TITLE: In Fight Against Farm Subsidies, Even Farmers are Joining Foes REPORTER: Scott Kilman and Roger Thurow DATE: Mar 14, 2006 PAGE: A1 LINK: http://online.wsj.com/article_print/SB114230602645097413.html TOPICS: Efficiency, Fairness, Regulation SUMMARY: The article reports on recent opposition and economic effects of the federal government's agriculture policy. "The current anti-subsidy sentiment, rising over the last year in the U.S., is stirring attention because it is unusually broad. Students for Social Justice at Baylor University in Texas have dumped cotton balls on the ground to protest cotton subsidies. The foundation of late Nascar legend Dale Earnhardt has teamed up with rock star Bono, whose movement wants to overhaul Western agriculture policies to boost African development. In Washington, D.C., the Alliance for Sensible Agricultural Policies is meeting to share ideas about changing the farm bill. Participants in Oxfam and Environmental Defense from the left, the National Taxpayers Union on the right and the libertarian Cato Institute. Prominent philanthropic organizations, including the William and Flora Hewlett Foundation, are financing some of this advocacy." The article offers four economic effects of the farm subsidies. First, the subsidies depress the price of food, which in turn harms farmers in the developing world. Second, the subsidies inflate the price of farmland. Third, with the subsidies targeted for certain crops, farmers have shifted production into those crops. Fourth, the subsidies, which are production-based, have increased the farmers' incentives to get bigger. One interesting note is that most subsidies go to farmers who are wealthier than the typical U.S. taxpayer QUESTIONS: 1.) Do farm subsidies introduce economic inefficiency? 2.) How do farm subsidies affect obesity rates? 3.) How do U.S. farm subsidies affect the well-being of African farmers? 4.) How do U.S. farm subsidies affect the price of farmland? Reviewed By: James Dearden, Lehigh UniversityGrain Drain * by Roger Thurow, Scott Kilman and Gregory L. White Wall Street Journal - June 18, 2004 ------------------------------------------------------------------------ * New Farm Powers Sow the Seeds of America's Agricultural Woes* On a vast, windy plain, a farmer swells with optimism as he surveys a carpet of wheat stretching toward the horizon. Bankers are throwing money at him to reap bigger harvests. Grain traders are elbowing their way to his front door, eager to export his wheat. Last year, he marvels, "they sold it to the Arab Emirates." This tableau has long been a trademark of the American Great Plains, which flourished for more than a century on an export economy fueled by amber waves of grain. But this farmer, Yuri Bogomolov, is on the opposite side of the world. His tractor was made in Minsk. His seed variety is Don 95, named for a river that nurtured his Cossack ancestors. The nearest town is Zernograd -- Grainville, in Russian. Meanwhile, in Eureka, S.D., Greg Grenz is retreating from wheat. Seven years ago, he sowed 2,000 acres. This season he planted only 975. On the same spring day that Mr. Bogomolov was admiring his realm, Mr. Grenz was preparing to plant soybeans, which, at least for now, are more profitable. "You just can't make a living growing wheat anymore," he said from behind the wheel of his pickup truck. America's run as a wheat powerhouse, and the dominant player in global agriculture, is under attack from a crop of newly emboldened, low-cost international rivals who are striking at one of the main pillars of American economic might: food exports. U.S. farmers are increasingly under pressure as they compete with commodities including Brazilian soybeans, Indian wheat, Chinese apples, Mexican tomatoes and Caribbean sugar. This "farms race" has implications beyond agriculture. America's influence on issues such as international trade owes much to its domination of food. "The U.S. has been the superpower of agriculture," says Ben Pearcy, director of Eastern Europe operations for commodity processing giant Bunge Ltd. "Now it faces a number of new powers." The shift is shaking a foundation of America's economic might. About two-thirds of the land in the 48 contiguous states is tied up in agriculture. Farming and related businesses account for about 12% ofU.S. gross domestic product and about 17% of American jobs, according to the U.S. Department of Agriculture. America currently exports more agricultural goods than it imports, a rare bright spot in the nation's trade balance. Half of America's annual wheat harvest is sold overseas, a trade that's expected to fetch $5 billion this year. There's a strong link between agricultural and political power, and the new farming players are feeling their oats. During trade negotiations last year, Brazil, India and China rallied opposition to agricultural subsidies handed out by the U.S. and European Union to their own farmers. That set back a critical round of trade talks. Wheat is at the vanguard of this change. In the 1980s, America controlled half the world's trade in the hardy grain, competing with Europe, Canada and Australia. Now more than 90 countries grow wheat and many have lower costs and closer proximity to key markets. China, in a drive for self-sufficiency, has become the world's top wheat producer and is nurturing a sophisticated biotechnology program. India, a land long-associated with hunger, became an important exporter three years ago when it released part of its huge wheat reserves onto the world market. But it's the return of the Black Sea wheat belt, home to Mr. Bogomolov, that stands as one of the great turnarounds in global agriculture. In the early 19th century, Russia was an important grain producer, but it stumbled midcentury amid war in the Crimea. The U.S., with the help of Russian immigrants, took advantage and built a thriving agricultural economy. American supremacy was cemented in the 20th century as the Soviet Union's collectivized farm system faltered. The communist government imported so much U.S. wheat that by 1988 it was buying 18% of America's total production. Now, wheat is once again pouring out of Russia in volumes rarely seen since the days of the czars. Long a sleeping giant with an abundant supply of cheap, fertile soil, Russia is now putting that land to work through political and market reforms. Combined with neighbors Ukraine and Kazakhstan, Russia will
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