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Tuesday, March 14, 2006

Agricultural Welfare

I'll believe it's possible to eliminate crop subsidies if and when it happens:

In Fight Against Farm Subsidies, Even Farmers Are Joining Foes, by Scott Kilman and Roger Thurow, WSJ: A movement to uproot crop subsidies, which have been worth nearly $600 billion to U.S. farmers over the decades, is gaining ground in some unlikely places -- including down on the farm. In Iowa ... a Republican running to be state agriculture secretary is telling big farmers they should get smaller checks. Mark W. Leonard, who collects subsidies himself ... told a room full of farmers ... that federal payments spur overproduction, which depresses prices for poor growers overseas. "From a Christian standpoint, what it is doing to Africa tugs at your heartstrings," Mr. Leonard told them. ...

There is a long history of mostly failed attempts to pare farm payments. But the current anti-subsidy sentiment ... is stirring attention because it is unusually broad. Students for Social Justice at Baylor University in Texas have dumped cotton balls on the ground to protest cotton subsidies. The foundation of late Nascar legend Dale Earnhardt has teamed up with rock star Bono, ... to overhaul Western agriculture policies to boost African development. In Washington, D.C., the Alliance for Sensible Agriculture Policies is meeting to share ideas about changing the farm bill. Participants include Oxfam and Environmental Defense from the left, the National Taxpayers Union on the right and the libertarian Cato Institute. Prominent philanthropic organizations, including the William and Flora Hewlett Foundation, are financing some of this advocacy. ... Another spur to the anti-subsidy movement comes from the World Trade Organization...

The movement is tilting against one of the most deeply entrenched federal entitlements. In 1996, a Republican-led Congress passed legislation to wean farmers from subsidies over seven years. But Washington backed off as the farm economy entered one of its cyclical tailspins. The 2002 farm bill signed by President Bush is one of the most lavish ever, even as the economic cycle improved. ... There isn't any serious talk in Washington of wiping out subsidies entirely, and the powerful farm lobby has defended itself against attacks in the past. ... But now, farm leaders, federal officials and politicians are seriously discussing alternatives, such as buying farmers out from subsidy programs, incentives to encourage farmers to save during good years and paying growers for environmentally friendly practices...

The government created subsidies during the Great Depression to fight rural poverty. At the time, 25% of the U.S. population lived on farms. ... Today, farmers represent less than 1% of the population. ... The government caps annual payments to an individual farmer at $360,000, though loopholes allow higher payments. Most subsidies go to farmers who are wealthier than the typical U.S. taxpayer. Little of it goes to poor farmers because subsides are tied to production. ... 72% of subsidy money goes to 10% of the recipients. ...

The Bush administration is in the reform camp. ... Last month, the White House Council of Economic Advisers took the unusual step of devoting a chapter in the annual "Economic Report of the President" to lambasting crop subsidies, saying they "hurt countries that could benefit from exporting these commodities to the United States." President Bush has yet to propose his own specific solutions. ...

    Posted by on Tuesday, March 14, 2006 at 12:06 AM in Economics, Regulation | Permalink  TrackBack (0)  Comments (2)


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