Stardate 20030927.1839

(On Screen): John writes:

It occurred to me today that farm subsidies may be one of our advantages in the war against terrorism.

Formerly I would have said that I was mildly against farm subsidies. Now it seems like it is a very good idea that we are making sure that most of our food is home grown.

It is my opinion that they are overall a pretty bad idea, and in fact indirectly work against our goals in the "War Against Terrorism" (which needs a new name). Even without subsidies this nation would produce far more food than it consumes, and as it is we import a lot of food anyhow (such as beef from Canada, South America and Australia). We export more calories than we import, but we import a lot of "high quality" food of various kinds.

But the subsidies have created a situation where a lot of farmers in the third world can no longer make a living, and have caused indirect economic effects which are not to our benefit. And there are a lot of basic commodities which are major cash crops in third world countries, or should be, but aren't in practice because of a combination of subsidies and import quotas in the US, and even more so in Europe.

For instance, there are several major nations whose economies would benefit immensely if the US were to open up its markets for sugar. After Marcos was finally kicked out of the Philippines, some American lawmakers visited and asked what kind of aid they'd like from us. The response was that they didn't want any aid, what they wanted was for us to stop limiting their exports of sugar to us.

The American market for sugar (sucrose produced from cane or beets) is artificially controlled in the US, mostly through import quotas to limit supply and drive prices up. But that isn't because sugar producers are particularly influential, or that they represent a vital part of our economy. It's because Archer Daniels Midland wants the price of sugar to be held artificially high enough so that it's cheaper for soft drink producers and other manufacturers of processed food to use corn sweetener instead of sugar. And Archer Daniels Midland is very influential.

Were all subsidies and import limits eliminated, the price of sugar would fall, but not as far as you might think. There are natural market forces which would support it, because the demand for it would grow explosively once its price fell below the price of corn sweetener. And if its price tried to rise above that of corn sweetener, demand would plummet. (Note that this would be based on the price per serving rather than per kilo. In products where the two are interchangeable, they have to use more kilos of corn sweetener because it doesn't taste as sweet.)

That would be a significant boost for the Philippines and for Brazil in particular, but there are a lot of other nations which produce and export sugar which would benefit. It wouldn't affect American sugar producers all that much, in part because there really aren't all that many of them. And it wouldn't affect corn farmers very much, because there are a lot of other things you can do with corn, and only a small fraction of the corn we grow every year is converted to corn sweetener. (The majority of the maize we grow is used for animal feed, and much of the rest is exported. Corn/maize isn't used anything like as much in American food overall as wheat or rice.)

But corn sweetener happens to be an extremely profitable business for Archer Daniels Midland. (Who have been known to break the law regarding campaign contributions on occasion, and who are the commercial force behind a lot of other idiotic government policies which have the effect of creating demand for corn.)

A lot of the farm subsidies work the same way. There's this myth about the subsidies that they're somehow preserving the "family farm", and that the majority of them are paid to small farmers. It doesn't turn out to be that way.

A bunch calling themselves the "Environmental Working Group" opposes farm subsidies as they exist now, but decided to try a rather novel strategy for opposition than the traditional one of mailings and lobbying. So they sued the government under the Freedom of Information Act, and were given the payment records for every year since 1995. Not as sums and summaries, mind; almost every individual payment, with names and addresses and check values. They put it all online in a searchable database, as well as providing summaries of what they found.

Among other things, two thirds of subsidies went to the top 10% of recipients as of last year.

Some of the other summary information is interesting: about a third of the total expended on subsidies went for corn. Between 1995 and 2002, that was a total of more than $34 billion, which was twice as much as for the next largest commodity, wheat, at about $17 billion. Below that were soybeans and cotton at about $11 billion each.

It is the massive amount spent on corn which shows how corrupt this all is, because that's the fruits of ADM's lobbying efforts.

Wheat isn't a cash crop in third world nations. Between the US and Australia and Argentina, wheat is produced and sold in vast quantities, at prices which makes it impossible for smaller nations to compete. A