G8 subsidies contributing to WTO crisis

Published: 11 July 2006

EU and US agricultural subsidy regimes show depth of unfairness, says Oxfam

G8 leaders may be fighting a losing battle to kick-start the Doha trade talks because Europe and the United States are continuing to skew their farm subsidies so heavily in favor of their biggest agricultural producers, says international agency Oxfam.

New European Commission statistics show that in 2004, the latest year of recording, US$36 billion (€28.2bn) was paid out in direct subsidies out of a total Common Agricultural Policy (CAP) budget of $58bn (€45.6bn) – and the biggest 7% of Europe’s producers swallowed up more than half of these payments.

The figures show that the EU paid its biggest 2,460 farmers on average $667,000 (€524,000) each, or $1.7bn (€1.3bn) in total.

Among the biggest recipients of CAP payments sit in the G8 itself:

  • In Germany, 14% of the biggest farm producers got 65% of all payments, and 1,510 individual producers got $1bn (€802m) between them;

  • In France, 29% of the biggest farm producers got 72% of all payments, and 20 individual producers got $12.5m (€9.85m) between them;

  • In the UK, 31% of the biggest farm producers got 84% of all payments, and 460 individual producers got $269m (€211m) between them;

  • In Italy, 1.6% of the biggest farm producers got 34% of all payments, and 200 individual producers got $169m (€133m) between them.

As part of the Farm Bill, US agricultural support is similarly skewed toward its biggest producers. The top 10% of its biggest agricultural producers continue to get more than 72% of its $23 billion subsidy programs in 2005. Meanwhile, 60% of all US farmers do not collect any government subsidies.

“G8 leaders say they want a successful conclusion of the Doha round. However, it is their own unfair agricultural subsidies that are contributing heavily to the World Trade Organization’s current crisis,” said Oxfam’s Make Trade Fair spokesperson Luis Morago. “The G8 isn’t going to rescue a failing WTO round unless it deals with the scandal of its own inequitable and harmful agricultural subsidies.”

“These figures make a mockery of claims that the CAP and Farm Bill are geared toward small farmers and rural development. The vast majority of subsidies are going to the biggest agricultural producers,” Morago said. “These subsidies continue to promote over-production and dumping, hurting poor farmers in developing countries.”

“Developing countries only joined the WTO’s Doha round because they were promised this problem would be solved. But the EU and the US offers could even make things worse,” he said. “This is why developing countries are resisting a WTO deal now.”

Current offers to conclude the Doha round will actually allow the EU to increase their subsidy payments from $22.9 billion to $36 billion and the US from $19.6 billion to $22.5 billion.

“Rich countries promised to deliver a new WTO deal that would rein in their farm subsidies and stop dumping. The new figures prove that little is changing,” Morago said. “Europe’s common agricultural policy and the US Farm Bill continue to ignore small farmers at home and cripple poorer farmers abroad.”

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