Subsidies- who gains, who loses?
Subsidies keep foods such as hamburgers and hydrogenated fat cheap and thus encourage obesity among overfed Westerners. But their real victims are smaller family farms and the global economy. Real hardship and poverty are caused, worldwide, by the subsidy system of the US and EU.
Subsidies keep foods such as hamburgers and hydrogenated fat cheap and thus encourage obesity among overfed Westerners. But their real victims are smaller family farms and the global economy. Real hardship and poverty are caused, worldwide, by the subsidy system of the US and EU. Rich countries' subsidies to their own farmers amount to seven times their annual foreign aid of $50 billion. Along with protectionist tariff barriers they prevent those poor countries' farmers from selling their products to the rich world.
So how do subsidies cause poverty?
- Cheap exports of subsidised surplus food undermine local agricultural economies; farmers cannot compete with subsidised grain.
- World prices for all food are kept artificially low by subsidies. This is the main cause of poverty among the billion farmers worldwide who earn less than $1 per day. Although cheap food prices help those on low incomes, the urban poor should not be used as an excuse for keeping the rural poor in poverty. It is rural poverty that fuels the exodus to the urban slums. The foundation of developing country economies is agriculture, usually 50-80 per cent of gross national product (GNP) compared to one per cent of US or UK GNP. If farmers do well, the whole economy thrives. The more farmers earn, the more they spend on material goods and, crucially, the more they spend on educating their kids giving them the opportunity of better jobs with better wages.
- Subsidies also drive small farmers in the US and EU countries out of business. They support large farms that practise environmentally damaging monoculture.
