World Farmers Suspicious of 'Free Trade'

Family farmers from the United States, Europe, the United Kingdom, Scandinavia, Latin America and Africa, meeting in Brussels, Belgium, expressed the growing world-wide opposition to agriculture being subjected to the jurisdiction of the World Trade Organization (WTO), while demanding that they receive a fair price for what they produce based on cost of production.

Sponsored by the Coordination Paysanne Europeenne (CPE), a European farmers' organization, the gathering, through a series of round table sessions and debates, focused attention on key questions:

(ogonek) Are the US' Freedom to Farm Act and Europe's Agenda 2000 well-adapted answers to the world agricultural stakes?

(ogonek) Are the production methods in the US and the European Union beneficial on the economic, food safety, environmental and social levels?

Attending the February 24-26 sessions from the U.S. were Bill Christison, a Missouri farmer and President of the National Family Farm Coalition; Sophia Murphy, from the Institute of Agriculture and Trade Policy; and this reporter.

Discussing their common problems, the farmers clearly demonstrated that family agriculture world-wide sees the content of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), Freedom to Farm, Agenda 2000 and the current effort by US and European governments to patent genetic engineering all as efforts by the world's two major economic powers, through industrialization and corporate power, to control the flow of food throughout the world.

In a conference working paper the CPE declares: "Who is going to control food, oil, communications -- human beings? In Seattle at the WTO ministerial meeting what was expressed was a refusal to entrust the fate of the population, the destiny of the planet and the human species to some powerful entities. The present reorientation of the world concentration process of food/chemical/seeds/genetic industries, linked to the poor sales of GMO's (genetically modified organisms), shows very well the battles which are taking place, where populations have not yet said their last word."

By way of illustration the gathering noted that the US and Europe cannot maintain their recent trade agreements without "confessing their real objectives" which are:

* Decreasing the agricultural prices for providing food industry and super markets with low prices, the lowest possible prices on the planet; the direct support to farmers since 1992 are therefore a support to the agro-industry and commercial sectors.

* "Sharing between them the world markets, imposing growth, by forcing the penetration of the US and EU surpluses into the third countries (dumping and compulsory access to the market by five percent)."

Comparing Christison's explanation of the ruinous effects on US family farm agriculture stemming from the passage of Freedom to Farm in 1996, European farmers point out that likewise Agenda 2000, while allegedly focusing on the defense of a "European agricultural model," has instead adopted an agricultural policy that is hastening the decrease in agricultural prices, eliminating large numbers of family farmers, favoring the enlargement of the bigger farms and the development of industrial cattle breeding.

In explaining the US situation IATP's Murphy noted that "in the US, 1996 domestic farm legislation shifted the basis for making payments to grain farmers from the types and quantities of crops produced to so-called `decoupled' payments. This was expected to break the production enhancing element of government support. In practice, however, farmers have increased production in response to both high and low world prices, against the expectations of trade theorists. The new payments remain as a subsidy to agriculture, without the benefit of controlling production levels."

At the same time Freedom to Farm was being sharply attacked by the American representatives the EU was being accused of not honoring the stated purposes of its Common Agricultural Policy (CAP) as the European speakers at the Brussels conference pointed out that CAP is not merely a food production policy, but is more comprehensive in that it was originally designed to support the social and environmental priorities of the EU.

This fact, the speakers noted, is seldom recognized by those who criticize it, mainly the US, and who compare the financial outlay under the CAP to expenditures on their own agricultural policies which usually are merely economic in nature.

The CAP differs from such policies in that it was designed to support:

(ogonek) the incomes of 7.3 million farmers, who have an average farm size of 17.5 hectares (43.225 acres);

(ogonek) promote rural development and avoid rural depopulation;

(ogonek) compensate farmers for fulfilling demands of society such as the protection of the rural environment which often warrants action beyond good agricultural practices;

(ogonek) help farmers overcome their loss in competitiveness due to the ever-increasing restrictions on their production methods in response to society's concerns and demands such as: environmental constraints, use of certain technological applications (hormones ban, antibiotics as a feed additive ban, ever more restrictive animal welfare rules, genetically modified organisms, etc.)

The EU has argued that agriculture is specific in nature and cannot be treated in the same way as other economic sectors, either in terms of domestic or international policies, due for example to the diversity of agriculture, the influence of climate on production and the extreme fluctuations in production and prices if left totally independent on market forces.

Yet, the CPE notes that while the EU claims to focus on the "multi-functional dimension" of agriculture, the CAP has in fact been "specializing the farms for 40 years," i.e., destroying multi-functional agriculture.

"Discovering the latter today can be logical only if the CAP takes a clear reorientation. But this is not done in the Agenda 2000, which goes on favoring the big or over-intensive farms. Therefore, this strategy of the EU is not credible and Seattle has shown that the other countries cannot be fooled," CPE adds.

A quick examination of European agriculture underscores the CPE arguments and dispels many of the myths being perpetrated by corporate agribusiness in their effort to lower farm prices to U.S. farmers and promote their own self-serving trade policies.

(ogonek) While the EU agriculture policy was designed to fulfill the aforementioned objectives, as opposed to the US' almost strictly economic concerns, the EU farmer is subject to more restrictions and farms on the average an area which is one-tenth that of the US farmer, who received on the average in 1999 some $11,000 per farm in government support, double that provided to the EU farmer.

(ogonek) The EU and U.S. agricultural budgets as a percentage of the Gross National Product (GNP) are similar, with the U.S. slightly higher at 0.6 percent.

(ogonek) The EU agriculture budget has been largely stable for the last few years and is fixed at the 1999 level for the next seven years while the U.S. Federal support to agriculture has increased by 300 percent since 1995.

(ogonek) The assumption by CAP critics, such as the US, that the EU export refund expenditure -- a compensation to the exporter for the fact that purchases take place on a market which has a higher price than that on which the products are sold -- accounts for the major part of the value of EU agricultural exports is false. In 1992, prior to the EU's policy reform, the expenditure was 55 percent of the value of agriculture exports, but in 1998 the figure had declined to 9.4 percent. While the EU has imposed even greater disciplines on export assistance than obliged to by the WTO agreement, the U.S. expenditures on export assistance is not subject to any WTO discipline or limitation.

(ogonek) Through its set-aside scheme, the EU has reduced potential production exports of grain since 1993 equivalent to one year's production in the EU.

(ogonek) The EU is the largest importer of agricultural products in the world, much of which enters at zero or low tariff levels and in 1997 imported $24 billion (Euro) more than the US. EU imports have increased by 250 percent between 1991 and 1997, compared to a 68 percent increase to the U.S. The EU has always had a trade deficit in agricultural goods while the U.S. has always shown a trade surplus.

It is against this background that Europe saw the loss of 200,000 farmers in 1999, while it has lost some 600,000 beef producers in the past five years. Finland and Sweden alone last year lost a total of 10,000 farmers and the United Kingdom, in a recent report by that nation's National Farmers Union reported 22,000 farmers quit in 1999 as farm incomes fell 16 percent from 1998 with the annual value of Britain's farming output down by 25 percent from 1996.

Clearly, as Dijon French economic professor Jean-Christophe Kroll told the Brussels meeting, the myth of a "world market" needs to be dispelled as a large measure of that so-called market is simply made up of "buyers who have no money" while the food production sector is faced with lower prices while producing more and earning less. By the EU's own admission some 80 percent of its support is going to only 20 percent of its farmers.

Christison also noted that in the US of the nation's 1.9 million farmers some 330,000 currently produce 83 percent of the nation's agricultural products and receive the largest support of government supports.

In seeking policies based on economic and social justice the CPE has stated, with general agreement from the Brussels participants, that food sovereignty, fair agricultural trade, sustainable family farming production and food safety are the indispensable principles for the reorientation of the CAP and the rules of world trade. To accomplish such they recommend:

(ogonek) Feeding the population is above all a regional issue. International trade in agricultural production is very weak and that the 90 percent that is produced regionally should not be sacrificed for deregulating the ten percent that goes to the world market. Agricultural policies should therefore remain in the hands of the population and the States, and not dictated by international trade, thus agriculture has no business being subjected to the rules of the WTO.

(ogonek) Instead of signing the so-called "free" trade agreements with "very far regions," the EU should rather focus on developing fair agricultural trade relations with its closest neighbors.

(ogonek) All the direct or indirect forms of export and import dumping should be banned with all current major international trade agreements so designating. CPE believes that the EU should give up export subsidies "obtaining therefore greater margins of maneuverability and creditability vis-a-vis the US as well as the Southern countries. The EU could easily, facing the U.S., rebalance the status of the oil-protein-producing plants, having lots of deficit and being at the very core of the CAP distortions since 1962."

(ogonek) The price of agricultural products should be linked to the regional production costs and low price imports should be taxed. Because of this very regional preference the US, the EU, India and others have developed their production these past 50 years. This regional preference, CPE claims, without export dumping is less "protectionist" than de-coupling which covers up dumping.

* Compulsory access to the market should be terminated: it has not been installed to the benefit of the developing countries (farming is going to be developed only if agricultural prices are remunerating), but to the benefit of exporting countries to enter new markets.

CPE also believes that "we should not only talk about sustainable agriculture and development and food safety, but that all these concepts should be implemented" and that the CAP should be thoroughly refocused on "putting an end to the industrialization of agricultural production modes and favoring the sustainable family farm production. The EU should stop funding infrastructures which increase the gap between the producers and the consumers, and should, on the contrary, support the regional trade of products.

"The principle of precaution," they conclude, "and the burden of proof should be applied to the people who want to market a product. Let us not forget that the race for the lowest production cost ... and the deregulation of world trade, is not compatible with food safety."

A.V. Krebs is director of the Corporate Agribusiness Research Project, P.O. Box 2201, Everett, Washington 98203-0201; email; web:

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