GLOBAL SUBSIDIES INITIATIVE
Subsidy WatchIssue 25, July 2008
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Fertilizer subsidies in Malawi: Preparing an exit strategy
By Nelson Nsiku, Lecturer of Economics, The University of Malawi – The Polytechnic
During the 1990s, Malawian farmers experienced a rough transition from government policies that controlled and supported the agricultural sector, such as fertilizer subsidies and price stabilization, to a more liberalized agricultural policy environment. In the wake of this change, prices for staple foods and inputs fluctuated widely, and the majority of smallholder farmers were unable to afford the fertilizer and seed that they desperately needed. This period of economic instability coincided with a Southern-Africa wide drought, resulting in extremely low yields.
Also in this issue:
Analysis
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The Airbus-Boeing WTO Rulings: A Preview
By Simon Lester, www.worldtradelaw.net
In the coming months, we are likely to see a number of news articles on the ongoing WTO disputes over subsidies allegedly given by the U.S. government and EU Member States to the two dominant makers of civil aircraft, Boeing and Airbus.
News
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The fear of inflation causes some countries in Latin American to raise subsidies
Already under pressure due to the ballooning costs of their subsidy policies, many Latin American countries are also threatened by their old nemesis, inflation. Moreover, dealing with one could actually worsen the other.
Countries in Latin America that subsidize energy and food have seen their budgets climb in alarming fashion this year due to soaring international prices for these commodities.
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European Commission launches investigation into U.S. biodiesel subsidies
Heeding complaints by the European biodiesel industry, the European Commission (EC) has launched an inquiry into U.S. biodiesel subsidies which are alleged to have resulted in dumping of U.S. biodiesel into the European market.
At the centre of the controversy is a Volumetric Blenders Tax Credit adopted by the U.S. in 2004 which grants a tax credit of US$ 1 per gallon - or over US$ 300 per ton - of biodiesel blended in the United States.
Studies
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Discussion paper reviews methods for measuring irrigation subsidies
A discussion paper published in June by the GSI aims to encourage the development of an internationally recognized methodology for quantifying irrigation subsidies. To date, a variety of methods have been used to measure subsidies for irrigation. The fact that these methods are not comparable has hampered efforts to discipline subsidies at an international level.*
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OECD chastises Canada over farming policy
The Paris-based Organization for Economic Co-operation and Development (OECD) criticizes a number of Canadian subsidy programmes, but particularly its support to farmers, in a new economic survey. In the last six years Canada has backtracked from earlier moves toward liberalizing its agricultural sector, to the detriment of most Canadian farmers, according to the OECD.
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World Bank recommends approach to analyzing distortions in agricultural markets
A report published by the World Bank adds to the literature on modeling distortions to the agricultural sector by recommending an approach that it claims is better tailored to developing countries.
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New research from Missouri refutes allegations that ethanol mandates save money
A report from a Missouri-based research organization debunks the claim that Missourians are saving money through a state law requiring that retail gasoline contain a minimum of 10% ethanol. The report is in reaction to an assertion by the Missouri Corn Merchandising Association (MCMA), alleging that Missourians will save more than US$ 285 million through the E-10 mandate in 2008, and nearly US$ 2 billion over the following decade.
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