8 March 2004

Brazil: The new breadbasket

The alarm is being sounded not only by farmers, but by economists and policymakers who recognize the importance of the U.S. farm economy to the nation as a whole.

Low prices at the farm gate mean higher taxpayer subsidies from Washington, D.C.

While rising world food production also means lower consumer prices in the supermarket, the shadow of Brazilian competition is just beginning to be felt in rural America, particularly Minnesota, the nation's seventh-largest exporter of farm goods.

As Brazil gobbles up more of the global export market, some worry that it could become to farming what China is becoming to low-cost manufacturing, and what India is becoming to offshore information technology.

'Brazil is the 800-pound gorilla of farming,' said U.S. Sen. Norm Coleman, who has joined a procession of Minnesota officials to Brazil in recent months. 'From the perspective of agriculture, they're the competition.'

I'd ask for bets that the US will shift the terms of trade against Brazilian farming (as they have against Australian farming) as soon as they identify the threat. US expenditure on agricultural subsidies (untouched by the free trade agreement) now stands at US$180 billion.

Free trade seems to apply only to rich country exports.

No comments: