Our View: Fight Foreign Subsidies, Don’t Unilaterally Disarm

June 3, 2015

Farmers face a lot of risks the rest of us don’t. And given the capital requirements of farming today, each of these risks has big financial consequences.

There’s the obvious risk: Mother Nature, which can wipe out a year’s worth of hard work and investment via flood, drought, freezes, hailstorms, insects, plant disease, and the list goes on and on.

But there are other factors outside a farmer’s control that also dictate his or her ultimate success.

Overreach by the EPA shackles producers with bureaucratic red tape and drives up production costs. And the global marketplace can be wrecked by less efficient foreign producers looking to gain an edge through trade barriers, subsidies or currency manipulation.

All of these elements can leave a farmer feeling helpless. It’s why America has a farm policy in the first place – one that was improved in 2014 to enable farmers to better tailor a safety net to the unique risks they face with their individual operations.

But moving forward, it will be just as important for Congress to help minimize risks as it will be to provide affordable risk management tools.

The House Agriculture Committee took a huge step in that direction today when it held a hearing devoted entirely to the foreign subsidies that are distorting prices of agricultural commodities.

The hearing spotlighted two tremendous foreign subsidy resources worth a read.

First, the Texas Tech Research Institute sponsors an online database of commodity-by-commodity and country-by-country subsidies.

Developing countries, Texas Tech explained, supplement their price support programs with input subsidies that don’t get factored in to WTO-set subsidy limits but still deform the market place. These countries also are more prone to erect trade roadblocks to U.S. goods.

Next, the hearing recognized the exceptional work from DTB Associates, which has been previously highlighted by Farm Policy Facts.

That research found that Brazil, China, India, Turkey, and Thailand were systematically increasing subsidy rates beyond WTO limits and failing to properly report their activities to avoid reform.

For people interested in foreign subsidies, there are other materials worth referencing, too.

Take, for example, the recent list of foreign trade barriers published by the U.S. Trade Representatives office. And, our friends at the American Sugar Alliance who have created a website about foreign sugar subsidies as part of their campaign to end all trade distorting sugar policies and compete on level footing.

If America has a goal of obtaining free markets, then the time has come to pursue that goal by rooting out the biggest problems.

And no, the first step to a free market cannot be to unilaterally disarm U.S. policies that are steadily declining, are well below WTO limits and are already far more market oriented than our competitors.

Unilateral disarmament, which seems to be the goal of many farm policy opponents, does nothing to correct a volatile marketplace. It only rewards bad actors abroad and outsources America’s food production.

The first step must be to correct the alarming trend abroad to use subsidies and other questionable tactics like currency manipulation to corrupt the markets upon which U.S. farmers and consumers depend.