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Food Trade: the case for a food security box

Date
Time (GMT +01) 00:00 23:59

Chair:

Simon Maxwell, ODI.

Speakers:

John Madeley, Writer and Broadcaster.
Duncan Green, CAFOD.

1. Simon Maxwell introduced the discussion. Food issues associated with the WTO were complex and highly contested. It was often alleged, for example, that trade liberalisation in the food sector was harmful to poor farmers and to poor people, that the WTO made it impossible to support poor farmers in developing countries, and that there were new, strict limits on food stocks and safety net interventions. It was important to be clear about the arguments, to assess the evidence, and to review possible responses.

2. John Madeley offered a paper which provided a general context. Basing his remarks on a review of over 100 studies from around the world, he argued that trade liberalisation was seriously detrimental to food security and to rural livelihoods; poverty was increasing in absolute as well as relative terms in rural areas affected by liberalisation. Evidence to support this core proposition could be found in cross-country studies (FAO, WTO) as well as in country studies. Examples included small farms in Kenya, rice producers in Madagascar, maize farmers in Mexico, small-scale milk producers in Uruguay, the edible oil sector in India, and the small farm sector in Cambodia.

3. The arguments needed to be clear. Madeley accepted that there were confounding factors (like internal liberalisation), but suggested that the link between trade liberalisation and increased poverty was robust. Nor was this a short-term phenomenon: the dismal record of transnational corporations in creating jobs, the WTO (TRIMS-related) restrictions on supporting local firms, both suggested that the adverse consequences on the poor were likely to be long-term. TNC power in the production and marketing chain was the key issue, more important, he argued, than Northern agricultural subsidies, harmful as these were: market power and technical supremacy were the key issues.

4. Four main implications followed. First, TNCs should be regulated. Second, the pace of trade liberalisation should be slowed. Third, there should be a shift in policy analysis from trade liberalisation for its own sake, to a focus instead on helping the poor. And fourth, there should be greater promotion of fair trade options, building on current market success (for example, the fair trade market for coffee in the UK had grown by 49% p.a. for the previous five years).

5. Duncan Green distributed a CAFOD briefing paper available at and made a presentation. He described the WTO framework and the Agreement on Agriculture (AoA), explained why developing countries were unhappy, asked what needed to change, and set out in detail a menu of changes for the new round of talks which began in 2000. The AoA had foreseen increased market access, reduced domestic support and lower export subsidies, with longer implementation periods for developing countries, and ‘special and differential’ treatment for developing countries (including exemptions for the least developed and compensation for higher food prices). Developing countries were unhappy because developed countries had not liberalised or reduced export subsidies, because their own liberalisation appeared to have led to import surges, and because the compensation measures for higher prices had not been implemented. Poor farmers had been particular losers.

6.The proposal, then, was to have different rules for small farmers and different rules for ‘food security crops’ (defined as crops which are either staple foods, or which are the main sources of livelihood for low-income and resource-poor farmers’. These could be expressed in a ‘development box’ (a term preferred to the alternative food security box). To be specific, the proposals would mean (a) greater flexibility in providing support to small farms and food security crops, (b) grater flexibility for government protection against import surges, (c) allowing governments to purchase food security crops for local distribution at stable, above-market prices, and (e) linking further liberalisation in the South to reductions in Northern protection and subsidises.

7.The presentations generated a good deal of discussion. On several topics, it was important to refer back to discussion earlier in the series, for example on the long-term viability of small farms, and on the changing nature of agricultural commodity chains. Among the points raised were the following:

  • Some disagreed strongly with the core proposition set out by John Madeley, that trade liberalisation was bad for small farmers. The sceptics doubted that sufficient effort had been made to separate out the effect of trade and other liberalisations, questioned the analysis of several of the case studies presented, and argued that, even if there were losses, the benefits elsewhere in the economy more than compensated. Others, however, argued in favour of the Madeley thesis.

  • The importance of non-trade liberalisation for small farmers was emphasised. They had been penalised in the past by unfavourable taxation, inefficient parastatals, and poor economic policy. If these hurdles could be removed, poor farmers would benefit from liberalisation.

  • Northern protectionism was obviously a serious matter for developing country agriculture, both through price effects, and also through non-price effects (for example market access rules).

  • The role of transnationals in agricultural commodity chains was also noted as an important issue.

  • The question of the development box was discussed. It was difficult to be unequivocally in favour or against without more detail. For example, what kind of protection would small farms need, over what period, and with what effect on consumer prices (given that most poor people were net buyers of food).

8. It was obvious at the end of the discussion that many questions remained unresolved. This was, however, a crucial issue, and one at the heart of current debates about development. It was definitely an area requiring more research.

Description

This event discussed whether trade liberalisation in the food sector was harmful to poor farmers and to poor people.