NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

What do shrimp fishermen in Louisiana have in common with cotton farmers in Burkina Faso? Both have suffered serious financial setbacks because of American farm subsidies. And with the breakdown of the Doha Round earlier this week, both will continue to suffer well into the foreseeable future.

Currently America’s federal farm policy ?rewards farmers for the amount of corn they grow, not how they grow it.? What this means is that farmers use extra fertilizer on their crops in order to ensure that they have an abundant harvest. During the spring, when heavy rains pass over the Midwest, this extra fertilizer runs off into the Mississippi River and flows into the Gulf of Mexico. ?The fertilizer has the same effect in the Gulf as it does on the Midwest fields it came from,? National Public Radio reports. ?But instead of giving corn a growth spurt, the nitrogen fuels massive algae blooms that then die and suck all of the oxygen out of the water as they decompose.? This lack of oxygen has created a dead zone thousands of square miles in size, which cannot sustain aquatic life. For shrimp fishermen who depend on sea life for their livelihood, farm subsidies are actually sinking their businesses. As Doug Daigle of the Environmental Protection Agency told NPR, ?if the dead zone continues to grow, it could eventually cause a complete collapse of the Gulf Coast ecosystem. At stake, among other things, is Louisiana’s $2.3-billion fishery.?Now let’s turn to the other side of the world and examine the effects of American farm subsidies in Burkina Faso. According to the Christian Science Monitor, the United States hands out ?$4 billion-plus? annually to producers and exporters of US cotton. (In 2005, the WTO ruled that these subsidies were illegal, but the US has kept them in place while it boggs down the ruling through a labyrinthine appeals process.) In Benin, Burkina Faso, Mali, Togo and Chad, 10 million extremely poor Africans depend on cotton for their livelihood. And sadly, even with increased demand for cotton, their earnings have stagnated and these farmers remain mired in poverty. This is because American farm subsidies grossly deflate the market value of cotton, making it more affordable for manufacturers to buy cotton from American growers. According to these nations, African cotton farmers lose out on more than $1 billion due to deliberate market distortions.

In the United States, there is a myth that an entrepreneurial spirit, or a ?Protestant Ethic,? powers economic achievement. But as shrimp fishermen in Louisiana and cotton farmers in Africa know all too well, you can work hard and still have nothing to show. It is true that innovation and diligence is important, but above all, business is about politics. And in politics, there are winners and there are losers.