Stragies For Providing Corporate Welfare: Agribusiness Model

“They don't need a bailout. All they need is the time to restructure, and we're confident they'll be very successful.” “It’s unfortunate that General Motors is going to have to be laying off at the same time Toyota and other companies are expanding in the U.S.”

Allan B. Hubbard, director, White House National Economic Council.

Sholnn Freeman, “Bush Advisor Is Against Auto Bailout,” Washington Post, 12/06/05, D03.

American taxpayers spent a staggering $143.8 billion on farm subsidies over the past ten years, more than $104 billion of which (72 percent) went to the top 10 percent of recipients--some 312,000 large farming operations, cooperatives, partnerships and corporations that collected, on average, more than $33,000 every year. In lieu of imposing a limit on taxpayer subsides to the very largest, government-dependent agribusinesses, defenders of the status quo are prepared yet again to slash conservation funds and food assistance programs for the poor.

Under a little-noticed provision of the Trade Act of 2002. USDA's Foreign Agriculture Service (FAS) has begun to provide trade adjustment assistance subsidies to agricultural commodity producers in the United States who demonstrate that they have lost revenue to competing imports. Data obtained by EWG under a Freedom of Information Act (FOIA) request shows that in calendar year 2004, payments under this program totaled $11.5 million to producers of five commodities (salmon, catfish, shrimp, blueberries, and lychee nuts). Three states accounted for 83 percent of the payments: Texas, Alaska and Washington.

“New EWG Farm Subsidy Database Reignites Reform Efforts,” Environmental Working Group, 11/01/05.

The EU and the US are cheating on the poor. They are telling poor countries that they have to open their markets in return for cuts in farm subsidies in the west but in reality they are cooking the books with devastating consequences for the poor.

…Aid and debt are essential, but without the vital third leg of the stool - trade - we won't get poverty reduction in Africa. This is the Enronisation of the Doha round of trade negotiations. Rich countries have used creative accounting to cheat poor countries into giving up their market access in return for nothing.

…While rich countries have apparently agreed to get rid of the most nefarious subsidies of all - export subsidies - in reality they will be able to keep the bulk of their other forms of support that act as a hidden export subsidy or lead to the overproduction of many agricultural products of interest to developing countries.

Larry Elliot, “West accused of concealing farm subsidies,” Guardian (UK), 06/05/05.

Europe and the USA claim to have cut their subsidies over the years but, to date, there has been no substantial reduction, merely a relabelling of existing support. Since the Uruguay Round started in 1986, overall farm support in developed countries has virtually remained the same (more than 250bn per year in real terms, according to the OECD). …Oxfam has calculated that the EU and the USA are massively underestimating the real levels of export subsidization. The USA is providing 200 times more support in hidden export subsidies than it declares equivalent to 6.6bn a year. The EU pays the equivalent of 5.2bn in hidden export subsidies – four times what it report to the WTO. (3)

The developed world funnels the equivalent of nearly $257bn a year through subsidies and import tariffs to its (mostly) wealthy landowners and agribusiness – the last people who need propping up. (6)

…Oxfam estimates that the volume of de facto export subsidies involved in US exports to Guatemala has totaled $60m since 2000, with a peak of $19m in 2000 alone. …the USA, for example, produces wheat at a loss of more than 50 per cent, in spite of its hi-tech planting and harvesting machinery. (9)

…In 2003, the USA provided almost $40bn in agricultural support to its producers. …US rice producers…in 2003 received subsidies and support payments totaling $1.3bn for a crop that cost $1.4bn to grow. This meant that US taxpayers paid nearly 100 percent of the cost of production. (12)

…the USA most uses other forms of export support that are not yet disciplined by WTO rules, including export credits ($7.7bn) and the commercial use of food aid. (18)

…according to WTO notifications, total aggregated support in developing countries , where 90 per cent of the world farmers live, is 14 times lower than that of the USA and EU combined…developing countries…reduced their subsidies under the terms of the IMF structural adjustment programmes. (20)

…the USA is exporting cotton at 65 per cent below its real cost of production…(26)

…According to evidence used by Brazil in its case against the USA, the impact of export credits and ‘Step 2’ programmes has depressed world prices by around four per cent. …the [WTO appellate] panel has confirmed that all sugar exports are effectively subsidised, and that the EU is dumping more than three times the level of subsidised sugar exports permitted under WTO rules. (29)

Oxfam Briefing Paper 76, “A Round For Free: How rich countries are getting a free ride on agricultural subsidies at the WHO,” June 15, 2005.