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July 2004, Volume 10, Number 3


Subsidies, GMOs, Obesity

The OECD reported that farmers in rich countries received $257 billion in subsidies and payments in 2003, making subsidies equivalent to a third of farm sales. In Norway, subsidies are the highest share of farm incomes, and in Australia and New Zealand the lowest.

A June 16, 2005 General Accounting Office report concluded that some US farm subsidies go to marginally eligible farmers, but USDA responded that farmers "can structure [their] operations so to maximize [their] benefits." Between 1999 and 2002, the government paid about $15 billion a year to 1.3 million individuals, partnerships and other business entities to support the production of corn, rice, cotton, wheat, soybeans and other commodities. Most individuals are limited to $180,000 or $360,000 a year, and recipients are to demonstrate a "significant contribution" of "active personal management" of a farm to receive subsidy payments.

The US has traditionally been the world's major exporter of farm commodities, the low-cost producer of wheat, soybeans and corn, but now faces new competitors on world markets, including Brazilian soybeans, Indian wheat, Chinese apples, Mexican tomatoes and Caribbean sugar. US wheat acreage has shrunk to the lowest levels in 30 years, and falling exports and rising imports may reduce the US farm trade surplus from the peak $27 billion in 1996 to $10 billion in 2004.

US Trade Representative Robert Zoellick called on the EU to join the US and eliminate agricultural export subsidies as part of a new world trade deal. The most difficult issue is how much developing countries such as Brazil and India would be required to open their agricultural markets in exchange for the EU and the US eliminating farm subsidies. Current World Trade Organization rules allow the EU to spend up to $60 billion annually on farm subsidies, and Tokyo up to $30 billion, while the United States faces a limit of $19 billion.

The World Trade Organization in April and June 2004 concluded that US government subsidies of $12.5 billion between 1999 and 2002 were an unlawful interference with free trade. Without them, the WTO concluded in a case brought by Brazil, US production and exports would have been lower and world prices would be higher.

China was the world's largest cotton producer in 2003, producing 4.9 million tons, followed by the US at 3.7 million tons; India with 2.3 million tons; Pakistan, 1.7 million tons; and Uzbekistan, 1 billion tons. India, Pakistan and Uzbekistan do not subsidize cotton. US subsidies of $2 billion in 2003 were twice the $1 billion in subsidies provided by the EU to cotton farmers, and US cotton farmers received $18 billion in subsidies between 1995 and 2003. California produces 10 to 15 percent of US cotton, exporting $1 billion of the $3 billion annual crop.

GMOs. The U.N. Food and Agriculture Organization endorsed genetically modified crops in May 2004, which are about five percent of world crops. Most GMO crops are planted in six countries: United States, Canada, Argentina, Brazil, China and South Africa.

Mendocino county banned the planting of GMO crops, and there are likely to be anti-GMO measures on the ballot in Humboldt, San Luis Obispo, Butte and Marin in November 2004.

Four crops that have been genetically engineered for years - canola, corn, cotton and soybeans- but Monsanto in May 2004 announced that it would not introduce genetically modified wheat because US farmers feared it would cut into their export sales. Roundup Ready spring wheat, which could increase yields by 10 percent, would have affected a relatively small number of wheat farmers, but opposition came from the larger group of wheat growers who feared that cross-contamination could threaten their exports-US wheat exports are about $5 billion a year.

What happens if GMO seeds are spread by nature? In May 2004, Canada's Supreme Court ruled that a Saskatchewan farmer infringed Monsanto's patent on genetically modified canola, even though he said the seeds landed in his fields by accident. The farmer noticed in 1997 that Monsanto's Roundup herbicide did not harm his canola, so he saved the seed and planted it on 1,000 acres in 1998 despite a warning from Monsanto that he owed a C$15 per acre licensing fee. The Canadian farmer did not have to pay Monsanto, but in about 100 similar US cases, farmers have paid an average $100,000 to Monsanto.

Obesity. Most Americans are overweight, and a third are considered obese, with a body mass index exceeding 30. Plumpness used to be associated with affluence and the aristocracy, while today it is associated with the poor and their supposedly bad eating habits. However, Paul Campos argues that "The current hysteria about body mass and supposedly devastating health effects is creating a stratification in the society of power and privilege based on a scientifically fallacious concept of health. What we are seeing with this moral panic over fat in many ways is comparable to what we saw with the eugenics movement in the 20's."

Food Stamps, the coupons that have allowed poor US residents to purchase food since 1964, are now electronic, provided to recipients with debit cards. About 24 million US residents, 60 percent of those eligible, received food stamp benefits in March 2004. The government emphasizes that Food Stamps are nutrition assistance, not welfare, and the use of debit cards shields others from knowing that recipients are using Food Stamps to make food purchases. Debit cards are also being used to provide Medicaid and Special Supplemental Nutrition Program for Women, Infants and Children (WIC) benefits.

PETA. A People for the Ethical Treatment of Animals investigator worked at a Pilgrim's Pride plant in Moorefield, W.Va, and took pictures of workers jumping up and down on live chickens and drop-kicking them like footballs. Kentucky Fried Chicken, which buys chicken from the plant and had promised that all suppliers would treat animals humanely, said that it would not tolerate the behavior on the video released by PETA, which is at

Blisard, Noel, Hayden Stewart, and Dean Jolliffe. 2004. Low-Income Households' Expenditures on Fruits and Vegetables. USDA-ERS. Agricultural Economic Report No. (AER833) May.

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