The United States’ budgetar y deficit hasn’t restrained its support for American farmers, according to trade analyst Peter Clark.
In a study funded by the Dairy Farmers of Canada, Clark found programs offered by Washington, as well as by state and local governments, poured more than US$180 billion into farmers’ pockets in 2009.
That’s “well more than half of total U.S. farm gate revenues of US$290 billion,” Clark said at a news conference.
“Overall, the U.S., like the European Union, provides support to U.S. agriculture which is production and trade distorting. Rampant, misclassified and unreported domestic support is the root cause of the impasse in the Doha round and the overwhelming reason that meaningful negotiations will not be re-engaged for years.”
Clark handed out a CD containing the details of the data his consulting firm collected during its study of U.S. farm
supports. On paper, it would fill a thick three-ring binder. The study said support insulates American farmers from the reality of international markets.
Canada and other countries should be suspicious of American and European intentions going into meetings in Geneva in early December aimed at re-energizing the Doha round trade talks, Clark said.
“The U.S. wants to gain more market access for its farm products without paying anything in terms of reducing
domestic support for its efforts.”
Earlier this year, Clark predicted the trade talks would sputter out because the big players aren’t prepared to make meaningful changes. He says the deep division among developed and developing countries remain the main stumbling block in the negotiations.
Meanwhile, other countries will remember the Blair House agreement at the end of the Uruguay trade talks in the 1990s allowed the U.S. and Europe to gain a big advantage over other food exporters, Clark said.
There will be pressure on countries to reach a trade deal in Geneva next month to avoid reporting failure to world leaders when they gather in Davos, Switzerland early in 2011, he predicted.
U.S. government support for farmers comes through a variety of payments, loans and other assistance, he said, adding American dairy farmers garner about close to $20 billion annually.
“We estimate that the total direct and indirect benefit to U.S. dairy production through U.S. federal, state and local programs in fiscal year 2009 was US $12 per hundredweight of milk produced or C$31.11 per hectolitre,” he added. That compared to support worth C$25.90 per hectolitre in 2003.
Clark also rapped a report by the Organization for Economic Co-operation and Development that said Canadian farmers received more subsidies than Americans. The data is skewed because the OECD counts prices paid to dairy and poultry farmers under supply management as a subsidy but discounts the impact of the higher value of the Canadian dollar, he said.
He said that while Canadians may pay more in the grocery store for dairy and poultry, “we’re not paying for it in our taxes as well.”
– TRADE ANALYST PETER CLARK