The business of biofuels is booming. Rarely has a product of agriculture seen its market expand by double-digit growth rates year in and year out. But that is exactly what is happening as a result of the phenomenal demand for alternatives to petroleum-derived gasoline and diesel: respectively, bio-ethanol and biodiesel.
WTO World Trade Report on Subsidies
On July 24 - the day the G6 talks broke down at the World Trade Organization (WTO), leading to the suspension of the Doha Round - the WTO Secretariat released the 2006 World Trade Report. This year's report focuses on subsidies. Readers will find this to be one of the most comprehensive surveys of the subsidy literature, and data, written to date.
Attacking subsidies, tax breaks, and regulations that favor particular industries at the expense of the general good is a venerable tradition in the United States, practiced by pundits on both sides of the political divide. "Progressives" tend to focus on the distributional and environmental consequences of subsidies, while fiscal conservatives and libertarians deride subsidies for the burden they place on taxpayers and the market distortions they create.
Two recent articles from the Pioneer Press in St. Paul, Minnesota, reveal the speed at which subsidies are driving the production of ethanol in the US, and the environmental costs that are quickly becoming apparent. The US, like many other countries, has recently mandated minimum levels of ethanol as a fuel additive. "Suddenly, so many new ethanol plants are planned in (corn-growing) Minnesota that a once-unthinkable debate has begun: Will there be enough corn to go around?" writes Tom Webb.
Dean Baker, Co-Director of the Center for Economic and Policy Research, takes aim at the "myth that conservatives favor the market over government intervention" in his new book The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. Bill Gates, doctors and corporate agricultural producers all receive a hit.
The Paris-based Groupe d'Economie Mondiale (GEM) at Sciences Po reports that France has begun releasing comprehensive data on farm subsidies, including Single Farm Payments (SFPs), following formal requests from GEM and others to the French government.
The primary tools for determining the impact trade liberalization will have on poverty are multi-country Computable General Equilibrium Models (CGEM). However, the models that have been derived from this method have come to some very different results. In recent years these results have also been revised downwards, predicting more moderate gains from trade liberalization. Antoine Boukt, Sr. Research Fellow at the International Food Policy Research Institute (IFPRI), examines this phenomenon in detail, comparing the merits of the various methodologies, and explaining why their results diverge.
The Environmental Working Group (EWG) has revealed some $1.5 Billion in agricultural subsidies tucked away in a congressional emergency relief bill. The subsidies' supporters say they are designed to help farmers cope with rising fuel costs. But according to the EWG, "the majority of America's farmers, ranchers and rural residents will be excluded from the new subsidy, as the aid is funneled yet again to recipients of annual crop subsidies, who already collected a record $23 billion in 2005."