Mexican corn farmers tramp through their fields behind
donkey-drawn plows, they have one goal: to eke out
a living. Increasingly, however, they find themselves
saddled with mountains of unsold produce because farmers
in Kansas and Nebraska sell their own corn in Mexico
at prices well below those of the Mexicans. This is
not primarily due to higher efficiency. The Americans'
real advantage comes from huge taxpayer-provided subsidies
that allow them to sell overseas at 20 percent below
the actual cost of production. In other words, we
subsidize our farmers so heavily that they can undersell
poor competitors abroad. And just to make sure, we
have tariff barriers in place that make it extremely
hard for many third world farmers to sell in the United
States. The same is true for their efforts to sell
in Europe and Japan. The world's farming system is
rigged in favor of the rich.
There is an old saying: Give a man a fish, and you
feed him for a day. Teach him how to fish, and you
feed him for a lifetime. Mention "agricultural
subsidies" or "trade policy" to most
people and watch eyes glaze over. But those issues
go to the very heart of what is keeping the underdeveloped
world underdeveloped. The 50 percent increase in foreign
aid that the Bush administration has admirably promised
for the next few years pales in comparison with what
reduced farm subsidies would mean to help fight world
poverty. In the case of the earth's poorest —
some three billion people living on less than $2 a
day apiece — we in the West blithely toss them
the equivalent of a few fish but consistently fail
to let them fish for themselves.
A healthy, export-oriented farm sector, based on the
cheap land and labor that many poor countries have
in abundance, ought to be the first step on the ladder
of economic development. But across Africa, South
Asia and Latin America, that path out of poverty has
been perversely blocked by the subsidies the United
States, Europe, Japan and other rich countries pay
their most affluent farmers and agricultural businesses.
The developed world pays out more than $300 billion
a year in farm subsidies, seven times what it gives
in development aid.
These production incentives create oversupplies of
crops like sugar and cotton, which are then dumped
on world markets, squeezing tropical producers. Subsidies
also distort world market prices for vegetables, cut
flowers and cereal grains, many of which could otherwise
be marketed competitively by third world countries.
The United States is not the worst offender —
Europe is. But America runs a close and shameful second.
Western leaders regularly and rightly tout the virtues
of free trade to the underdeveloped world and energetically
press for the dismantling of tariffs on manufactured
goods and the removal of barriers to free investment.
But in the one area where most developed countries
enjoy the advantages of cheaper production costs,
the West is unwilling to practice free trade itself.
Earlier this year, Washington enacted a new farm bill
that raised agricultural subsidies by up to $180 billion
over the next decade. In October, French and German
leaders cut a deal extending and increasing the size
of Europe's Common Agricultural Policy, which already
costs more than $40 billion per year.
Significant proposals for reform are in the air. Robert
Zoellick, the Bush administration's trade representative,
has called for coordinated reductions of American
and European subsidy payments, the equivalent of mutual
arms reduction. Franz Fischler, the European Union's
agricultural commissioner, has proposed a shift away
from payments based on maximum output and toward farm
assistance based on environmental preservation goals.
These proposals will not go anywhere, however, without
stronger support than they have attracted so far from
political leaders and the public.
Continuing on the present perverse course will feed
social instability and environmental devastation throughout
the developing world. It will mean increased illegal
migration to fill agricultural and other jobs in richer
countries, instead of increased jobs and incomes in
the third world. Any serious effort to combat extreme
poverty, promote third world development and share
the benefits of globalization more fairly must begin
with a radical assault on agricultural subsidies.
It must begin now.