US Cotton Subsidies Cost W. Africa Millions: Report

by Haidir Rizvi

NEW YORK - More than 1 million children in West Africa would not go to bed hungry if Washington stopped providing subsidies to America's cotton growers, according to a study released Thursday by an influential development organization.

Researchers affiliated with Oxfam International say their findings also show that removing subsidies for cotton growers in the United States could enable some 2 million children in West Africa to get at least a basic education.

"Previous studies my colleagues and I have done clearly show the trade distorting effects of U.S. cotton subsidies by lowering the world price of cotton," said Daniel Sumner, the report's lead author and director of the University of California Agricultural Issues Center.

"But these new numbers show that even a modest increase in the world price of cotton that only partly reaches the farmer could greatly improve the daily lives of some of the world's poorest people," he added in a statement.

According to Oxfam's study, a typical cotton producing household in West Africa has about 10 family members, an average life expectancy of about 48 years, and an adult literacy rate of less than 25 percent.

The report's findings suggest that cotton is often the only source of cash for peasant families who live on less than $1 a day per person. Added income from increased cotton prices could make a world of difference.

The study found that with a complete removal of U.S. cotton subsidies, the world price of cotton would increase by at least 6 to 14 percent; prices that West African farmers would receive for their cotton would increase by 5 to 12 percent, and their household income would increase by 2.3 to 5.7 percent.

This increase, according to Oxfam, would mean enough money available to cover all the health care costs of four to ten individuals for an entire year, or schooling costs for one to ten children, or a one-year supply of food for one or two children.

"This data clearly exposes the hypocrisy of our policies, giving international aid with one hand and taking with the other through unfair trade rules," said Raymond C. Offenheiser, president of Oxfam's United States chapter.

"With Congress looking at the Farm Bill right now, and renewed interest in the Doha round [of world trade negotiations], this study shows how reform could help millions of poor people who are ready to lift themselves out of poverty," he added.

The World Trade Organization's (WTO) so-called Doha round of negotiations, which began in November 2001, have yet to be concluded. Proponents of the Doha round say its agenda is to make trade rules fairer. Critics have repeatedly charged that the round would expand a system of trade rules that would hinder development in poor countries.

Developing countries say that rich countries' policy of providing farm subsidies diminishes the value of their agricultural products in the world market, which violates the principle of fairness in trade.

Analysts say because U.S. farmers get more federal subsidies with each additional bushel they produce, they are encouraged to overproduce and dump their surplus on the international market, resulting in low prices that poor farmers in developing countries cannot meet.

Critics say this situation is not only unfair, but also illegal under WTO rules. In a case brought by Brazil, a WTO dispute panel found in 2004 that $3.2 billion in annual cotton subsidies and $1.6 billion in export credits paid by the United States in cotton and other commodities went against international trade rules.

While the United States acted to remove export subsidies as a result of the case, not much movement has taken place to reduce other trade-distorting cotton subsidies, leaving the United States vulnerable to possible retaliation by Brazil.

Oxfam warned that the United States risks damage to its image and interests if no immediate action was taken to remove the subsidies program.

"[It] would send a signal to our trading partners that the U.S. is not serious about a new global trade agreement," said Offenheiser. "Reforming the Farm Bill provides us with the opportunity to help more American farmers, reduce the harm of trade distorting subsidies for poor farmers overseas, and put the U.S. in a stronger position in future international trade negotiations."
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