the government encourages overproduction. That drives down the market price, forcing even higher subsidies and creating surpluses that can be shipped to Jamaica and elsewhere.The (London) Financial Times noticed the fancy footwork the subsidy bill is using to get around WTO rules:

Subsidy programmes that support prices, because they encourage farmers to produce more and hence push down world prices, are classified as “trade-distorting” under WTO rules and are subject to stricter limits. Despite the administration’s rhetoric that it was moving from supporting farmgate prices to protecting farmers’ incomes – the so-called “revenue assurance” principle – the proposed move was modest. The “marketing loan” programme, which subsidises farmers when the prices of their produce fall below a set level, altered the calculation of the price a little to take account of actual market prices, but the change will not be dramatic.

And… that means MORE U.S. corn will be flooding Mexico. Which means, less Mexican corn, more corn farmers coming into the U.S. to work for U.S. agribusiness, meaningMax Correa, secretary general of a campesino group called the “Central Campesina Cardenista,” estimates that “for every five tons bought from foreign producers, one campesino becomes a candidate for migration.” The importing of the proposed 450,000 tons of white corn, he told a press conference last week, is likely to eliminate more than 100,000 jobs in the rural sector.

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