US Farm Support Rises to Proposed Doha Ceiling

New data shows US trade-distorting farm subsidies reached US$12 billion in the 2012 marketing year – close to the US$14.5 billion ceiling that was proposed in the WTO’s 2008 draft Doha deal.

The figures, which Washington reported to the WTO in December, also indicate that trade-distorting payments fell slightly from the previous year, when they were above US$14 billion.

However, with many US subsidy programmes tending to increase spending when prices fall, the 2012 data also reflects the impact of the relatively high prices prevailing in the last seven years.

Recent decreases in prices for farm goods - along with new rules for support payments under the Farm Bill legislation passed one year ago - could mean current subsidy spending levels will be higher than those described in the latest figures, sources said.

Dairy, sugar, and wheat

Trade-distorting payments in 2012 were concentrated on dairy, sugar, and wheat, the new data shows.

Spending on these three products accounted for a significant share of US spending in the WTO’s “amber box” category - which for Washington is capped at US$19.1 billion under commitments it has made at the global trade body.

The government provided US$3.4 billion in support to dairy, US$1.5 billion in support to sugar, and US$1.1 billion for wheat, the figures show.

Spending on cotton reportedly represented US$636 million. Late last year, the US and Brazil reached an agreement which concluded a long-running trade dispute over Washington’s farm subsidies for this product.

Trade-distorting support for other products brought US “amber box” support to nearly US$7 billion. Another US$5 billion of trade-distorting “de minimis” payments were not counted towards the current WTO ceiling for US farm support, as they represent less than five percent of the value of production for specific products, or below five percent of total agricultural production in the case of non-product specific support.

However, both amber box and “de minimis” payments would be disciplined under a new category of overall trade-distorting support (OTDS) proposed in 2008 under the WTO’s ongoing Doha Round negotiations.

The US has reported it made no payments under a third category of production-limiting support - known as “blue box” subsidies - which would also be included in the OTDS calculation under the proposed new rules.

Mushrooming food aid

The US has also reported a massive growth in payments that are classified as causing no more than minimal trade distortion under WTO rules - dubbed “green box” support by trade officials.

At US$127 billion, green box support is now ten times the amount reported as trade-distorting payments.

Domestic food aid, to help US citizens on low incomes purchase food, accounts for the lion’s share of support reported to the global trade body.

Washington reported that US$107 billion was spent in this category alone in 2012.

Another US$10 billion was spent on “general services” – including extension and advisory services, animal and plant health inspection services, agricultural research, and also reimbursements for certain expenses incurred by insurance companies delivering federal crop insurance.

Environmental programmes accounted for US$5 billion, as did decoupled income support programmes – which pay out subsidies to farmers irrespective of the volume or value of their production.