The Impact of a New WTO Agricultural Agreement ... - Tufts University

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4. But Would it Help Poor Farmers?
A Discussion of Net Buyers and Sellers of Wheat and Maize in Ethiopia
The argument against subsidies is centered on the notion that since the majority of the
world’s poor are farmers, and most of the world’s farmers are poor, then policies that depress
agricultural policies must harm the poor. Advocates for subsidy removal, such as Oxfam and
other international organizations, highlight facts such as: 96% of the world’s farmers live in
developing countries, and in African countries 70-80% of the population is engaged in
agriculture (Oxfam 2002). In African countries, urban areas tend to be wealthier than rural areas,
and the poor are predominantly farmers. Thus, the basic argument is that even if the net welfare
effect for a country is negative, most of the harm would be borne by relatively better-off urban
residents, while rural farmers would benefit from higher cereals prices. However, understanding
the distributional consequences of a cereals price requires more information just determining
which households are cereals farmers. A serious flaw in the anti-subsidies debate is that it
assumes that farmers necessarily benefit from higher prices.
In reality, “producers” and “consumers” are not two distinct groups. An individual or a
household could belong to both groups. Households can buy or sell a certain grain, or they can
engage in both buying and selling. A farming family can find it necessary to buy grain to cover
the household’s food needs. For instance, in Ethiopia, where most rural households mainly
support themselves through farming, most households surveyed report that their crop does not
feed the household for the entire year. 13
Thus, most maize and wheat-growing households are
13 According to the 2000 Welfare Monitoring Survey report, in Ethiopia 54% of households’ crops feed the
household for six months or fewer.