In our class discussions on development and the environment we didn’t talk much about trade. For all the billions of dollars rich countries dish out in aid to make themselves look like they care, many more billions are spent protecting inefficient farmers in their own constituencies. Why is it that not more development agencies, who care about developing countries, do not vociferously call on governments of the rich to stop protecting their farmers? Some do, such as Oxfam, but they don’t seem to make any headway. Europeans and Japanese from the left and right, who supposedly care about the starving poor in Africa or South Asia, vehemently defend their agricultural policies, which effectively block out imports from the developing world.
The members of the OECD spend up to US$300 billion on agricultural subsidies every year! Country Programmable Aid of the OECD didn’t even top $100 billion in 2011. The EU’s Common Agricultural Policy represents half the EU’s budget of 122 billion euros, with direct farm subsidies alone accounting for nearly 40 billion euros. In the United States the total annual amount of farm subsidies stands at around US$15 billion. The 2002 US Farm Security and Rural Investment Act rewarded US farmers with nearly US$200 billion in subsidies in the subsequent ten years. That was US$70 billion more than previous programmes and represented as much as an 80% increase in certain subsidies! But the crown belongs to peace-loving Norway whose farm support is the highest in the OECD at more than 60% of farm income. Unbelievable. Japan is not far behind.
The resulting trade distortions tend to disproportionately disadvantage the world’s poorest agricultural producing countries, such as those in Africa and South America. They encourage overproduction of food at home and discourage food production elsewhere. Oxfam estimates that subsidies, price floors and outright bans has deprived Ethiopia, Mozambique and Malawi of potential export earnings of at least US$238 million since 2001. Clearly, we’re not talking about peanuts here, but big bikkies.
Fortunately New Zealand and Australia stand along side the developing countries on this one as our agricultural industries receive few or no subsidies and are virtually unprotected. New Zealand has the lowest level of government support to agriculture in the OECD at just 1% of farm income, Australia 3% and the United States 9%. Whenever I’ve been in Europe, Japan or North America and brought this issue up, I have been gobsmacked at the reaction of the locals. For some reason they can’t see the injustice in their policies.
This is not to say that trade liberalisation will suddenly fix the problems of the developing world, but depriving their citizens from exporting to wealthy countries exacerbates their poverty. Many well-meaning young people from the rich countries go to Africa to help out for a year or two. But then they nearly all go back, usually with a very healthy suntan. I wonder if they’ve ever thought about spending their energy putting pressure on their own governments to open up their markets to African products? Could the young Americans who were so het up about atrocities in Uganda spend their energy convincing Congress to cut their heinous corn subsidies?