U.S. Cotton Subsidies

Are American taxpayers being defended by the World Trade Organization? It looks that way. When you hear code words and phrases like ‘fair trade,’ ‘anti-dumping,’ ‘protecting American jobs,’ substitute political theft, favoritism, and government sponsored immorality. Political sophistry is no substitute for doing what’s right.


The Sunday July 4th 2003 Atlanta Journal Constitution front page article (shown below) about the World Trade Organization ruling on U.S. cotton subsidies failed to point out the obvious. U.S. farm subsidies are government sponsored theft. If you think this is an outrageous statement please provide an honest answer to the following question. How much money would you contribute to U.S. cotton farmers if they sought your charity through advertising appeals? They could seek donations by emulating other charities who use TV and radio spots, celebrities, or junk mail fliers to make their pitch. Would you contribute every year to such a charity?

Instead of persuading Americans to support their businesses through charitable giving or the market place, U.S. cotton farmers are doing what many American industries do. They substitute coercion for persuasion by purchasing politically forced contributions. Instead of asking for our money, they use the threat of deadly force that resides at the Internal Revenue Service to take it.

Hard working Georgia farmers like Louie Perry and Chuck Coley, would never dream of robbing their fellow Georgians at gunpoint, but they find it acceptable to have a government bureaucracy do the dirty work. Legalized theft has become the American way of life in business and politics.

Every group and constituency is attempting to live at the expense of someone else. What we fail to realize is that every group is played against the other. The only consistent result is politicians demand more money to expand government so they can provide more favoritism, economic protection, and dependence.

The bottom line is this; every government subsidy is wrong. It is an immorality that stands on legal theft. Charity is not a proper function of government. Government subsidies are a racket designed to steal private property. Your money is being used to ingratiate political constituents that support government theft.

I don’t know about you, but without a weapon, the $800,000 average net worth U.S. cotton farmer would be hard pressed to get much sympathy or money from me if he were standing on my front porch. Cotton farmers, and thousands of other companies and groups, avoid this deadly confrontation by robbing us with a weapon called government.


By DAN CHAPMAN
The Atlanta Journal-Constitution – July 4, 2004

MOULTRIE — Louie Perry and his cotton-farming brethren have been likened to freeloaders, cheats and — horror of horrors — Communists for their reliance on the U.S. government’s generous allotment of agricultural subsidies.

It’s hard to square that characterization with a 65-year-old man with oversized eyebrows, a mouthful of chewing tobacco and a ball cap inscribed with Disney’s “Grumpy.”

But many foreign leaders, acid-penned commentators and, now, the World Trade Organization accuse the United States and its subsidy-dependent farmers of so distorting the world’s trading system that farmers in less developed economies suffer.

Last month, the WTO ruled that the billions of dollars given to U.S. cotton farmers constitute an illegal market-cornering inducement. The subsidies allow farmers to dump their cotton at below-market costs, the trade body said, which robs poorer countries of much-needed export earnings.

The landmark WTO decision threatens cotton growers’ livelihoods much as the boll weevil did in the mid-1980s. If forced to give up subsidies, many of the South’s 25,000 cotton farmers — with an average net worth of $800,000 — would wither away.

Emboldened by the WTO ruling on cotton, foreign governments are expected to target U.S. subsidies lavished upon sugar, wheat, soybean and corn farmers. An all-out trade war looms. A rural way of life is under attack. “Cotton is all you’ve heard about up to this point. But [the ruling] has a far wider impact than that,” Perry said in his farm office, cluttered with dusty memorabilia and a computerized weather map indicating thunderstorms about to hit Colquitt County. “It’s the tip of the iceberg. Everybody has got a stake in this thing.”

Scandalous subsidies

Brazil, the world’s No. 5 cotton producer and a burgeoning trade superpower, sued the United States — the world’s leading exporter, with 40 percent of the global market — claiming that its subsidies violate international trade regulations. With research prepared by a University of California economist, Brazil claims that U.S. growers received $12.5 billion in subsidies between August 1999 and July 2003.

Without the export and price support subsidies, Brazil says, U.S. production would have dropped 29 percent and overseas shipments would have decreased 41 percent during that period.

On June 18, the WTO agreed that U.S. subsidies cost Brazilian farmers $600 million in lost sales last year.

Brazilian President Luiz Inacio Lula da Silva said recently that the “scandalous subsidies” breed poverty. The World Bank estimates that elimination of all the world’s cotton subsidies would increase the average price of cotton by 12.7 percent over a decade and benefit West African nations most.

Oxfam, an international anti-poverty organization, reports that Mali, Burkina Faso, Chad and Benin are home to 10 million poor cotton farmers earning less than $1 a day. Cotton accounts for half the export earnings in those countries.

“This ruling is a big victory for small cotton farmers,” said Jennifer Brant, a trade policy adviser for Oxfam America. We see the desperation and harm caused by subsidies in West Africa. U.S. policies exacerbate poverty, decrease the already poor farmers’ earnings and create a lot of despair. They have tough choices to make, whether to send their kids to school or buy medicine or buy seeds for harvest.”

A savvy breed

The South’s cotton farmers, already bruised from decades spent fighting drought, pestilence, poor soil, overproduction, low prices and bad publicity, are readying for a WTO fight.

“We’re being painted as the bad guys and hurting these folks, but we also have a constituency of good hardworking people trying to maintain a lifestyle, a rural, agricultural lifestyle,” said Richey Seaton, executive director of the Georgia Cotton Commission. “I don’t think there’s something wrong with somebody wanting to do what their family has done for several generations.”

Slightly more than 2,000 cotton farms covered a swath of South and Middle Georgia in 1992. A decade later there were 3,216 farms, according to the U.S. Department of Agriculture.

Georgia, the No. 2 cotton-growing state after Texas, employs nearly 50,000 farmers, gin operators, truckers, warehousemen and brokers. Cotton farmers are a savvy breed, with computers, lobbyists and talking points to turn aside anti-subsidy arguments.

Chuck Coley farms 1,500 acres of cotton in Dooly County, owns a gin in Vienna and writes pro-subsidy opinion pieces for Georgia newspapers. He cites other countries’ subsidies, tariffs and lax environmental rules as unfair trade advantages that, he says, highlight the need for U.S. government assistance.

Coley, like most cotton farmers, swears by the Farm Security Act, the 2002 “farm bill” that guarantees growers a minimum sale price.

“If they change the whole farm bill and cancel direct payments and all of a sudden you can’t grow commodities anymore, you’ll just grow pine trees and we’ll be dependent on imports of soybeans and cotton,” says Coley, a third-generation farmer. “I don’t think the American people want to become like where we are with oil, dependent on other countries.”

Big business benefits

Washington began handing out money to struggling farmers during the Depression. A system of price supports soon guaranteed cotton farmers a paycheck.Farm state legislators made sure the federal money spigot stayed open.

The $190 billion farm bill, signed by President Bush in May 2002, offers farmers a ‘safety net’ if prices fall too low. It defrays the cost of exporting cotton to maintain U.S. market share. It also helps domestic textile mills purchase more expensive U.S. cotton.

Most of today’s subsidies go to large-scale farmers or agribusiness companies. Georgia cotton farmers received $797 million in subsidies from 1995 through 2002, says the Environmental Working Group, a government watchdog in Washington.

“I don’t know whether this sounds good in print, but we couldn’t do without it,” Perry says as low clouds reach the edge of his fields. “If I want to live in a mud hut, I wouldn’t need the farm bill. You’re not subsidizing the farmer. You’re subsidizing the American economy.”

Perry insists that the farm bill remains ‘WTO-compliant.’ But the trade body labeled as illegal last year’s allotment of $3.2 billion in cotton subsidies and $1.6 billion in export credits (for cotton and other commodities).

Brazil, thanks to the WTO ruling, might restrict U.S. imports. Litigation could take years. The entire U.S. farm act might have to be scrapped.

“We can assure everyone that we will be defending U.S. agricultural interests in every forum we need to and have no intention of unilaterally disarming,” U.S. Trade Representative Robert Zoellick said in a statement June 18.

Bush administration officials say they’re willing to reduce certain subsidies, but only if Europe, Japan and other developed countries also do so. The 147-member WTO hopes to relaunch stalled trade talks, involving agriculture, manufacturing, services and customs practices, before the end of July. But agricultural subsidies will likely bedevil negotiators.

“This could be the time to protect the farm economy and protect America,” said Coley, who gins cotton for farmers within a 40-mile radius of Vienna. “Maybe it’s time to think if we even need to be in the WTO if we’ve got others trying to tell us what to do and we can’t tell them what to do.”

Farmers usually adapt. Perry says he’ll probably plant less cotton next year and more corn and peanuts.

The wind pushes his knee-high cotton plants sideways. Swirls of dirt dance along Perry Road. Fat raindrops pelt the window of his Chevrolet truck as he heads for the family cemetery.

“Farming’s been wonderful to us,” Perry says. “Nowhere could I have spent my life doing what I wanted to do and make a living. I’m a little cocky, but since my family has survived since the 1830s, we’ll continue to survive.”