Subsidizing agricultural production

Providing subsidies for agriculture
Using farm subsidies

Description

Subsidies in the form of area payments influence only the broad use of the land, and leave farmers free to decide what type and number of stock they keep, allowing them to be much more responsive to environmental conditions and changing weather patterns. In contrast, headage payments create a strong incentive for the farmer to keep specific kinds and numbers of stock, whilst price support encourages farmers to maximise both livestock numbers and output per head.

Implementation

The trend in agricultural support in the EU is downwards while that in the US is in the opposite direction as evidenced by the budget top-up in 1998 and 1999 of about $15,000m. The US agricultural budget under discussion in 1999 was for an amount of over $60,000 million, whereas the EU budget is only about $40,000 million. This comparison is all the more significant when one considers that the EU has over 7m farmers while the US has less than 2m.

In 1995, the first year of the Uruguay Round agreement, the subsidy for US soya producers was $800m, while in 1998 it was $1800m – a 125% increase in support is hardly in keeping with the spirit of the last WTO agreement.

Claim

On 15 October 1999 the European Commissioner of Agriculture, Rural Development and Fisheries, Mr. Franz Fischler described the criticisms of the Common Agricultural Policy emanating from the United States as totally unfounded and grossly misleading. These attacks on the CAP by the US he said are reminiscent of the rhetoric pumped out during the Uruguay Round, and are a clear attempt by the US to distract public attention from their reluctance to include in the newt WTO round sectors which are politically sensitive in the US. The CAP is not responsible for the difficulties being experienced by US farmers as indeed farmers anywhere else in the world, he added.

Counter-claim

We're subsiding farmers in the North to the tune of one billion dollars a day to preserve some very valid goals like their way of life, while we are not subsidizing to any measurable extent the hungry and the poor farmers in the developing world. Can we take a piece of this billion dollars a day that European and North American farmers a day are getting, maybe five percent or so, perhaps on a voluntary basis, and put it to work on ending hunger and poverty in the developing world?