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The 2007 US Farm Bill: Implications for Developing Countries

There is no doubt that the OECD farm programs have a significant impact on the structure of world markets, on the volume and direction of trade, and on world prices. A World Bank estimate puts these price impacts at between 10 and 50 percent, depending on the commodity (Table 1). Just as important are the implications that they have on the trade policies of many OECD countries, which find it necessary to protect their farm sectors from competition from other countries even while encouraging other countries to open up their own markets. Johnson (1950) raised this concern six decades ago, but the consequences of these policies have recently become clearer in the context of the Doha Round of negotiations in the World Trade Organization (WTO). The coincidence of a WTO negotiating round, in which agriculture plays a central role, and the debate over the 2007 Farm Bill gives an opportunity to bring US farm policy into line with both domestic and international objectives.