Counting Charity in Cotton-Pickin’ Dollars

By David L. Brown

They say that charity begins at home, and the U.S. view of world agricultural markets certainly bears out that adage. An article in this week’s edition of The Economist provides an excellent example. The story concerns the troubles of cotton growers in Texas, where drought has claimed about 1 million acres or about 15 percent of the state’s crop and may do even more harm before the crop comes in.

But the interesting part of the article is that Texas cotton farmers feel endangered by the latest round of talks by the World Trade Organization, the so-called “Doha Round,” which makes a top priority of reducing trade-distorting subsidies, particularly in agricultural products. The article quotes cotton farmer Barry Evans of Kress, TX, who whines that “his livelihood may be about to be traded away” if subsidies are reduced.

Cotton, it seems, is a special case in America where taxpayers pay more than $4 billion a year [in case you missed it, that’s “billion” with a “b,” or four thousand million dollars] to cotton farmers to subsidize their operations by making them able to compete with more efficient growers in other parts of the world. Charity indeed and on a grand scale, and the effect on more efficient small farmers around the world is devastating. According to The Economist article:

The absurdity of America’s cotton subsidies is well known. Uncle Sam spends over $4 billion a year propping up cotton farmers, with the bulk of the money going to those whose operations are much larger than Mr Evans’s. Cotton receives far more government cash per acre than other crops—in 2001, four or five times that of [corn] or wheat, according to a recent paper by the National Centre for Policy Analysis, a conservative think-tank. The losers are not just American taxpayers but some of the world’s poorest farmers, as America’s subsidised production pushes down world prices. Cotton prices have halved since the mid-1990s as America’s subsidies have doubled. (Read article; subscription required.)

So just to make this clear, we the American taxpayers pay rich fat-cat cotton farmers a ton of money so that they can market their crops at a low price and their cheap cotton forces down the world market and harms small farmers all around the globe. Then we are outraged when indigenous third world farmers turn to producing “cash crops” such as opium poppies, marijuana, and coca leaf.

Now one might imagine that those threatened cotton farmers would be thinking of other ways to make a living besides suckling at the government teat, but one would be wrong. The Economist quotes Mr. Evans as saying “We’re scared to death,” and goes on to say:

Though not scared enough, it seems, to think beyond today’s subsidies. Some dream that cottonseed oil, already used for cooking, could one day power America’s cars. But “I sure am not going to bet my long-term future on biofuels,” says Mr Evans. “We just don’t know enough yet.”

And what are these new bio-fuels programs? Why, another government handout for farmers, what else?

Now I don’t want to point a finger at America’s farmers as the root of all evil, for the agricultural subsidy programs have their roots in Washington, DC, where politicians love to “grow” votes by handing out billions of dollars to farmers in their home regions; in the boardrooms of agri-business corporations where huge profits are generated from the world markets on the backs of the American taxpayer; and in the factories of food processors who gleefully provide a stream of highly profitable government subsidized junk food to consumers.

The Economist comes down on the side of the angels on this question, stating:

The end of this gravy train is long overdue. Some change is inevitable even without a Doha deal, as the WTO has already declared some American cotton subsidies illegal. The uncertainly is casting a pall over the Cotton Belt—especially Texas, where more than a third of America’s 20m bales are grown.

And now for the surprise punchline to this essay: As this report from the weekly Economist arrived in my mailbox today, headlines: “WTO Talks Collapse Over Farm Aid Differences.” The article, reported by the Associated Press, says that the Doha round of world trade talks has broken down in large part over disagreement over agricultural policies. According to the AP story:

“We are in dire straits,” [Pascal Lamy, director general of the WTO] said after six of the WTO’s most powerful members failed to agree on steps toward liberalizing trade in farm and manufactured goods. He said he did not intend to propose any new deadlines or a date for negotiators to resume meeting. (Read it here.)

And those six nations who failed to agree were? Well, surprise surprise, they included Australia, the EU, Japan and the United States — first rank nations of the First World. Guess which side they were on? Also agreeing to disagree were Brazil, a major exporter of agricultural products, and India a third world nation that is struggling to keep its economy afloat. One can imagine that they were on another side altogether.

The bottom line of all this, of course, is that thanks to the efforts of the WTO negotiators, those fat-cat Texas cotton farmers will be able to keep their front trotters in the public trough as millions of small farmers around the world continue to sink further into poverty and despair.

Yes, charity is a powerful force indeed, one strong enough to wreak havoc in the entire world.

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