Don't Let Me Stop You

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Farm Subsidies In 2006, Farm Subsidies In 2008, Farm Subsidies Forever

Posted by Dan Draney on July 12, 2005

Genial co-guest blogger Steve wondered yesterday what the local implications would be if the Bush administration took steps to discontinue farm subsidies.

My answer? I really haven’t a clue. I’m not much of an ag economist, nor do I have a lot of experience with the ag economy in general (despite where I live and where I grew up). So in some part, I’ve got to plead a degree of ignorance on the subject.

But Steve’s post got me to thinking how big of an issue farm subsidies could become in both state and federal politics, especially considering that 2006 and 2008 are just around the corner.

Here’s Ag Secretary (and former Nebraska governor) Mike Johanns, quoted in an AgNet story appearing on the Wisconsin Ag Connection website:

Agriculture Secretary Mike Johanns, who departs for Beijing this weekend, said the administration sent a strong signal this week by asking Congress to kill a cotton subsidy program that was ruled illegal by the World Trade Organization.

“We have been saying all along we’re very anxious to get a reform-oriented WTO round,” Johanns told reporters Wednesday. “We believe that our farmers and ranchers can compete with anybody in the world.”

Farm subsidies are critical in the WTO talks. Developing nations want subsidies cut in wealthy countries to allow competition from farmers in poor countries.

President Bush, attending a summit with leaders of other wealthy nations, said Europe and the U.S. should agree jointly to abolish subsidies through current WTO negotiations.

“For us, the president’s challenge is right on target,” Johanns said. “Let’s move together, and let’s eliminate subsidies. We’re ready to do that.”

China purchased $1.7 billion dollars worth of US cotton in 2004, as the story says. One really wonders what possible argument there could be in favor of US export subsidies on that particular ag crop.

Meanwhile, as Steve also pointed out, there was a lot of tough talk against export subsidies at the G8 summit.

G8 leaders pledged Friday to end farm export aid and called for renewed efforts to conclude a new phase of world trade liberalization under the so-called Doha Round of negotiations by the end of next year.

The commitment on farm export subsidies, something demanded by African states and others, was made in a communique issued at a Group of Eight summit at the Gleneagles hotel in Scotland.

But it set no specific deadline.

“In agriculture we are committed to substantially reducing trade-distorting domestic support and substantially improving market access,” the statement said.

“We are also committed to eliminating all forms of export subsidies and establishing disciplines on all export measures with equivalent effect by a credible end date.”

On the Doha round of negotiations among member countries of the World Trade Organization (WTO), the communique said:

“We call on all WTO members to work with greater urgency to bring these negotiations to a conclusion by the end of 2006.”

First off, judging by the amount of ag crops and goods the US exports, there’s really no reason to keep some sort of “agri-shield” in place. These sorts of things aren’t beneficial to third-world countries trying to gain stable footing in global markets. (The best way to start a fresh or feed a growing democracy? Access to free markets and free trade, IMHO.) The elimination of the ag export subsidies is also something that’s been in the pipe for a while now.

Will the state and federal ag lobby like this? I frankly have no idea, and that’s why I wish I were more of an expert on the ag market. Perhaps the question of how the small ag producers (the “family farm,” if you will) will fare when subsidies are discontinued is better left to readers with more insight and better knowledge than I possess.

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