Trade Watch: West rethinks lopsided agricultural subsidies

From the Associated Press
Chris Tomlinson

NGIRESI, Tanzania — Farmer Loi Bangoti picks corn by hand on the lush, cool slopes of his land, nestled under the cloudy shadow of Africa’s highest mountains.

Half a world away, farmer Tim Recker drives his combine through the famously flat, open cornfields that stretch out in the sun across the plains of Iowa.

For all their differences, both men rely on a complex global food market that decides how much their corn is worth and who will buy it. And the lives of both — along with millions of other farmers — will be affected by a growing movement to change one of the biggest forces shaping the market: subsidies.

Many experts agree farmers need help to grow food year in and year out, but Western farmers may get too much and African farmers too little. Western farmers receive billions of dollars in subsidies every year, which makes their food cheap to grow and sell. African farmers are left on their own because of decades of anti-subsidy policies pushed by the World Bank and others as a condition for aid money.

Now, Africans are fighting back.

Some African countries are considering subsidies for their own farmers — Malawi has started providing discount vouchers for seed and fertilizer to farmers and is seeing such a bumper crop that it now sends emergency corn to neighboring Zimbabwe. African nations have also joined in lawsuits opposing American subsidies, resulting in a World Trade Organization ruling in October that the U.S. could face billions of dollars in sanctions.

At the same time, subsidies are facing more scrutiny than ever within the United States. A farm bill before Congress — the first in five years — was once a shoo-in, but now faces the threat of a veto from President Bush. He has called for an end to farm subsidies by 2010 to avoid trade conflicts.

The complexities of the subsidy debate play out far from the courts and the chambers of power in the daily lives of farmers like Bangoti and Recker.

Bangoti’s story shows how a little help can go a long way. He points with pride to his two acres of corn, beans and potatoes, stretching up the slopes of Mount Meru in a mosaic of various greens dotted with the brown of a few fallow fields.

Back in 1992, Bangoti lived in a mud hut, worked as a day laborer, herded skinny cows and harvested barely enough corn and beans to feed his family. Then scientists came to his farm as part of an agricultural aid program.

They looked at his soil, found the right seed and gave him his first batch of chemical fertilizer. They showed him how to get as much milk from two dairy cows as from his 20 traditional cattle. The techniques were simple, yet rare in Africa, where few labs analyze soil samples and few companies develop improved seed.

By 1993, Bangoti had tripled his output — and profits. At the time, he was profiled in an Associated Press story on African farming. His success since proves it was no accident. He is still farming, and still thriving.

“I built my own modern house,” Bangoti, 50, says proudly, sitting under a shiny tin roof surrounded by dark blue concrete walls. “I was able to send my children to school. … A long time ago, you could have a lot of cows, and have nothing. Now, with this modern way of living, you can have a few cows, but produce more.”

Bangoti says all it would take is a little training and a few supplies for Africans to grow all the food they need.

They once did, in the 1960s. Now, Africans import 25 percent of what they eat. Their share of the global agricultural market is down from 8 percent to 2 percent. And theirs is the only continent where food production per capita has fallen — roughly 22 percent since 1967, according to the World Resource Institute.

One reason, experts say, is the loss of subsidies. In exchange for foreign aid, debt-saddled African countries agreed to cut subsidies. Less than 4 percent of government spending in sub-Saharan Africa now goes to agriculture.

But without a safety net, a single bad season can bankrupt a farmer, and often does. And without help, African farmers are too poor to pay for the good seed and fertilizer that bring land to life.

There are signs of change. The World Bank is rethinking its stance on subsidies after a scathing internal review last month, and it made agriculture the center of its agenda this year for the first time in more than two decades. About 70 percent of Africans live off the land, and agricultural reform — from seed to market — is the surest way to lift the continent out of poverty.

African governments have promised to double their spending on agriculture. And the Gates Foundation and former U.N. Secretary-General Kofi Annan are leading an effort to bring to Africa the green revolution that swept through Asia.

As Bangoti leafs through a photo album of the experts who have visited his farm, he says the training and the aid have changed his life.

“Now I am always moving forward,” he says. “I never go backward.”

Bangoti says he could grow even more — if he could sell it. But he is competing against farmers in the richest countries of the world who get a lot more help, such as Recker.

The cornfields Recker sees through the glass patio doors of his modest ranch house have supported his family for generations. Recker followed his father and grandfather into farming, and works 1,500 acres in northeastern Iowa with his brother.

Today, the price of corn is at a record high because it is in demand to make ethanol. Recker’s business revolves around the timing of the markets as much as the seasons. As he sits at his breakfast table in his overalls and baseball cap, his mobile phone beeps to announce the arrival of the opening commodity prices at his local mill.

It was a different story when Recker started out in the mid-1980s, during one of the country’s worst agricultural crises. He says he could never have survived it without subsidies.

Subsidies kick in when prices are low. But they are given for each bushel, which creates an incentive for farmers to grow as many bushels as they can. The torrent of food then drives down world prices and makes it next to impossible for African farmers to compete.

Some of the extra food ends up in Africa. Most Iowa corn floats down the Mississippi River on barges to become feed for livestock or grist for ethanol. But at some point Recker’s corn has almost certainly gone to Africa for food relief, which experts say destroys local markets.

The United States — the largest donor to the U.N. World Food program — sends Africa corn, wheat, sorghum and soybeans. Aid agencies then have to hand out free or cheap American food instead of buying from African farmers. The cheap imported grain keeps Africans poor, and dependent on cheap imported grain.

The crisis is such that Atlanta-based CARE International, one of the world’s largest charities, announced in August that it would walk away from $45 million in American food to avoid disrupting the economies of the people it wants to help.

The subsidy system makes it hard for African farmers to compete on the world market. Western farmers get 29 percent of their income on average from their governments, according to the Organization for Economic Cooperation and Development. So they can sell their food for far less than Africans who get no subsidies.

African farmers may get help from an unexpected source — American corn and wheat farmers.

A new generation of corn and wheat farmers is arguing that the current subsidy system no longer meets the needs of their rapidly changing business. Instead of subsidies per bushel, they want the guarantee of a minimum level of revenue for each farm.

The change seems small, but it could result in farmers growing far less — and dumping far less extra corn and wheat on global markets. So Recker, the president of the Iowa Corn Growers Association, goes to Washington every three weeks to make a case that will benefit Bangoti, quite by accident.

“I think we have an opportune time to make sweeping changes in farm policy,” Recker says. “We need to have a program that is designed to supplement the farmer only when he needs it, and when he needs it most.”

Other farmers are not so sure. Peanut and cotton farmers want to keep the current subsidy system but get more money from it.

American cotton farmers receive $3 billion a year in subsidies — sometimes more than half their income, said Daniel Sumner, an agricultural economist at the University of California at Davis. He calculates that African cotton farmers — who pick each bud by hand and dig furrows with plows and oxen — lose $250 million a year because of the U.S. subsidies. That’s enough for each of those farmers to feed two children and pay all school fees for a year.

Cotton farmers in the U.S. say that the impact of subsidies on Africans is overstated, and that African farmers face internal challenges such as productivity and low yields.

Back in Tanzania, Loi Bangoti is not waiting for the outcome of the subsidy debate. In fact, he has never heard of subsidies for Western farmers, and he has no idea how they might affect his business.

But he is thrilled with his own success. His four sons have embraced the new ways he learned, and one even teaches modern dairy farming in a new program in neighboring Uganda.

He is especially proud of one thing: He no longer needs or takes handouts.