7 January 2002

THE CLASH OF CIVILIZATIONS

Wonderland products - for a deranged world

Although not directly about GMOs, the first item, Devinder Sharma's article, 'Western Cow vs Southern Farmer', delineates the flawed economic and development paradigms into which they fit.

The second item, on US soybean subsidies, sheds some light onto some of those economic distortions.

In 1999 US corn exports to Europe dropped by 96% because the US could not provide non-GM corn. Between 1996 and1999 US soybean sales to Europe more or less halved, dropping by more than a billion dollars from $2.1 billion to $1.1 billion.

Agronomic studies show that even in terms of farmers' production costs the economic beneficiaries of such GM crops are the biotech companies and not farmers.

Yet despite this lack of economic benefits and a drastically diminishing market, the acreage of GM soya and corn has not gone into decline. Why? A 1999 study by the US General Accounting Office reveals "the subsidy rate for soybeans would cover about 250 percent of the cost of growing them, while the corn rate would cover about 150 percent of the cost of producing that crop."

Note that "Lawmakers are considering cutting the soybean subsidy rate" but this would mean soy "would in turn become eligible for other types of payments it doesn't receive now". Among the subsudies recently proposed are ones to directly support GM crops in the face of "consumer reluctance" and regulatory measures reflecting public concern. [AG GROUPS PUSH BIOTECH IN FARM BILL
https://members.tripod.com/~ngin/201201f.htm]

GMOs truly are Wonderland products - for a deranged world.

1. Western Cow vs Southern Farmer
2. Possible Cuts in Soybean Subsidies

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1. Western Cow vs Southern Farmer

THE CLASH OF CIVILISATIONS

By Devinder Sharma

It is a strange world. For all we know, it is also an unequal world. The glaring inequality is not only confined to the ever widening gulf between the rich and poor, between the elite and the masses and between the people and the powers that be. Perhaps the most debasing and demeaning inequality that affects mankind, and that too in an era of globalisation, is the manner in which even the cattle in the western countries are pampered at the cost of several hundred million farmers in the developing countries.

It is a strange paradox, the story of man’s exploitation of the available resources for his own selfish and immediate needs. It is a strange story of man’s inhumanity and moral cruelty towards a fellow human being. It is in essence the gory tale of man’s bestality, the utterly flawed economics and the imperfect development paradigm.

It certainly is a great cultural shock for any visitor from the rich and industrialised countries to see stray cattle on Indian roads. The face of an emancipated cow amidst swanky cars adorns the cover of many a travel guides on India. Move a little outside the metropolitan cities, the picture frame would predictably move towards an Indian village. And invariably you will see a hardworking farmer toiling in his crop field with a mud-plastered house in the background. In addition to the smiling face of the farmer, you are likely to see the picture of his wife, clad in a ghagra-choli, cutting the grass and tending the cows.

This is the amazing story of an Indian farmer and for that matter any of the 1.5 billion small and marginal farmers from the developing countries. This is the face of a Third World farmer, who on an average owns not more than two acres of land and still continues to feed himself and his family of five, year after year. He lives under a thatched roof or a tin roof, and has never had the luxury of central heating or air-conditioning. In fact, a majority of these small farmers do not even have electric fans, have little or no sanitation facilities and have never received any government support in the form of subsidies.

Move the picture frame to a western farm. Whether in the United States, European Union or Australia, in midst of the sprawling crop fields, you are likely to see a cattle farm. These cattle are well-fed and huge, with big dangling udders. Take a peep inside the cattle sheds, and you will see a well designed concrete structure fitted with tube lights, fans and showers. At most places, especially in the US and European Union, these barns are centrally heated. Computer chips worn around the neck of cows enable feeding machines to meet the exact nutritional requirement of each animal. Moreover, each cow requires about 25 acres of land on an average to meet its feed and nutritional needs ­ enough to enable ten farming families from the Third World to earn their livelihood.

The inequality between the man and the beast doesn't end here. The amount of subsidies a cow in the developed world receives is almost twice the annual income of an average farmer in the Third World.

In European Union, for instance, the annual support for an estimated 300 million dairy cattle in the year 2000 was to the tune of 2,735 million euros for milk and milk products and another 4,465 million euros for beef and veal. Much of the support is in the form of direct payment to farmers and falls within the purview of the "green box" and "blue box" stipulations under the World Trade Organisation (WTO). These are the subsidies that have not to be reduced under the phase out of market distorting support mechanisms. It is however another matter that all subsidies that the developing countries provide to their farmers and that too indirectly are considered to be market distorting and therefore have to be removed or drastically pruned.

For the dairy sector also, the aggregate quantum of subsidy as a percentage of the value of the milk produced is measured in terms of a Producer Subsidy Equivalent. In 1997, the PSE index stood at 82 per cent in Japan, 59 per cent in Canada, 54 per cent in the European Union, 47 per cent in the US and 23 per cent in Australia. Such has been the high level of protection provided to milk producers by the developed countries that even with the stipulated reduction in both the volume and the amount of subsidies, the EU and the US continue to flood and dump its highly subsidised milk and milk powder. While the dairy subsidies continue to be on the upswing, the PSE index indicates that farmers in India and in most developing countries were negatively taxed all these years. For India, which alone has one-fourth of the farming population of the world, the PSE index stood at minus 2.33 per cent whereas for Colombia it was minus 60 per cent.

Still more shocking and shameful is that while the world makes no effort to feed its estimated 800 million people, almost entirely in the developing countries, who go to bed hungry every night, no effort is spared to feed the cattle in the rich and industrialised western countries. In the recent years, the new system of direct payments to farmers (since 1992) in the European Union has stipulated increase in consumption of cereals from 134.8 million tonnes in 1993 to 178.2 million tonnes in 2000, largely through increased use of EU produced cereals for animal feed. Even though the feeding of cereals to animals and then their subsequent slaughter for human consumption requires six times more grains than what would be needed for the average dietary intake, there is no regret.

Ironically, the number of cattle that are reared in such luxury in the rich and industrialised countries (including the OECD countries, the richest trading block), do not exceed 1.5 billion. Strange, that the number of small farmers who live in penury and are faced with further marginalisation too does not exceed 1.5 billion. The clash of civilisation therefore is too apparent, too loud and clear. Under such circumstances, to be amused at the abundance of stray cattle on Indian roads is perhaps a folly. After all, when the conflict for survival between man and the animal reaches such extremes, it is the cattle in the developing world, which first pays the price. No wonder, it is not unusual to find stray cattle battling for their life with over 20 tonnes of polythene in their stomachs.

But then, with due respect to George Orwell: "All animals are equal, but some animals are more equal than even humans" #

(Devinder Sharma is a New Delhi-based food and trade policy analyst.
Responses can be emailed at: dsharma@ndf.vsnl.net.in)

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2. Possible Cuts in Soybean Subsidies

By PHILIP BRASHER, AP Farm Writer
Friday January 4 2:50 AM ET
http://dailynews.yahoo.com/h/ap/20020104/pl/soy_subsidies_2.html

WASHINGTON (AP) - Soybean farmers are worried that the Bush administration will cut subsidies for their crop this year, a move that could save taxpayers as much as $1 billion or more but could risk a political backlash in states with key Senate races.

Representatives of soybean growers have met at least twice with Agriculture Secretary Ann Veneman in recent weeks to urge her not to lower their subsidy rate.

"It is extremely important to soybean producers that that source of revenue and income protection stay there,'' said Bart Ruth, a Nebraska farmer who is president of the American Soybean Association.

Government analysts say that the subsidy rate for soybeans is too high relative to other crops and is encouraging farmers to grow too much soy.

Last year, farmers harvested 74 million acres of soybeans, 11 million more than in 1996, when the subsidy rate, or "loan rate,'' was raised to $5.26 per bushel. It has not been changed since.

"There is an incredible disparity between what the market is signaling and what the loan rate is signaling,'' said Keith Collins, USDA's chief economist.

Under the 1996 farm law, USDA could cut the rate as low as $4.92 per bushel, which would save the government more than $1 billion.

In a letter to Veneman this week, Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, warned her against making what he said was a rumored Reduction of $500 million in soybean subsidies. "Clearly this is not a time when farmers are in a position to absorb further losses in income,'' he said.

USDA spokeswoman Alisa Harrison said Thursday that the department will announce a decision on 2002 subsidy rates sometime this month.

Soybeans are a major crop in several states likely to have close Senate elections this year, including Arkansas, Minnesota, South Dakota and Iowa, where Harkin is seeking another term. Those races could decide which party controls the Senate in 2003.

The government guarantees farmers a minimum income for grain, cotton and soybeans by providing subsidies when market prices fall below a fixed level. Soybeans were selling for more than $7 a bushel in the mid-1990s, well above the $5.26 subsidy rate, but have since dropped to nearly $4.

The subsidy rate for corn is $1.89 per bushel, and market prices have been averaging about $2.

USDA has paid about $4.5 billion in subsidies on all 2001 crops, with $2.7 billion of that going to soybeans.

A 1999 study by the General Accounting Office (news - web sites) said that the subsidy rate for soybeans would cover about 250 percent of the cost of growing them, while the corn rate would cover about 150 percent of the cost of producing that crop.

Soybean growers say there would be plenty of demand for their crop, if not for the strength of the dollar, which makes U.S. crops more expensive than those from countries such as Brazil that have weaker currencies.

Lawmakers are considering cutting the soybean subsidy rate as they make revisions in the 1996 farm law. Soybean acreage would in turn become eligible for other types of payments it doesn't receive now.