Putting Rich Farmers First.(Cover Story: Who Is the Greenest of Them All?; SPECIAL REPORT)(agricultural subsidy)

With food prices rising, the U.S. congress does just the wrong thing.

The United States scores better than Europe on agricultural subsidies, but it's backsliding quickly.

High food prices have been bad news for consumers, but they have revealed even worse news about the tendencies of government. Soaring crop prices offer a tremendous opportunity for smart reforms and real economic development. In rich countries like Western Europe's and the United States, high prices could, in theory, make it easier to wean farmers from lavish subsidies, plugging holes in the public budget and putting the world's farmers on a more level playing field. That, after all, has been the stated goal of free-market-oriented governments in the United States for many years. Lowering subsidies could also lighten farmers' footprints on the landscape; subsidized and protected farmers usually plow too much land and tread heavily with fertilizers and pesticides. Which makes it all the more surprising that the response of the United States in particular to the food crisis has been to do the opposite of what would be best for the world economy. Over the last month the U.S. Congress has passed new legislation that will heap even more cash on farmers. The bill will extend a program that protects U.S. sugar producers from world competition by guaranteeing that they alone can keep most of the U.S. market. It channels money to a wide range of farmers regardless of whether they need it, and it indexes new subsidies to already high crop prices, which puts the government on the hook for massive payments when prices eventually decline.

This is exactly the kind of thing that the United States has excoriated Europe for doing in the past. Yale's and Columbia's Environmental Performance Index confirms what has been known for years: the European countries are the worst offenders in the lavishing of agricultural subsidies. (The EPI team measured subsidies using a method applied at the World Bank: they look at the difference between the world market price for products and the actual price inside each country.) The richer members of the European Union, such as France, Germany and Britain, have maintained these poor practices because their farm lobbies are strong but also because they are rich. The poorer new EU members, such as Poland, do much better on the EPI's subsidy score because their governments don't have so much money to splash. Although the United States has never had a good record on subsidies, the EPI study shows that U.S. farm programs are not nearly as lavish as Europe's. America, however, is now catching up.

It is not an accident that the latest U.S. farm bill arose in an election year. Despite its huge and unnecessary cost as well as a well-deserved veto by President George W. Bush, the legislation is so popular with politicians keen to earn re-election that it passed by a large enough margin to override the veto. The farm lobby keeps winning because most farm policy is wired according to the age-old lesson in politics: the benefits are channeled to special interests, and the costs are diffused to people who don't notice or can't do much to change the policy. American taxpayers and eaters pay a small part of the total cost, but until recently they didn't notice it. Even worse, farmers in the rest of the world suffer under this policy because they can't sell ...