Farm Subsidies Use "Creative Accounting"

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The United States and the European Union are using “creative accounting” to mask the huge subsidy payments they are making to their farmers, undermining international talks, according to Oxfam.

Oxfam, the British aid agency, said rich countries had promised to eliminate export subsidies by 2016, but they are encouraging farmers, through subsidies, to produce excess goods and dump them on the world market, the Associated Press reported.

"Rich countries are dodging the commitments they've made to reduce subsidies that hurt poor farmers overseas," said Celine Charveriat, head of Oxfam's Make Trade Fair Campaign. "At the same time, they're forcing poor countries to open their markets to unfairly subsidized produce."

According to Oxfam, rich countries pay their farmers a total of $250 billion a year, a level that is no different, in real terms, as in 1986.

The practice not only hurts farmers in developing countries, but the “duplicity” of the U.S. and EU also threatens negotiations with the World Trade Organization (WTO), which intends to produce a trade liberalization agreement later this year in Hong Kong.

In a report released Wednesday, Oxfam estimates that the U.S. pays farmers $6.6 billion in hidden export subsidies, which is more than 200 times what it reports to the WTO. The agency also said that Brussels pays $5.2 million, or four times what is reported.

EU spokesman Fabian Delcros told the Associated Press that its farm subsidies are transparent and that the 25-nation bloc has proposed phasing out export subsidies, as long as other countries show a similar commitment.

One columnist for the Des Moines Register, Mark W. Leonard, a farmer and banker from Holstein, Iowa, argues that the agricultural subsidy program needs reform, calling the program “a significant agent of the economic decline of rural America for many years and a nearly immoral use of taxpayer dollars.”

He supports a bill, the Rural America Preservation Act, which would limit payments to any single faming operating to $250,000 a year, versus the $360,000-per-entity limit now. Under current law, husbands and wives can be separate entities. The bill would also make anyone who commits fraud, through multiple entities, for example, ineligible for farm benefits for six years. Leonard says about 10 percent of large farm operations get 80 percent of the program benefits, harming family farms.


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