2002 November 01 Friday
EU $50 Billion Per Year In Farm Subsidies

You all may recall the big deal that EU mandarins made over George W. Bush's steel tariffs. Well, next time you hear a European complaint about American tariffs ask them about the size of their farm subsidies and farm goods import barriers:

Meeting in the city's swanky Conrad Hotel, the two leaders struck a deal that freezes EU's farm spending at a shade under $50 billion a year for the next decade (good news for the Germans who are the union's principal paymasters) in return for a commitment to continue subsidizing European farmers (good news for the French who receive more agricultural handouts than any other EU country.)

My interpretation of the BBC article excerpted below is that the US is spending about 35% of what the EU is spending on farm subsidies:

An international outcry has greeted the decision by the US senate to pass a subsidy bill offering US farmers $173.5bn (118.7bn) over ten years.

Here's a slightly more detailed breakdown for how much the passed bill authorized:

The farm bill authorises US$ 173.5 billion in subsidies for a ten-year period, $73 billion for 2002-2007 alone, and increase of 70 percent over the previous level. Existing subsidies are increased for soya bean, wheat and corn. New subsidies are introduced for peanuts, lentils, chickpeas and dairy farms. Previously abandoned subsidies for honey, wool and mohair have been restored.

Using a different measure of support the web site of what appears to be the US Ambassador to France comes up with much higher figures for the US and EU in farm subsidies in 1999 and I suspect these figures are no higher than the current figures:

Those following agriculture issues and the important discussions on agriculture taking place in the world trade organization and the OECD are aware that american government assistance to its farmers remains less than one-half that provided by the EU. The most respected indicator of support to the agriculture sector, the OECD's producer support estimates (pses), provides the following comparisons in its just-released report: in 1999 the EU provided $114.5 billion in producer support which was the equivalent of 49 percent of gross farm revenue. The comparable figure for the U.S. was $54 billion in producer support or 24 percent of gross farm revenue.

The $311 billion per year figure is an astounding amount of money:

The U.S. is not alone in coddling farmers and food processors. Rich countries spend more than $311 billion a year in ag subsidies, twice the amount of total farm exports from developing nations, according to a study by the Paris-based Organization for Economic Cooperation & Development. U.S. farmers, on average, receive a fifth of their income from Washington. European and Japanese farm sectors are even more pampered. Their subsidies run to 31% and 59% of farm income, respectively. That results in overproduction, which artificially cuts prices around the globe.

Farm subsidies raise consumer prices and especially in the EU:

EU food prices are 44 percent higher than they would be without the Common Agricultural Policy, while US food prices are 11 percent higher because of US farm subsidies.

In the EU-15 countries, about 17 percent of consumer spending is for food; in the 10 new countries, the average is 35 percent. The price of butter, for example, is about 2.5 times higher in the EU than in New Zealand, which has eliminated most farm subsidies.

Share |      By Randall Parker at 2002 November 01 03:48 PM  Economics Political


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