|* A New Villain in Free Trade: The Farmer on the Dole|
WHEN diplomats, world leaders and economists meet in Johannesburg this week to figure out how to help struggling countries, they will be slinging darts at a brand new villain: the big American grain farmer.
Deserved or not, this year the big American farmers were transformed seemingly overnight from benevolent producers of the world's greatest bounty to unfair competition — greedy welfare kings undermining poor farmers in Africa, Latin America and Asia.
The criticism has nothing to do with famine relief, but with American farmers selling their subsidized grain below cost to the rising middle class overseas, much like countries that the United States accuses of dumping their underpriced steel here.
"It's fairly straightforward," said Pranab Bardhan, professor of economics at the University of California at Berkeley. "The subsidies encourage overproduction, which depresses prices and leads to a kind of dumping of low-priced grain on the world market. The only people who will be hurt from these subsidies, who will really go hungry, are the poorest people in the developing countries."
In May, President Bush signed the $190 billion 10-year farm bill that will continue to give the nation's biggest farmers $19 billion in subsidies, perpetuating a Depression-era program of direct financial aid to encourage production of grain and cotton. Some critics call that a welfare system, and some of the most important developing nations with big agricultural exports — Brazil, Thailand and South Africa — spoke up loudly, charging the Bush administration with hypocrisy.
They complained that one minute the United States says it wants developing countries to rely on free trade rather than handouts, the next it enacts a law, which they say is the biggest impediment in the free trade of food, the one commodity all these countries produce.
These countries had hoped that Mr. Bush, an avowed free-trader, would reduce the American farm subsidies and shame the European nations to follow his lead and reduce theirs as well. The European Union gives its farmers $60 billion in annual subsidies, which cause similar problems for developing countries. Japan subsidizes its rice growers, too, but with fewer repercussions on the world market.
Thailand, which exports $40 billion of fruits, vegetables, fish, rice and other food, sent a delegation of farmers and parliamentarians to Washington in June to protest the new farm subsidies.
"This is the way of rich countries," said Prakarn Virakul, the agricultural attaché of the Thai Embassy in Washington, who accompanied the farmers on their visit. "They tell us to open our markets; we do but they don't stop giving their farmers subsidies. Now American farmers will be given money to grow cheap rice and push down the world price for the next six years. That pushes our poorest farmers out of business."
When he speaks of American farmers, however, he does not mean the farmers who grow the food Americans eat — farmers of fruits and vegetables as well as ranchers. They do not receive a penny of federal subsidies.
"There is now a complete disconnect between farm policy and what people actually eat," said Timothy E. Josling, a Stanford professor who specializes in agriculture and trade. "The subsidies support what was historically the most important part of American agriculture but not what people spend their food dollar on today."
With the federal budget tumbling into deficits, Senator Richard G. Lugar, Republican of Indiana and one of the few farmers in Congress, sided with the little farmers and denounced the subsidies. "These subsidies are destroying small family farmers, not helping them," he said, adding, "We've got food coming out of our ears."
At the end of the debate, Mr. Lugar and his allies were easily defeated.
The reason is politics. In this election year, Senate Democrats and House Republicans marshaled votes for the bill, hoping to appeal to the farm bloc and hang on to the majorities in their respective chambers.
In hindsight, this argument was merely a rehearsal for the current global debate.
In Congress proponents of the farm law argued that without subsidies indebted family farmers would be run off their homesteads.
Twenty or 30 years ago, farm policy actually had something to do with feeding the country. It was designed to ensure food security by continuing the Depression-era program to pay big grain farmers to grow food. But today there is no need to ensure food security. The United States has been self-sufficient in food for decades.
Early in the farm bill debate, Agriculture Secretary Ann M. Veneman raised questions about fairness. There are more than two million grain and cotton farmers who receive free government subsidies, but only 10 percent of them get 69 percent of the $19 billion every year.
According to Agriculture Department statistics, these big farmers used their government checks to expand their acreage, buying small neighboring farms, and increased their production, which pushes down the world market price. They are still profitable, because government subsidies make up the difference. But the grain farmer in Asia, Africa or South America without subsidies has no defense against world grain markets, which are at historic lows.
For its part, the Bush administration is trying to find a compromise. Robert B. Zoellick, the United States trade representative, proposed breaking the deadlock between farmers in rich countries and those from developing nations by first eliminating export tariffs on agricultural goods and putting a tighter cap on subsidies rich countries pay their farmers. "This is a reform long demanded by developing countries, which rightly resent having to compete not only with internal agriculture supports but also with the lavish subsidies some developed countries used to pay others to buy their food," Mr. Zoellick said.
IN poorer countries where two-thirds of the people still live on farms, America's grain subsidies are seen as the equivalent of a declaration of war.
In the past several years, these developing countries have dropped barriers and opened their markets in the belief that free trade, not reliance on handouts, is the best way to climb out of poverty. This June, the administration promised aid at a conference in Mexico to countries that followed the free trade route.
The new farm law is seen as a betrayal of those promises and of these developing countries' attempts to beef up their own agriculture and feed their people. The United States, Europe and Japan spend $1 billion a day to support their farmers or about six times the aid payments they send to the developing world, which is desperate for help to build up its agriculture.
Kofi Annan, the United Nations secretary general, said at the World Summit on Hunger this summer: "You put yourself in the shoes of a small developing country which cannot export its agriculture products because of restrictions and tariffs, a small developing country that cannot compete on the world market even if it could export, because the richer farmers in the richer countries are heavily subsidized.
"There is no point in giving with one hand and taking it with the other."
*In their efforts to keep their farmers busy, the non-corporate farmers, the governments of America and Europe, are undermining the poor nations by subsidizing farm products and isolating those framers who cannot afford GM seeds and other bioengineered farming implements.