AGRICULTURAL SUBSIDIES-ARE THEY JUSTIFIED?

One of the burning issues that divide the developing and developed countries while discussing about harmonization and unhindered working of the world trade regime is the massive economic subsidies showered on the farmers in rich countries to make their food and energy cheap. Probably these policies are put in place under the mistaken impression that low cost energy and food would be able to maintain a good quality life for the citizens. Is this surmise true? Obviously not, considering the health conditions of a vast proportion of the population there who struggle to keep some of the life threatening diseases away from their door steps! Here is a critical commentary on these subsidy policies being perpetuated in countries like the US and the EU.

"The United States currently pays around $20 billion per year to farmers in direct subsidies as "farm income stabilization"^[9][10][11] via U.S. farm bills. These bills date back to the economic turmoil of the Great Depression with 1922 Grain Futures Act, the 1929 Agricultural Marketing Act and the 1933 Agricultural Adjustment Actcreating a tradition of government support. A Canadian report claimed that for every dollar U.S. farmers earn, 62 cents comes from some form of government, with total aid in 2009 from all levels of government adding up to $180.8 billion.^[12] The beneficiaries of the subsidies have changed as agriculture in the United States has changed. In the 1930s, about 25% of the country's population resided on the nation's 6,000,000 small farms. By 1997, 157,000 large farms accounted for 72% of farm sales, with only 2% of the U.S. population residing on farms. In 2006, the top 3 states receiving subsidies were Texas (10.4%), Iowa (9.0%), and Illinois (7.6%). The Total USDA Subsidies from farms in Iowa totaled $1,212,000,000 in 2006.^[13] From 2003 to 2005 the top 1% of beneficiaries received 17% of subsidy payments.^[13] In Texas, 72% of farms do not receive government subsidies. Of the close to $1.4 Billion in subsidy payments to farms in Texas, roughly 18% of the farms receive a portion of the payments.^[14] "Direct payment subsidies are provided without regard to the economic need of the recipients or the financial condition of the farm economy. Established in 1996, direct payments were originally meant to wean farmers off traditional subsidies that are triggered during periods of low prices for corn, wheat, soybeans, cotton, rice, and other crops." ^[15] Top states for direct payments were Iowa ($501 million), Illinois ($454 million), and Texas ($397 million). Direct payments of subsidies are limited to $40,000 per person or $80,000 per couple.^[16] The subsidy programs give farmers extra money for their crops and guarantee a price floor. For instance in the 2002 Farm Bill, for every bushel of wheat sold farmers were paid an extra 52 cents and guaranteed a price of 3.86 from 2002–03 and 3.92 from 2004–2007.^[17] That is, if the price of wheat in 2002 was 3.80 farmers would get an extra 58 cents per bushel (52 cents plus the $0.06 price difference). Corn is the top crop for subsidy payments. The Energy Policy Act of 2005 mandates that billions of gallons of ethanol be blended into vehicle fuel each year, guaranteeing demand, but US corn ethanol subsidies are between $5.5 billion and $7.3 billion per year. Producers also benefit from a federal subsidy of 51 cents per gallon, additional state subsidies, and federal crop subsidies that can bring the total to 85 cents per gallon or more.^[18] (US corn-ethanol producers are also shielded from competition from cheaper Brazilian sugarcane-ethanol by a 54-cent-per-gallon tariff^[19][20]) "

"There is big money at stake here and the people truly intended to benefit from the subsidies are the ones most directly squeezed out by the subsidies themselves. Ethanol and its $0.45/gallon subsidy is a primary culprit in this phenomenon. Our nation's farmers use ten million hectares of arable land in order to grow corn for ethanol alone. When farmers forgo one crop in order to grow another the ripple effect drives up the price of all other growables. And rising corn prices drive up the price of livestock that feed on grains. In sum, 90% of all agriculture subsidies go directly towards staple crops such as corn, wheat, soybeans and rice–all grains (and we still subsidize tobacco growth!). This ensures that the subsidies are neither in our economic, nor nutritional interest. A grain intensive diet (and the proliferation of processed edibles like high fructose corn syrup) have a distinctly negative impact on the health and weight of their eaters. When farmers want to fatten up their livestock, they feed them grains instead of other feed alternatives. As our subsidies incentivize the growth of grains as opposed to other edibles (like lettuce, peppers, tomatoes, etc.) it is no coincidence that Americans have a growing (sorry for the 2nd such cheesy pun, I had no choice…) obesity problem as well."

The trade negotiations between the "haves" and "have nots" do not seem to be getting any where with the rich nations unwilling to do away with their subsidy regimes for fear of offending the powerful farm lobbies who have tremendous influence on the political class through unlimited funding of elections. The tragedy is that the subsidies not even benefit the small farmers in these countries as 80% of the hand out is cornered by big sharks, year after year creating a situation wherein small farms are systematically being gobbled up by the large players. While what is happening in a country like the US is of concern to the citizens there, it also has global implications. World economy is affected because the livelihood of millions of small and micro farmers in many poor countries is gravely threatened by depressing the global prices of exportable commodities and probably it is time collective action is taken to right the wrong that is being perpetuated for decades with least sensitivity to the sufferings of a vast majority of populations living in African, Asian and South American continents.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

FOOD AID PROGRAMS-WHO IS BENEFITED ANY WAY?

"Food Aid" programs sponsored by many rich countries are intended to prevent starvation amongst the population in the aid receiving countries. While committing the quantum of aid the donors invariably insist on supplying food grains from their granaries through high cost delivery channels and there is a disconnect between the value of food supplied and number of beneficiaries actually covered. Surplus food grains stored as a part of the food security system for long time find their way to poor countries with suspect quality too. In a critical appraisal of the impact of such high "visibility" aid programs, some critics have pointed out the inherent inequality and adverse consequences brought about by such supposedly "humanitarian" services of donor countries.

Once the food finally arrives, it floods agricultural markets, destabilizing fragile local economies. Small farmers are the first to go bankrupt. Most of them are women like Khalida, who work small plots of land hoping to sell enough at market to buy cooking oil, flour, a bar of soap and a pair of shoes so a child can stay in school. These women are more than the backbones of their families: they grow most of Africa's food. Unlike giant grain corporations, these women farm without fossil fuels and harmful chemicals. Their sustainable agriculture practices are critical to meeting the twin challenges of feeding people and protecting the planet. Khalida and millions of other small-scale women farmers are the people we want to support with our food aid programs. Instead, the policy undermines the livelihoods of those who hold the key to long-term food security in Africa. Fortunately, there is a straightforward solution: the U.S. should buy food aid crops directly from local farmers in Africa. When the U.N. World Food Program did this, they were able to obtain 75 percent more corn to feed hungry families than when they purchased grain from factory farms in the U.S. Buying specifically from women farmers has an enormous added benefit. Studies consistently show that when poor women gain access to money, they use it to provide food, healthcare and education for their children. Now is the perfect time to push for this innovative solution and Sudan is the best place to start. Here are three reasons why:

It was not long ago that some senior American policy makers, while making tall declarations about economic aid to Africa, suggested that the poor farmers in this part of the world must use the GM technology for increased production! They further wanted them to procure the required inputs from that country, little realizing the logistical and practical difficulties inherent in such proposals. The bottom line is that more benefits must flow to the donor through such aid programs while they are least concerned about the benefits that can flow to the receiver! Similarly sending grains from the donor country brings about unintended negative consequences as detailed in the critical analysis cited above. The suggestion to transfer the aid money directly to the recipient country is an eminent one deserving consideration.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

POOR IN "WEALTH" BUT RICH IN "FELLOWSHIP"-THE RWANDA PARADOX

Universal health insurance is a desired objective entertained by countries all over the world but very few have been able able to achieve coverage of the majority of population under their national insurance program. While life insurance which is becoming popular and affordable to many provides security to a family on the death of the insured, health insurance is a means of helping the family to fight against unanticipated contingencies due to many life threatening diseases. With medical and hospitalization expenditure becoming increasingly cost prohibitive, those with low surplus income are finding it difficult to keep away the threat of health afflictions. In a country like India government hospitals and health centers do provide some solace but the quality of the facilities and the medical staff is at best tolerable. Those who can afford high premiums charged by the insurance agencies have access to some of the best privately run hospitals with state of the art facilities. The Rwanda model is some thing unique, especially for a country considered one of the poorest in the world.

"The little prince is the first in his line to be delivered in a clinic rather than on the floor of a mud hut. But he is not the first with health insurance. Both his mother and grandmother have it, which is why he was born here. Rwanda has had national health insurance for 11 years now; 92 percent of the nation is covered, and the premiums are $2 a year. Sunny Ntayomba, an editorial writer for The New Times, a newspaper based in the capital, Kigali, is aware of the paradox: his nation, one of the world's poorest, insures more of its citizens than the world's richest does. He met an American college student passing through last year, and found it "absurd, ridiculous, that I have health insurance and she didn't," he said, adding: "And if she got sick, her parents might go bankrupt. The saddest thing was the way she shrugged her shoulders and just hoped not to fall sick." For $2 a year, of course, Rwanda's coverage is no fancier than the Mayange maternity ward. But it covers the basics. The most common causes of death — diarrhea, pneumonia, malaria, malnutrition, infected cuts — are treated".

For any country it is a choice between building hospitals for free treatment of the low income population needing medical attention or a universal insurance scheme that covers the entire population, leaving the running of hospitals in the private hands. Whether at low premium rates such a universal system can work efficiently may be a matter of concern for the planners. Probably the money spent on establishing and running the health centers and district hospitals under government aegis which do not inspire much confidence any way, can be better utilized in subsidizing insurance premium for poor people. One can also consider PPP mode for running medical facilities currently owned by the governments with adequate provisions for treating low income people under the universal health insurance scheme while others with adequate income can be charged as per normal norms.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

"WAKE UP" CALL FOR RICH COUNTRIES-ACT OR PERISH

The harmful effects of green house gas emissions are well known and the Copenhagen summit last year was supposed to have addressed this problem for arriving at a global consensus. But the issue of mandatory emission cuts was mired in controversy with a vertical divide between the "haves" and "have nots" of this unfortunate planet. Countries like China, Brazil and India on the threshold of high developmental achievements require enormous energy for fulfilling the aspirations of their people who were suffering for decades due to poverty and low income levels. For the economic super powers with practically flat growth trajectory, sacrifice is not a word in their lexicon. Other wise what rationale there is in their demand on these countries for drastic reduction of emissions which can be accomplished only by shelving or slowing down many of their human development programs. Against such a back ground comes the refreshing stand taken by the premier scientific body in the US asking for eduction in emissions for the the welfare of its own people

"The academy says that between 2012 and 2050 the nation should produce no more than a total of 200 billion tons of greenhouse gases, ideally considerably less. (At the current rate of seven billion tons a year, the country would produce 266 billion tons.) The longer we wait to begin reducing emissions, the academy adds, the harder and more costly it will be to reach the target. It recommends putting a price on emissions as well as investments in energy efficiency, alternative fuels and developing cleaner technologies".

China and India voluntarily declared steep cuts in their emission rate, though such a gesture will cause lot of hardship to their people. It is appalling that Even the small decrease of less than 15% from their already high emissions, seems to be "painful" to the richest country of the world, the US where maximum number of wealthy people in this planet are concentrated. Is there still hope that mankind will come out of this "emission trap" in the foreseeable future? That depends on the attitude of the self anointed "arbitrators" sitting in Tokyo, Paris, Rome, London, Berlin, Washington DC and Canberra, members of the super rich club, G7.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com