US takes care of farmers

The latest US farm bill is an example of how a country should care for its agriculture. We would do well to follow the example
Issue date : 20 June 2008

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A few weeks ago, negotiators AT the World Trade Organisation received a new draft agricultural agreement. It proposed market liberalisation through lower tariffs, less support to agriculture and the elimination of export subsidies. I n spite of this, the US Congress recently approved the 2008 Farm Bill – a huge support package for farmers. T his elicited fierce reaction from other countries. The G-20, a group of developing countries that opposes subsidies in developed countries, issued a statement condemning it.

They alleged the new Bill would lead to increased subsidies for farmers and run counter to long-term agricultural reform. National Farmers Union president Tom Buis commended the US Senate and Congress for approving the Bill. According to him “[the] Bill makes much-needed improvements and investments in conservation, nutrition, anti-hunger farm and ranch development and other vital programmes”. Inside the Farm Bill Actually called the Food, Conservation and Energy Act of 2008, it has five main goals.

1. To ensure food security by:

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  • increasing nutrition programmes by US,361 billion,
  • increasing assistance to food banks,
  • providing new funding to boost organic agriculture, fruit and vegetable programmes,
  • making country of origin labelling mandatory for meat and produce.

2. Promote homegrown renewable energy by:

  • providing US billion to fund programmes that will help the renewable energy industry to invest in technologies that use sources other than feed grains,
  • reducing the corn ethanol tax credit and
  • redirecting this to cellulose ethanol incentives, creating a programme to encourage and develop production of dedicated energy crops,
  • increasing research on bioenergy and renewable energy.

3. To reform farm programmes by:

  • extending and modernising the safety net for farmers,
  • budgeting for standing programmes for disaster assistance such as drought- and flood-stricken crops.

4. To protect the environment by:

  • increasing the conservation programme spending by US,9 billion,
  • doubling funding to protect farm land from urban and suburban development pressure,
  • increasing funding for a variety of environmental programmes.

5. To strengthen international food aid by:

  • providing US million to purchase food overseas for food aid,
  • providing additional funding for the International Food for Education and Child Nutrition Programme.

The good, the bad and the ugly he US 2008 Bill will have a significant impact on global agriculture. Food security plans in the US will help maintain demand and product prices there. The bioenergy programme will have a huge impact on grain prices. Although there’s a shift to using non-food crops, grain use for biofuel will remain high. Technological developments will see new biofuel processes being launched in the next year or two and despite criticism about the use of grain for biofuel, the US will continue to do so.

Ethanol production has resulted in a sharp increase in income in rural farming areas, some of which were poverty-stricken before. Ethanol is perceived to be environmentally safe and it decreases, albeit marginally, the US’s dependence on imported oil. The farm reform and environmental programmes will have little effect on farmers in other countries, as they just shift money from one application to another.

Food aid creates problems for farmers in developing countries. Buying food aid abroad provides the US with a less disruptive option than the old way of shipping surplus production. However, as we have seen in the past, as soon as there are surpluses, the policy changes to a programme of legalised dumping. he new Farm Bill completely ignores the multilateral negotiations and will harden the attitudes of other subsidising countries, such as the EU, Switzerland and Japan.

A lesson for SA? While one deplores the effect of the Farm Bill on the global economy, one must admire the way in which the US government looks after agriculture and consumers. The food security programmes will help US farmers sell their products and help the consumers afford them.

A former agriculture minister once said, “A nation that cares for its agriculture, cares for its future.” Our political leaders will have to learn this lesson or we may become one of the countries dependent on US food aid. Dr Koos Coetzee is an agricultural economist at the MPO. All opinions expressed are his own and do not reflect MPO policy. |fw