Reforming the Farm Bill
By Amanda Kay McVety
On 5 June, the US Senate began discussing its draft of the 2012 farm bill. The final bill will govern American farm and food policy for the next five years, and quite a bit of attention is being paid to proposed changes in the funding of the Supplemental Nutrition Assistance Program (food stamps) and environmental sustainability programs. But more than America’s health is at stake because the bill will affect farmers and families around the globe. What happens here matters there. Government subsidies to “farmers” (often actually massive agribusinesses) in the world’s wealthiest nations make life harder for everyone in the world’s poorest.
The international community is well aware of the problem and has been for quite some time. The ever-vigilant Nicholas D. Kristof warned New York Times readers about it following the passage of the 2002 farm bill. Later that year, European Union delegates stalked out of the World Summit on Sustainable Development in protest after representatives of developing nations asked to submit a declaration calling for the elimination of farm subsidies. Meanwhile, a World Bank study released that fall reported “that full elimination of agricultural protection and production subsidies in the rich countries would increase global trade in agriculture by 17 percent, with agricultural and food exports from low- and middle-income countries rising by 24 percent. As a result, total annual rural income in these countries would rise by about $60 billion, or roughly 6 percent.” It was clear in 2002 that agricultural subsidies seriously impeded international development efforts (as did, notably, tariffs), but not much has been done in the decade since to change the status quo at least in the developed world.
Developing nations cannot alter the domestic policies of the G8; they have nothing close to the power wielded by agribusinesses. What they can do, however, and what they are doing, is reforming their own agricultural infrastructure to try to compete on a very unlevel playing field. Ethiopia is a great example. The Ethiopian Commodity Exchange (ECX), modeled after Chicago’s Board of Trade, opened in 2008, bringing farmers all over the country into one, centralized market. The ECX even offers a call and text service so that farmers can get up-to-the-second prices on their phones, an important step forward in its mission “to connect all buyers and sellers in an efficient, reliable, and transparent market by harnessing innovation and technology, and based on continuous learning, fairness, and commitment to excellence.” Impressed by the results, Ghana is currently working on creating its own exchange.
Ethiopia is doing its part to transform its position in the global economy, but its efforts remain hampered by foreign tariffs and subsidies. The 2012 farm bill offers the United States a chance to remove some of the obstacles. The US Senate Committee on Agriculture, Nutrition & Forestry claims that the bill “represents the most significant reforms in agricultural policy in decades.” Much of that reform needs to address subsidies that are not only wasteful, but also harmful. Important steps have been taken, most notably with Senate approval of Tom Coburn’s (R-OK) amendment to cut farm subsidies for anyone with an average income over $1 million. The current Senate bill promises that “Any person or entity with an adjusted gross income (AGI) of more than $750,000 will be ineligible for payments from Title I Farm Bill programs, which are now capped at $50,000 per entity. This bill also ensures that payments go to those farmers with an active stake in the farming operation.” In addition, the bill promises to help farmers around the world by expanding international food aid programs and allowing US aid organizations “to purchase food through local and regional markets,” a 2008 initiative that has been proven far more efficient than the standard required utilization of American-grown crops. The proposed Senate bill offers some meaningful reforms, but it needs to do more. The problem is not just the wastefulness of the current system (which remains expansive — check out a new report by the Environmental Working Group on crop insurance subsidies), but the harmfulness of it.
The proposed bill continues the old pattern of privileging producers of corn, soy, barley, rice, and wheat over producers of fruits and vegetables. Keeping prices low on carbohydrates and high on the fresh produce needed in order to maintain a healthy diet hurts Americans. It hurts farmers in the developing world by keeping prices low on the agricultural products that are most easily shipped abroad, thereby continuing the current distortion of global commodity markets. Maintaining the status quo ensures that Americans will continue to struggle with obesity while millions around the world continue to struggle with hunger. The Senate — and the House after it — has an opportunity to change that, but it will require putting the health of individuals, at home and abroad, above powerful business interests. Let’s hope it doesn’t take another five years for that possibility to become a reality.
Amanda Kay McVety is Assistant Professor of History at Miami University. Her book, Enlightened Aid: U.S. Development as Foreign Policy in Ethiopia, which came out with OUP earlier this year, examines the history of American aid efforts in Ethiopia and the current debate about how to make international development efforts more effective.