Iowa Public Television

 

Government Agricultural Price Supports Drop Worldwide

posted on June 9, 2000


SOYBEAN FUTURES PRICES ALSO SAGGED THIS WEEK, BUT SOME OF THE STING FOR SOYBEAN FARMERS IS BEING MITIGATED BY UNCLE SAM. MORE THAN 600-THOUSAND FARMERS WHO GROW OIL-BEARING CROPS ARE GETTING PAYMENTS TOTALING $462 MILLION AS PART OF A FARM AID PACKAGE PASSED BY CONGRESS LAST YEAR. THE CHECKS ARE MEANT TO COMPENSATE GROWERS FOR LOW PRICES. ALMOST A THIRD OF THE PAYMENTS WILL GO TO FARMERS IN IOWA AND ILLINOIS.

GOVERNMENT SUPPORT FOR FARMERS IN SOME OF THE WORLD'S WEALTHIEST NATIONS IS NOTHING NEW. IN FACT, IT'S INCREASING. CONGRESS ALREADY HAS PASSED LEGISLATION TO PROVIDE PAYMENTS TO FARMERS FOR A 2000 CROP THAT'S BARELY IN THE GROUND. AND WHILE FEW BEGRUDGE FARMERS COMPENSATION FOR ANEMIC CROP PRICES, THERE ARE THOSE WHO SAY SUCH LARGESSE COMES AT A COST.

A STUDY BY A PARIS-BASED THINK TANK SHOWS WORLDWIDE GOVERNMENT SUPPORT TO AGRICULTURE IN 1999 REACHED $361 BILLION DOLLARS. AND FUNDING TO PRODUCERS, MEASURED AS A PERCENTAGE OF TOTAL GROSS RECEIPTS, ROSE FROM 31 PERCENT IN 1997 TO 40 PERCENT LAST YEAR.

THE STUDY WAS DONE BY THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT, A GROUP OF 29 COUNTRIES THAT USES DATA TRACKED BY O-E-C-D AS A BASIS FOR POLICY DISCUSSIONS ON TRADE, THE ENVIRONMENT AND AGRICULTURE.

THE O-E-C-D STUDY FOUND PRICE SUPPORTS AND PAYMENTS BASED ON PRODUCTION ACCOUNTED FOR ABOUT 75 PERCENT OF THE GOVERNMENT AID. BUT THE ORGANIZATION SAID A NUMBER OF AD HOC EMERGENCY PACKAGES, INTENDED TO COMPENSATE FARMERS FOR LOW COMMODITY PRICES, COULD ALTER FUTURE PRODUCTION DECISIONS, ENDANGER EFFORTS TO LIBERALIZE FARM TRADE AND STALL IMPLEMENTATION OF FARM POLICY REFORM.

THE STUDY CONCLUDED THE VARIETY OF WAYS IN WHICH EMERGENCY FARM AID PACKAGES WERE EMPLOYED WERE "INCONSISTENT WITH THE LONGER-TERM PRINCIPLES OF AGRICULTURAL POLICY REFORM" ADVOCATED BY MANY O-E-C-D NATIONS.

THE REPORT SAID ALL O-E-C-D NATIONS EXCEPT AUSTRALIA AND TURKEY RAISED LEVELS OF FARM SUPPORT IN 1999. KOREA WAS THE BIGGEST SPENDER, WITH AID TO FARMERS WORTH 74 PERCENT OF THE COUNTRY'S TOTAL FARM OUTPUT. NEW ZEALAND, AT 2 PERCENT, CONTINUED TO PROVIDE THE LOWEST LEVEL OF SUPPORT.

IN THE U.S., THE RATE OF FARM SUPPORT INCREASED FROM 22 PERCENT IN 1998 TO 24 PERCENT LAST YEAR, DUE ALMOST ENTIRELY TO EMERGENCY AID DELIVERED BY CONGRESS.

ON A COMMODITY BASIS, RICE, MILK AND SUGAR REMAIN THE PRODUCTS WITH THE HIGHEST LEVELS OF SUPPORT. WOOL, POULTRY AND EGGS RECEIVED RELATIVELY LITTLE.

ON THE HEELS OF THE O-E-C-D REPORT COMES NEWS FROM WASHINGTON THAT U.S. DAIRY FARMERS COULD RECEIVE UP TO $17-THOUSAND DOLLARS ANNUALLY TO COMPENSATE FOR FALLING MILK PRICES. UNDER BIPARTISAN LEGISLATION INTRODUCED THIS WEEK, THE $450-MILLION DOLLAR PROGRAM WOULD PROVIDE WHAT BACKERS CALL A "SAFETY NET" FOR DAIRY FARMERS.

THE PAYMENTS WOULD TRIGGER IF FLUID MILK PRICES DROP BELOW $12.50 A HUNDREDWEIGHT. FARMERS COULD RECEIVE PAYMENTS FOR UP TO THE FIRST 2.6-MILLION POUNDS OF MILK THEY MARKET.


Tags: agriculture commodity prices farm subsidies government news