The 2008 Farm Bill and the Doha Agenda

The 2008 Farm Bill and the Doha Agenda

What does the 2008 US Farm Bill mean for Doha?

This article reviews the US Farm Bill, also known as the Food, Conservation and Energy Act of 2008 and asks how the bill might work in relation to the 19th of May draft of the proposed Doha Agreement on Agriculture.

Points highlighted regarding the bill include:

  • it introduces a new optional programme for farmers called the Average Crop Revenue Election, or ACRE, an income insurance programme that is meant to protect farmers against both low yields and price drops
  • the real cost is unpredictable, because the amount actually paid out varies with average annual market prices and crop yields, together with legislative target prices and the historic yield per acre in different regions
  • the likely fall in commodity prices ahead could trigger very large payments to US farmers under ACRE’s provisions

Implications for the Doha negotiations include:

  • in terms of US food aid programmes, the 2008 legislation brings very little reform. President Bush has made several important attempts to reform US food aid but failed to persuade Congress to adopt his reforms
  • regarding export credit guarantees, the 2008 Farm Bill eliminated the GSM-102 programme of long-term export credit. It also removed the one percent cap on loan origination fees in the GSM-102 programme
  • What happens if the new Doha rules require changes to the Farm Bill? The unofficial US Trade Representative (USTR) position in Geneva is that Congress will have to change the laws to accommodate any Doha agreement, but in practice the political outcome would be at best uncertain

The authors conclude that the 2008 Farm Bill indicates that the fundamental structure of US support for agriculture is unchanged: it depends on output and market prices. They assert that the high commodities prices projected during the life of the Farm Bill (2008-2012) are likely to help the US conform to the WTO’s model of domestic support disciplines in the short-term. Yet, it is impossible to predict how the heady mix of speculative investment, higher oil and fertiliser prices, increasing climactic uncertainty and mounting water shortages will affect short-to-medium term prices. These latest developments, they argue, are yet another reminder of the urgent need to re-think agriculture trade policy, both in the US and around the world.

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