FROSHMUN CONFERENCE June 8,

2015

AGRICULTURALSUBSIDIES Read to Discover –What are the purposes of agricultural subsidies? –Who should be given agricultural subsidies? –How can subsidies help or hurt domestic economies and foreign economies? –To what extent can a country subsidize its agricultural sector if a country decides to subsidize?

STATEMENT OF THE PROBLEM Agricultural subsidies are sums of money given to members of the agricultural community from the government with the purposes of increasing the incomes of farmers, increasing the supply of products, and helping emerging agricultural businesses compete in the global market. Many developing countries utilize agricultural subsidies in order to support their economies.  However, subsidies often have the opposite effect because of the modern agricultural business, which has more agricultural corporations than small, individual farmers.Therefore, the subsidies given to big business often encourage inefficiency, ultimately weakening the agricultural community. Corporations refuse to diversify their products with the subsidies and simply overproduce and flood the market with a single crop.

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2015

History of the Issue

FROSHMUN CONFERENCE June 8,

When agricultural subsidies first became part of domestic policy, they were intended to aid small, individual farmers. If the agriculture business is supported through subsidies, the price of commodities is driven down. In this way, a nation-state can guarantee a stable and inexpensive food supply for its people. This is essential, especially in underdeveloped countries, to eliminate malnutrition and health problems. It helps to achieve Article 25 of the UN Bill of Rights, guaranteeing “the right to a standard of living adequate for the health and well-being of himself and of his family.” Overtime, with the globalization of the agricultural market, corporations have taken over agribusiness. Therefore, government subsidies have started to go directly into the hands of big businesses. These big businesses are self-sufficient and do not need the support of subsidies.  Instead, these subsidies have made the price of crops artificially low. They have further suppressed small farmers by giving big businesses an advantage they don’t need. Furthermore, subsidies of big businesses have limited crop diversity and decreased efficiency in the agricultural business by eliminating any incentive to make a profit. Big businesses are now able to produce absurdly large quantities of crops like corn and wheat for an absurdly low cost. The Doha Development Rounds is a committee of the World Trade Organization (WTO) started in 2001. It aims to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. Many of the smaller, or economically weaker nations, have been pushing for the abolishment of agricultural subsidies, while many of the economically powerful nations (USA, countries of the European Union, Japan) still support this policy. The US spends $20 billion a year on agricultural subsidies, the European Union $51 billion, and Japan $46.5 billion. Such a division creates a stalemate, and the conflicting interests, and general unwillingness to concede anything, no matter how small, by many of the delegates have effectively shut down progress in the talks. As of May 2012, the future is still uncertain concerning negotiations.

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Case Study: United States The United States has had a long history of institutionalized agricultural protectionism, finding the majority of it’s origin in multiple New Deal policies created during the Great Depression. During this time, poor management of farms had caused great food shortages, and what was once fertile farmland had become barren plains, which created massive dust storms in a phenomenon known as the Dust Bowl. To prevent such a disaster from occurring again and to make America’s agricultural industry competitive on the global market, a series of agricultural subsidy programs and agricultural protection acts were put in place. Now, the United States government spends twenty to thirty billion dollars a year sustaining these agricultural subsidy programs. Currently, the United States leads the world in agricultural exports, and by a wide margin. Most notably, it accounts for over fifty percent of the global export of corn and soybeans. It is the leading producer in corn, also by a wide margin, and is third in the world in wheat production. It is clear to see that the United States produces a greater amount of food than it needs to feed its population. However, Mexico’s agricultural industry, like that of most central american nations, has suffered greatly at the hands of the success of the United States. Agricultural Protectionism has allowed the US market to outcompete neighboring markets by keeping the price of US agricultural products lower, effectively ending any chance of fair competition on the global market. This has caused most small scale farms throughout the region to go out of business, and left many unemployed. A significant portion of this unemployed population has now gone to the United States seeking agricultural work, contributing to the massive illegal immigration issue that the U.S. currently faces. In this way agricultural subsidies have caused trouble for both the nation initially hurt by them and the nation that instated them.

2015 FROSHMUN CONFERENCE June 8,

Terms and Concepts

Past International Action

–Agricultural subsidies: Money given to farmers from their government with the intention that they will use the money to supplement their income, diversify crops, and increase production and efficiency.

–Agricultural Act of 1949: Post World War Two, contrary to what American farmers expected, The United States government kept buying surplus crops in order to rebuild Europe and Pacific areas of war. Part of one of the Farm Bills, the Agricultural Act of 1949 created the Commodity Credit Corporation which buys surplus and ships it to foreign countries. A slight variation of this act exists to this day for American food aid but under criticism for inhibiting domestic farmers in developing countries.

–Agribusiness: The modern agricultural community that is defined by advanced technology, large corporations, and the over production of cheap crops. –Agricultural Protectionism: Countries protect their agricultural production by giving farmers subsidies. Growing food in the US may be less efficient than growing it somewhere closer to the equator or with more fertile soil but the US wants to keep production of food in the country so the pay farmers to make growing in the US profitable. This gives the country bargaining power and the ability to feed all the people in the event of a disaster. However protecting just a domestic market means that all the countries that can produce cheap goods can not sell them in the US.

–Common Agricultural Policy (CAP): Created in 1957, it is an agricultural subsidies program that is present in many European Countries which provides farmers with subsidies for their land, consumers with guaranteed low prices, and imposes tariffs on imported foodstuffs in hopes of European farmers a competitive edge in the market. –1984: New Zealand Eliminates Agricultural Subsidies In 1984, New Zealand saw fit to eliminate its system of agricultural subsidies. Only 1  per cent of New Zealand’s farmers had to leave the business as a result of eliminating the practice, and it has since been determined that these were the farmers who had inefficient practices, and were therefore only being kept afloat by government subsidy. Since abolishing subsidies over twenty years ago, New Zealand’s agricultural output has quintupled and incomes have posted healthy gains.

Bloc Positions Many large first world, or developed, nations, including the United States, have great economic investment in the practice of agricultural protectionism. As a result, a limit or law against agricultural subsidies will likely hinder the economy of said nations. These large first world nations tend to have greater power than the third world, or developing,  nations affected negatively by agricultural subsidies. As such, this issue is subject to great political influence. There must also be the recognition that agricultural protectionism affects the global food supply, though whether its existence is a positive or negative factor is subject to debate. Rather than being purely economic, agricultural subsidies could also be a humanitarian affair, since it as stated earlier is a factor in global food supply. As such, it must be solved with recognition of both it’s economic and humanitarian elements. 3

Questions  to  Consider  When  Formulating  a  Resolution     (Remember,  a  resolution  should  not  seek  to  answer  all  these  questions,  and  is  not  limited  to  these  questions.)

1.  What  role  should  the  World  Trade  Organization  have  in  governing  domestic  agricultural  subsidies? 2.  Should  the  surplus  food  produced  by  subsidy  funded  farms  be  given  to  charity  or  sold? 3.  Without  Agricultural  subsidies  how  can  the  WTO  assure  there  is  enough  food  to  feed  the  world  and  for   individual  countries  to  feed  their  people? 4.  Should  large  corporations  that  depend  on  subsidies  to  pay  their  employees  and  run  their  business  be   compensated  if  agricultural  subsidies  are  reduced? 5.  Should  developing  nations  fund  their  one  agricultural  subsidies  in  the  future  or  now  with  help?

Research Sites CIA World Factbook https://www.cia.gov/library/publications/the-world-factbook/ UN General Assembly http://www.un.org/en/ga/ The Debate http://debatewise.org/debates/2907-us-farm-subsidies-abolish/ Agricultural Subsidies https://en.wikipedia.org/wiki/Agricultural_subsidy

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Thanks to Andrew Benson, Marykate Cary, George Gatter, Maryeliz Kelleher, Gabriel Khoury, Allison Law, Anna Meyer, And Mr. Ford For taking the time to create this guide