Global Policy Forum

By Kevin Watkins*

These are anxious times for Brahima Outtara, a 25-year-old cotton farmer in Logokourani village in western Burkina Faso. Standing on his half-acre plot in one of the poorest parts of one of the world's poorest countries, he surveys his harvest and worries about the price his crop will fetch.

That price will decide whether or not his family has enough to eat, whether he can pay for health costs, and whether he can keep his three children in school. "Last year we were nearly ruined by low world prices," he says, "we went hungry, but now I am praying for a better future."

Cut to the high plains of Texas. This is the cotton capital of the United States - the country whose 25,000 cotton farmers generate about one quarter of all world exports. Giant mechanised irrigation sprinklers and tractors guided by global positioning satellite systems crawl across vast farms averaging more than 12,000 acres. Farmers here aren't losing any sleep over prices - they are guaranteed a bumper harvest of the crop that helps keep Outtara in poverty: farm subsidies.

The same crop is at the centre of an increasingly bitter international trade dispute. Eighteen months ago, the EU and the United States promised to eliminate agricultural export subsidies as part of the commitment to a new development round of trade negotiations. As those negotiations move into a higher gear, they are back-tracking on the commitment.

America's cotton farmers share almost $4bn in government support - roughly $160,000 per head - shielding them from the deepest depression in world prices since the 1930s. These same subsidies deepened the current slump. By encouraging more production for a stagnant market they lowered world prices by a quarter, devastating the livelihoods of West Africa's 11 million cotton farmers in the process. The subsidy cheque delivered to US cotton producers was bigger than the total GDP of countries like Burkina Faso and Mali. And the world price decline cost West Africa alone some $200m - far more than it gets in US aid and debt relief.

The example of cotton shows the double standards at the heart of world agricultural trade. Subsidised US exports are destroying the livelihoods of impoverished maize farmers in Mexico, dairy farmers in Peru, and rice farmers in Haiti. The EU is also doing its bit to keep the poor poor. Through the common agricultural policy, EU taxpayers and consumers pay farmers billions of dollars to overproduce sugar, cereals and dairy produce. Then they pay traders to dump the surpluses overseas, destroying the markets on which small farmers depend.

Last month, the WTO secretariat produced a proposal for reforming agricultural trade. Export subsidies would be slowly phased out from 2007. But over half of the $1bn a day now spent subsidising intensive agriculture at home and export dumping would be left untouched. Pascal Lamy has condemned it as "unhelpful and unrealistic". This, mind you, is the same commissioner who is pressing developing countries to rapidly open up their markets in everything from banking and financial services to manufactured goods.

Farm policy negotiations inhabit an Orwellian world where words take on new meanings. Take the proposal to halve production subsidies. This means all subsidies, right? Wrong, in fact, it covers what are described as, in WTO-speak, "trade distorting subsidies". Governments can provide other types of subsidies - known in the jargon as Green Box measures - to their heart's content, including payments that rise with the size of a farm and past production, compensation for low prices, and assorted income aids. These payments may perpetuate surplus production and export dumping, but they are all permitted under WTO rules - and they will be immune to any cuts agreed in the negotiations. There are no prizes for guessing that the US wrote the rules, or for discovering that around $2 out of every $3 spent by the US in farm subsidies fall into the WTO-friendly category.

Once the phoney war has finished, the US and the EU will sink their differences and agree a set of trade rules that allow them to continue business as usual, regardless of the consequences for the world's poor. Then again, they might be planning to put the interests of people like Brahima Outtara before the vested interests of corporate farm subsidy grabbers in the Paris basin and the Texan cotton belt. Did anybody else see that pig fly past my window?

* About the Author: Kevin Watkins is head of research at Oxfam.

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