US cotton growers collected nearly $2.7 billion in federal subsidies last year, up $400 million from the levels that Brazil successfully argued were a violation of world trade rules, an environmental group reported on Monday. In June, the World Trade Organisation ruled that US cotton support payments seriously hurt Brazilian growers. The United States has appealed the ruling. It was the first case in which developing nations successfully challenged farm subsidies in industrialised nations.
In its case, Brazil focused on US spending during 1999-2002, a period of low cotton prices world-wide. Congress revised the farm subsidy law in 2002 to automatically send more money to grain, oilseed and cotton growers whenever returns from sales and subsidies fell below targets set by law.
According to the Environmental Working Group (EWG), American cotton growers received $2.697 billion in 2003 subsidies, up from $2.389 billion in 2002.
The cotton figures were released in EWG's update of its database to add 2003 subsidy payments. The data is posted at http://www.ewg.org and can be searched for payment by crop, by state and by individual farmer.
The EWG began obtaining and analysing farm payment records from the US Agriculture Department in 1995.
US cotton growers argue that federal subsidies have a minor impact on global prices, ranging from less than a penny to 1.2 cents per pound. They also note the US program has reduced the loan rate and target price for cotton since 1992.
About 80 percent of the 2003 cotton subsidies were paid to just 10 percent of growers, or 22,000 farm operations, EWG said.
For years, EWG and other conservation groups have urged Congress to devote more money to land, water and wildlife stewardship and put less emphasis on crop subsidies.
EWG President Ken Cook told reporters the US farm program has evolved into a financial backstop for the erratic export market. Exports account for 25 cents of each $1 in farm receipts but sales of various crops fluctuate year-to-year.
"It's a buffer. It's trade adjustment," said Cook. "It's not about keeping people on the land."
Farmers "get to grow as much as they want and the taxpayers will be there for every bushel and every bale, helping them along," Cook said in criticising the cost of the US farm program.
By EWG's tally, $131 billion was paid to US farmers for crop supports, land stewardship and disaster aid in the past nine years. The figure includes $16.4 billion in 2003.
US cotton growers were forecast to harvest a record 22.54 million bales this year, up from 18.26 million bales in 2003. More than half of this year's crop will be exported.
Under a complicated formula in the 2002 farm law, growers are guaranteed an annual payment based on their past output of cotton, calculated at 6.67 cents per pound (0.46 kg). A so-called marketing loan assures a minimum price for cotton of 52 cents per pound.
Additional money is paid to growers if returns from sales and subsidies are below the target of 72.4 cents per pound.
Comments
Comments are closed.