The U.S. Congress has begun its work on the 2012 Farm Bill which will shape US agricultural and food assistance policy between 2013 and 2108.
The US Farm Bill is the primary agricultural and food policy tool of the U.S. government, and is passed every five (5) years by the U.S. Congress. Covering such a broad range of issues and impacting so many industries, the start of discussions by the Congress on the Farm Bill has been the signal for the start of lobbying efforts by various constituents to make reforms aimed at:
Farm Bills have become most contentious because they have been the vehicle used to authorize the payments to U.S. farmers to provide guaranteed incomes and price supports – subsidies. The United States has subsidized and protected the production of cotton, milk, peanuts, rice, and tobacco, and other commodities. The United States currently pays around $20 billion per year to farmers in direct subsidies. Most of these subsidies, it is reported, are paid to large agribusiness concerns, making it difficult for small US farmers to compete.
These subsidies have also been harmful to small farmers outside of the U.S. A paper published by the CATO Institute in 2005, during the last debate on the Farm Bill, remains relevant to today’s debate. Ripe for Reform: Six Good Reasons to Reduce U.S. Farm Subsidies and Trade Barriers lists additional benefits for reform:
• lowering the cost of food prices for consumers and food inputs for businesses,
• rationalization of farm production so farmers produce what is actually in demand, and
• leveraging the playing field for small farmers around the world.
Subsidies paid by the U.S. Government, and other developed economies, to their cotton farmers provide them with a guaranteed income, which in turn allows them to sell cotton on the world market at below-market rates. This uncompetitive practice depresses world market prices for cotton. Cotton farmers in other countries, particularly poor countries, are unable to compete at these low prices and lose not just money but their livelihoods. A 2010 report calculated that this practice was costing West African farmers £155 million each year. This scenario is repeated with respect to the other crops being subsidized by the U.S. Farm Bill, and by other developed country programs.
Reduction or elimination by developed countries of the support they provide to their farmers remains a key demand by developing countries at the Doha Development Round, and U.S. failure to reform its programs has been one of the stumbling blocks on the way toward achieving a comprehensive deal at the WTO. In July, 2006, WTO Director-General, Pascal Lamy listed as the requirements for a successful deal – the United States must make deeper cuts on its domestic supports; the EU must offer increased agricultural market access; and the large developing countries must offer more on industrialized tariffs.
The 2012 Farm Bill provides another opportunity for U.S. reform. This time, it is being developed in the context of the US deficits and the existing high prices for a number of agricultural goods. President Obama has already unrolled in his budget proposals to cut the subsidies, albeit to strong resistance. However, this action has placed elimination of subsidies in the debate for the first time. Here is an action that promises benefits for U.S. farmers, U.S. consumers, and small farmers around the world. The stakes are huge, making this an issue worth fighting for.