NELSON INSTITUTE DIRECTOR REACTS TO GLOBAL FOOD CRISIS, PLAN TO INCREASE U.S. AID; CRITIQUES DEVELOPED COUNTRIES’ AGRICULTURAL POLICIES

May 5, 2008

HARRISONBURG— Today, in a commentary for National Interest online, the web edition of the foreign policy journal The National Interest, Dr. J. Peter Pham, Director of the Nelson Institute for International and Public Affairs at James Madison University, responds to the global spike in food prices and President Bush’s announcement last Thursday that he was seeking an additional $770 million to support food aid and development programs.

Noting that “ more than a humanitarian tragedy, the soaring prices threaten to cause massive economic and political instability,” Dr. Pham enumerates some of the culprits, including a sustained drought in Australia, the fact that one-third of the American corn crop is turned into ethanol (despite a net energy loss in the process), a romanticized view of traditional farming and an ideological bias against genetically-modified crops which have substantially cut donor assistance for agricultural modernization in developing countries, and the food aid policies of developed countries which undermine the farm sectors of recipients.

However, he argues, it is farm subsidies for farmers in developed countries which “do more to retard food security—and general economic progress—in poor nations than almost anything else.”

Right now approximately one-third of American farms receive direct subsidies from the federal government in programs involving cotton, corn, rice, soybeans and wheat. The money is not distributed equally: about three-quarters of the subsidies are collected by 10 percent of those receiving subsidies, each with an average net worth of $2.5 million a piece—five times that of the median American household.

Even the subsidy to the one non-foodstuff among the “big five,” cotton, has a direct impact on global welfare. Cotton accounts for at least two-thirds of agricultural revenues in some of the poorest countries in the world—places like Benin, Burkina Faso, Chad and Mali. If this subsidy, which costs taxpayers between three and five billion dollars annually, was eliminated, world cotton prices would increase by 6–14 percent, while West African cotton farmers in particular would see a 5–12 percent increase in their incomes. That would substantially increase the living standards of some ten million people. The extra $46 to $114 per family annually may sound small, but that amount is the equivalent of school tuition for two children and ordinary healthcare for an entire family. It should also be added that the cotton subsidy makes a special mockery of American foreign assistance: last year, Burkina Faso received approximately $18 million from USAID, but handouts to American cotton farmers drained at least $40 million from the country’s economy.

Dr. Pham observes that while “neither Hillary Clinton nor Barack Obama has even touched the question of agriculture subsidies,” John McCain has a well-known dislike for them: last Thursday during a campaign swing through Des Moines, the presumptive Republican presidential nominee told an audience that he would veto the farm bill if he were president “because I believe that subsidies are unnecessary.” The article concludes:

While it’s admirable that the United States is seeking to alleviate the global food crisis, Americans should look beyond the current shortages. And that means facing up to the fact that some of their country’s own policies play a role in driving hunger and instability abroad.

The full text of Dr. Pham’s commentary, “Beyond the Food Aid Band-Aid,” can be accessed by clicking here.