The trade policies of the United States have been criticised globally for market-distorting subsidies which affect the lives of people in developing countries. But, at the same time, there is the perception that the US supports these measures to safeguard the interest of its farmers. To what extent are farmers actually benefiting?
US farmers are not benefiting from US agriculture and trade policies. The 1996 Farm Bill dismantled key programmes with the goal of increasing competition and new markets for farmers. It removed the price floors and farmer set-asides that ensured a fair price for farmers and discouraged overproduction. The result is that the US has fewer farmers, larger farms, as much land in production as before, and similar, even increasing, levels of production.
The big commodity groups have benefited from low world commodity prices and are also the ones lobbying for the billions of dollars in subsidies that have allowed them to gain control over the grain and meat market and dumping on the global market.
Meanwhile, US farmers have struggled to make ends meet in a declining rural economy in the US and in the face of an increasingly consolidated food system.
The negotiations at the World Trade Organisation have been widely criticised for serving corporate interests with rules and agreements being tailored to suit the market and create unfair competition. Most negotiations are carried out by ministers of various countries. How do the interests of agribusiness companies influence the framing of rules?
Representatives from agribusiness companies have incredible access to and control of policymakers, particularly in the US. It is widely known that US agribusiness helped write the Agreement on Agriculture during the Uruguay Round.
In the US, agribusiness representatives meet regularly with the US trade representative. There is also a revolving door between the private sector and government. Many former executives and board members of different agribusiness groups hold posts in the US Department of Agriculture and other US Cabinet posts.
The Centre for Responsive Politics reports that more than $ 809 million was spent by agribusiness to lobby Congress between 1998 and 2006. They also report that in the 2006 election cycle, agribusiness contributed more than $ 44 million to congressional candidates, the top recipients being those in the House and Senate agriculture committees. It is not surprising that many retiring congressional representatives are hired by the private sector when they leave office.
The blurred relationship between agribusiness and policymakers in the US has favoured new markets for agribusiness groups at the expense of farmers and consumers around the world.
The current experience from trade reveals that small farmers in developing countries have not been able to make gains from trade on account of not having the capacity to tap the global value chain formed by agribusiness firms. Can the big multinational and transnational corporations (MNCs and TNCs) operating globally provide the right market and trade flows to bridge the inequities of trade?
It is not in the interest of MNCs and TNCs to bridge the inequities of trade. Their interest is to make a profit, and they do this by squeezing small farmers on both sides of the production chain who have fewer companies to buy farm inputs from and fewer companies to whom they can sell. In some cases, the same companies dominate multiple layers of the production chain. Farmers are left without choices, bearing most of the burden in terms of meeting the standards required by the agribusiness corporations in their production chain, as well as the cost.
The alternative approach is to focus on policies that will invigorate the local economy and support food security goals. To do this, emphasis must be on infrastructure, local ownership, diverse markets and distribution mechanisms.
It has been widely said that concentrated market power is an important reason for the erosion of farm income in many national economies. But do these companies have a similar influence at the international level?
Market power is definitely influencing our food system at the global level and has been for some time. Seed companies such as Monsanto have been criticised for their investment, particularly in genetically modified crops that have been sold throughout the world. Agricultural input companies such as Cargill and ADM have been criticised for squeezing national markets, dumping grain at below the cost of production, and overproducing grain to support factory farms.
We are now seeing that food retailers (mainly from the European Union and the US) have found an emerging market in supermarkets and processed foods. These companies have their own infrastructure and market control that is both horizontal and vertical, depending on the company. Local producers and processors around the world are finding they are simply unable to compete with these mega companies.
One of the most important distortions in international trade is through the subsidies pumped in by developed countries. Can regulating the activities of agribusiness firms mitigate the influence of the level of distortions in international trade?
It should be noted that subsidies are a symptom of a broken system of agriculture, not the cause. As price controls and other national policy instruments such as food reserves, cooperatives and state marketing boards have been removed to pave the way for so-called ‘free trade', the ability of governments to mitigate distortion has also been eroded. In this context, governments must have policy space to support fair agriculture and trade policies, including regulating agribusiness.
Because the drivers of agribusiness are largely based in the EU and the US, strengthening and enforcing anti-trust law in the North would have a profound and positive impact on the rest of the world.
What policies do you feel are needed to usher in a fair agricultural and trade policy in the context of increased investments and the role of TNCs and MNCs in the agricultural markets of developing countries?
We need a variety of tools, some of which I have referred to earlier.
At the national level, these include fair prices for farmers. These also include trade rules that allow for state marketing boards, cooperatives, subsidies for national agricultural priorities, mandatory price and cost reporting, fairness standards for agricultural contracts, and protection for agricultural producers and workers, among others. While some of these policy tools may be more appropriate in one country over another, the fact is that the only way to usher in fair agricultural and trade policy is to strengthen public oversight of policies. Governments must have the policy space to be able to regulate the involvement of TNCs and MNCs in their national contexts, and activists must hold their governments accountable to do so.
At the global level, we need increased monitoring of international commodity markets to reverse price volatility. We also need an international review mechanism to address proposed mergers and acquisitions among agribusiness firms. We need to ban dumping. And we need to ensure trade and investment rules that support rather than hinder food security, rural livelihoods and farmers' rights.
(Alexandra Spieldoch may be contacted at aspieldoch@iatp.org) |
