Trade Injustice

A question on the Junior Fellow application form asks “Do Canadian agricultural subsidies that are provided to Canadian farmers benefit or hinder development in rural African communities? Explain.”

In short, agricultural subsidies provided to Canadian farmers are harmful to African farmers, as you might suspect.

Subsidies essentially have the effect of lowering per unit cost of production and, as a result, lead to higher agricultural production in developed countries. Enhancement of agricultural production in the developed world displaces production in developing countries.[1] It is estimated that sub-Saharan Africa loses about US$2 billion dollars annually because of subsidies and other protectionist measures in developed countries – the developing world as a whole loses US$24 billion annually.[2]

It is primarily the wealthy countries that can afford to subsidize their farmers, although not all of them choose to. The OECD says that New Zealand's farmers get only 2 per cent of their incomes from government support, Australia's farmers only 4 per cent. U.S. farmers get much more - 16 per cent. Canadian farmers get 22 per cent. Throughout the European Union, government support provides 32 per cent of farm incomes. In Switzerland, the record holder, the percentage is 68. Failure on the part of developed countries to meaningfully reduce subsidies to farmers challenges the credibility of their expressed commitment to promote development.

The issue of agricultural subsidies leads into the broader topic of Trade Justice, which seeks fair rules to govern world trade. This is a topic that EWB has focused on in the past and still does although it has taken a back seat to the ACT campaign and Fair Trade in recent times. Click here to read more about agricultural subsidies and Trade Justice.

[1] Healy, Stephen, Richard Pearce, and Michael Stockbridge. The Implications of the Uruguay Round Agreement on Agriculture for Developing Countries: a Training Manual. Rome: Food and Agriculture Organization of the United Nations, 1998.

[2] Stiglitz, Joseph E., and Andrew Charlton. Fair Trade for All: How Trade Can Promote Development.Oxford: Oxford UP, 2005.

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