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U.S. corn subsidies said to damage Mexico

(Wednesday, Aug. 27, 2003 -- CropChoice news) -- Elizabeth Becker, NY Times, 08/26/03: WASHINGTON— The more than $10 billion that American taxpayers give corn farmers every year in agricultural subsidies has helped destroy the livelihoods of millions of small Mexican farmers, according to a report to be released on Wednesday.

Prepared in advance of critical trade talks next month, the report by Oxfam International argues that the subsidies given American corn farmers allow them to sell their grain at prices far below what it costs to produce. That has led to cheap American corn flooding the Mexican market and pushing the poorest Mexican farmers out of business, the report said.

"There is a direct link between government agricultural policies in the U.S. and rural misery in Mexico," according to the report entitled, "Dumping Without Borders: How U.S. agricultural policies are destroying the livelihoods of Mexican corn farmers."

Like many other nongovernmental groups, Oxfam is working to promote changes in international rules at the meeting of the World Trade Organization in Cancún, Mexico, next month.

Mary Kay Thatcher of the American Farm Bureau Federation said that while it was obvious that American corn farmers received subsidies unavailable to Mexican farmers, that did not mean Americans had an unfair advantage. "In Mexico versus the U.S. it's a no-brainer," she said. "The Mexicans have far lower labor costs, lower land costs, input costs. To say that our subsidies are hurting Mexican farmers is ridiculous. It's not true."

Administration officials also rejected the idea that American exports to Mexico undermined farmers there. Julie Quick, a spokeswoman at the Agriculture Department, said that since most of the American corn exported to Mexico was used as animal feed for Mexico's rapidly expanding chicken and pork industries, it could not be undercutting small Mexican farmers who grow corn for human consumption.

"If we were dumping corn, then Mexico could file a complaint under the World Trade Organization, and Mexico has not," Ms. Quick said.

Trade and development experts at the World Bank say that reducing or eliminating the agricultural subsidies and tariffs of wealthy nations would help developing nations more than any other single action.

The World Trade Organization has put changes in farm practices and trading rules at the top of its agenda during the current round of talks, which are dedicated to the developing world.

Mexico, the birthplace of corn, opened its borders to American corn exports after signing the North American Free Trade Agreement in 1994. Within a year, corn imports from the United States doubled and today nearly one-third of the corn used in Mexico is imported from the United States. The United States is the biggest exporter of corn in the world and the biggest exporter of corn to Mexico.

The report said the price of Mexican corn has fallen more than 70 percent since Nafta took effect, severely reducing the incomes of the 15 million Mexicans who depend on corn for their livelihood.

But Bush administration officials said the Mexican government gave some price support to its corn farmers. The support is minimal, however, since the entire Mexican agricultural budget is only one-tenth the size of the subsidies given to American corn farmers alone, according to the Oxfam report.

Trade officials said today that agricultural trade had increased in both directions under Nafta, noting that Mexico's total agricultural exports to the United States had doubled under the agreement.

"The U.S. has been at the forefront working for ambitious and substantive global agricultural reform; we look forward to Mexicans joining us," said Richard Mills, the spokesman for the office of the United States trade representative.

A new statistical analysis of global subsidies released today argues otherwise, and says the wealthier nations have been undermining agriculture in the poor and developing world.

According to a study by the International Food Policy Research Institute, a nonprofit research organization, the agricultural policies of wealthy nations — including tariffs, export subsidies and direct farm subsidies of over $300 billion every year — cost developing nations about $24 billion every year in lost income.

Latin America and the Caribbean lose $8.3 billion each year, the largest sum of any region, according to the institute's report.

While both reports acknowledge that Mexico and other developing nations fail to provide enough support to their rural communities, their focus was to encourage wealthy nations to cut their subsidies. The institute's report concluded, "The fates of hundreds of millions of small-scale farmers and poor consumers in developing countries struggling to survive on a dollar or two of income a day hang in the balance."

Source: http://www.nytimes.com/2003/08/27/business/27CORN.html