G8 refuses to cut export subsidies


Leaders of five developing countries — India, China, Brazil, Mexico and South Africa — who also met for summit level talks here had separately, called for expediting a global trade agreement that would stimulate the world economy.

But for this to happen, they wanted developed nations to end trade-distorting subsidies and export sops. The G-8 declaration, however, promised only to refrain from taking decisions to increase tariffs above today’s levels.

“We will refrain from raising new barriers to investment or to trade in goods and services, imposing new exports restrictions or implementing World Trade Organisation’s inconsistent measures to stimulate exports.”

Leaders of the world’s eight most rich countries, in the same breath, vowed to keep markets open and free and to reject protectionism of any kind. “In difficult times we must avoid past mistakes of protectionist policies, especially given the strong decline in world trade following the economic crisis,” the declaration said. (via G8 refuses to cut export subsidies).

US of A – the most efficient agricultural system in the world?

Today, an ‘efficient’ and ‘hi-tech’ agricultural farm sector in the US needs more than US$ 7.5 billion (conservative estimates, assuredly) of subsidies to survive. The US-EPA says, “By 1997, a mere 46,000 of the two million farms in this country (America), accounted for 50% of sales of agricultural products (USDA, 1997 Census of Agriculture data)– and gobble up most of this huge subsidy that lowers Third World agricultural prices.

Giant food corporations, killed buying competition with high prices (to farmers), direct buying from farmers (at higher prices), monoclonal seeds that destroy bio-diversity. And the US consumers are not getting the lower food prices that are being promised in India.

Devastation in the Third World

These subsidies lower agricultural prices, devastate agriculture in Third World countries, creating man-made famines. These man-made famines, of course, gives the West a false sense of superiority. The Indian farmer working without subsidies, with low technology, lower productivity has a cost edge over his European an American counterparts.

The ‘backward’ Indian farmer

The Indian farmer working without subsidies, with low technology, lower productivity has a cost edge over his European an American counterparts. With the declining power and use of the dollar, the US is fighting a losing battle against agricultural subsidies. The US depends on less than 50,000 corporate ‘farmers’ for 50% of ts production. These corporate ‘farmers’ will abandon agriculture at the first sign of reduced subsidies.

Over the next 20-30 years, this leaves India (and Russia) to cater to global food shortfalls. The Western industrial model is in its sunset phase. The Indian agricultural model can be the big winner in the next few decades – under the right stewardship.

Indian agriculture has a great future – and don’t you ignore it! On the other hand, industrial over-production, debt-financed over-consumption, American economic model, funded in the past by Bretton Woods /Petro-dollars /Sino-dollars, is about to end.

And that is the reason why the West (America and Europe) will not lower barriers or subsidies.

And then the propaganda overdrive

Of course, then out came the spin-meisters. The PR machines.

“There is an urgent need for decisive action to free humankind from hunger and poverty,” G8 leaders said in a statement issued on the last day of their summit in Italy, at which they were joined by African heads of state. (via G8 announces $15 bn food security package- International Business-News-The Economic Times).

First the protection … then the subsidies … then the distortions … then the aid.

“The sums just aren’t adding up. Is this all really new money or are they fishing some of it out of the recycling bin?” asked spokesman Otive Igbuzor.

  1. galeo rhinus
    July 13, 2009 at 4:07 pm

    subsidies and famines…

    …it is a little tricky.

    For example – US subsidies do not hurt farmers in India directly… but it creates a form of price control – which India chooses to participate in.

    By making that choice – which is solely India’s – Indian farmers are exposed the vagaries of US policies… for example – Sugar.

    To blame the US for the sugar cooperatives have done to the Indian farmer is plain silly.

  2. July 14, 2009 at 4:04 pm

    The whole point is that US$15 billion in direct subsidies cause damage to the global agricultural system.

    Famines in Africa are directly related to this. As is the impoverishment of the African farmer. A one time ‘granary of Rome’ Africans today struggle to feed themselves.

    The Indian farmer has also been affected – maybe lesser.

    These subsidies are again a direct result of the Bretton Woods /Petro /Sino dollar scourge – and NOT due to contribution of the American tax payer.

    Your comment, by isolating the sugar cooperative system in India deems itself irrelevant. By holding up one semi-diseased tree as an example of the entire forest, your bias towards an ‘efficient’ US agricultural system becomes apparent.

  3. galeo rhinus
    July 15, 2009 at 3:44 pm

    Africa’s problems have little to do with subsidies – rather their own system which is in a complete state of disarray. Most of the famines in Africa – today – including the massive ones in the 1980s and 1990s were because of the cutting off of supply lines in the local wars that were fueled by outsiders who continue their indirect rule over the continent.

    You are trivializing Africa’s problems by making them vulnerable to things such as subsidies…

    the solution to India or africa – is that both these places need to unschackle themselves… africa’s task is much harder.

    Sugar represents the quintissentail problems in Indian farming… almost all other commodities that have an export market are in no different state – be it wheat – which has a far worse story to tell than sugar…

    To say that the 5 billion US subsidies is causing suicides amongst indian farmers is plain shameful… worse than the marxists who would have blamed americans for nandigram…

    …once you play the victim – that’s what you will remain – a victim.

    Be very selective in playing the victim card… and agricultural subsidies are simply one of the forms of managed trade that the world has adopted… there is no sign that the chains on trade will be unschackled… you could continue playing the victim for another hundred years – never bothering to clean up the system that can be cleaned…

    …your rhetoric is designed for the demagogues… disowning responsibility and blaming others… Long live Bal Thackeray!

  1. July 13, 2009 at 9:02 pm
  2. July 13, 2009 at 9:03 pm

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