A common argument against liberalization is that the U.S. should hold onto its agricultural tariffs as "bargaining chips" in WTO negotiations. The worry is that if we were to dismantle our barriers unilaterally, other countries would lose any incentive to give up theirs.
But reducing protectionism would not primarily be a "concession" to other countries. It would be a favor to ourselves. In the process we would set a good example and create good will in global negotiations, inviting other countries to join us in realizing the benefits of lower domestic food costs.
3. Budget Savings and Equity for U.S. Taxpayers
Agricultural reform also would reduce the cost of government. The Office of Management and Budget estimates that taxpayers shelled out an expected $26 billion in direct agricultural subsidies in fiscal year 2005--the biggest single-year subsidy bill since 1986. Just nine years ago, Congress promised to phase out farm subsidies by 2003. Instead they've reached near-record highs.
Subsidy levels before 1996 were set by a formula that triggered an increase when crop prices fell. Starting in 1995, crop prices began to rise, resulting in lower payments from the federal government. The Freedom to Farm Act, passed in 1996 when commodity prices were high and demand for subsidies low, ended the price support program and replaced it with a declining fixed payment unrelated to market prices. Payouts were scheduled to drop from $5.6 billion in 1996 to $4 billion by 2002 and then disappear.
But Congress reversed course in 1998, when crop prices began to decline, passing an "emergency" supplemental bill that raised total farm subsidies to $12.4 billion. Subsequent supplementals hiked handouts to new heights, totaling more than $76 billion between 1999 and 2002, a whopping $57 billion more than the Freedom to Farm Act originally mandated.
In May 2002, President George W. Bush hammered the final nail into Freedom to Farm, signing a six-year appropriation that revived the old price support program. Taxpayers have coughed up $55.5 billion in the three fiscal years since. For the same money Congress paid to farmers during the "phase-out" period between 1995 and 2003, the federal government could have purchased outright more than a quarter of the country's farms.
Yet two-thirds of American farmers don't even receive subsidies. So where does all that tax money go? Mainly to large agribusinesses and the richest family farmers. In 2003, the most recent year for which comprehensive statistics are available, the top 10 percent of all subsidy recipients gobbled up 68 percent of the money, and the top 5 percent got 55 percent.
Take, for instance, Riceland Foods in Stuttgart, Arkansas, the
largest single recipient of farm welfare. In 2003 it received $68.9
million in subsidies for producing rice,
soybeans, wheat, and corn--more than all the farmers in Rhode
Island, Hawaii, Alaska, New Hampshire, Connecticut, Massachusetts,
Maine, Nevada, and New Jersey combined.
The second-largest recipient of farm welfare in 2003 was Producers Rice Mill, also in Stuttgart, Arkansas, which received $51.4 million. The agricultural welfare rolls also include many Fortune 500 companies, such as Archer Daniels Midland and International Paper, plus corporations most people don't associate with farming, such as Chevron, Caterpillar, and Electronic Data Systems.
From the taxpayer's perspective, there is no good reason why the federal government should continue to subsidize farmers or companies, especially those that can remain profitable on their own.
4. More Environmentally Friendly Land Use
The distortions and perverse incentives of U.S. agricultural policies have encouraged practices that damage the environment. Trade barriers and subsidies stimulate production on marginal land, leading to overuse of pesticides, fertilizers, and other effluents. A central if unstated purpose of American farm policy is to promote production of commodities that would not be economical under competitive, free market conditions. This often means emphasizing crops better grown elsewhere, requiring more chemical assistance.
Overuse of fertilizers and pesticides adds to runoff that pollutes rivers, lakes, and oceans. According to the World Resources Institute, agriculture is the biggest source of river and lake pollutants in the United States. A study by the Environmental Protection Agency found that 72 percent of U.S. rivers and 56 percent of lakes it surveyed suffer from agriculture-related pollution. Areas of the Gulf of Mexico have become "dead zones" because of the runoff from farms in the Midwest. Even where fertilizers and pesticides are not used intensively, the mere act of plowing soil eliminates forest and grass cover, leaving soil exposed for weeks at a time and vulnerable to erosion. Erosion can build up silt in nearby rivers and downstream lakes.
Domestic sugar protection has maintained a concentration of producers in central Florida who have used up water from the endangered Florida Everglades while spitting back phosphorous content far above the level consistent with maintaining the surrounding ecosystem. The high runoff has seriously reduced periphyton, such as algae, that supports birds and other animal life. Congress has spent billions to repair the damage caused to the Everglades by the protected sugar industry.
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