US farm subsidies in no danger

Even in a year when U.S. farmers’ incomes are likely to be the second highest in 35 years, Obama’s modest budget proposals to cut US farm subsidies by about a quarter over the next decade is unlikely to win support from the Republican majority in Congress

“The Obama administration’s proposed 2012 federal budget released today targets several wasteful agriculture programs, including cutting $4.25 billion over 10 years from subsidies to large farm operations, wealthy landowners and the crop insurance program.” Extract from the Environmental Working Group blog

The lack of Republican interest in cutting the subsidies—totalling $16.35 billion in 2009—is ominous given that quite a few of the largest recipients of farm subsidies are located in Democrat congressional districts. There is no guarantee the the White House proposals will be viewed favourably by the President’s own party.

The Obama proposals set a paltry target for cuts spread over a decade. But even so, they’re larger than the nearly-irrelevant $2bn cut that the proposed Doha round deal would impose on U.S. subsidies over a similar period of time.

The most recent outline of a deal in the Doha round would set the Unites States’ starting point for production subsidy cuts—based on commitments the U.S. made in the 1980s Uruguay Round— at a total payment of $48.2bn. A Doha deal would impose an impressive-sounding cut of 70% on that number, bringing the future ceiling for permitted U.S. farm subsidies down ot $14.46bn or 88% of their 2009 spend. In other words, the Doha deal makes no changes of any real consequence for U.S. farmers.

Just in case you find that prospect depressing: the EU will probably have to make no cuts at all in its farmer handouts as a result of the flawed Doha deal.

Note on data: The Environmental Working Group’s farm subsidy database is an invaluable reworking of USDA data. A lot of shock value in their tables. In 2009, for example, the top 1% of recipients of U.S. farm handouts took 20% of the money: more than $2bn. The top 20% took 80%.

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