On Global Food Fights

"Free trade is destroying the lives of rice and corn growers. People in my village earn just $20 a month and use traditional methods ... How can they compete with rich international businesses?"

--Tri-Heru Wardoya, a Sumatran farmer

The Sacred Become Profane

Until 2001, virtually all goods and services crossing national borders dance to the tune set by the world's single governing body of trade relations. That is, all, except for food.

There has always been a tacit agreement among the shapers of the Post-World War II era to leave Agriculture out of "free" trade. Each nation can set tariffs and provide subsidies for local
farmers in order to protect not only the domestic agriculture sector but as a matter of national security. After all, hunger kills just as as guns and ammos do.

In 1994, when the the World Trade Organization (which I fondly call Whores That Offer) was established to enforce trade agreements on goods, services, (including finance) and intellectual property, the need to regulate trade in food products was recognized. The Agreement on Agriculture or AoA was included, although largely set aside. Until 2001, in what has been called the "Doha Round" of WTO talks.

For the first time in the last 60 years, the previously untouched, but perenially controversial trade in Agriculture has captured the world's attention in ways talks on banking secrecy or copyright infringement never had. After all, who cares anything about financial matters or enforcement of intellectual property rights but those whose profit margins are threatened? But WE, all of us, need to eat to survive. More importantly, 2/3 of the world's nations depend heavily on income derived from agriculture export.

Funny enough (or, if you've a serious disposition, absolutely tragic), even those whose agriculture sectors are dwarfed by income from other sources are surprisingly the main opponents in trade talks.

Battle of the Titans

The United States and the European Union are the two largest food exporters in the world, their farmers among the richest.

Considering the not significant income derived from food trade (as compared to manufactured exports or services), one wonders why in heavens they bother to point fingers at each other as to whom is the greater Food Bully.

In a time where "Free Trade" is as sacred as the Koran and Holy Bible, these two are the greatest violators of their own trade principles.

Europe's Common Agricultural Policy (CAP)

The CAP played a significant role in forging the European Community after the devastation of the Second World War. The introduction of agriculture in the common economic policy was a necessary step to integrate the economies of the member states. It was also seen as an integrating mechanism and social welfare policy for farmers who were most susceptible to fascist tendencies during the war period.

In the last half a century the CAP protected a progressively shrinking number of pampered farmers from external competition by erecting tariffs. Small land-owners eking away a living were pressured to give way to technologically advanced farming industries.

While many Europeans themselves see the unfair advantage given to these companies as well as the tax burden they themselves must shoulder, CAP remains essential to keeping the peace in an "Enlarged" EU. The 15 new members from Central and Eastern Europe are primarily agriculture producers and they expect their own farmers to receive subsidies and protection as their Western counteparts. For these reasons and for many more I have absolutely no desire to explain in excruciatingly technical detail, the CAP is never going away.

The perenially overblown CAP budget will continue to burst the European Commission's belt at the seams. The Commission allocates roughly 40 billion Euros which will actually increase to 50 billion in eight years (EU Commission CAP Mid-term Review 2003).

Despite the EU's claims to the contrary, and despite internal calls for reform, CAP remains a thorn on European taxpayers' side and an incontrovertible fortress designed to keep Third World produce at bay.

The US Farm Bill

On the other side of the Atlantic, the Farm Security and Rural Investment Act of 2002 (Farm Bill) has been criticized by the EU as an even more "trade-distorting" (meaning in violation of the Doha principle of abolishing subsidies). One mechanism of the new Farm Bill is the Market Access Promotion Program which allocates $200 million to expand markets overseas. It has been suggested that it was no coincidence that George W. Bush, a Republican, whose traditional electoral bastions have been the agriculture-producing states in the Heartland, had promised this bill to US farmers during his campaign.

The US Farm Bill minces no words in its policy agenda, at least until its expiry on 2008. Trade expansion is critical. Markets outside of the country must be found.

Most growth in food demand will be in developing countries, where populations are also seen to increase. Prospective importing countries (in order) are China, India, Indonesia, Mexico, Pakistan, Russia, Thailand, Philippines, Korea, Turkey and Egypt. The EU and the Cairns Group, a bargaining body of Third World countries and of which the Philippines is a member, have been identified as the US’ main competitors. The trade agenda for the 21st century: continue liberalization of trade in agriculture, enhance competitiveness, ensure proper tools and an maintain an ambitious global marketing strategy.

The Food Fight Could Turn Ugly

What is clear among economists, NGOs and academics is that the AoA divides winners and losers among industrialized and developing countries.

It is said that should “complete” liberalization and removal of tariffs, domestic support and export subsidies take place, these will trigger an increase in agricultural commodity prices in the world market, making farming more profitable for all.

This will seem a miracle, however, since the trend in the last few decades has seen the drop of almost all agricultural goods. It takes more and more bananas to buy those Nokia units. One must plant more and more coffee to purchase non-fat caramel macchiattos.

The “projected” rise in prices should induce countries to better improve their output for export. Certainly the Philippines, whose agricultural goods only comprise 6% of total exports but employs 40% of our labor, might be enjoined to reform domestic policies in order to offensively; take advantage of these forecasts and defensively; shelter our own rural producers and laborers and domestic consumers.

Some are doubtful however that the should the AoA come in full effect, any substantial rise in prices will actually occur. Some are even doubtful that AoA compliance will actually reduce domestic subsidies of both US and EU.

Complete liberalization of trade in agriculture will also mean that those who are the clear dominant producers will have an advantage over countries like the Philippines in a free-for-all competition for markets world-wide.

No doubt, both the US and EU will continue to balance domestic farm interests and their commitments to the WTO, placating the thousands of protesters (including those that strip and jump into icy cold seas) with jargon-filled and booby-trapped compromises.

The implications seem rather daunting and from the Philippine point of view, the room for maneuver seems miniscule. Meanwhile our government officials, pun intended, are still "sleeping in the kangkungan."