Agriculture is the main means of livelihood in developing countries. Hence, one would expect that developing countries heavily subsidise agriculture, to promote farmers’ interests and protect them from competition from developed countries that can produce at a lower cost, using modern technologies and more efficient means of cultivation.
However, as in many other aspects of world economics, the reality is quite different.
It is the world’s richest and most developed countries that subsidise agriculture the most. In fact, the worst offenders are the 30 member countries of the Organisation for Economic Cooperation and Development (OECD), an international organisation of those developed countries that accept the principles of representative democracy and a free market economy!
The amount of agriculture subsidy totally provided every year by OECD countries like Australia, Canada, European Union countries and the USA, is estimated to be between $ 280 billion (World Bank estimates) and $ 300 billion (Oxfam estimates). This amount is roughly six times the total development aid provided by these countries. US subsidies to its cotton-growers alone are three times its foreign aid to Africa!
Apart from displaying hypocrisy about commitments to development of the world’s poor, the rich countries’ agricultural subsidies severely distort world trade.
High subsidies in developed countries protect the market in these countries from producers in other countries who may produce more efficiently. This protection, which favours a small number of very large farmers and farm corporations, encourages overproduction. The excess production is then “dumped” on the world market. The cheap subsidised products drive down world prices and badly affect the chances of developing countries earning from export of agricultural commodities and products.
Sugar is a good example. The European Union (EU) heavily subsidises sugar. Fattened by subsidies, European farmers produce sugar in...