A while back, I wrote a lil bit about how US cotton subsidies are making African cotton farmers go broke.
Now, the Atlanta Journal-Constitution’s written a series on how big this cotton subsidy problem really is — not just for African farmers, but for us taxpayers. The reporters, Dan Chapman and Ken Foskett, interviewed 200+ farmers, economists, government officials and ag experts, and examined thous of records and more than a dozen government databases.
Why? Cotton growers collected $3.4 billion in subsidies last year. Basically, these subsidies are “a multibillion-dollar entitlement” — most of which goes to rich people who don’t need it.
No, I’m not exaggerating. Farmers who grow the most get paid the most, regardless of need. “Some $10.5 billion — about half of all tax-funded subsidies — flowed to just 5 percent of eligible farmers in 2005.” Bigger farms get more subsidies — cuz they can legally subdivide their farms to collect more govt money. So “Subsidies help the largest farms to acquire the best land and squeeze out smaller growers.”
You don’t even need to actually be a farmer to reap the benefits of these subsidy programs. If you own the land, you get the money. This means that “Hundreds of millions of dollars have flowed to urbanites and large institutions, including major universities and Fortune 500 companies.”
In fact, subsidies’ll get you a lot more government handouts than welfare. Welfare benefits go kaput after just a few years. In contrast, farm subsidies are always avaliable, even if you’re already making good money.
In Georgia, subsidy recipients include former Coca-Cola Chairman M. Douglas Ivester and his wife, who’re hugely rich. Ted Turner collects subsidies in 4 states — mostly for “conservation,” cuz he can get money based on the historical yield and productivity of the land — “The subsidy is paid even if no crop is grown.”
And this subsidized cotton isn’t just for domestic use. Sez the AJC: “the U.S. cotton supply far exceeds domestic demand, and more than two-thirds of the crop is shipped overseas.” Which is why “Four West African nations alone estimate lower prices cost them $150 million to $250 million in cotton sales a year.”
Which is why the next article on AJC’s list is gonna be “How African farmers struggle to compete.” After that, I’m hoping for some “what you can do” stuff –
[via EWG's Enviroblog]
Exactly cut subsides free the market. Just another reason why the republicans can not be called right wing.
Comment by simon — October 11, 2006 @ 1:32 am
At least in Cali, we’re trying to make elections more fair via clean money campaigns (see post on prop 89). Hopefully that’ll pass, curbing the amount of money big ag businesses can throw at politicians –
Comment by Siel — October 11, 2006 @ 9:41 am
Although cotton subsidies paid to a handful (2500) of American corporate cotton “farmers” in the US ($US 4-5 billion/annum)is causing substantial economic prejudices and financial loses to African cotton producing nations in sub-Saharan Africa (SSA) and is seriously threatening both the survival of the cotton sector and the livelihoods of millions of small-scale cotton farmers throughout SSA, simply eliminating US cotton subsidies will by itself will NOT revive the cotton sector and will fail to improve the economic and social welfare of cotton farmers.
In fact, estimates by the International Cotton Advisory Committee (ICAC), using its World Textile Demand Model, clearly indicate that the elimination of American cotton subsidies would raise cotton prices by $US 11 cents per pound ($0,24 cents/kg).
However, any likely increase in the price of cotton resulting from an end to trade distorting cotton subsidies is:
1) Likely going to be pocketed by the numerous players along the supply chain (i.e. traders, ginners, exporters, government, etc) and is not likely to benefit the cotton farmers in terms of higher farm-gate seed cotton prices, thus failing to reduce poverty among the most vulnerable and affected economic agent in the cotton supply chain – the cotton farmer.
2) Any likely increase in the price of cotton lint resulting from an elimination of trade distorting cotton subsidies is inevitably going to be offset by the “invisible hand” of the market; an increase in the price of cotton lint is going to be followed by a corresponding increase in the supply of cotton, bringing back the price to its “equilibrium” level (i.e. demand=supply), thus offsetting the initial price increase resulting from the elimination of the cotton subsidies.
In this context, it seems evident that the solution to reviving the cotton sector in sub-Saharan Africa is to ADD VALUE to the cotton by locally processing the cotton throughout the supply chain – from spinning yarn, weaving fabrics, dyeing & printing, designing to garment manufacturing. Local value addition of cotton will enable both cotton farmers and cotton producing nations in SSA break free from the vicious trap cycle of declining cotton prices resulting from trade distorting US/EU cotton subsidies and from the dictate of the world market. Furthermore, processing the cotton locally will create critically lacking investment, desperately needed employment and generate income, thus creating economic growth within the economy. Last but not least, it will provide decent and affordable clothing to the local inhabitants that will have been made by Africans using African (organic) cotton and manufactured using designs that reflect African cultures, traditions and pride – thus putting a definite end to the daily humiliation Africans have to wear in the form of used clothing – known as “Kifua” or “dead white mens’ clothing” – dumped accross Africa.(to add insult to injury!).
Truthfully,
Arya.
Comment by Arya — October 13, 2006 @ 11:06 am