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AGRICULTURE REPORT - Why Farm Aid Has its Critics and SupportersBy Mario Ritter

Broadcast: Tuesday, March 21, 2006

I'm Steve Ember with the VOA Special English Agriculture Report.

Aid to farmers has become a major issue in world trade talks. Industrial nations provide farmers with payments to improve farm earnings¹. But, developing nations say aid to farmers in rich nations suppresses² world agricultural prices.




The issue of agricultural subsidies³ has nearly halted the Doha Round of World Trade Organization talks. The Doha Round is the latest in a series of negotiations⁴ by WTO members to improve international trade. Farm subsidies were a major reason that talks in Cancun, Mexico, failed in two thousand three. And, no major agreements were reached in Hong Kong in December of last year.

Today's system of farm subsidies in America began in the nineteen thirties during The Great Depression. Prices in the nation dropped. At that time, twenty-five percent of the nation's population lived on farms. And farmers were among those hurt most by dropping prices.

In nineteen thirty, Congress and President Herbert Hoover tried to protect American markets by taxing foreign imports. Crops were also protected. But this caused other nations to create trade barriers. This closed markets to American goods, making the world economic situation worse.

Three years later, Congress and President Franklin Roosevelt enacted⁵ the Agricultural Adjustment Act. That law and several that followed put in place most forms of farm subsidies that continue today. These include paying farmers not to plant crops. They also include guaranteed prices for some crops, surplus⁶ buying programs and loans.

Not all crops can receive subsidies. But, the Department of Agriculture is required by law to provide subsidies for wheat, corn and other grains used to feed animals. The USDA must also subsidize seeds used to make oil, milk, peanuts, sugar, honey, wool, tobacco and other products.

Farm subsidies are estimated to cost between seventeen and twenty thousand million dollars through next year.

Critics of the system say it does not provide a market solution to agricultural prices. They say a small number of the largest farms receive most of the subsidies.

But supporters say subsidies are necessary because crop prices have dropped for at least fifty years. They note that competitors in the European Union have been unwilling⁷ to lower their large farm subsidies.

This VOA Special English Agriculture Report was written by Mario Ritter. I'm Steve Ember. Our programs are online at www.unsv.com.