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OfflineGazzBut
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Why world poverty is a trade issue
    #4255223 - 06/04/05 10:02 AM (11 years, 6 months ago)

If Cotton farmers receive $3.9 billion dollars a year in subsidies which artificially decreases the price of cotton and the US give $1.3 billion in aid to Africa that means the true figure for US aid is actually -$2.6 billion dollars.


Why world poverty is a trade issue - and why the G8 must address it
By Maxine Frith Social Affairs Correspondent
04 June 2005

Link

The full picture of how the multibillion-dollar American farm subsidy system - coupled with Britain's appetite for cut-price clothes - is destroying Africa's cotton farmers was revealed by aid agencies yesterday.

T-shirts available in UK supermarkets for less than ?2 are made from American cotton and produced in Chinese sweatshops for the British market, undercutting small producers in some of the world's poorest countries.

American cotton farmers receive $3.9bn (?2bn) a year in Government subsidies - more than the entire GDP of Benin and three times the annual amount the US gives in aid to Africa, according to the charity Oxfam.

But more than 60,000 farmers in Benin have stopped growing cotton in the past five years because they cannot compete against such massive market distortions that keep the price of cotton artificially low.

In 2002 alone, the GDP of Benin fell by 1.4 per cent and export earnings by 9 per cent as a direct result of subsidies and the falling price of cotton.

The west African country - 161st out of the 177 poorest countries in the world - depends on cotton for 60 per cent of exports.

Once known as "white gold" in west Africa because of its earning potential, cotton is now leaving many farmers in debt because of the low prices - and there is nothing else they can grow on their barren land.

The World Trade Organisation ruled last year that America's cotton subsidy system was illegal and set a 2 July deadline for it to announce reforms.

But aid agencies believe that the Bush administration has little intent of scrapping the system and called for Britain to put pressure on the US president at next month's G8 summit.

The agencies believe that, while measures to increase aid and for debt relief are vital, African nations such as Benin cannot escape poverty until the trade issue is finally addressed.

That would mean a wholesale review of subsidies paid to farmers in the US and in Europe to give Africa the chance to begin to compete - and the agencies want the leaders at Gleneagles to work torwards a resolution.

Amy Barry, of Oxfam, said: "The whole system of American subsidies is not only morally unjust but illegal, and the WTO has backed that. Cotton is a graphic example of how these subsidies destroy the poorest farmers in the poorest countries, and we are calling for a scrapping of the system and compensation to African farmers for the losses they have incurred."

She added: "This is about political reform but consumers need to take responsibility.

"The reason why you can buy a T-shirt for ?3 in the shops, days after something similar has been featured in Vogue is because of these artificially low cotton prices and labour costs which have a direct and destructive impact on farmers in Benin and other African countries.

"You may be able to get cheaper clothes, but at what price?"

American farmers have been subsidised for years but the impact has been particularly savage over the past five years.

Poor rainfall and low yields in countries such as Benin have affected production, while the price of cotton fell by 30 per cent in 2002, when the US Farm Bill raised subsidy levels to $250 a hectare.

The American government now, in effect, pays its farmers to produce cotton, spending $14.8bn between 1998 and 2002 on subsidies, compared with the $20bn dollar value of the crop.

Cotton is currently 48 cents per pound - 30 cents less than it costs American farmers to grow their crop. If subsidies were scrapped, it is estimated prices would rise by 26 per cent, hugely increasing the money earned by African farmers.

The US is the world's largest exporter of cotton - and most of it is bought by China.

At the beginning of this year, quotas designed to limit the flood of cheaply produced clothing into the West were scrapped, ostensibly to free up trade.

Instead, the end of the Multi-Fibre Agreement has meant production has switched from factories in Africa and the tsunami-hit countries to China because of cheaper production costs.

British companies such as Tesco and Arcadia, which owns Top Shop, have put tremendous pressure on suppliers to cut costs in order to allow them to sell clothing at cheap prices.

Even if consumers adopt a more ethical stance, it seems unlikely the US will bend to calls for it to reform the system, despite the billions of dollars it costs the federal Government each year.

Farm groups, especially large-scale producers with multi-million dollar profits, hold huge sway on Capitol Hill. The American Farm Bureau Foundation spends more than $3m a year on lobbying, while influential politicians such as the House Speaker in Congress, J Dennis Hastert and Senate majority leader Thomas Daschle, come from farm states.

Paid $25m in US subsidies

David Griffin, cotton farmer, Arkansas, USA

David Griffin and his family own 40,000 acres of land in Helena, Arkansas, 30,000 of which is used to grow cotton.

Between 1995 and 2003, Tyler Farms, the operation in charge of the land, received $24,297,994 in cotton subsidies, according to the Environmental Working Group in the US.

The farm group was the biggest recipient of cotton subsidies in America, yet Mr Griffin hardly needs the cash. He lives in a 13,000 square foot, million-dollar home, runs several tractor dealerships and sits on the board of the local bank.

He set up the farm group in 1993. It is organised into a complex web of 66 "corporations" to limit liability and get the largest amount of payments.

It is these farms, rather than smaller producers in the US, that gain the most from the subsidy payments - 60 per cent of growers receive nothing from the government.

Hit by a double whammy

Michael Ahnon, cotton farmer, Kotokpa, Benin

Michael Ahinon, from the village of Kotokpa in central Benin, has struggled to keep his small, 20-acre farm afloat this year.

Even with much lower production costs than his American counterparts, he cannot make a profit. He has fallen into debt and cannot afford to pay for health care, education or food for his family. He has now halved the number of hectares he devotes to cotton cultivation.

Five years ago, Mr Ahinon could make an annual profit of about 2.5 million FCFA (?2,500), but he is now lucky to make 200,000 FCFA.

Mr Ahinon still has to use traditional, short-handled tools, while ineffective pesticides have left his cotton ravaged by mice and insects.

"We would like to have subsidised credit and other support to encourage us," he said. "While we are farming cotton with our hoes, others are producing with huge machines. We are donkeys, who work without earning anything."


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Offlinecb9fl
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Re: Why world poverty is a trade issue [Re: GazzBut]
    #4255313 - 06/04/05 10:51 AM (11 years, 6 months ago)

Solution -- End government subsidies.


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It is better to be hated for what you are than to be loved for what you are not. -Andre Gide

"Generosity is nothing else than a craze to possess. All which I abandon, all which I give, I enjoy in a higher manner through the fact that I give it away. To give is to enjoy possessively the object which one gives."


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InvisibleSoopaX
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Re: Why world poverty is a trade issue [Re: GazzBut]
    #4255373 - 06/04/05 11:27 AM (11 years, 6 months ago)

Geez, when will the US Government stop spending our tax dollars to fund American farmers and improve their standard of living and start illegally funneling it to Africa. I'm Irate.


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Offlinecb9fl
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Re: Why world poverty is a trade issue [Re: SoopaX]
    #4255383 - 06/04/05 11:32 AM (11 years, 6 months ago)

Geez, when will the US Government stop spending our tax dollars to fund American farmers

My thoughts exactly. Government needs to stay out of our business and let us do what we want with our money.


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It is better to be hated for what you are than to be loved for what you are not. -Andre Gide

"Generosity is nothing else than a craze to possess. All which I abandon, all which I give, I enjoy in a higher manner through the fact that I give it away. To give is to enjoy possessively the object which one gives."


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InvisibleSoopaX
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Re: Why world poverty is a trade issue [Re: cb9fl]
    #4255483 - 06/04/05 12:16 PM (11 years, 6 months ago)

OK, enjoy your 80$ t-shirts :smile:


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Offlinecb9fl
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Re: Why world poverty is a trade issue [Re: SoopaX]
    #4255523 - 06/04/05 12:30 PM (11 years, 6 months ago)

This isn't magic world. If the government didn't spend as much and stopped taxing so much I would have more money to spend. On top of that it would force the market to stay competitive instead of receiving government handouts.


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It is better to be hated for what you are than to be loved for what you are not. -Andre Gide

"Generosity is nothing else than a craze to possess. All which I abandon, all which I give, I enjoy in a higher manner through the fact that I give it away. To give is to enjoy possessively the object which one gives."


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OfflineTao
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Re: Why world poverty is a trade issue [Re: SoopaX]
    #4255549 - 06/04/05 12:37 PM (11 years, 6 months ago)

I'll just buy the cheap African ones thanks.


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OfflineGazzBut
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Re: Why world poverty is a trade issue [Re: SoopaX]
    #4255623 - 06/04/05 01:12 PM (11 years, 6 months ago)

Quote:

Geez, when will the US Government stop spending our tax dollars to fund American farmers and improve their standard of living and start illegally funneling it to Africa. I'm Irate.




So you support David Griffin receiving $25 million in tax dollars to grow produce that is sold at 40 cents per pound but in reality costs 78 cents per pound to produce? If so you are either very generous or very misguided!

Do you really think a guy who lives in a "13,000 square foot, million dollar home" and "runs several tractor dealerships" whilst "sitting on the board of the local bank" really needs to be taking $25 million dollars out of the public's pockets?

And I bet you still think the idea that the rich help the rich at the expense of the average guy is just a lefty/socialist myth!


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InvisibleSoopaX
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Re: Why world poverty is a trade issue [Re: GazzBut]
    #4255758 - 06/04/05 02:05 PM (11 years, 6 months ago)

No, I don't think that he should be getting the money. But I don't think that Africans should either. So do you really care that the taxpayers are having their pockets dug into, or is it the 'who' that is doing the digging thats got you so upset? I'm against (most) subsities because they are illegal uses of my tax dollars. The reason that I don't want Davey or Africa to get my money is the same reason. It's my money that I earn and I want to do with it as I please. The government was set up with strict guidelines built in for federal taxation uses and those aren't being followed at all.


So, would you care if this money wasn't being 'stolen' to pay dave griffin, but was being 'stolen' to give money to Africa?


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Offlinecb9fl
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Re: Why world poverty is a trade issue [Re: SoopaX]
    #4255915 - 06/04/05 02:41 PM (11 years, 6 months ago)

So, would you care if this money wasn't being 'stolen' to pay dave griffin, but was being 'stolen' to give money to Africa?

I would.


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It is better to be hated for what you are than to be loved for what you are not. -Andre Gide

"Generosity is nothing else than a craze to possess. All which I abandon, all which I give, I enjoy in a higher manner through the fact that I give it away. To give is to enjoy possessively the object which one gives."


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InvisibleSoopaX
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Re: Why world poverty is a trade issue [Re: cb9fl]
    #4255925 - 06/04/05 02:43 PM (11 years, 6 months ago)

Good. I care LESS if it goes to help some American farmer (who is truely in need), but I still don't want it to happen. It's a matter of me being furiously upset (the American farmer) and being totally outraged (Africans)


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OfflineJesusChrist
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Re: Why world poverty is a trade issue [Re: GazzBut]
    #4256995 - 06/04/05 08:48 PM (11 years, 6 months ago)

Interesting article, and I tend to agree with it. I am not chomping at the bit to pay anything to compensate the third world farmers, but I am eager to end all subsidies all together.

I also don't think the article mentioned the pampered European farmers, and their subsidy situation is just as bad if not worse. I didn't think that was fair, but that is a small point.

American foreign policy has had some disastrous effects. All during the cold war we were giving aid to third world nations. We give the aid to the government, and we centralize the power. We dump food on their economies and it destroys the local farmers. Farmers were often the most productive and wealthiest entrepreneurs in third world economies. We destroy the private markets and make everyone dependent on the central government.

I am trying to make the flow coherent. I have a drinking problem.

1) Aid comes in, usually in the form of excess food that has been bought off of American farmers to maintain higher domestic prices.

2) Third world farmers can't compete against the dumped food. They go out of business. In the name of free trade, private property, and the efficiency of markets, the United States destroys third world markets with dumping. Even worse, we call this destruction "Aid", and we all give ourselves pats on the back for being such wonderful and caring people.

3) When the local farmers go out of business, the country can no longer feed itself. It becomes dependent on American "aid".

4) The people then become dependent on their government. Where do they get their food? The government.

We fought an ideological war with communism. During the "cold war", we repeated this "aid" process time and time again. We like to speak of liberty, capitalism, freedom, choice, free markets and free trade. In reality, what we did to these nations is make them dependent on a central government. We made them closer to the ideal model of communism and socialism than anything that would remotely resemble a capitalist model. It blows my mind.

What we should have done is eliminate all subsidies, and eliminate all barriers to our market. The third world could feed us, and they could make money on it. It is probably one of the things that they are best suited to do. And they could do it cheaper if we let them.

Take Egypt for a telling example. The Nile delta was once of of the most formidable bread baskets in the entire world. Egypt can't afford to pay the subsidies that the Europeans and Americans do, and as a consequence it has crippled their economy. If all food aid was cut off to Egypt, they couldn't produce enough to feed themselves. And this from a country that was probably the original "bread basket" in the history of civilization.

I believe in free trade, but when American officials talk about free trade it is mostly lip service. If you are an Egyptian farmer, you have to think that our officials have testicles the size of grapefruits to tell such boldface lies with a straight face.

Quote:

Few measures that we could take would do more to promote the cause of freedom at home and abroad than complete free trade. Instead of making grants to foreign governments in the name of economic aid--thereby promoting socialism--while at the same time imposing restrictions on the products they produce--thereby hindering free enterprise--we could assume a consistent and principled stance. We could say to the rest of the world: We believe in freedom and intend to practice it. We cannot force you to be free. But we can offer full cooperation on equal terms to all. Our market is open to you without tariffs or other restrictions. Sell here what you can and wish to. Buy whatever you can and wish to. In that way cooperation among individuals can be worldwide and free.

-Milton Friedman, "The Case For Free Trade"





http://www.hooverdigest.org/974/friedman.html


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InvisibleSilversoul
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Re: Why world poverty is a trade issue [Re: cb9fl]
    #4257012 - 06/04/05 08:52 PM (11 years, 6 months ago)

Quote:

cb9fl said:
Solution -- End government subsidies.



:thumbup:


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OfflineProsgeopax
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Re: Why world poverty is a trade issue [Re: JesusChrist]
    #4260079 - 06/05/05 03:55 PM (11 years, 6 months ago)

Good post.  You summed it up very well. :thumbup:


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You can accept, reject, or examine and test any new idea that comes to you. The wise man chooses the third way.
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Disclaimer: I reserve the right to change my opinions should I become aware of additional facts, the falsification of information or different perspectives. Articles written by others which I post may not necessarily reflect my opinions in part or in whole, my opinions may be in direct opposition, the topic may be one on which I have yet to formulate an opinion or have doubts about, an article may be posted solely with the intent to stimulate discussion or contemplation.


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OfflineGazzBut
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Re: Why world poverty is a trade issue [Re: JesusChrist]
    #4262683 - 06/06/05 07:51 AM (11 years, 6 months ago)

Quote:

I also don't think the article mentioned the pampered European farmers, and their subsidy situation is just as bad if not worse. I didn't think that was fair, but that is a small point.




I agree. We Europeans do exactly the same thing. We even subsidise farmer to make produce that wont even be eaten just to prop up our economies!

Quote:

I am trying to make the flow coherent. I have a drinking problem.





You seem to be doing a good job!  :laugh:


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