Farm Summitry, Too
President Reagan will have a rare opportunity next month, at the economic summit in Toronto, to advance his important campaign to end global farm subsidies. There are signs even in Western Europe of growing sympathy for his objectives.
The almost intolerable burden of the subsidy programs is finally forcing government leaders to pay attention. In the European Community about $28 billion a year goes to farm programs ostensibly serving 12 million farmers, while in the United States the support programs have cost more than $65 billion over the last three years--$17.7 billion this year alone--for a population of about 2.3 million farmers. That is an average of $2,300 a year for every European farmer, $7,600 a year for every American farmer. But it has not worked out equitably. In fact, much of the subsidy program benefits the farmers who least need it, further distorting the situation.
The problem is exacerbated by massive farm-export subsidies in the European Community and the United States. These export subsidies allow sales at prices as much as 30% below the actual cost of production. That has helped reduce surplus stockpiles, but it has distorted the world market, and it has hurt other exporting nations that have only modest or no subsidies for their farmers.
Consumers have become major victims of the system, not only supporting enormous tax burdens for the subsidy programs but also paying artificially elevated prices that result from rank protectionism. Japanese consumers pay as much as 10 times the world price for rice to maintain a traditional system that guards domestic Japanese producers from international competition. U.S. consumers pay inflated prices for sugar under an elaborate plan that protects domestic sugar producers while punishing other producers, among them many of the impoverished nations of the Caribbean and Pacific whose economic vitality is of strategic concern to Washington.
The importance of the summit of seven in Toronto is that it includes all of the nations that can do something to correct the problem. Their decisions can put back on track the lagging international negotiations that are scheduled to reach a climax in Montreal in December. It is then that adoption is scheduled of a framework for implementing the phasing out of farm subsidies by the end of the century.
Without a spur from the summit, the negotiations are likely to collapse. The problems were evident in mid-May in Paris at a meeting of the Organization for Economic Cooperation and Development, marked by a broad agreement between the United States and the Europeans but also by European Community insistence that there can be no phasing out, only subsidy reductions.
At least two European nations, West Germany and France, have major political problems in reforming farm subsidies because the farmers, while small in numbers, play a critical swing role in national politics. Farmers in the United States also have exercised disproportionately major influence in Washington, some of them benefitting from income-protection programs beyond anything offered urban dwellers. That power will be tested again in the November presidential election. Reckless campaign promises in November could be as damaging as an obstinate summit in June.