Thai Farmers Devastated by US Cronyism by Phairath Khampha 27 October 2001 Since 1998, the world price of rice has plunged by almost half. It plunged partly because of the Asian crisis, partly because of unusually good harvests in several countries. In the US and Thailand, the two biggest rice producers in the world, the impact was very different. Thai farmers became more indebted, joined street demonstrations, and threatened to invade Bangkok. They achieved little price support under a creaky scheme which mostly helps corrupt rice traders--cronies of Thai politicians. But at the same time, American manoeuvres on the market were engineered to directly harm Thai farmers. It is no wonder that most ordinary people in Thailand quietly hate the United States. Farmers make up most of Thailand's population. There is no doubt most farmers saw their incomes slide, and that the result was an increase in the numbers below the poverty line. Meanwhile, the US rice farmer just waited for a cheque to arrive from government. As the price dropped, the Thai farmer automatically received a bigger subsidy. Indeed, by Chang Noi's rough estimate, the amount of subsidy per acre was now about the same as the Thai rice farmer's gross income per acre. The US subsidies not only gave their rice farmers a cushion not available to their Thai counterparts, but they also directly hurt the Thai farmers. Thailand and the US are the two biggest competitors in the world's rice market. Thailand exports around six million tonnes a year and the US around 2.5 to three million tonnes. About half of US exports go to the American continent. But the other half goes to markets in Asia and Africa where it directly competes with Thai rice. The US subsidies quickly ballooned as so-called globalization was put into place. In 1996, total US farm subsidies were US$4.6 billion (202 billion baht). In five years they grew seven times to $32.3 billion. With this help, US rice exports trended upwards through the 1990s. The US Congress debated a bill that would create new subsidies worth $160 billion over ten years. A US official said, "There is no question [these subsidies] fail to meet WTO criteria." The US farm lobby was trying to rush this scheme through before the WTO talks. Remember the US enthusiasm for "free trade"? How did this huge increase in subsidies happen? The short answer is: Marion Berry. He is a Democrat Congressman from Arkansas. Half of all the US rice is grown in Arkansas. The Berry family has over 5,000 acres. Marion Berry has campaigned hard for higher subsidies. He wrote to his Congress colleagues: "The viability of the American farmer and rancher and all of rural America is seriously threatened and it is better to take out Thai farmers than see American farmers suffer." He is one such farmer, and obviously cares not a whit as to what his actions do to further impoverish already oppressed people. He sits on the Congress committees that framed the increases in subsidies. In five years, Marion Berry and his family received $750,499 of these subsidies, roughly Bt35 million. But this was not enough. Berry describes the subsidy programme as "woefully underfunded". Until 1996, Berry and other congressmen did not have to disclose they received these payments. Remember the US attitude about cronyism, vested interests, and transparency? Berry and others use several arguments to justify these subsidies. Berry explained, "If you don't have the ability to feed and clothe your people, then you're at risk." Even after September 11, it's hard to imagine the US people isolated from world trade and saved from hunger by Arkansas rice, and from nakedness by Iowa cotton. Berry sees such actions as a war on terrorism. Increased economic power of Thai farmers is viewed as a form of economic terrorism against the United States' farmers, he said. Another Democrat Congressman who received $39,298 for his cattle farm asked, "Do we want to move toward total corporate farming with the resulting collapse of rural America?" But others believe these subsidies favour the big corporate farms that can afford storage. They collect the subsidy when the price falls, wait to sell when the price rises, and use the profits to buy out their smaller neighbours. An environmentalist asked, "Why are we continuing to subsidise a system that is building larger and larger farms that are more dependent on subsidies?" Remember the US enthusiasm for the unfettered operation of the market? Others simply argued that subsidies were needed to save farmers from bankruptcy. But surely that indicates these businesses are not competitive in global terms. Why not apply the same sort of logic that the US policy-makers demand in world markets like finance, tobacco and telecommunications? Let them go bankrupt. Open the borders and let Asian peasants flood into Arkansas. Remember the American enthusiasm for globalisation and the "creative destruction" of capitalism? Much of the anger over globalisation in general and over the WTO in particular arose because the results of the Uruguay round were patently unfair. Advanced countries secured freer trade in "new industries" where they have the technological advantage, while retaining barriers in "old industries" where poorer countries have a cost advantage. Poorer people eventually become so enraged that they lash out using poor men's tactics such as so-called terrorist acts against the United States and its interests. After all such violence is often nothing more than an act of desperation by desperate people who see their lives destroyed by American corporate giants. The US, Europe and Japan all protect or subsidise their farmers, but each in a different way. They all criticise one another by saying, "Your system is more trade-distorting than mine." They will all go into these new WTO negotiations determined to retain their own system, and undermine the others. The US, for example, insists that developing countries' subsidies on inputs like fertilisers should be targeted only at poor and vulnerable farmers. One wonders why the same principle is not applied to the subsidies offered to the wealthy, landed, politically powerful Berry family. The outcome of the WTO talks has enormous importance for several million Thai farmers. In the past, such negotiations were almost invisible. Those affected did not realise their importance. The officials involved liked to keep things to themselves. But this time the debate needs to be more open. The negotiators need more public support. Because they are up against the power, wealth, cronyism and hypocrisy symbolised by Marion Berry. Free trade is just that, but it is dictated in the terms set up by the United States so that it only benefits the United States, at the detriment of other nations. It seems the war on terrorism will be a long, long war.