Rich Nations Need to Work Together to Eliminate Crop Subsidies; Would Triple Agricultural Trade in Developing World

Bread for the World
Wednesday, 2 April 2003

Agriculture in the Global Economy, Bread for the World Institute's thirteenth annual report on the state of world hunger, contains new research that the current system of agricultural subsidies in the developed world depresses the economies of poorer nations and is not the best way to help struggling rural U.S. communities either.

Among the report's key findings:

  • If the United States and other developed countries eliminated agricultural subsidies, developing nations would see their net agricultural trade (exports minus imports) triple from $20 billion to $60 billion.
  • Farmers and others employed in the agricultural sector of the developing world would see their annual incomes increase by nearly $26 billion. Liberalizing agriculture is in the interest of rich and poor countries alike. The estimated gains to all countries from the elimination of subsidies and tariffs in developed countries would be $100 billion.
  • The current system of farm subsidies is not the best way to help U.S. farmers who really need help. Forty-seven percent of U.S. farm subsidies go to 8 percent of farmers, mostly large, commercial operators. Approximately 60 percent of U.S. farmers receive no subsidies at all.
  • The developed world spends $310 billion per year in subsidies to protect its farmers, but provides only $50 billion in development assistance to developing nations. The report calls attention to President Bush's proposed Millennium Challenge Account (MCA), which could ultimately boost U.S. assistance spending by $5 billion per year.
  • With Congress and the Bush Administration debating the future of U. S. foreign assistance to fight hunger and poverty, Agriculture in the Global Economy shows that eliminating agricultural subsidies in tandem with boosting development assistance could make important gains.

    "The current system of agricultural subsidies depresses prices for poor farmers in developing countries and is not the best way to help struggling farmers in our own country, " said Bread for the World Institute president David Beckmann. "There's a direct connection between the current system of subsidies and the persistence of world hunger."

    Agricultural Subsidies: Hurting Abroad, Not Helping at Home

    Of the 840 million people in the world who are undernourished, nearly three-quarters live in rural farming communities. And while the United States and other developed countries talk a good game on free trade, they protect their agriculture by paying some farmers more than $300 billion in subsidies annually. In 2001, the U.S. spent more than $95 billion on domestic agricultural subsidies, nearly one-third the world total from developed nations.

    At the same time, Agriculture in the Global Economy finds that current farm policy fails to support smaller U.S. farmers or adequately deal with hunger and poverty in rural America.

  • In the past 40 years, farming jobs in the United States have dropped from just under 8 million to about 3 million today.
  • As the number of farms has dwindled, the percentage of the rural workforce employed in farming has been cut in half, from 14.4 percent to 7.6 percent.
  • Western and southern farming communities are experiencing faster increases in food insecurity than any other part of the U.S., including inner cities.
  • Based on these findings, Agriculture in the Global Economy recommends that the United States government:

  • Gradually eliminate domestic commodity subsidies and restrictions on agriculture exports from developing countries.
  • Invest in rural communities by supporting economic development initiatives, job training, business promotion, infrastructure development and assistance to low-income people.
  • By working with other industrialized countries to gradually eliminate protectionism in agriculture, income gains among poor farmers in the developing world would make a dynamic market for U.S. agriculture. The benefit would be similar to the gain U.S. farmers experienced from the rapid development of East Asia.
  • For more information, or to contact Bread for the World, see their website at:

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