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High US farm subsidies -- one of the most contentious issues in the deadlocked Doha round of WTO trade talks -- have not been drastically cut in the new farm bill that went before the US Congress on July 26, 2007.
Both US President George Bush and Speaker of the House Nancy Pelosi are in favour of cuts, but the House Agriculture Committee (whose 46 members are from districts that received more than 40% of all farm subsidies from 2003 to 2005) has strongly resisted any such move.
If it is passed, the bill will however end subsidies for the richest farmers -- those earning more than $ 1 million a year -- and will close a loophole that let some farmers exceed subsidy limits by owning partnerships in multiple farms.
The bill also requires country-of-origin labelling for meat, a requirement favoured by consumer advocates and small ranchers.
The White House, in a statement on July 25, 2007, said that President Bush would veto the farm bill in its current form because it was too expensive and would require raising taxes while fixing subsidies.
The New York Times, in an article on June 25, 2007, stated that while the administration and Congressional critics of the bill are “pushing for some of the same changes, the White House is keen to extend and even increase so-called direct payments to farmers of corn, soybean, cotton and other major crops”.
These payments, totalling more than $ 5 billion a year, are made even when farmers are earning sizeable profits. Critics say they should be replaced with crop insurance and other revenue protections that pay only if farmers actually lose money.
The NYT says the White House favours these direct payments in part because they are based on past crop production, not on current crops or prices, meaning they have no impact on market conditions and do not violate world trade agreements.
July 26, 2007
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