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Isn’t it ironic?

Rapeseed and sunflower farmers in the EU receive billions of euro dollars in subsidies to plant their crops. Over in Malaysia, oil palm planters have to pay a slew of taxes imposed by both the federal and state governments.

Oilseed farmers in the EU, rivals of oil palm farmers in Malaysia and Indonesia, are big recipients of Common Agricultural Policy (CAP) subsidies. The CAP acts like a tariff wall around the EU by blocking agricultural imports out while keeping prices higher in the EU.

Here’s a video of a British lawmaker explaining how the CAP is selfish in protecting farmers in the EU. At the same time, it is enabling EU-based multi-national food companies to price their way out of competition at grocery shelves of developing nations. The EU’s CAP subsidies is hurting farmers in developing nations, like Malaysia and Indonesia.

Below is a 6-minute documentary by Jack Thurston, co-founder of http://farmsubsidy.openspending.org/ , led by a group of European journalists, bent on identifying and tracking the amount of CAP subsidies amount going to “farmers”.

Among financial institutions and food giants, classified as “farmers” (because they are landowners) and receiving direct subsidy amounting to hundreds of million euros under the CAP are Rabobank, ING Bank, HSBC Bank, Deutsche Bank, Nestle, Unilever, Danone and Friesland Foods.

The EU farm subsidies is not limited to European multi-nationals. American multi-nationals like Cargill and Kraft Foods, which own land in the EU, also receive hundreds of millions euros in subsidies under the CAP.

Malaysia’s policy makers must open their eyes wide and lend their ears to the palm oil trading community. Similarly, oil palm planters need to unite and adapt to the fast-changing world of ruthless vegetable oil politics if they want to remain relevant in this market.

It’s pertinent for oil palm planters to be aware that the EU’s farm and export subsidies to their farmers and food companies and the EU government’s FTA negotiation with developing nations are actually two sides of the same coin.

Over in the USA, landowners also receive big amounts of subsidies from taxpayers money. Between 1995 and 2012, the USA government paid out US$11.3 million in taxpayer-funded farm subsidies to 50 billionaires or farm businesses. Direct payments, promoted as a safety net for working farm and ranch families, are in reality annual cash giveaways to the most profitable businesses in farm country. Recent amendments to the Farm Bill being weighed by USA lawmakers could well increase their take.

According to Environmental Working Group (EWG’s) analysis at http://www.ewg.org/research/forbes-400-subsidy-recipients-1995-2012  more than 40 billionaires own properties that grow crops that are likely to be insured through the federal crop insurance programme, include corn, soybeans, wheat, cotton and sorghum. 
From 1995 to 2012, these five crops account for nearly US$44 billion in premium subsidies – about 82 per cent of total crop insurance subsidies and more than two-thirds of all agricultural land enrolled in the crop insurance program.
Early this month, the USA farm bill negotiators, had been warned, in enlarging these crop insurance subsidies might also run afoul of international trade agreements, which place a US$19.1 billion annual limit on trade-distorting subsidies.
With the cost of these trade distorting or “amber box” subsidies potentially topping US$20 billion a year, the World Trade Organization (WTO) may no longer consider USA crop insurance subsidies to be de minimis, inviting a legal challenge from trading partners in developing Asia.

Every year, Malaysia exports some US$20 billion worth of palm oil to more than 150 countries. In negotiating the terms of  the Trans-Pacific Partnership (TPPA) Agreement  with the USA — the lead negotiator of  TPPA, it is the right thing to do for Malaysia’s Ministry of International Trade and Industry policymakers to include the interests of oil palm planters and exporters. Keen attention must be focused on dismantling trade distortion measures oil palm planters face. After all, Malaysian government officials must remember that their salaries are derived from hard-pressed taxpayers’ money …. and Malaysia’s biggest taxpayers, on a sectoral capita basis, are the oil palm planters.

  1. Hokkien Lang
    January 17, 2014 at 11:19 pm

    Bloody two-faced ANG MOH…. it is really very disgraceful for the EU government to feign innocence when all along they are mired deep in their bullying tactics against oil palm farmers and Asian food companies here!

  2. Pekebun Kecil
    January 18, 2014 at 9:27 am

    Hokkien Lang …. multi-nationals like Nestle and Unilever are on the same boat as the rapeseed and sunflower farmers in their home country la because they receive berjuta-juta subsidy from the EU government. These multi-nationals are very good at “sandiwara” whenever the NGOs “attack” them on the Internet. These domineering multi-nationals are actually wolves (just like rapeseed and sunflower farmers hiding in the shadows) in innocent sheep clothing pretending to be scared whenever the NGO dogs “bark” at them. Over here, I don't get any subsidy at all because I choose to plant oil palms and not padi. I have to pay so many kinds of taxes to the government every time I sell my fruits to the miller!!! Is the government listening to the plight of smallholders like me?

  3. cleverboy
    February 2, 2014 at 2:46 pm

    In WTO terminology, subsidies in general are identified by “boxes” which are given the colours of traffic lights: green (permitted), amber (slow down — i.e. be reduced), red (forbidden). In agriculture, things are complicated. The Agriculture Agreement has no red box, although domestic support exceeding the reduction commitment levels in the amber box is prohibited; and there is a blue box for subsidies that are tied to programmes that limit production. There are also exemptions for developing countries (sometimes called an “Special & Differential box”).

  4. Curious75
    February 5, 2014 at 11:33 pm

    Malaysia's palm oil industry have to work so hard to earn US$20 billion in palm oil exports. The USA government doles out US$20 billion taxpayers' money as subsidies to its farm landowners. See the difference between developing country and developed country?

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