Free trade and farm fallacies: From the Uruguay round to the world food summit

Ecologist

Volumn 26, Issue 6, 1996, Pages 244-255

  Watkins, Kevin ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

AGRICULTURAL IMPACT; FOOD INSECURITY; FOOD SECURITY; FREE TRADE; TRADE AGREEMENT; URUGUAY ROUND;

EID: 0030323662     PISSN: 02613131     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (13)

1. Galbraith, J.K., "Agricultural Policy: Ideology, Theology and Reality Over the Years", mimeo of speech to National Governor's Conference, Harvard University, Cambridge, MA, 27 July 1987.
2. FAO, International Trade and Food Security, FAO, Rome, 1996.
3. In an impressively compiled table appended to a food security background paper for the Summit, the FAO's secretariat shows the correlation between per capita staple food production and net imports of cereals. Out of 93 countries examined, 51 registered a decline in per capita food production over the period 1972-1992. In most of them, food imports were considerably in excess of the 22 kilogrammes per person average for developing countries. Thus in Peru, to take one example, net imports accounted for 74 kilogrammes per person, compensating for a decline of almost one per cent per year in local production. The lesson drawn is that imports have played a vital role in filling the gap between production and demand.
4. FAO, op. cit. 2.
5. Overall, the industrialized countries transferred around $182 billion in the form of agricultural subsidies to producers who represent less than five per cent of their combined population. That sum was equivalent to more than 40 per cent of the value of agricultural output. Of this total, the United States accounted for $19 billion, and the 15 countries of the EU $74 billion. Expressed differently, each full-time farmer in the United States received a subsidy of $14,000.
6. The General Agreement on Tariffs and Trade (GATT), set up after the Second World War, is the main international forum for laying down the rules and standards governing imports and exports between countries. These rules and their scope have been revised through periodic negotiations, the most recent being the Uruguay Round, named after the country where talks were launched in September 1986. This was the first time that agriculture had been included in the GATT negotiations. Previously, the experience of the Dust Bowl in the United States and post-war hunger in Europe had persuaded policymakers of the need to protect farmers and to develop self-sufficient food systems. By the 1970s and 1980s, however, competition between the US and EU in world markets, where both were off-loading their surpluses, prompted the US in particular to push for liberalization in international agricultural trade through GATT as a means of restricting its rival.
7. The minimum import provisions have important implications for food security. Although the predominant staple in traditional diets is exempt from the requirements, several countries have more than one staple crop. For example, both rice and maize are food staples in the Philippines, as are beans and maize for much of Central America. In addition, imports of a crop such as wheat are competitive with other staples. The result is likely to be the undermining of staple food production.
8. According to the World Bank, the Philippines has the lowest ratio of public expenditure for agriculture to total expenditure and to GDP of any ASEAN country. See World Bank, Philippines Poverty Assessment: A Strategy to Fight Poverty, World Bank, Washington, DC, 1995.
9. Around half of the population in the Cagayan Valley and Central Mindanao, the main maize producing areas of the Philippines, live below the poverty line and are dependent upon maize for household food needs and for income.
10. Cited in Cargill Bulletin, Vol. 3, February 1995.
11. Indeed, for the US, gaining a greater share of the Asian market is now a major priority. It is not difficult to see why. The region currently accounts for about 40 per cent of US farm exports, and a positive trade balance of $29 billion. This is a region where overall US trade balance is massively in the red. Moreover, the scope for expansion is enormous. According to the USDA's Foreign Agricultural Service (FAS), wheat consumption in the South-East Asian region has increased by 50 per cent in the 1990s to over eight million tons. Between 1990 and 1994, the region's utilization of wheat rose by over 600,000 tons a year, and since virtually no wheat is produced in the region, any increase in future demand will automatically translate into increased imports. Regional production of rice and other coarse grains has increased at less than half the rate of consumption, with wheat imports filling the gap. By the end of the decade, the FAS forecasts annual wheat imports of 12 million tons and maize imports of 8 million tons - respectively a doubling and threefold increase. As the FAO concludes: "this region has the potential to become one of the primary forces driving import demand in the grain trade." Some of the national trends are particularly striking. In Indonesia, the region's largest cereals market, wheat imports were running at an average level of 2.5 million tons between 1990-1994. By 1998, they are projected to rise to seven million tons, largely under the impetus of a pot noodle industry which is one of the fastest growing food businesses in the world. In the Philippines, increased wheat consumption has been driven by consumer preferences for bread, rolls and noodles. Today, wheat consumption is around 80 pounds per capita, compared to 30 pounds in the 1970s. According to the most recent national nutrition survey, the average intake of grams provided by rice has fallen by five per cent since 1993, while per capita production of rice and maize has stagnated. In Malaysia, wheat imports have grown by over one third to around one million tons. Vietnam, one of the region's fastest growing economies and last untapped markets, is being closely examined by US commercial milling and wheat export interests.
12. US Department of Agriculture, Asia and the Pacific Rim, WRS series, 1994.
13. US Embassy Manila, Agricultural Situation Report, August 1995.