LETTER FROM AMERICA: If, in the next few days, you should be strolling down Kildare Street and happen upon a band of straw-chewing, gumbooted civil servants singing merrily, be not afraid. The world is not losing its marbles, the Department of Agriculture has just heard the details of the new US Farm Bill. In France, as the Wall Street Journal pointed out, they're probably also dancing in the streets.
Officially, however, we're taking a dim view of the Americans and their wanton profligacy and I am sure that my opening paragraph will be enough to provoke a "disappointed" rebuke from the Minister's own office. After all we're all really in favour of farm reform. Really . . .
This week, after much soul-searching the two Houses of Congress reconciled their minor differences and are putting their seal to a Farm Bill that will cost US taxpayers at least $170 billion over the next 10 years, 70 per cent or $70 billion more than the cost of continuing current policies.
Most of it is production subsidies to farmers. The President has said he will sign it.
From the consumer's point of view, the increase will have little effect on supermarket prices.
The farmer receives about 20 cents of every dollar spent on groceries; the rest goes mostly to the grain companies and other middlemen. "The impact is on the taxpayer," said Keith Collins, chief economist for the Agriculture Department.
And on - last month, Kraft Foods announced that Life Savers sweets, a 90-year-old American icon, will no longer be made in the US. The Michigan plant is being closed, and production shifted to Montreal. Why? Because US farm programmes double the price of US sugar. Federally price-supported sugar is "at least twice as expensive as on the world market," notes Kraft spokeswoman Claire Regan. Just by moving to Canada, the cost of the main ingredient in Life Savers will drop by $10 million per year.
Back in 1996 the Republicans' Freedom to Farm Act, the last Farm Bill, was an historic attempt to turn around US farm policy. It turned its back on compulsory setaside and federal purchases of surplus production. And although it retained price supports and added cash payments to growers to tide them over through a transition, its goal was to have the world market, not the federal government, telling farmers how much and what to plant.
It allowed the US to adopt a morally superior position, aligned to the ultimate free marketeers of the Cairns Group, in lecturing Europe about the awfulness of the CAP and the need to open up its markets to the producers of the developing world.
But there's many a slip between cup and lip, and as prices dipped in successive years, Congress would readily roll out an emergency package to save the farmers from bankruptcy - a mere $20 billlion last year. And so, as one EU official here put it, now they're just assuming an emergency every year - and doing so on the basis of assumptions about prices which mean that the estimated $170 billion price tag is likely to well understate the true figure.
What's more, the bulk of the extra money from this bipartisan measure will go to some of the largest and wealthiest wheat, corn, cotton and rice growers in 10 central and southern states. Of $71 billion handed out to farmers over the past five years, two-thirds went to just 10 per cent of the farms.
And attempts to put a ceiling on individual payments have been completely diluted.
Far from keeping smallholders on the land, its ostensible purpose, critics warn that the bill is likely to boost land prices and profits for the biggest farmers allowing them to buy out their smaller neighbours. US farms are already on average 10 times the size of EU farms (40 acres to 400 here) and although subsidies represent a smaller share of production the US hands out about four times as much per farmer.
The Environmental Working Group, a determined critic of US farm policy, has studied the cash distribution from 1996 to 2001. With cotton, wheat, corn and rice subsidies combined, the top 10 per cent (170,000 farmers) received 66 per cent ($38.5 billion) of total payments ($58.3 billion), or average payments of $226,880. But the top one per cent (17,000), collected 19 per cent ($11 billion), with an average payment of $647,000.
The top 1 per cent of cotton farmers, which only represents 1,858 recipients, collected nearly 25 per cent of total cotton payments of $1.7 billion, with an average payment of $913,478. Yet, despite such a large taxpayer investment in cotton recipients, the number of cotton farms has actually declined to 30,663 in 1997, compared to 42,819 in 1987, according to the 1997 US Agricultural Census.
The story is similar with wheat farms which have declined in the same period to 236,339 from 344,391. And the truth is that while two million claim to be farmers, only some 300,000 are still earning a living from the land.
Moreover, with farmers guaranteed a return under the Bill on anything they produce, no matter what happens to prices, the US is heading into another inevitable production glut. That, in turn, will depress domestic prices making it impossible for unsubsidised producers abroad to sell on the US market. And the US operates a "loan deficit payment" system which works in effect rather like the EU's export refund system to guarantee the 25 per cent of US produce that is exported can compete.
Yet, only a couple of months ago in Doha the US pledged to work towards a new world trade round in which agriculture would play a central part. The idea was to see the progressive elimination of competition-distorting subsidies to farmers to create a global level playing field and hence a fair global market place.
That rationale has driven the painful cuts in European agricultural supports agreed by EU leaders in Berlin three years ago as part of the current budget package, with promises of more in the pipeline inevitable if the Doha process really gets under way.
For those who do not want that to happen, and Ireland and France have been at the forefront of resistance to change, the US Farm Bill is a mighty cause of celebration.