H’mmm, I’ve recently been writing about the numbers of people killed by Saddam Hussein’s Weapons of Mass Destruction back in the 1980s. I guess it was around 25,000 people at the time– though many of the 100,000 Iranians contaminated by the Iraqi CW suffered mightily over the years that followed (and until today.)
The number of women, men, and children who die quite avoidable deaths in low-income countries every few months because of the completely unfair (and under WTO rules, most probably actually illegal) subsidies that the US and other rich countries give to their agricultural producers is almost certainly higher than that.
Therefore I think we ought to get used to calling them Subsidies of Mass Destruction (SMD’s.)
And right now, the US Congress is considering provisions in the 2007-2012 Farm Bill that are set not just to keep the US’s agricultural subsidies in place, but also to increase them. The House of Representatives passed its version of the five-year Farm Bill on July 27. This PDF info sheet from the House Ag Committee tells us “proudly” that the bill preserves and increases subsidies paid on 25 different commodities, including those two “Kings” of the traditional US plantation/slavery system, cotton and rice, which still are “Kings” in this Farm Bill.
Oh, also, shock, horror. This bill is going to put a “hard cap” on the income of anyone who’s eligible for getting the subsidies. It’s as low (irony alert) as one million dollars per person…
So you can really see that these subsidies are not really about “preserving the small American family farmer”, at all. They’re about massive taxpayer handouts to Big Agribusiness.
Oxfam has done a lot of solid research over the past few years into how the US cotton subsidies destroy the livelihoods of miliions of farmers in low-income countries around the world.
For example, this press release from September 2002. It said:
- US subsidies to cotton producers are contributing to mass poverty in some of the world’s poorest countries, according to a report published today by the international development agency Oxfam.
Government support to the 25,000 domestic cotton producers in the US totals $3.9 billion annually, more than three times the US foreign assistance to Africa’s 500 million people.
“The US is the world’s strongest proponent of free trade, but when poor cotton farmers in Mali try to trade on the world market, they must compete against massively subsidized American cotton,” says Phil Twyford. “This makes a mockery of the idea of a level playing field. The rules are rigged against the poor.”
American cotton subsidies are highly targeted to benefit the largest farming operations. The largest 10 per cent of American cotton agro-businesses received three-quarters of the total subsidies.
The Government of Brazil is launching a complaint with the World Trade Organization, claiming that US cotton support constitutes an unfair trade practice.
More than 10 million people in Central and West Africa depend directly on cotton. It is a major source of revenue for countries such as Mali, Burkina Faso and Benin. The amount of money America spends on cotton is more than the entire GDP of Burkina Faso, where 2 million people depend on cotton and half of who live below the poverty line.
Oxfam says that Africa is losing $300 million a year, based on estimates from the International Cotton Advisory Council, and that the withdrawal of US subsidies would raise the world price of cotton by 11 cents a pound.
World cotton prices have sunk to as low now as any time since the Great Depression. The US subsidies are pushing prices even further into collapse…
Well, in March 2005 the Brazilians did win the “case” against the US cotton subsidies that they’d lodged with the WTO’s Dispute Resolution Mechanism… Do you think that put an end to the US cotton subsidies??
Short answer: No.
Today, I found a handful of great online resources about the nature of the US cotton subsidies, and the industry that has grown up around them.
First of all, I found this totally awesome online database, that’s produced by an outfit called the Environmental Working Group. The EWG’s doughty researchers used FOIA applications to the US Dept of Agriculture to free up some much-needed public information about the structure of the subsidies. That page there shows you how strongly receipt of the subsidies was concentrated into a few hands in 2005. If you noodle around that database a little bit you can find out all kinds of information about the recipients of the subsidies, too.
On this page, fairly low down, I found out that in 2005, cotton subsidies totaled $3.3 billion. Ah, and here is the cotton page itself. More great figures there.
But here was one of my greatest online finds of today: A brilliantly researched and written investigative piece about the whole cotton subsidy phenomenon written by CNN-Money reporter G. Pascal Zachary in December 2005.
His whole article is well worth reading by anyone interested in this whole crazy/lethal enterprise of US cotton subsidies.
Here are my highlights:
- The federal government now pays more than $2 billion a year to farmers and traders to produce cotton that the world, already awash in cotton, simply does not need… By a broader measurement of subsidies used by the World Trade Organization, American cotton growers got $4 billion in 2004 alone and are expected to collect roughly the same amount this year.
The cascade of money leads to an unending series of perverse incentives and damaging outcomes, at least to the wider world beyond U.S. cotton farmers and traders: As the subsidies stimulate higher production, global prices are further depressed, dealing punishing blows to cotton farmers in poor countries, particularly in Africa. Nor is the program done much credit by who gets the money. It’s not generally the stalwart family farmer, although there are some subsidy recipients who still might fit that mythic American mold. Mostly it is large corporate agricultural operations. Some are indeed owned by families–including many millionaires and even a billionaire or two, like members of the Boswell family, which runs one of the nation’s largest farming enterprises and has received tens of millions of dollars in cotton subsidies over the decades. Other subsidies go to a handful of powerful international trading firms that market U.S. cotton. Cargill, the Minneapolis-based agribusiness giant that’s one of the richest privately owned companies in the country, received $155 million in government payments during the past decade for trading U.S. cotton abroad. Subsidies aren’t even limited to American companies: Louis Dreyfus Co., the global commodities trading power based in France, got $34.6 million in U.S. subsidies last year alone. “Cotton subsidies,” says economist Pietra Rivoli, a professor at Georgetown University, “are way too high, unfair, and embarrassingly hypocritical in a country that’s the world’s self-proclaimed free trade champion.”
He describes how the subsidy system actually works:
- Basically, growers are supported from preplanting through harvest, making cotton essentially a risk-free venture. A direct payment based on a farmer’s historical acreage goes to every cotton grower every year before an acre is planted, even if the farmer isn’t going to raise cotton that year. (The payment is sometimes used to fund a different, more valuable crop.) A second payment kicks in at planting time. Then a grower can borrow against the crop, using the newly sown cotton as collateral. But the loan is no normal loan. If the price of cotton falls below 52 cents per pound on world markets, the government–not the farmer–takes any loss on the loan. And there’s a third payment, from a so-called countercyclical program. If prices fall below 65 cents per pound, the grower gets a payment from the government of roughly 13 cents per pound. With cotton trading in the 50s, countercyclical payments are triggered all the time. Another element of the program, called Step 2, pays trading firms to market U.S. cotton.
Most of the subsidies go to farmers. But it’s not easy sorting out which ones, and subsidy recipients are rarely identified publicly. The U.S. Department of Agriculture’s tracking system for the payments is difficult to decipher, and many farmers have mastered the art of subdividing their operations under numerous different names, partnerships, and ownership structures to skirt payment limitations. (In cotton country, that’s called “harvesting the program.”) Farmers are disinclined to say much about the program. They seem to have taken to heart an old adage of J.G. Boswell, the patriarch of the cotton-growing Boswell family: “As long as the whale never surfaces, it is never harpooned,” he liked to say. The family and related interests today own more than 140,000 acres in the San Joaquin Valley [of California] and elsewhere; they’re one of the biggest cotton growers in the United States. Boswell, who came to the area in 1921, always kept a low profile. Current leaders of the family, whose net worth is in the billions, have occasionally surfaced long enough to say they’re opposed to subsidies. But they’ve accepted some nonetheless: Federal data compiled by the Environmental Working Group, a Washington-based advocacy group, shows that between 2000 and 2003, J.G. Boswell Co. got $16.8 million for cotton.
He writes about Parkdale America, a privately owned maker of yarn, that received $135 million in Step 2 payments for the 10 years ending in 2004. He notes that Parkdale is likely America’s largest producer of textiles and one of the few that haven’t succumbed to foreign competition, and adds: “Economists point out that Parkdale could probably import foreign cotton cheaply enough that it might not need the subsidy, just as Apple Computer buys foreign-made memory chips and is none the worse for it. Parkdale could, that is, if the government did not impose steep tariffs on cheap foreign cotton that effectively bars it from the U.S. market.”
- American cotton has made up roughly half of the cotton traded across borders for many years. But the market distortions the program creates are severe and damaging. Terry Townsend, a leading cotton analyst, says dumping [um, probably not a great verb to use there Pascal??] U.S. subsidies would instantly raise world prices by as much as 10 cents a pound and cut U.S. production by at least 15 percent. The effect would be particularly beneficial in places that desperately need economic help, notably West African countries like Burkina Faso that are significant exporters but can’t make money at today’s prices and whose governments are far too poor to provide any subsidies. The environment, too, would catch a break from reduced production; growing cotton can be tough on the planet, especially now that genetically modified seeds encourage U.S. growers to soak their fields in a defoliant that kills everything from bugs to the cotton bush itself and knocks the unharmed bolls to the ground, where they can be scooped up by mechanical harvesters. All in all, U.S. subsidies are “too harmful,” says John Baffes, the World Bank’s top cotton expert. “They need to be reduced.”
Ok, so you may still be asking just why the US taxpayers are still investing in these Subsidies of Mass Destruction??
Zachary provides one possible answer…. It’s all about fighting terrorism!
At the end of his piece, he has this great vignette from a meeting that US Secretary of Agriculture Mike Johanns held in late November 2005, with hundreds of cotton farmers who had gathered at Texas Tech University in Lubbock, cotton’s top research university…
- The farmers have come from across the country… It’s standing room only, and the event is being broadcast on live radio statewide. Three local congressmen share the stage with Johanns.
Johanns leads the farmers in the pledge of allegiance. A military honor guard marches in, bearing colors, and a student sings the national anthem. Soon farmers line up before a lectern to speak to the secretary. Many emphasize that the cotton program is vital to national security. “In view of terrorist activity,” one farmer advises, America must not rely on foreign cotton. Other dark warnings follow about China’s surging production, Brazil’s potential as a cotton exporter, and the damage cutting subsidies would do to farm communities and the American way of life in general. Secretary Johanns nods. The congressmen nod. The other farmers in the hall nod.
Well, the “anti-terrorism” argument is one argument. Hilarious though it no doubt seems to most rational people in this context. I mean, for goodness sake, if the US is quite happy to import computer chips and software systems from overseas (without tariffs or other barriers), and doesn’t seem to worry about the effects of that trade on our national security, can we honestly take seriously a claim that cotton goods are even more “sensitive” for our national security than those??
Another, more plausible explanation for the longevity of these subsidies– as, actually for subsidies in many other portions of the federal budget, including aid to Israel– has a lot more to do with sheer lobbying muscle than any rhetorical claims that may be made in the name of “counter-terrorism.” And here, I think AIPAC should probably cede first place to the National Cotton Council (and maybe to the National Rifle Association, too. But that’s another issue.)
Zachary’s great article there has a few references to the NCC. But you can learn a lot more about it here. Including that you can learn— no surprise here at all– that “The NCC is pleased with House Passage of New Farm Legislation.”
I reckon that the NCC’s lobbying muscle is the only explanation for, for example, the otherwise inexplicable position adopted on the latest Farm Bill by California Sen. Barbara Boxer, who is generally a very sane and forward-looking person.
Last week, she was reported by the SF Chronicle as being opposed to a proposal to reduce the “income cap” for farm subsidy recipients from that $1 million figure in the House Bill, down to a “mere” $250,000:
- “It’s not an easy issue for California,” Boxer said. “We have our rice people and we have our cotton people.”
The reporter there, Carolyn Lochhead, noted that generally Boxer is “an ardent supporter of environmental programs who chairs the Senate Environment and Public Works Committee.” Lochhead adds,
- The [farm] bill drew sharp criticism from many environmental and food activists as well as economists and budget groups who said it largely leaves intact Depression-era crop subsidies that send billions of dollars a year to the nation’s wealthiest growers of five commodities – cotton, rice, corn, wheat and soybeans – at the expense of environmental and nutrition programs.
As Lochhead (and also Pascal Zahary) noted, a good alternative approach for US agriculture would to divert funding from these huge subsidies to traditional-style Big Ag, and to invest it instead into environmentally sustainable and organic land-use projects.
So I’ll just end up this post with a link to this fascinating and generally well-thought-out article by Will Allen, Eddie DeAnda, and Kate Duesterberg on the website of the Organic Consumers Association. They make the very important argument that, in this whole business of farm subsidies, US farmers should not consider themselves to be in any kind of a zero-sum contest with farmers in low-income countries. Far from it, indeed…