farm subsidies

“Farming” for dollars in the EU

by Fran Smith on July 17, 2009

in Agriculture, International, Trade

Most of us knew that the European Union’s system of farm subsidies, the Common Agricultural Policy (CAP) gives out huge amounts to farmers in the EU countries.  What hasn’t been clear is that a lot of the monies go to businesses only tangentially connected — if at all — with farming.

Now the New York Times has an in-depth article detailing how large sums of CAP money go to such businesses as asphalt manufacturers, and to such people as the Queen of England, Prince Charles and other royal and — very wealthy — individuals.

Here’s some NYT  information about the cost of these subsidies:

The E.U. pays out more than half its annual budget, around €53 billion, in farm subsidies, four times as much as the United States. The subsidies cost each European Union citizen around €110 a year, according to the European Commission, a healthy chunk for a family of four. The money is raised from customs duties, sales taxes and a contribution made by each E.U. country based on its wealth.

“Individual families are paying double for their food — one for their higher prices in the stores and then for the taxes that they pay out for subsidies,” said Stefan Tangermann, an agricultural economist.

The article details some of the more far-fetched of the non-farm recipients:

That is how a gravel manufacturer like Arids qualifies for farm subsidies, as did Pasquina, which collected €1.13 million for its new asphalt factory in Spain. The Spanish utility Endesa also was eligible — it received €466,000 for installing electrical connections.

These aren’t just funny stories, but the policy has real economic consequences for taxpayers and the poor in developing countries:

Farm subsidies are a controversial economic tool — a sacred cow for politicians in the United States and Europe. But some economists view them as trade-distorting instruments that hit the pocketbooks of taxpayers and destroy the livelihoods of farmers in some of the world’s poorest countries by prompting Western states to dump surplus food there while also reaping the benefit of subsidies.

Check out CEI’s video on U.S. farm subsidies, “Farming for Dollars.”

O’Grady hits Obama’s trade policy

by Fran Smith on October 29, 2008

in Agriculture, Environment, International, Trade

More good reads in the WSJ today.  Mary Anastasia O’Grady in her column in the Wall Street Journal provides a sharp contrast between the two presidential candidates in their approach to international trade.

As O’Grady notes, Senator Obama views trade — not as an economic artivity — but as a tool to pursue other social goals, such as labor and environmental standards.

Mr. Obama says he would change the way the U.S. negotiates trade agreements. Instead of focusing mainly on removing barriers to the movement of goods and services, he would use the agreements “to spread good labor and environmental standards” to the rest of the world. He voted against the Central American Free Trade Agreement (Cafta) in 2006 and says he will oppose others that do not have strong-enough labor and environmental provisions.

On cutting agricultural support, O’Grady also points out that Obama co-signed a letter to President Bush asking him not to “cut farm subsidies as part of Doha.” That, as many know, was a major contentious issue that helped doom progress on the Doha Round agenda.

Here and here are some articles and op-eds that CEI has published about the value of more open trade. Fred Smith just this week debated a senior advisor to the Obama campaign, where trade was a major issue. Here’s where you can listen to an audio recording: “SAIS Hosted Debate on Economic Policy Agenda for New U.S. President on October 27.”