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Lesson from New Zealand: Plow under U.S. farm subsidies


President Bush showed his anti-consumer, anti-taxpayer side on Monday, May 13: he signed legislation that increased farm subsidies by $83 billion. This legislation, supported by Oregon’s U.S. Senators Smith and Wyden, and Representatives Wu, Walden and Hooley, shows corporate welfare is alive and kicking in Washington, DC with bi-partisan support.

U.S. farm subsidies were to have gradually ended with the passage of the 1996 Federal Agriculture Improvement and Reform Act, which aimed to decrease subsidies over seven years and move farming toward greater reliance on market supply and demand. New Zealand demonstrates the benefits of following through with such intelligent policy.

In 1984 New Zealands’s government, led by the Labour Party, began the swift elimination of that country’s farm subsidies. Last year, the Federated Farmers of New Zealand, the country’s main farmers group, released a paper Life After Subsidies. Among the findings: the value of New Zealand’s farm output has soared 40 percent in constant dollars since the mid-1980s. Further, productivity in agriculture has averaged six percent annual growth, versus only one percent before subsidies ended.

Life After Subsidies also notes, “New Zealand has gained environmental benefits as well. Water quality has improved as wasteful practices fuelled by subsidies have stopped.” Though mass bankruptcies were predicted, just one percent of the country’s farms went out of business. Adjusting to new economic realities, Chris Edwards and Tad DeHaven at the Cato Institute wrote, “New Zealand farmers cut costs, diversified their land use, sought non-farm income opportunities and altered production as market signals advised.”

Once election year politics are over, Oregon’s Congressional delegation should take a principled and unanimous stand and right the wrong they voted to create. Intelligent farm policy requires ending subsidies.

Kurt T. Weber is vice president of Cascade Policy Institute, a Portland, Oregon based think tank.

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