How Welfare For Conservative Farmers Kills Ethiopians

I’ve been reading Enough: Why The World’s Poorest Starve In An Age of Plenty. I was afraid it might ignore economic and political realities to express naive wishes that we could all just share more, but it actually dives deep into some of those economic and political realities. Among other things, the authors (two long-time Wall Street Journal correspondents) explain how African farmers were left behind by the Green Revolution.

The book recounts efforts to increase yields for Ethiopian farmers in the early 2000’s, leading to a bountiful crop. But unlike previous successes in Central America and Asia, even that good crop paradoxically led to another famine.

First, there was no infrastructure to store or transport the surplus crop to other parts of the country, so it all came on the market in the same place at the same time. Predictably, prices crashed below the cost of production.

Second, there were no commodities markets to allow farmers to lock in prices for the next season, and third, there were no government subsidies to provide price supports. This all left the farmers both unable and unwilling to plant nearly as much the next year, which just happened to have a drought. Cue severe food shortage and calls for food aid.

But it gets worse. The food aid undermined what was left of the fragile market. The free-marketer in me wanted to believe the power of market incentives must have been inspired somebody in the country to try to transport surplus grain to make a profit. A few pages later, I learned that indeed some traders did, but they were met by “free” food aid that made their efforts worthless. There were even traders trying to store up extra grain to sell later at higher prices, but American food trucks rolled right past their storehouses, cornering the market.

It would be sad enough if the food aid was coming from well-intentioned charities. It would be even worse if it was coming from well-intentioned government programs. But what makes it so incredibly tragic is that the food aid essentially comes from the American farm lobby that needs the government to buy up a good chunk of their product, which it then tries to give away to other countries as good-looking aid.

Part of this story could be used to support government involvement in building infrastructure to help goods move or even subsidizing farmers to keep production high enough in the face of low prices to avoid famine. But the irony is that even any theoretically perfect attempt by the Ethiopian government to improve their country’s agriculture would have been completely undermined by the reality of the American government’s extravagant subsidies to its own farmers. The deeper irony is that these extravagant subsidies go to farmers who are generally staunchly conservative and presumably opposed to other farms of welfare.

Congress is currently working on a new farm bill, which is apparently supposed to have a new Five Year Plan for subsidies and price supports and other goodies. I don’t even know what’s up for debate on those aspects because the only news I can find about the bill involves disagreements about cuts to the food stamp program. Now I have few qualms about cutting food stamp benefits; even the recently reduced-from-a-temporary-increase maximums ($347 for 2) are higher than my wife and I spend on food in an average month. And I find the ubiquitous anecdotes of fraud more convincing than pat reassurances that such fraud is rare and taken care of.

But at least that welfare goes to people who are generally poor and only has costs in money and perhaps poor incentives. The welfare to farmers involves hundreds of thousands of dollars in transfers to already-wealthy farmers that essentially get the government to pay them to haphazardly dump their wares on disrupted foreign markets, exacerbating famines and almost certainly killing many people.

I wrote my Congressman to express my disapproval of such policies, although I don’t know if the farmer part of the bills are even up in the air at this point. I can even see an argument for some farmer subsidies, although I suspect Ethiopia might succeed just fine without them if it had the roads and the commodities markets to help. (In a cruel twist of fate, Enough explains how developed countries pressure developing countries to refrain from using such subsidies anyway, in spite of – or more likely, because of – the fact that they themselves are using far more extravagant subsidies on their own farmers, who understandably don’t like the competition.)

So I think it’s perfectly reasonable for conservatives to highlight the recent doubling of food stamp rolls for the poor and all of the problems that entails, but my patience grows thin for any who do not also highlight the welfare for their own farmers that is quite literally killing even poorer people on the other side of the world.