Transcript - March 9, 2007
BRANCACCIO: Welcome to NOW.
We like to think that our taxes help make the world a better place - but consider the impact of the billions of dollars paid each year to the 30,000 farmers who grow cotton in the United States. In return, those farmers grow lots of cotton - so much that tens of millions of small cotton farmers in the developing world are facing ruin. This year Congress takes up a new Farm Bill, and there's a surprise - the Bush administration is pushing to cut back on those fat subsidies to American farmers.
Na Eng produced our report.
BRANCACCIO: On a vast estate in the Texas panhandle, Roger Kitten maneuvers his cotton stripper over long stretches of neat irrigated cotton rows.
Across the world, another man, Tahirou Konate, bends down in his fields in West Africa, picking the old fashioned way...
These men are competitors in the global cotton market. Both are trying to survive and to support their families with cotton prices that have spiraled downward. But they are on opposing sides in a fierce trade battle pitting the world's superpower against the world's underclass. On one side of the battle: America's 30,000 cotton farmers who get government subsidies; on the other side: tens of millions of cotton farmers in the developing world who say those American subsidies are wiping them out.
and now, the battle is coming to a head in Washington D.C. Democrats and Republicans alike have long supported generous subsidies. But this year, the Bush administration is taking on the farm lobby. It has proposed a renovation of the current farm policy to help along new global trade agreements to open the door for more U.S. exports and a stronger economy.
JOHANNS: I always say to farmers, "Cuss it, discuss it, the reality you are farming in an international economy."
BRANCACCIO: It is America's role in this international economy that is affecting the lives of so many, including the cotton farmers in the west African country of Burkina Faso...see it there, above Ghana and under Mali. You may have learned it as Upper Volta in school.
Burkina Faso has one of the lowest living standards on this planet. The people in this village, Padema, live without much: and many simply don't have enough to eat.
But Burkina Faso is also a country where cotton is king.
KONATE: The harvest looks good this year. We thank God that we had good rain. And the crops look really healthy.
BRANCACCIO: On this day, Tahirou Konate sets out to harvest his cotton fields...
Konate and his neighbors hand pick cotton much like it was done in our country 100 years ago . They don't have any fancy machines for the job. Look at his hands... not even a pair of work gloves.
Everyone pitches in—his kids are in the fields too. The toddlers play. But 12-year old Zalissa and her sisters work hard under the ferocious sun.
ZALISSA KONATE: When I wake up in the morning, I go to fetch water, and then I cook for the family. And then I spend the day picking cotton.
BRANCACCIO: For the communities in this impoverished region of West Africa, cotton forms the backbone of the economy. When the world price of cotton was high, it spurred economic growth and development here. Burkina Faso depends on cotton for sixty percent of its export revenues.
KONATE: We used to call cotton white gold because it was the only thing we could grow to generate income. But we can't call it that anymore.
BRANCACCIO: With prices on the decline, African farmers have been earning less each year for their crops.
Even without the latest farm technology, the growers here produce high quality cotton - it's a long fiber known for its resilience and bright shade. But Konate's not sure what difference this quality makes in how much cash he's able to pocket.
KONATE: Prices go down so quickly every year that I can't even tell you how much I'm going to earn this year. With these low prices, it's as if we're giving our cotton away.
BRANCACCIO: Cotton has flooded the world market more than the textile industry really needs. And we all know what happens when supply outstrips demand. Economists say one major reason for the glut in the cotton market: farm subsidies in America and in Europe.
Enter the anti-poverty group Oxfam.
Raymond Offenheiser is president of Oxfam America.
OFFENHEISER: The problem that we're facing right at this minute is that African farmers can't wait. They're facing questions of survival.
For an African farmer—to go out of business is to face starvation. So, we need to make some major adjustments in these—subsidies right now to unlock the potential for trade for African farmers—to enable them actually to harness the benefits of an international trading system for their nations.
BRANCACCIO: It works like this:
To help farmers when there are low prices, the United States, as well as other countries, gives out taxpayer money to their farmers.
The government cash encourages those farmers to grow more and more cotton.
That can drive prices down even further...
And when prices go down, farmers everywhere take a hit. For the farmers in Africa—already living at the edge—the effect of this is devastating.
KONATE: We are suffering terribly here. People in my community can barely afford the basics of life. We can't even afford to send our kids to school or pay for medicine when we get sick. Just try to imagine what it would be like if someone in your family fell ill, and there was nothing you could do for them.
BRANCACCIO: Farmers from poor countries are not taking this lying down. They've been protesting around the globe. And they've gone to the World Trade Organization to demand the U.S. get rid of its billions of dollars of farm subsidies. The U.S. has resisted. But the developing world has kept at the issue. Now, the battle over farm subsidies has gummed up the efforts of wider global trade negotiations.
VIDEO CLIP: "We will not be a party to any consensus that does not recognize our right to grow and trade and survive in this world economy."
BRANCACCIO: There's the African perspective on this and there's the American one. Cotton farmers only make up a small portion of the overall U.S. economy. But America is still the largest exporter of cotton in the world. What happens to cotton in the U.S. has a huge effect on the market everywhere.
And let's be perfectly clear. If there's a villain in this cotton story, it's not the American farmer. Near Lubbock, Texas, cotton grower Roger Kitten worries that a way of life his family has known for generations is being threatened.
KITTEN: We don't know anything else. I mean, our great grandpa, our grandpa, my daddy, me, my kids, that's all we've ever done is farmed. I mean it's a way of life. It's our livelihood here.
BRANCACCIO: Kitten and his sons share 7,000 acres of land. The kittens get a government check for hundreds of thousands of dollars every year. That money goes to support not just Roger, but also the families of his children.
Roger's son, Jeffrey, explains that the money goes to cover the high expense of operating a modern farm. That cotton stripper you're seeing them driving... that one rig cost the kittens about 160,000 dollars.
JEFFREY KITTEN: I think the perception of the whole farm program or farm subsidies, is that that farmers are getting a hand out. And that, and that a lot of us are getting rich. You know, people see the big numbers, how many dollars we're getting. But they don't really understand what it's really all about. They don't realize what we spend out here to grow a crop.
BRANCACCIO: Economists say without taxpayer help, some of America's cotton growers would lose money growing cotton. But with price guarantees and a wide variety of other payment programs, the farmers have this layer of protection. You, the taxpayer, make up the difference between many cotton farmers operating at a profit or at a loss.
Collin Peterson, a Democrat, chairs the House Committee on Agriculture. He says the government can't just pull the rug from underneath farmers who have made big financial investments.
PETERSON: You've gotta give them time to transition out of this. What do you do with a guy that's got $3 million invested in equipment—for cotton?
BRANCACCIO: An American farmer.
PETERSON: Yes. And he—he didn't do anything wrong. He used to sell this to somebody in the United States. And all of a sudden the market changed. And now he's being told that his investment is worthless. And—is that fair?
BRANCACCIO: Roger Kitten says he wouldn't be able to get by without that help, and neither could the rural communities that are not exactly living large out here.
KITTEN: If this safety net goes away and we have to just go to the rural market, we're sunk. We're... we won't be able to make it. And I hate to—I would hate to see that. Because this whole rural economy out here is based on the farmers out here. And there's a lot of these small towns that are dying because, already because of, there's not much margin in growing cotton or any crop anymore.
BRANCACCIO: But the subsidies are controversial even among farmers. That's in part because certain crops, like cotton, but also corn, rice, soybeans and wheat, get government subsidies, but many others - like fruits and vegetables—do not. And critics argue the government money goes primarily to America's larger commercial producers instead of small family farmers.
OFFENHESIER: So, what we're looking at here is a situation where a tiny sliver of American farmers are receiving an enormous benefit at the taxpayers' expense. It's a—basically, a corporate welfare program for very, very large American agriculturists.
BRANCACCIO: In fact, according to the department of agriculture, almost sixty percent of American farmers do not receive any subsidy money. Among those who do—Cargill, the largest agricultural business in this country. Over a ten year period, Cargill got $155 million of taxpayer money in cotton subsidies alone... another big winner: Allenberg cotton, owned by a multi-billion dollar French conglomerate. That company received 186 million dollars.
This money, this subsidy was originally created during the depression as a way of it helping the American family farms survive the hard times, get through the dust bowl period... And what's happened is we've turned the New Deal into the raw deal benefiting a very, very small group of big producers in American agriculture. Most Americans think this program is intended to save the family farm. In fact, it's actually killing the American family farm.
BRANCACCIO: But, it's money from the government to a farm. How can it hurt them?
OFFENHEISER: Well, basically, what's happening is these large farmers are receiving, in some cases, almost a million dollars in subsidies. And what's—they're using that money to buy new land. It's driving up prices for land in rural areas. It's driving up the tax rates. And it's taking the smaller farmer and driving him off the land and making—and making him—unable to produce.
BRANCACCIO: And that's exactly what worries small cotton grower Ken Galloway. His family broke ground here in west Texas at the turn of the last century. Now, he's afraid of getting squeezed out by larger producers.
GALLAWAY: The way agriculture's going today is we're seeing bigger—bigger farms and fewer farms. and—I just think, when we get to the—the point where there's—two or three huge companies, and that's what'll get to in—in 50 years, controlling all of agriculture, that's not gonna be good.
BRANCACCIO: And Galloway doesn't like the cotton industry's dependence on government support. Even though he collects 30-40 thousand dollars a year in subsidies himself, he's not happy about taking what he sees as a government handout.
GALLOWAY: Subsidies are not good for anybody. They're really not... The farmers sitting there having to rely on someone else to give his profit? Is that a place where you really want to be? Relying on the government every month for a check? That's not where I want to be. It's a lot of tax money goin' to, basically—keep a lot of the rest of the world poor.
BRANCACCIO: For growers big and small —change may be on the horizon. The Farm Bill and its huge subsidy program is up for renewal ... the Bush administration has just submitted its proposal for this massive 100-billion dollar piece of legislation. In a reversal, the administration is now ready to scale back some subsidy payments.
JOHANNS: We have a proposal on payment limits that would end our commodity program subsidies to producers who are among the top 2.3 percent of Americans who file federal tax returns.
BRANCACCIO: Agriculture Secretary Mike Johanns wants to eliminate payments to the country's top farmers, those who make more than 200,000 dollars a year. He also proposes to close some loopholes, as well as adjust the payment formula so that it would effectively reduce some benefits to cotton growers.
Anti-poverty groups are guardedly optimistic —saying his proposal could eventually help raise cotton prices.
OFFENHEISER: As is often the case with legislation, the devil is in the details.
BRANCACCIO: Offenheiser will be watching the process closely in the coming months as congress draws up a bill.
But many members of Congress sitting on the agricultural committees, including Chairman Peterson, disagree with the administration's proposal. And they have little patience for the international criticism of American subsidies.
PETERSON: We—from a national security standpoint, think that we should—produce our food and our fiber—in the United States and not become dependent on foreign countries.
I would rather pass a Farm Bill based on the reality of the situation in the United States right now—as it affects farmers.
BRANCACCIO: And as for those African farmers - Congressman Peterson argues that they're losing much more to middlemen in their own countries, sometimes their own governments, than what they're losing from subsidies in America. He says modernizing African agriculture and reforming their system would be a better way for poor farmers to see more in their pockets.
BRANCACCIO: In some of these developing countries, they don't just get the world market price is what you're saying.
PETERSON: The reality is, from what I can see of the situation, that it's—it's a problem right there within his own country. And I—I feel sorry—you know, I would like to help them. But getting rid of our cotton program is not gonna solve their problem.
BRANCACCIO: With the low rainfall in the Texas panhandle, Roger Kitten says it's not that easy to find alternatives to growing cotton.
KITTEN: We grow cotton out here. And when we say we're gonna grow cotton, we cannot plant fruits or vegetables. We can't plant those types of crops.
BRANCACCIO: Kitten would rather be selling his crops for a decent price on the market. But until he can do that, he does not want to see the subsidy program changed in any way. Depending on how much the subsidies are cut, he's afraid his world could turn upside down.
KITTEN: We're kinda farmers at heart... and we, we just don't want to let it go. I think it would kind of be a slur to my grandparents that it - if I didn't try hard to keep-keep this farmin' situation going.
BRANCACCIO: Other American farmers see themselves more connected to the farmers in Africa. Ken Galloway has spoken out on the issue, which eventually took him and other American farmers on a goodwill trip to West Africa.
GALLOWAY: I saw men, women and children, all day, bent over working all day long hard physical labor, to—to not to get wealthy but just to get by.
And—I felt a real strong kinship, because these were people who were working the land just like I do, growing crops, struggling to make a living to provide for their family. And that impacted me deeply.
BRANCACCIO: Back in Padema... some of the growers have started bringing in their harvest... donkey carts loaded with cotton lurch forward on the dirt paths ...
The farmers here say they too have no other choice but to keep growing cotton...
KONATE: I can't imagine my life without cotton; it would be a catastrophe. If there were no sale of cotton, we would need something to replace it, then there would be no problem. But I simply can't see cotton being replaced successfully here.
BRANCACCIO: In a landlocked country with few other natural resources and fickle clouds - Burkina Faso's economy is likely to be tied to cotton for a long time to come...
While Zalissa and her two sisters stay behind to work in the fields, some of her brothers and sisters are lucky enough to be inside a classroom...
On this day, the school fees are due... Konate goes to pay the bill. It costs just four dollars a year for each child to attend school in this village...yet Konate can not afford to send all of his kids to school. Indeed, half of Burkina Faso's children never get a shot at an education.
Konate says he hopes Americans will understand that the folks here are fighting for their lives.
KENATE: This is definitely a matter of life or death for us. In some ways, it's even worse than death because death is something that happens to all of us. But this situation we find ourselves in is worse because it is killing us slowly, just a little bit each day.
BRANCACCIO: In the coming months, the world will be watching to see whether congress will trim some of the billions of dollars of cotton subsidies... most economists agree it would give West African farmers a much better chance to earn a decent living from their hard labor.
BRANCACCIO: When we're looking through all the many calculations about what a difference it would make if you were able to remove these subsidies. The World Bank looked at this and thought getting rid of the cotton subsidy in the United States might boost the price for cotton ten, 15 percent. That might mean $40 or $50 extra a year for a farmer in someplace in West Africa. Is that a significant amount of money?
OFFENHEISER: Most of these farm families are living on a dollar a day. If you're living on a dollar a day and there's an increase in price—even marginal increase in price, it might increase your income. That is extremely important. It's gigantic for a farmer in West Africa. The significance of that is that you might be able to put your daughters in school again.
You might be able to feed your family and assure their nutrition. You might be able to have a well built in your village. You might—at the end of the day be able to live a more dignified life.
BRANCACCIO: Tune in next week on NOW for An extraordinary interview with Bill George - a former Fortune 500 chairman and CEO—on what's broken with capitalism and how to fix it.
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And that's it for NOW. I'm David Brancaccio. We'll see you next week.