The American Congress recently passed the bipartisan Global Food Security Act, a $7 billion dollar project aimed at bolstering efforts to end hunger, malnutrition and poverty across the globe. Sounds noble, but this Act will most certainly not improve global food security, especially in Africa, because it fails to address a fundamental cause of food insecurity in the developing world: US agricultural subsidies.
If President Obama really wants to fix world hunger, he’d do well to truly liberalize American agriculture by removing subsidies for wealthy farmers. It has been well documented by the United Nations, the World Trade Organization, and numerous experts that subsidies go against the principles of free trade. They lead to “international dumping” - where products from developed countries are sold to consumers in developing countries at unfairly low prices that force out domestic producers.
Extensive economic studies show that it is wealthy farmers who benefit from subsidies, not poor ones.
As the global economic order currently stands, African farmers - and their governments - cannot compete with billions worth of American protectionism on essential crops such as tobacco, cotton, corn and rice. Since the 1950s, the IMF and World bank mandated that African governments liberalize their economies with Structural Adjustment Policies in order to qualify for loans. As a result, many of these countries can neither afford to subsidize their own farmers, nor can they put import duties on foreign produce. In other words, they simply cannot stand a chance on the global marketplace.
One might reasonably argue that President Obama has a primary duty to help American farmers before foreign ones. Yet, extensive economic studies show that it is wealthy farmers who benefit from subsidies, not poor ones. Rather than aid small farms, subsidies lead to farm consolidation and drive small-scale farms out of business. Subsidies also inflate the value of farmland, thereby artificially raising barriers to entry for young, aspiring farmers. All these issues have been documented by different economists, from institutions ranging from the Brookings Institute to the Mercatus Center to the Heritage Foundation.
Thriving Without Subsidies
Further, agricultural products that receive little to no direct subsidies from the American government, such as, fruit, vegetables and tree nuts, have managed to thrive. According to the Economic Research Service at the USDA, the U.S. fruit and tree nuts industry generates over $25 billion in farm cash receipts annually, accounting for 13 percent of the total receipts for all agricultural commodities. All of this is produced on less than 2 percent of U.S. agricultural crop land. Countries like Australia and New Zealand have eliminated farm subsidies and their agricultural production and income for farmers continues to thrive.
Without addressing the issue of subsidies, initiatives such as the Global Food Security Act will serve to maintain global food insecurity.
One of the stated goals of the new law is to, “create an environment for agricultural growth and investment.” Yet, growing more food means very little if farmers cannot match subsidized American products on the global markets. If they cannot competitively sell their produce, they will be unable to make a living from it or support any manufacturing industries that would benefit from agriculture.
Without addressing the issue of subsidies, initiatives such as the Global Food Security Act will serve to maintain global food insecurity. History has already taught us that; this is not the first time that the USA has taken on a project purported to end world hunger. In 1961, Congress passed the Foreign Assistance Act with similar goals and much of the same language. This new Act appears to be mere political posturing. As the U.S. plays politics, millions more people will be impoverished. African farmers do not need this Act; they need a fighting chance on a more level playing field.