8 October 1999

US producers get additional aid

By Philip Clarke

ADDITIONAL subsidies worth $8.7bn (£5.3bn) should soon be on the way to beleaguered US farmers, following agreement on a record emergency aid package by the House of Representatives in Washington.

This is considerably more than the $7.6bn (£4.6bn) suggested by the Senate two months ago – indicative of the mounting crisis caused by low world prices and a series of natural disasters.

It also comes just one year after a similar $6bn (£3.7bn) aid deal, and in the same week that Washington started a $1.3bn (£788m) pay-out under its long-term set-aside programme.

The final amount still has to be signed off by the White House, and already there is pressure from some parliamentarians and farm groups for even more. One senator has claimed the package does not contain enough for the eastern states, still reeling from the effects of hurricane Floyd.

The emergency aid will be split $7.5bn (£4.5bn) to make up for low prices and $1.2bn (£727m) for disaster relief. Together, they will take the total farm spend for the next financial year to $69bn (£42bn).

Criticism of the payments in the EU has been severe. "While Europe is reducing the level of support for agriculture, the US is increasing its support, in contrast to its earlier declarations," EU farm commissioner Franz Fischler said recently.

The NFU believes this undermines the US position in the run-up to the next round of world trade talks, where the elimination of production-related direct aid payments is supposedly its top priority.

But Peter Fane of Brussels consultants Eurinco is not so sure. "If these payments are genuinely green box (not linked to production), then it does not undermine their case.

"Even if they are blue box (linked to production), that was agreed as part of the last GATT agreement, so we should not necessarily cry foul."

&#8226 The US Department of Agriculture this week announced new export credits of $83m (£50m) for food and breeding stock to western and southern Africa. This form of trade subsidy will be a particular target of the EU in the WTO talks, which get underway in Seattle next month. &#42