Last week I was lucky enough to travel to Washington D.C. to re-release a book that I jointly authored with Andy Stoeckel and Martin van Bueren - called 'Greening Farm Subsidies'. The book, which was jointly backed by the Rural Industries Research and Development Corporation and the World Wide Fund for Nature was released in a seminar hosted by the American Enterprise Institute last Monday (24 November).

In brief, the book outlines the case against farm subsidies based on both economic and environmental grounds. Economists have long understood that farm subsidies were inefficient and inappropriate and have argued for their removal. What is maybe less well understood is that many (Myers and Kent estimate 80%) of farm subsidies are also bad for the environment.

An example. In the United States, sugar producers in Florida are provided with significant government price support (and some handouts). This results in U.S. consumers paying twice the world price for sugar, an inefficient allocation of resources and confectionary producers move to Canada to get access to cheap sugar. In addition to these economic costs, the use of phosphorus in sugar farms has resulted in phosphorus levels in the Florida Everglades some 10 times the appropriate level. This has lead to the reduction in the amount of periphyton, which feeds the microscopic organisims which feed the fish and amphibians. In some areas, the water birds and most other creatures have disappeared.

Farm subsidies are a significant issue. They are largely seen as the reason for the collapse of the World Trade Organisation talks in Cancun in September and are a stumbling block for further trade liberalisation. But more than that they are a domestic issue that should be a concern for all countries of the world (except New Zealand - the only country to have already removed farm subsidies).

For OECD countries, farm subsidies make up 30% of an average farmers income, and around US$600 billion is spent on farm subsidies worldwide each year. That is well in excess of Australia's entire annual GDP. These subsidies play no useful economic role, they harm agricultural exporting countries (largely poor countries) and they are generally harmful to the environment. They need to be reformed urgently.