NCPA - National Center for Policy Analysis


December 22, 2005

Officials at a recent World Trade Organization meeting agreed to end farm export subsidies by 2013. If the WTO adopts the new agreement next year, farmers in poor countries will finally be able to compete in agricultural markets, and consumers in wealthy countries can expect lower food prices, says Investor's Business Daily (IBD).

According to the Organization for Economic Cooperation and Development (OECD), farm supports cost member countries about $300 billion a year. Moreover:

  • Consumers in the European Union pay about 42 percent more for agricultural products than they would without tariffs and direct payments to farmers.
  • Americans pay 10 percent more, while the Japanese pay more than twice as much.

While many assume that government subsidies support poor, struggling family farms, the truth is that subsidies often go to the richest farmers:

  • In 1999, 45 percent of American farm subsidies went to the largest 7 percent of farms.
  • In France, the richest 20 percent of farmers receive about 80 percent of subsidies.

As a result, rich farmers in developed countries receive enough government support to allow them to export products overseas at cheaper prices, thereby shutting out farmers in poor countries, says IBD.

But the goodies for a few come at the expense of many. Consumers pay more for food products, which can make or break low-income families. And in the end, taxpayers foot the bill for misguided farm policies that have worn out their welcome, says IBD.

Source: Issues & Insights, "No Tricks on Trade," Investor's Business Daily, December 20. 2005.


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