What is in this article?:
- Brazilâ€™s ag subsidies raise troubling questions
- AMS limit problems
- Brazil's recent notification to the WTO of agricultural subsidies for the 2009/10 crop year has raised issues about Brazil’s positions on trade-distorting domestic support policies.
Brazil is considered a developing country, but has become an economic power as a major exporter and agri-food now accounts for 28 percent of GDP. Brazil’s Ambassador to the WTO, Roberto Azevedo, is one of two candidates to become Director General of the WTO. The Brazilian government’s recent notification to the WTO of agricultural subsidies for the 2009/10 crop year has raised issues about Brazil’s positions on trade-distorting domestic support policies.
Total farm support by the Brazilian government as defined by the WTO was valued at $10.0 billion for 2009/10. Almost half of that, $4.91 billion, was in the ‘green box’ considered to be minimally trade distorting and not subject to limits. The largest category was domestic food aid at $1.72 billion. That is typical of many countries, including the U.S. Government holding of food stocks for food security purposes was reported at $653 million. This included $386 million ‘for acquisition of agricultural products from family farming’. There is a proposal at the WTO to greatly expand this category for developing countries. Other major categories in the green box were extension and advisory services at $800 million, infrastructure at $622 million, agrarian reform at $430 million and research at $285 million.
As a developing country, Brazil can have some development programs under ‘special and differential treatment’ that are also exempt from limits. These programs totaled $1.65 billion, most of which was for investment in improving rural structure, acquiring equipment and machinery and animal services at $1.44 billion. Other programs included production credit for low-income or resource-poor farmers, debt rescheduling and input subsidies.
Brazil had $3.48 billion of Aggregate Measures of Support (AMS) in 2009/10 in domestic support that was classified in the ‘amber box’ as trade-distorting subsidies that must be limited and reduced over time. Non-product specific AMS totaled $2.53 billion. Debt rescheduling programs accounted for $1.53 billion of the total AMS and production and marketing credit was another $822 million in AMS. The remaining $176 million was for direct outlays for a risk minimizing agribusiness program. Non-product specific support is considered ‘de minimis’ for developing countries if it is less than 10 percent of the total value of production. Non-specific product support was only 2.47 percent of total value of production of $102 billion.
The remaining amber box AMS was in $950 million of product-specific domestic support. Corn had the highest AMS at $293 million, followed by cotton at $269 million, coffee $137 million, rice $126 million, wheat $75 million, sugar cane $24 million and edible beans $23 million. Developing countries are allowed product-specific AMS up to 10 percent of the value of production of the product before the AMS is considered beyond the de minimis and reportable to the WTO. Cotton was the only crop beyond the limit at 11.5 percent of value of production and its AMS value of $269 million was the only AMS subject to the amber box AMS ceiling of $912 million for trade-distorting domestic support. Sugar’s AMS of $24 million for a production cost equalization program, is an insignificant 0.15 percent of a crop value at $16.0 billion.