US Farm bill & poverty
Last one year US congress is debating the new US farm bill, which expired last September 2007. The bill will impact the rural communities of United states and the larger world and will have far reaching consequence in some of the poorest regions in the world.
Size of this bill is $300 billion over 5 years and its scope is everything related to US agriculture to farmer payouts to subsidies to food stamps, etc. Traditionally subsidies made up to 15 billion per year but recently has come down as low as 10 billion due to higher commodity pricing. Most of the subsidies end up with just 8% of the total US farmers who are in some part of large conglomerates, this stifles other US farmers and all developing countries by keeping the prices artificially low in those regions. Within the United States, in regions like the Mississippi delta poor farmers are finding it impossible to climb out of poverty. As poor farmers tend to have lesser land they get lesser subsidy than the rich farmers with more land which helps the latter to buy more land or better machinery resulting in the poorer farmer not being able to compete with the richer farmer.
Less than 2% of US population works on farms unlike half of the population in developing world. Farming is the largest occupation in the world and the income generated is key for climbing up the economic ladder and increase the standard of living in poorer regions. Oxfam studies points to the fact that the cotton farmer subsidy in US has dramatic effects on income generation of millions of cotton farmers in West Africa. Even a modest increase in cotton prices for West African farmers would mean more income towards education of their children, better diet and healthcare, etc. But due to subsidies the margin of profits for farmers is so low, they are forced into subsistence living. The only way to break this cycle of poverty for these farmers is fair market competition which is impossible as the harvest capacity of United States floods most of the world commodities market resulting in price dictated by them too. The abolishing of the US subsidy program would make the prices much more competitive for the West African farmers to better their lives.
Poverty alleviation is hard hit by such practices and in poorer countries with 70% of population dependent on farming, this “farm bill” makes it impossible for such countries to better their standard of living. Mostly all the subsidies go to commodity farmers, basically staples like corn, wheat, etc which is labor intensive and employs the largest segment of the societies in the poor regions. For example, the unfair competition in corn prices has devastated the farmers in Mexico which has also contributed to large scale migration of low skilled labor into the United States. Even the US aid programs are being affected, most of the food aid is bought by US government at lower prices produced by US farmers and then sent to poor regions of the world. In the poor regions the US food results in fundamentally altering the prices of local produces and it makes it no longer viable to locally produce similar food. CARE, one of the large charities recently has stopped accepting funds from US federal programs due to the negative impact (http://www.nytimes.com/2007/08/16/world/africa/16food.html?em&ex=1187409600&en=f24fcdc9bda66c75&ei=5087%0A).
In 2004, World Trade Organization (WTO) declared cotton subsidies in US illegal, the last WTO talks failed on the topic of rich countries farming policy as developing countries consider the reduction of subsidies of paramount importance (http://www.bloomberg.com/apps/news?pid=20601087&sid=ardyFvYPoEzY&refer=home). Unites States needs to take bold steps to help alleviate poverty, it is understandable that the practice cannot be stopped overnight, it at least needs to start slowly cutting back on the subsidy program which will help everyone including United States as countries with better standard of living will import higher value items from them resulting better sales for US industries. US farm bill was supposed to be a temporary depression era bill, but over the decades has become permanent and is approved every 5 years, it is time to get back to the original intent of the bill for long term prosperity of United States and the world.
Labels: africa, aid, farm bill, food, poverty, USA
