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Synthesis/Regeneration 26   (Fall 2001)

Which Road to Qatar: Food First or Export First?

by Dr. Vandana Shiva, Director,
Research Foundation for Science, Technology,
and Natural Resource Policy

As we approach Qatar, there is consensus that actually existing globalization is unfair, unjust, and at the root of the creation of new poverty and deepening inequality. There is, however, difference of opinion about where we go from here.

The establishment response from the WTO the World Bank, the Governments of the North and South and NGOs dependent on Government financing is that the real problem is that globalization was incomplete access to markets of the South was achieved through one sided trade liberalization, but markets of the North continue to be closed to exports from the South, especially exports of agriculture and textiles. This unidirectional market opening is clearly unfair and unjust. The agenda for Qatar is then justified as further negotiations to open up northern markets and give market access to southern countries. The new Round has, therefore, been called a “Development Round,” a round to benefit the Third World through market access especially in agriculture.

There are, however, a number of problems with using the Third World as an excuse for a New Round.

Unfair Trade Practices

The asymmetrics, imbalances and unfair rules in the current WTO agreements can be corrected without a new round.

The average tariff in Organization for Economic and Cooperative Development (OECD) countries in 1995 were 214% for wheat, 97% for barley, 154% for maize. Their tariff peaks reach 350% and above in extreme cases for some products of interest to developing countries. The most important areas with highest tariff rates include the major agricultural staples—cereals, meat, sugar, milk, butter and cheese as well as tobacco products and cotton.

Within the current review and reform process there are two paradigms emerging—the paradigm of “Expand or Sink” vs the paradigm of “Shrink or Sink.”

The “Expand or Sink” paradigm is based on two basic assumptions.

The first is that globalization in itself is good; the only problem is that it did not go far enough. Further globalization for market access is thus the solution.

The second is that export-dominated agriculture can remove poverty and reduce inequality in the Third World.

…globalization puts commerce above survival and its expansion threatens to create more environmental destruction, more poverty and greater inequality.

The “expand or sink” globalization school is in effect an “export first” school for agriculture based on the tenets:

1. Exports come first. 2. Exporting is a right and giving market access is an obligation, no matter what the environmental and social costs.

The “Shrink or Sink” school anti-globalization movement, on the other hand, views the way forward as based on a turnaround and shrinkage of the globalization agenda. “No new Round–Turnaround” and “WTO—sink or shrink” were the civil society calls for the Seattle and Qatar Ministerials respectively. In agriculture, in particular, the turnaround agenda requires the reversal of industrialization and trade liberalization policies in agriculture in the North and the South and putting sustainability, small farmers and food security and food safety at the center of trade reform and agriculture policy both in the North and in the South.

Underlying the rejection of further globalization for market access are three basic realisations.

The first is that food security requires food first, not export.

The second is that globalization is intrinsically flawed because it puts commerce above survival and its expansion threatens to create more environmental destruction, more poverty and greater inequality.

The third is that export dominated agriculture creates poverty, unemployment and malnutrition because natural resources like land and water which are vital for agriculture are limited and increased exports implies diversion of scarce land and water from generation of local livelihoods and local needs to production for exports.

Free trade market access differs from fair trade market access

Market access under WTO rules of globalization is so-called “free trade” market access. “Free trade” market access is not really free because it depends on government policies and public subsidies. It is based on the principles of trade liberalization—on exporting as a right and importing as a duty. It leaves no room to prevent exports which deprive people of food security, or imports which deprive farmers of livelihood security. Free trade market access is also based on the assumption of “like-product”—that the method and process of production does not matter, and discriminating between products produced justly and sustainably and those produced under conditions of injustice and non-sustainability is a “non-tariff trade barrier” which must be removed. Free-trade market access therefore prevents fair trade partnerships which promote trade that protects livelihoods, the rights of producers, the environment and food security.

Free trade market access destroys high value exports and promotes ecologically destructive exports

Free trade market access has in fact undermined the high value, ecologically sustainable exports from the Third World.

The argument that free trade market access will benefit Third World farmers is false.

Kerala, which exports spices and coconut, has had its farm economy devastated due to trade liberalization. In fact most of the agricultural commodities of Kerala have been showing a steady decline in the monthly market prices. According to Department of Agriculture, Government of Kerala, during 2000 the farmers of Kerala have suffered an annual loss of Rs. (rupees) 6645 crores (10 million) due to the price fall of major plantation crops alone, e.g., coconut, rubber, pepper, arecanut, coffee, tea and cardamom.

While export of genuinely high value, ecologically sustainable products is being undermined by trade liberalization policies, ecologically destructive exports from the Third World are being promoted.

Free Trade “market access” is predicated on corporate control of agriculture

The argument that free trade market access will benefit Third World farmers is false.

Farmers sell to local and domestic markets. Corporations buy and sell in global markets. Market access is therefore not farmer based but corporation based. Benefits from trading do not go to farmers but to companies. Even as markets for US agricultural commodities have increased through market access and removal of restrictions on imports in countries like India, US farmers’ incomes have continued to decline. Higher exports do not imply higher incomes for farmers. Both US and Indian farmers have lost out due to market access. In 1999–2000, soya prices dropped from $ 8.40 to $ 4.20 a bushel in the US even while the US corporations exported soya to India, which destroyed India’s oilseed farmers. Within one year, soya imports increased by 300%, costing the country a drain of US $1 billion of scarce foreign exchange and farmers their livelihoods. Exports grow and farmers are dispossessed.

Similarly, as export domination has increased in agriculture in India, displacement and indebtedness of farmers have also grown. The worst epidemics of farm suicides are in areas growing export commodities such as hybrid cotton.

Whether it is exports and market access North to South or South to North, corporations gain and farmers lose. Market access is in fact a corporate construct to gain control over markets globally. It destroys farmers everywhere and strengthens corporate control everywhere, North and South.

Since export-oriented agriculture is based on contract farming and corporate profits are based on buying as cheap as possible from farmers, exports in free trade systems do not transfer export earnings to farmers. Instead, exports further impoverish farmers and local communities, unless exports are producer-driven and take place under principles of food security and fair trade systems. But fair-trade is different from free trade. It is based on producer-consumer partnership, not market access rules. It is based on small producer driven policies, not corporate-driven policies. It is based on sustainability and justice, not profit maximization alone.

Market access implies undermining of domestic food security

Free trade market access implies that food desperately needed by the poor domestically is exported, creating hunger and starvation. To release food for exports, national policies are changed from food first to export first policies. Subsidies are shifted from farmers and the poor to exporting corporations. India is a good illustration of this shift. As food subsidies have been withdrawn under trade liberalization, and food prices have risen, people are buying less and consuming less. This has led to increase in food stocks. Fifty million tons are rotting in the warehouses while thousands starve to death. While food subsidies were withdrawn from those earning $1.05 a day on grounds that they were Above the Poverty Line (APL), Cargill and private corporations have been supplied food grains at highly subsidized prices. During 2001, India is exporting 5 million tons of wheat and 3 million tons of rice. While people pay Rs. 7,000 per ton, for wheat exporters are getting the wheat at R. 4,300 per ton, a subsidy of Rs. 13.5 billion. While people pay Rs. 11,300 for rice, exporters are getting it at Rs. 5,650 per ton, a subsidy of Rs. 10 billion.

Such distortions that aggravate hunger become necessary in order to export food grains from the Third World and to benefit from market access rules of free trade. But the benefit goes to corporate traders, not to the Third World poor people. Without the diversion of food subsidies for corporations, exports would not be “competitive.” The export first logic, which is at the heart of market access rules, is thus a recipe for hunger and famine. Internationally, export first policies of trade liberalization have increased hunger and malnutrition. From the period 1979–81 to 1992–93, the decline in food grain consumption per capita has been -6.7 in Mexico, -2.7 in Argentina, -5.1 in Brazil, -18.1 in Kenya, -8.7 in Tanzania ,-0.5 in Ethiopia, and -10.1 in India.

Free trade “market access” implies a globalization of non-sustainable industrial agriculture

Producing large quantities of commodities for long distance trade is a major driving force for the expansion of monocultures and the increased use of chemicals and non-renewable fossil fuel energy in agriculture. This implies the destruction of diversity, the pollution of ecosystems, rising costs of production for farmer, increasing debts and increasing farm suicides. Farmer suicides in India are concentrated in areas where hybrid cotton seeds have spread. Cotton cultivation has increased 25% since trade liberalization. In Warangal, Andhra Pradesh, cotton cultivation increased from 0 areas in 1985 to 100,000 hectares in 1998. In Punjab, the area under hybrid cotton has increased from 10,200 ha in 1998 to 76,800 ha in 2000–2001. Input costs and costs of cultivation have also increased. In Warangal pesticide use increased by 2000% over a decade. In Punjab, cost of chemicals and seeds increased cost of cultivation from Rs. 1535.95/hec to Rs. 19,496.52, nearly a ten-fold increase. Pesticide use went up from Rs. 40/ha to Rs. 2401 per/ha a 6000% increase. A quintal of cotton which used to cost Rs. 149.19 in 1972 now costs Rs. 1703.04 more than a ten-fold increase. Meantime, the price of cotton has been falling, creating a negative economy in which agricultural production is neither environmentally sustainable nor economically sustainable for small holders.

These increased exports have brought death and suicides to both cotton farmers and weavers.

“Market access” implies increased CO2 emissions and increased climate instability

When countries stop producing food for their own food security, export their agricultural produce and import what they need, there is an inevitable increase in greenhouse gas emissions and climate instability. 1 kg. of food traded globally contributes 10 kg of CO2. If all the food people eat reaches them through long distance trade, the current CO2 emissions would increase dramatically, creating floods and drought, hurricanes and heat waves. This would totally wipe out agriculture. The climate change externality of the CO2 emissions linked to increased market access and global trade in agriculture will thus rapidly outweigh all benefits accruing to global corporations in terms of increased trade.

If for no other reason than climate stability, localization of food systems to the highest extent possible is a survival imperative.

Sustainability, justice, democracy and survival demand that we take the road of “Shrink or Sink.”

The road to Qatar and beyond will either be paved by the expansion or shrinkage of the globalization agenda. The latter will involve policy commitments, globally and nationally, to protect the small farmer, reduce the costs of cultivation, reduce environmental destruction, reduce purchase of external inputs such as seeds and chemicals, localise production of staples, focus on food first rather than export first policies, focus on high value exports based on fair trade and environmental protection.

The expansionist agenda of globalization will promote exports at any cost, it will put exports before food security, it will shift ecologically destructive production to the Third World, it will increase the use of toxics and chemicals, it will lead to higher rates of suicides for farmers and starvation deaths for the poor, it will increase corporate control over land, water, seed and food processing and food distribution. Sustainability, justice, democracy and survival demand that we take the road of “Shrink or Sink.” If trade liberalization expands, we will all sink.

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