U.S. subsidies destroy the world

Thirty-five thousand people live in Zacatelco, a rural town in central Mexico where most people used to make money from selling corn, wheat or dairy products. Everyone calls Zacatelco the “town without men” because so many men — almost one in every family — have left for the farms and cities of the United States to earn money and send it home. Three money telegram offices operate in the town’s central square nine hours a day, six days a week, receiving money orders that range from $100 to $800 from the farm regions of California and the Midwest as well as cities like New Haven. Many of Zacatelco’s missing men are right here, working in multiple low-wage jobs to send money home. Last night, 300 citizens of Zacatelco honored their town’s patron saint, Santa Ines, at a festival in a Catholic church just a few miles away from campus. Zacatelco’s local priest, Father Adrian, described a generation of “suffering” — of mothers who must raise their children alone, of fathers who miss watching their children grow up, of wives who hear from their husbands less and less, and of men who return home as alcoholics, drug addicts, or permanently disoriented. He lamented the migration phenomenon but wondered aloud what else his economically ravaged community could do.

Towns such as Zacatelco, towns of ravaged economies and missing men, have become ubiquitous throughout Latin America and Africa as developing countries have been forced to open their markets to heavily subsidized U.S. agricultural commodities.ÊNew Haven is increasingly home to undocumented immigrants from Guatemala and El Salvador as well.

Over the past 15 years, as Mexico has undertaken one of the most rapid market liberalization transformations in the world, trade agreements with the U.S. supposedly promoting “free trade” have forced the Mexican government to open its markets to U.S. agricultural commodities and abandon its protective tariffs for domestic products. However, the United States has increased subsidies to its own agricultural producers by billions, allowing them to sell their products at artificially low prices that lower global prices and make it impossible for small farmers in the developing world to compete.

Just last May, President Bush signed the Farm Security and Rural Investment Act, a $190 billion farm subsidy bill, paid for by U.S. taxpayers, that will increase government subsidies to agricultural firms by up to 80 percent a year for the next ten years despite widespread international condemnation. This year, the revenues of wheat and corn growers will be increased by 30 percent through government grants while the revenues of rice and cotton farmers will be increased by 50 percent through the subsidies. These subsidies actively encourage over-production by promising producers minimum price for corn, wheat, soybeans and cotton. Surplus commodities are essentially dumped into the markets of developing countries — the U.S. exports corn at prices that are 20 percent below the cost of production and exports wheat at 46 percent below cost.

Once these artificially low-priced goods are dumped into third world markets, U.S. agro-business conglomerates make billions — since the implementation of NAFTA in 1994, U.S. maize exports to Mexico have tripled. But Mexican farmers have lost even their domestic market share. While U.S. producers have gained unlimited access to world markets, Third World producers can no longer compete in their own markets, much less penetrate new ones, because of subsidies which severely debase the playing field.

Seventy-three-year-old Victor Flores, an agricultural engineer who worked for Zacatelco’s Center for the Support of Rural Development for 30 years, described how the plunging wheat and corn prices have affected farmers. “Farmers in this community are now working in factories for the lowest wages or leaving for the other side. We cannot compete with the U.S. subsidies. For years, while the U.S. has maintained its subsidy support for its farmers, our government has taken money away from agricultural subsidies. U.S. goods are too cheap — artificially cheap,” he explained.

The United States is far from alone in protecting its billionaire agricultural elite. The rich industrialized countries of the world act together to undermine growth severely in Africa and Latin America. Together, developed countries spend about $350 billion a year subsidizing their own farmers — more than seven times the world total in development aid. In a sick perversion, taxpayers in Europe, Japan and the United States spend $1 billion a day to enrich further wealthy agro-business conglomerates while further impoverishing the billion small-scale producers in the world who live on less than $1 a day.

While these policies are enacted in the name of “free trade,” there is nothing free about a $190 billion subsidy. The costs aren’t limited to Third World communities and U.S. taxpayers either. The overproduction that results from expensive federal agricultural subsidies isn’t just dumped in the Third World — surplus beef and dairy products are also dumped into the stomachs of America’s 27 million public school children everyday. An article in this week’s Mother Jones details how politically powerful agro-business industries shape the menu of the National School Lunch Program, whose original mission was to provide low-cost, healthy meals to students. Today, the federal government spends $800 million a year on beef and dairy products from U.S. agro-business, resulting in meals full of beef, cheese and milk, laden with saturated fats even as school nutritionists protest, asking for leaner meats and fresh vegetables. Because of the amount these industries spend on political campaigns, their influence in determining school menu choice persists despite nutritionists’ warnings of skyrocketing obesity and Type-II diabetes among children and adolescents that health officials see as connected to the 4 billion fat-filled meals served in American public schools each year.

Why would the United States engage in such a seemingly deranged set of policies that seem to benefit so few at the expense of so many? Agro-business industries have more than doubled their campaign contributions to federal candidates since 1990, contributing a total of $59,317,269 to the 2000 presidential race and $45,559,127 to last year’s federal elections.

There is nothing free about trade today — for everyday Americans or citizens of the developing world — which is precisely why the rich are getting richer while the poor get poorer. Truly free trade can change the world. If U.S. agricultural subsidies are eliminated or at least reduced, economic growth and poverty alleviation around the world will have an unprecedented opportunity to flourish. Economic modeling by Oxfam shows that if developing countries could increase their share of world trade by just 5 percent, they could generate about $700 billion dollars, translating into poverty reduction for hundreds of millions of people. If Africa, East and South Asia, and Latin America could increase their share of world trade by just 1 percent, the resulting gain in income would lift 128 million people out of poverty.

There is nothing free about $190 billion. U.S. taxpayers are creating towns with missing men, destroying economies, and fattening and sickening their own children. That’s what we pay for. That’s what we vote for. Is that what we want?



Shonu Gandhi is a senior in Saybrook College. Her column appears regularly on alternate Mondays.


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