Business Standard
When Finance Minister Jaswant Singh increased farmsubsidies in the Budget for 2003-04, he spoke of how hewas still spending less per farmer per day than the West didon cows.Well, according to the United Nations DevelopmentProgramme's (UNDP) latest Human Development Report,the annual dairy subsidy in the European Union (EU) is $913per cow, which is almost double the per capita income ofsub-Saharan Africa at $490 and 114 times the annual percapita aid given by the EU to this region.It gets worse when it comes to Japan, where each cow gets$2,700 to chew on each year, a figure that's more than fivetimes the per capita income of sub-Saharan Africa.The US spends $10.7 million per day subsidising its cottonfarmers, which is three times the total aid given to sub-Saharan Africa.On an aggregate, rich countries spend around $311 billionsubsidising their farmers, against $52 billion they give in aidto all countries.In other words, if the rich countries stopped all aid, butremoved farm subsidies and allowed developing andunderdeveloped countries to export their farm products, thelatter would benefit six times more.
The gross domestic product (GDP) of sub-Saharan Africa isa mere $301 billion. Huge subsidies depress farm prices,often the only income for poor countries.The EU's subsidised exports have contributed to the declineof the dairy industries in Brazil and Jamaica and the sugarindustry in South Africa.Interestingly, even the aid given by the rich has beendeclining steadily over the years. Even in absolute numbers,aid given in 1990 was $58 billion, or 0.33 per cent of theGDP of the donor countries. By 2001, this had come down to0.22 per cent.Apart from the direct subsidies, tariffs in the Organisation forEconomic Co-operation and Development (OECD) countriesare also biased against the low-priced produce of poorcountries.In the 90s, the average OECD tariff on manufactures fromthe developing world was 3.4 per cent, or more than fourtimes the 0.8 per cent paid by other OECD manufacturedproducts.Bangladesh's $2.4 billion exports to the US attract an importduty of 14 per cent, while France exports more than $30billion but just pays a 1 per cent tariff.The OECD countries also impose higher tariffs on finishedproducts than on primary products to force developingcountries to export raw materials instead of finishedproducts.New Zealand charges a 5 per cent import tariff on coffeebeans, but trebles this for ground coffee. Japan charges amere 0.1 per cent import tariff on unprocessed textiles,against an 8.6 per cent duty on fully processed textiles.And we're not even talking textile quotas yet, which in 2002,still covered most of the items in the list in the late 80s.As the Human Development Report 2003 puts it, "It is hardto imagine the poorest countries achieving their social sectorgoals without the policy changes required in rich countries."
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