Foreign Ag Support Programs Put American Farmers at a Competitive Disadvantage

September 15, 2015

American wheat farmers lose close to $1 billion in revenue each year because certain countries are violating trade rules under the World Trade Organization (WTO) agreements, according to a new study.

The report, which was conducted by Iowa State University and released by the U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG), is the first of its kind to quantify the economic impact that excessive foreign agricultural support policies and trade barriers have on the U.S. and beyond.

“Our wheat producers are willing and able to compete with anyone on a global scale as long as they have a fair playing field,” said Dalton Henry, the director of policy at the U.S. Wheat Associates. “Clearly there are a number of bad actors when it comes to playing by the rules.”

The countries in question include China, India, Turkey, and Brazil. They were chosen “because of their significant roles in the world wheat market and their recent increase in trade distorting policies,” the report stated. They have been increasing subsidies for domestic wheat production that far exceeds their commitments.

“There are certain countries who are not living up to their WTO agreements and we hope to raise awareness of this current reality,” said Brett Blankenship, president of NAWG.

The focus of the study centered on two types of subsidies: minimum support prices and input subsidies – both of which are connected to current production. The idea being that they are designed to spur additional production of a specific commodity like wheat. The results of the study indicate that if the subsidies were removed then farmers of the countries modeled would plant less wheat.

“There’s a perception that exists that developed countries like the U.S. are heavily subsidizing its agricultural producers to the point of distorting markets and what the study shows is that’s not the case at all,” explained Henry.

Indeed, over the last two decades the U.S. has dramatically changed its support for farmers while other countries have ramped up their most trade distorting support programs.

Yet during trade negotiations, these same heavily subsidized countries call for more cuts to American farmers despite the United States always meeting its obligations under the trade agreements.

Armed with new data, these commodity groups hope to impress upon both trade representatives and policymakers in Washington that U.S. farm policy is worth fighting for.

“We’re proud of our own farm bill in the U.S. We have crafted a safety net that doesn’t distort trade and we expect to hold other countries accountable to the same standard,” said Blankenship.