Every day, American farmers are exhorted by commodity groups and farm organizations to support free trade. We are told that exports are our salvation -- our best hope for better prices -- since our domestic market is "mature" and little growth in usage for our products can be expected at home.
As failure of the World Trade Organization (WTO) meeting in Seattle this past winter highlighted, however, free trade is not universally welcomed and applauded. Indeed, free trade is not a blessing to all. In some cases, farmers are the ones who are hurt.
There seems to be universal confusion among leaders in our farm sector regarding the reasons why the Seattle WTO meeting failed. The general press, for example, blamed the failure on labor unions, environmentalists, and other extreme activists. True, several hundred demonstrators got out of hand in their confrontation with the police and did considerable property damage during the Seattle talks. These unlawful acts, which should not be condoned, received major emphasis in the press, but there is more to the story. It is easy to see how even well-meaning groups can be misled, given the portrayal of the events at the meeting by the general media. But we all should do our homework before placing blame.
The official WTO delegates in Seattle represented 135 nations in the world. There was enough genuine opposition among the delegates to result in a complete failure of agreement in the trade talks. In addition, there were nearly 45,000 people there besides the registered delegates. These people participated peacefully in seminars, workshops and strategy sessions to voice their opposition to policies of the WTO. Fierce opposition from outside the official meeting came from both rich and poor nations, but mostly from developing and Third World countries from the Southern Hemisphere.
Trade union representatives, human rights groups, environmentalists and representatives of hundreds of non-governmental organizations (NGOs) also voiced opposition. Most of these NGOs are involved in developmental assistance programs at the village level in developing and Third World nations. They see the detrimental effects of unbridled trade "up close and personal."
The trade protesters in Seattle had a range of complaints, but the one probably heard most loud and clear was that the WTO has gone too far in setting up undemocratic rules that promote the interests of multinational companies driven only by the desire of rich nations and the corporations themselves. In 1999, fewer than 30 of the richer, developed nations contributed more than $280 billion in direct farm subsidies to help their own farmers. Here in the United States, farm subsidies totaled more than $22.5 billion dollars, and they are forecast to exceed $17 billion dollars this year. Without this massive influx of taxpayer dollars, many of our farmers would have been unable to meet their financial obligations.
Poorer nations often find it difficult to pursue food security (ability of their own farmers to produce their own food) in the face of international pressure to open up their markets and import foodstuffs. These nations must have the right to protect their own farmers to be able to produce their own food, without the fear of economic or political intimidation by the United States and other rich nations. Poor nations seldom have the luxury to subsidize their farmers, who represent a high percentage of their population. We had a similar percentage of farmers in the United States in the early 1900s.
Since 1991, I have had the privilege of serving as a volunteer or technical assistant on agricultural developmental assistance assignments to Estonia, Poland, Czech Republic, Hungary, Bulgaria, Croatia, Albania and Kazakhstan. These new, independent democracies, which were formerly under Communist rule, have welcomed joint-venture capital from the West to rejuvenate their ailing businesses and industries. Far too often, leaders in these poorer nations been taken in by the "free-traders" and opened their borders to food and grain imports that have decimated their own farm economies.
In 1992, Finland was exporting butter and cheese to Estonia, priced so cheaply the Finns were coming over and buying large quantities to take back home. Estonian farmers were receiving only about $6/cwt. for milk and there were thousands of tons of Estonian butter and cheese in storage.
In August of 1993, Estonian farmers reported they could get only $52/metric ton (2204 lb.) for wheat, barley, rye or oats--when they could find a buyer. For wheat, $52/metric ton would be only $1.38/bushel. Estonian farmers were paying more than 30% interest on operating capital. At the same time, it was reported in the English version of The Baltic Press that the United States was negotiating with Latvia (Estonia's next-door neighbor to the south) to send them 200,000 tons of PL-480 corn. The Latvians would need to pay as much as $50/metric ton freight to receive this "free" corn.
In western Poland in March of 1994, frozen chicken leg-parts, imported from the United States were selling for 89¢/lb. In the same store, neatly packaged frozen whole Polish chicken processed in a town nearby was selling for $1.04/lb. A few days later, when I got back home in Dyersville, Iowa, chicken leg-parts were priced at only 49¢/lb. Polish farms average only about 18 acres, and interest on borrowed money at that time was running 30% to 50% per year.
In June of 1994, the Dutch were sending cheese to Estonia. The Estonians said the quality was such that it should have been fed to livestock, yet this cheese was neatly packaged and taking the place of Estonian cheese. The farm price for milk was only slightly more than $6/cwt. in Estonia. Farmers were discouraged that their government was not protecting their borders.
In April of 1993, while at a former collective in Hungary, I found they could often not market butcher hogs because the processor was busy slaughtering hogs from Western Europe. At that time, butcher hogs were $38/cwt. in Hungary and $52 in the European Union. In 1995, a German company had joint-ventured with a very large former State fruit processing plant in western Poland. The plant was processing fruit from Germany, while nearby Polish farmers' fruit was rotting in the field.
About the same time, a multinational ice-cream bar company had purchased franchises all over Hungary. The company was bringing dairy products from Western Europe to sell in these franchises, while the farm price for milk was as low as $6/cwt. and Hungarian dairy farms and processing plants were going bankrupt. I was told that more than half the dairy products sold in the cities in Hungary were imported. Smithfield Foods, the largest vertically integrated hog producer-processor in America, recently bought one of the largest slaughter plants in Poland. The present-day market-inexperienced Polish farmers are no match for such sophistication. It would be like Smithfield Foods moving into Iowa in 1910.
These are just a few examples of poorer nations' farmers suffering from unprotected markets. Similar cases have been documented all over the world. These are some of the same reasons people from poorer nations were so disturbed with the WTO in Seattle.
Instead of using the WTO to force poor and developing nations to accept our agricultural surpluses, we should help them become self-sufficient in food production. Most of those countries economies are rural- and agrarian-based economies. Driving farmers into the cities to swell the unemployment lines ultimately contributes to instability of governments.
Martin Clark is a retired livestock and grain farmer from Dyersville, Iowa, who also has worked on volunteer and technical assistance assignments with farmers in Estonia, Poland, Czech Republic, Hungary, Bulgaria, Croatia, Albania, Kazakstan and Brazil.