During the last 10-year period for which relevant statistics are available (1996-2005), U.S. rice farmers got 72 per cent of their cash income from federal farm subsidies. Cotton farmers got 50 per cent; wheat farmers, 35 per cent; barley farmers, 30 per cent; corn farmers, 25 per cent. These are average percentages for the decade - meaning that the percentages must have reached higher levels in some number of years. A Congressional Research Service study published last October documents the aberrational excesses that occasionally occur. In 2000, wheat farmers got subsidies equal to 100 per cent of their market incomes; rice and cotton farmers got 175 per cent. These farmers must be regarded less as farmers and more as able-bodied welfare recipients in straw hats.
As most countries do, the U.S. subsidizes farmers directly by sending them cheques in the mail and indirectly by restricting imports, which compels people to pay the subsidies at the grocery store. The indirect method imposes a tax no less effectively than the direct. You need to know the respective cost of each method to calculate a country's actual subsidies - and to determine how much of them can properly be deemed to be illegal.
The World Trade Organization, for example, allows the U.S. to provide $19-billion (U.S.) a year in agricultural subsidies. In fact, counting cash subsidies and tariff subsidies, U.S. farm "support" routinely exceeds twice this legal limit. In the first five years of the George W. Bush presidency (2001-2005) the average cost of federal farm support programs was $42.7-billion a year.
In a report published in April, the Cato Institute's Center for Trade Policy Studies concluded that, since 1983, "a few favoured farm sectors have received between $21-billion a year (1995) and $56-billion a year (1999) in government support in the form of direct subsidies and higher prices." The centre calculated the staggering opportunity cost - or lost-opportunity cost, to be precise - of these subsidies: "If American taxpayers and consumers had been spared the cost of farm programs during the last two decades, and had been able to invest these savings at the market rate of interest, they would be $1.7-trillion wealthier today."
Most farm subsidies in the U.S. go to the richest farmers. The Environmental Working Group, a non-partisan research organization, has calculated that half of all subsidies go to the 7 per cent of American farms that report incomes of more than $250,000 a year. And the OECD, meantime, has determined that the median wealth of American farm households is more than five times the median wealth of the average American household - meaning that people who are relatively poorer are augmenting the bank balances of people who are substantially richer.
With origins in President Franklin D. Roosevelt's New Deal, U.S. farm support programs are deeply entrenched. The legislation that mandates them has been deemed "permanent," making farm subsidies an entitlement program difficult to amend, almost impossible to repeal - though federal subsidies for wool and mohair, for tung nuts and honey, for Irish potatoes have been eliminated over the years and peanuts are now mostly on their own. (U.S. farmers grew great orchards of tung trees, which are native to China, for oils used in making paints - until President John F. Kennedy revoked import quotas in 1962.) U.S. farm support programs still use cloaks of compassion to conceal the corporate welfare. The U.S. Department of Agriculture gives food stamps to 25 million people, but uses the program to flog dairy products. It's the USDA that administers American humanitarian food aid, dumping vast amount of surplus foodstuffs around the world - enriching its own farmers as it impoverishes Third World farmers who can't compete with the U.S. Treasury.
Notwithstanding these excesses, though, the U.S. is a model of restraint when compared with the rest of the world's rich countries. Two of these countries provide minimal support for their farmers - and they have booming global exports to show for it. The OECD says that New Zealand's farmers get only 2 per cent of their incomes from government support, Australia's farmers only 4 per cent. U.S. farmers get much more - 16 per cent. Canadian farmers get 22 per cent. Throughout the European Union, government support provides 32 per cent of farm incomes. In Switzerland, the record holder, the percentage is 68.
Canada has now taken the U.S. to court, asking the WTO to rule on U.S. compliance with the trade organization's rules. Whether or not the U.S. farm-aid program is technically legal, a dubious proposition, it is indisputably wrong in principle - as the Canadian farm-aid program is wrong in principle.
Trade Minister David Emerson should have named his own country as a co-conspirator in crimes of corrupted commerce.