Sunday, June 01, 2003

Subsidizing Poverty - The New Republic

Peter Beinart does a good job in pointing out the hypocrisy of President Bush's recent speech on biotechnology, and the effects that Europe's agricultural policies are having on the livelihood of African farmers.

Agricultural subsidies that specifically prop up exports to the developing world are a small part of that larger, shameful picture. And they are a part for which Europe bears most of the blame. (European countries designate many of their farm subsidies for export, while the United States mainly subsidizes production.) So the president was right to lecture the Europeans.

But here's what he didn't say. A year ago, Bush signed the Farm Security and Rural Investment Act of 2002. The law�crafted to help Democratic and Republican farm-state senators up for reelection �boosted agricultural subsidies by an astonishing 80 percent. And, because the president signed it, many Africans will die.

To understand why, consider just one provision of the legislation: the subsidy on cotton, which the 2002 law more than doubled, from 35 to 72 cents per pound. The United States is a highly inefficient cotton producer; in fact, America's production costs are roughly three times those in the West African nation of Burkina Faso. Yet Burkina Faso is losing market share because the United States subsidizes its cotton industry by roughly $2 billion per year (three times as much as the U.S. Agency for International Development spends annually on Africa). According to Oxfam, the United States actually spends more subsidizing the production of cotton than it earns selling it�making the industry a net loss to the U.S. economy. Those subsidies go to America's 25,000 cotton farmers, who boast an average net worth of $800,000; by contrast, the average yearly wage in Burkina Faso is roughly $200.

I highly recommend reading the article in its' entirety.