Bush Offers to End Agriculture Subsides if EU Will

This journal is unaccustomed to praising President Bush’s policy moves, and even more unaccustomed to doing so more than once in a great while. However, after his work on Africa before the G-8 summit, he earned the praise of anyone and everyone concerned with the hundreds of millions who live there. And now, he has done it again, offering to scrap US farm subsidies if the European Union does the same.

Cynics will claim he runs little chance of having to act on the offer, but Mr. Bush is not really quite that elegant a politician. He tends to do what he says he will, and the problems arise from being wrong so frequently. In this case, though, he’s dead right. Agricultural subsidies misallocate economic resources to the detriment of western consumers as well as farmers in the developing world. In their favor, they pay off politically well-connected agribusiness – which considered fairly, is not really a good idea.

America does, indeed, subsidize its farmers, and in the day when the family farm was a cornerstone of American culture, there may have been a plausible, non-economic argument for the subsidies. In the 1930s, the non-profit organization and concert-giving body FarmAid says there were 7 million farms, 5 million more than today. And of the 2 million farms in the US, just 565,000 are family operations. Of the corporate farms, some are family operations with a modern ownership structure, but most are entities like Archer Daniels Midland – corporations just like IBM and GE that engage in food production. And a sizeable number of these are not American operations. Indeed, the Prince of Lichtenstein gets a check from the US taxpayers every year for his “investment” in US farming. His Highness is certainly welcome to invest in the US, but just why does he need a subsidy paid for from the pockets of American firemen, plumbers, and teachers?

As bad as US farm subsidies are, the EU has the Mother of all Farm Subsidy programs – the Common Agricultural Policy [CAP]. The result of this multi-generational bribe to French and Italian farmers has been wine lakes and butter mountains as well as needlessly high prices for consumers and labor immobility. The cultural aspect of rural life in Europe may well merit such payments for non-economic reasons, but protecting the rural French and Italian lifestyle at the expense of the Dutch, English and German urban one has its limits. Tony Blair has already attacked this nonsense, and the recent Brussels meeting on the EU fell apart.

Simply put, the one sure way out of dire poverty for the hundreds of millions trying to live on $1 a day is trade (Note: Under the CAP, European cows get €2 a day, or around US$2.40). And what they have to trade is farm commodities. But they can’t compete against First World corporate entities that get First World taxpayer money. If the farm subsidies went away tomorrow, there would still be problems of fertile soil, irrigation, transportation, and more. But those are issues that farmers can handle. Europe needs to bite the bullet take Mr. Bush’s offer to heart. He’ll have a heck of a time convincing congressmen and Senators from Wisconsin, Kansas and the Dakotas to go along, but a great many of them are his biggest supporters. He could probably pull it off.

[EDITOR’S NOTE: Writing encouraging things about the American president is an enjoyable endeavor. One hopes he offers even greater scope for such in the future.]


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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