Tuesday, December 13, 2005

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Ag subsidies revealed!!!

We know that a sticking point in the WTO negotiations is the resistance by the developed world to reduce their agricultural subsidies. Within that simple statement, however, the nature of ag subsidies is incredibly opaque. If you read Arvind Panagariya's Foreign Affairs essay, you discover that there are different "boxes" of subsidies. You also discover -- according to Cato's Daniel A.Sumner -- that many of these subsidies could soon be ruled as in violation of existing U.S. commitments to the WTO.

For now, however, these subsidies are here -- but who, exactly, gets them?

For that answer, I encourage you to check out the Environmental Working Group's Farm Subsidy Database. Through many, many FOIA requests, they have produced. an interactive website chock full of interesting facts. For example:

  • Half of all subsidies go to only 5% of Congressional districts.

  • Four commodities—corn, wheat, rice and cotton—account for 78 percent of all ag subsidies.
  • EWG also has an interesting proposal to reallocate the ag money away from subsidies but towards rural areas where farmers actually generate high value-added goods already.

    [Yes, we know U.S. subsidies are bad. What about EU ag subsidies?--ed.] Until recently, the EU's Common Agricultural Policy was way more opaque in terms of its allocation of funds. However, there's a new website called FarmSubsidy.org, which provides as much info on CAP subsidies as is available (shockingly, countries like France have ignored an EU directive and refused to make their subsidy records available to the public).

    Among the more useful tidbits of info:

  • More than 80 percent of CAP payments go into 20 percent of farms -- including, deliciously enough, members of European royalty. The Queen of England, for example, received over 230,000 euros a year.

  • 5 million farms recceive less than 1,250 euros in payments

  • New EU members from Eastern Europe pay more into the CAP program than they receive in subsidies.
  • Go check it all out.

    posted by Dan on 12.13.05 at 07:16 PM


    Do the numbers for corn subsidy include the fuel ethanol subsidies which are falsely marketed as an energy conservation program?

    posted by: triticale on 12.13.05 at 07:16 PM [permalink]

    Dan, if you have a minute you should check out Monsieur Mandelson's NYT column today: http://www.nytimes.com/2005/12/13/opinion/13mandelson.html.

    It makes clear Europe will stonewall on farm subsidies at Hong Kong. Which means Doha is going nowhere.

    posted by: Zathras on 12.13.05 at 07:16 PM [permalink]

    I propose replacing the term "rent seeking" with "pillage broking".
    Mencken defined government as a "broker in pillage" and the term rent is just a generic term for a unit payment to a factor of production, as per Frank Fetter.

    posted by: Bill Stepp on 12.13.05 at 07:16 PM [permalink]

    The ethanol subsidies take the form of a tax exemption from the Federal motor fuel tax. It amounts to a susidy of $0.51 per gallon of ethanol.

    posted by: Ralph J. Brown on 12.13.05 at 07:16 PM [permalink]

    I think you mean "resistance by the developed world" - no? The NYT has an interesting piece on this today suggesting that an ag deal could come sometime in 2006 but definitely not at Doha:


    posted by: Sarah K. on 12.13.05 at 07:16 PM [permalink]

    Whoops! Fixed now.

    posted by: Dan Drezner on 12.13.05 at 07:16 PM [permalink]

    Direct assistance to maintain farmers income would be much cheaper. Most of the subsidies are spent on losing operations.

    posted by: Lord on 12.13.05 at 07:16 PM [permalink]

    I don't know if it's normally considered to be a subsidy, but allowing growers to use massively subsidized illegal labor would appear to fit the definition of a subsidy. Is preventing that under consideration?

    posted by: nofollow breaks blogs on 12.13.05 at 07:16 PM [permalink]

    What always strike me as funny (well, not really, since I not a supporter of the ethanol subsidy) is that, in Iowa at least, the grade with the Ethanol is denoted the Plus version, and it's cheaper than the regular.

    Today, for example, when I filled up my (truck-based van) tank in Bettendorf (the Quad-City next door to Davenport, where I actually live), the Plus was something like 20-cents-per-gallon cheaper. Elsewhere that I've traveled, it would be the reverse.

    So,thanks, taxpayers, for helping to save me $5 this morning! Think I'll go hit the local Starbucks ...

    posted by: reader_iam on 12.13.05 at 07:16 PM [permalink]

    That works as an undergraduate debating point on this subject, but in the real world the American crops that figure prominently in world trade are mostly planted and harvested mechanically. Farm workers are used to pick fruits and vegetables, most of which are sold domestically, their producers receiving substantially less government support than producers of wheat, corn, rice, or cotton who depend heavily on the export market.

    posted by: Zathras on 12.13.05 at 07:16 PM [permalink]

    poker Have a nice day! :)

    posted by: poker on 12.13.05 at 07:16 PM [permalink]

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