The New York Times

June 15, 1991, Saturday, Late Edition - Final

SECTION: Section 1; Page 23; Column 1; Editorial Desk

LENGTH: 624 words

HEADLINE: Feed the Soviets, Starve the Taxpayer

BYLINE: By James Bovard; James Bovard is the author of "The Farm Fiasco" and the forthcoming "The Fair Trade Fraud."


(c) 1991 The New York Times, June 15, 1991

BODY: With this week's announcement of another export credit package for the Soviet Union, the Federal Government is once again trying to solve U.S. farm problems by throwing money at foreign governments. Unfortunately, Washington's farm export policy is becoming a black hole that is senselessly pulling in more and more tax dollars while providing minimal benefit to farmers.

U.S. grain exports are now routinely Pyrrhic victories. The Agriculture Department recently paid an export subsidy of $1.41 a bushel on wheat sold to Norway for $1.50 a bushel. Thanks to the department's generosity, American wheat is now far cheaper in Oslo than in Chicago.

And by paying a 94 percent export subsidy on wheat, the Agriculture Department displaced unsubsidized exports of U.S. grain sorghum to Norway. The Feed Grains Council complains that subsidized wheat exports are increasingly undercutting unsubsidized exports of corn and other feed grains.

The Export Enhancement Program, the largest U.S. export subsidy program, has spent more than $2 billion to boost wheat exports. An Agriculture Department study concluded that 9 of every 10 bushels of wheat exported through the program would have been exported anyhow. So instead of exporting for a profit, the U.S. sold for a loss. Robert Paarlberg, a Harvard economist, notes, "It would have been almost a dollar a bushel cheaper simply to buy surplus wheat on the free market and then destroy it, rather than to give it away" under the export program.

The Agriculture Department is also burning tax dollars to export eggs to Hong Kong, barley malt to Venezuela, rice to Turkey and frozen chickens to Saudi Arabia. A department study found that poultry export subsidies not only cost taxpayers more than $50 million -- but also drove up retail poultry prices in the U.S. by almost $1.5 billion.

On March 1, the department announced a major expansion of dairy export subsidies. The Government is paying farmers 98 cents a pound for butter -- and selling butter to foreigners for roughly 60 cents a pound. At a time when many Americans cannot afford to buy milk, we will spend more than $50 million to dump 140,000 tons of U.S. dry milk on world markets at fire-sale prices.

Members of the Congressional farm lobby appear to believe that taxpayers are obliged to bankroll any foreign government willing to receive U.S. farm products.

Representative Dan Glickman of Kansas complained that Mr. Bush's initial refusal to grant more credits was the "equivalent of a grain embargo" against the Soviets. This makes as much sense as my complaining of a Mercedes embargo because the German Government will not give me the money to buy a fancy imported car.

Farm-state Congressmen are happy that giving export credits to the Soviets, by fueling demand for American wheat, is driving up U.S. wheat prices. This may be great for politicians. But the higher U.S. prices become, the less competitive American wheat will be on world markets. The more export subsidies Washington provides, the more difficult it becomes to export any grain without a subsidy.

(c) 1991 The New York Times, June 15, 1991

If legislators truly want to boost farm exports, they should abolish Federal farm programs. This year the Agriculture Department will pay farmers to leave more than 60 million acres of land idle -- thereby sharply decreasing output and productivity. Federal price supports drive U.S. crop prices above world prices, crippling our competitiveness.

We cannot become rich by giving food to foreigners. Farm export subsidies have disrupted international markets, squandered billions of dollars and bushwhacked some American farmers. The sooner the crazyquilt collection of export subsidies is abolished, the more prosperous the nation will be.