the Real Winners from U.S. Agricultural Policies
GDAE Working Paper No.
05-07, December 2005
Timothy A. Wise
Who are the real winners from U.S. agricultural policies?
It may not be the farmers who receive the billions of
dollars in annual farm subsidies.
There is little evidence that farmers as a group are
reaping significant gains from current U.S. agricultural
subsidy programs, even though they are the direct recipients.
Low prices and high costs have left farmers with stagnant
or declining net farm incomes. Furthermore, there is
little conclusive evidence that the removal of U.S.
subsidy payments would significantly reduce production
or raise prices, though there is significant disagreement
on this point. There is wider agreement that U.S. farm
policies contribute significantly to depressed prices
for agricultural commodities. Among the beneficiaries
of those low prices are the consumers of U.S. grains
and oilseeds, among them the concentrated animal feeding
operations that now dominate the U.S. livestock industry.
These industrial operations get feed that is generally
sold at below farmers’ costs of production.
This paper raises two questions for future research,
and provides tentative answers. First, would U.S. policies
that ensure higher feed prices reduce the incentives
toward concentrated feeding operations and tip the economic
balance back toward diversified family farmers? Initial
research suggests that the economic benefits of current
policies to corporate livestock operators are significant
and that their reform could contribute to structural
change in the farm sector in favor of family farmers.
Second, since subsidies to feed are not now treated
as highly disciplined input subsidies for livestock
operations under World Trade Organization rules, would
a more accurate accounting bring U.S. subsidies above
the maximum levels allowed in the prevailing Agreement
on Agriculture? We present initial calculations that
suggest such an accounting change would put the United
States over is limit for 2000 and nearly over for 2001.
Agribusiness interests are largely left out of the
debates over U.S. agricultural and trade policies. Payments
mainly go to farmers, and the WTO negotiations focus
principally on disciplining such payments and reducing
other forms of agricultural support and protection.
Yet the transnational corporations that dominate the
agri-food sector are among the most important beneficiaries
of policies that lead to low commodity prices by encouraging
overproduction. It is important to identify the real
winners from U.S. agricultural policies. A closer examination
of the benefits to industrial livestock operations would
be a good place to start.
“Identifying the Real Winners from U.S. Agricultural
Policies” is available online at: http://www.ase.tufts.edu/gdae/Pubs/wp/05-07RealWinnersUSAg.pdf
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