US Subsidies Fall Due to High Prices

High prices for US farm goods meant trade-distorting subsidies remained low in 2010, according to new data that the government has provided to the WTO. However, record payments for ‘food stamps’ that help the poor buy food has pushed total farm support to a new record, the figures show.

US ‘amber box’ payments - highly trade-distorting payments, which are capped at US$19.1 billion under WTO rules - totalled just US$4.1 billion in marketing year 2010, according to the new numbers. Weather-related crop shortfalls and continuing high demand for biofuels have pushed prices higher in recent years, meaning government programmes that are activated by low prices have not been triggered.

While the amber payments are at an all-time low, other forms of trade-distorting support have crept upwards. The new figures show the government spent US$5.7 billion in ‘de minimis’ support - trade-distorting payments that do not count towards the ceiling under WTO rules so long as, in developed countries, they represent less than five percent of the value of production.

In 2010, as much as US$4.7 billion of the de minimis payments came from subsidised crop and revenue insurance - a category where spending could be set to expand significantly under proposals for the new Farm Bill.

Product-specific payments were heavily concentrated in just a few commodities, with sugar and dairy taking the lion’s share of support.

Meanwhile, as outlays on food stamps have risen sharply, total farm subsidy spending has reached a new record of US$130.3 billion. Of this, US$120.5 billion has been reported as ‘green box’ payments, which under WTO rules are not meant to cause more than minimal trade distortion.

According to US government figures, domestic food aid - the category including food stamps - represented almost eight-tenths of total green box spending in 2010, at US$94.9 billion. ‘General services’, such as support for research and advisory services, accounted for another US$15 billion, with some subsidies also allocated towards decoupled income support payments and environmental programmes.