April 08, 2020
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The Unequal Fertility Cult

The farm subsidy regime in the West is as skewed as it is in India

The Unequal Fertility Cult
The rich nations' subsidy story has many Indian angles. One, these countries started giving food subsidies post-World War II, to ensure food security, just like India started its own payouts when the PL480 dried up. Second—VHP-ites take heart—most of the former's subsidies go to cows (dairy farming). The World Bank calculates that the average Japanese cow gets $7 a day, while the European one gets $2.20. And the OECD (rich nations' club) estimates that farmers in the West receive over $300 billion a year, or six times the level of assistance provided by rich nations to poor.

Some 40 per cent of farm income in Europe is now directly paid by Brussels; the corresponding figure for Japan is 75 per cent. Place this against the stark figure of half of global population (half of whom are in India) living on less than $2 a day. Or against the fact that agriculture accounts for only 1.6 per cent of Japan's economy, 2.9 per cent of France's and 1 per cent of Britain's.

Like in India, the western subsidies are iniquitous. The largest 2 per cent of Europe's farms receive 24 per cent of all direct payments from their respective governments while the smallest 60 per cent get only 10. Even in the US, the richest 7 per cent of farms soak up half of government support. Both the EU and the US dole out cheques as "deficiency payments" (the gap between the low global prices and high cost of production) to farmers. The EU combines this with price support and export subsidies.

All these countries also use import tariff as a barrier. Japan's import tariffs on rice go up to 1,000 per cent, while America's $4 billion cotton subsidies to 25,000 well-off farmers is more than the value of what they produce, besides helping to pauperise 10 million African farmers in four countries—Burkina Faso, Mali, Chad and Benin.

It's these African nations which scuppered a deal at Cancun. Campaigners for cuts in farm subsidies have a trumpcard up their sleeves. At the end of the year, the so-called "peace clause" expires, at which point EU and US subsidies can be challenged under the wto's disputes procedures.
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