Dialogue: Big bucks for US farmers leave peanuts for rest

American agriculture is about to land its biggest haul of state subsidies yet, says OWEN JENNINGS*.

Farmers in the United States are waiting for the finishing touches to be put on the latest Farm Bill, which is worth more than US$400 billion ($918 billion) to them.

Despite the WTO, despite Nafta, despite George Bush and balanced budgets, they are about to land their biggest subsidy haul yet. The age-old problem with subsidies is that they make a few prosperous and many poor.

Four hundred billion dollars is 10 times New Zealand's entire Government budget. Some individual farmers will get huge amounts of taxpayer assistance, but most of the big cheques go to corporate farmers. One of the ironies of subsidies is that the people they are meant to help - the little guys - get the least in relative terms. Well, mostly.

Meet Waymon Heard, a 71-year-old, third-generation peanut farmer, who is hanging out for the state cheque. He is entitled to a share in cash of US$7.14 billion ($16.38 billion) allocated for peanut farmers.

Of course, Waymon has a few other opportunities to dip into the state's generous coffers.

He could apply for one, or five, or 10, of the 172 conservation grants that the Bush Administration is planning on dishing out.

In fact, he can apply for as many as he wants. He may qualify for an energy assistance grant or a marketing assistance grant. He could apply for a marketing grant, perhaps.

But what Waymon really wants delivered is a quota buyout cheque. It's a new idea to help Waymon and his mates withstand pressure from Canadian and Mexican imports.

The Government has decided to pay Waymon US$9.04 million ($20.74 million) for his 8 million pound peanut quota.

No wonder he is down at the gate every day waiting for the mail truck.

The family are just a bit uneasy about giving up the quota. It has kept their market price for their peanuts over US$1400 a ton, twice the world price. It's been a pretty good deal.

However, Waymon is not panicking. He can pocket the US$9 million from the quota buyout plus all the other help - possibly another US$9 million - and still grow peanuts for years to come. After all, the subsidies are guaranteed for 10 years and Waymon is considering retiring before he turns 80.

Meanwhile Pedro, a 40-year-old small farmer of peanuts in Cohilla, Mexico, is paid peanuts for his crop in comparison to Waymon. He needs access to the US market. The US Government is making it extremely difficult for him to have a fair whack at competing for market share.

New Zealand farmers don't grow peanuts (they are probably relieved that they don't after reading this) but they experience the same idiocy with milk, meat and horticultural products. That's why we have to redouble our efforts to free up trade and why it's so difficult to make progress.

* Owen Jennings is Act's agriculture spokesman.