Nations protest US Farm Bill at WTO talks

At a World Trade Organization meeting aimed at reviewing new proposals for the Doha Round of trade talks, New Zealand’s WTO ambassador Crawford Falconer reported that a number of countries had expressed unhappiness over the new US Farm Bill, just passed last week over President George Bush’s veto.

Under WTO rules, the US would have to amend the Farm Bill to bring it into compliance with the Doha Round trade agreement, if WTO negotiators can produce a breakthrough for the stalled trade talks. Agricultural protection by rich nations is the stumbling block to progress on a new world trade agreement.

The Farm Bill was enacted into law when the US Senat and the US House of Representatives voted to override President Bush’s veto. The $289 billion bill includes more than $200 billion for food stamps and nutrition programs over the next five years, an increase of $10 billion to recognize the higher cost of food. The Senate is expected to vote today, and is also expected to override. If the Senate votes to override the veto, the bill will become law on Senate passage.

The bill contains a historic two-tiered ethanol incentive, with corn ethanol subsidies dropping to $0.45 per gallon and a new $1.01 subsidy introduced for cellulosic fuels. A last minute amendment had changed the language of the higher subsidy from “cellulosic ethanol” to “cellulosic fuels”, which otherwise would have exempted companies such as LS9 and Gevo.

The Farm Bill had not been vetoed since 1956, and originally observers did not think that an election-year veto was possible, since the top ten states in farm subsidies control half the electoral votes
for the presidential campaign. The White House budget director said that the bill “doesn’t have hardly enough reform.”

A controversial feature has been the cap on farmer income in order to receive subsidy payments. The new bill forbids subsidies to farmers with more than $750,000 in income, or $1.5 million for a married couple.

EWG has published a list of the leading subsidy recipients, who received as much as $900,000 in subsidy payments in 2006.

In Iowa, Senator John McCain said that, as drafted. he would veto the Farm Bill because of excessive subsidies, which he called unnecessary. McCain added, “I do not believe we should have tariffs against imported products, but I want to promise you as president of the United States of America I will recognize one fundamental fact, and that is the farmer in the state of Iowa and the United States of America is the most productive, the most efficient and the best, and I will open every market in the world to your products
and I will sell them.”

The Farm Bill bill contains a reduced 45 cents per gallon ethanol subsidy and a $1.01 per gallon subsidy for cellulosic ethanol. Tax credits for biodiesel were removed from the bill, and the tariff on Brazilian ethanol is extended through 2010.

The bill contains $900 million for biofuels development, $900 million for nutrition programs aimed to offset higher food prices, while land stewardship programs would received an additional $4 billion, and specialized crops $1.35 billion.

Negotiations over the stalled Farm Bill had put existing ethanol incentives in peril last month, according to House Agriculture Committee chairman Collin Peterson. The chairman said that, in order to offset $9.5 billion in increased spending, Senate negotiators had proposed a $0.05 per gallon cut in the ethanol blender tax credit and reductions in other incentives for a total of $1.226 billion in ethanol support cuts.

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