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Contributions from
the Column
Studies and reports
Flexible, but not without principles
Liberalisation in itself does not increase food security
12/2004 |
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[ Agriculture and trade ]
Liberalisation in itself does not
increase food security
Agriculture is the dominant economic sector in many developing countries. However, the rules governing the world market make it difficult for poor nations to make money with agricultural products. Does this mean that liberalisation of agricultural trade is in the interest of poor countries? Advocates of free trade believe it is, while sceptics warn of possible detrimental effects on food security.
The Australian Ambassador to Germany, Pamela Fayle, is an advocate of free trade. The German government held an International Workshop “Policies Against Hunger III” on agricultural trade and food security in Berlin in late October, where she cited a World Bank study which states that growth can quadruple when countries open their markets. Fayle emphasised, however, that the rich nations would first have to do their homework by reducing their agricultural subsidies. Subsidies in the industrial nations, Fayle argues, lead to over-production, which in turn depresses prices on the world markets. Consequently, and because of the high entry barriers to the markets of advanced nations, developing countries lose the incentive to expand their agricultural production. To meet food requirements, they instead rely on imports, even exacerbating their dependence. Fayle sticks to her basic conviction: “The most effective way to reduce poverty and increase food security is through enhancing economic growth, and trade liberalisation is one of the most effective drivers of economic growth.”
Many experts from developing countries express completely different opinions on the pros and cons of opening markets. Walden Bello, of the Thai NGO Focus on the Global South, reported in Berlin that the liberalisation of the agricultural markets since the mid-1990s has had catastrophic consequences in the Philippines. It did not lead to higher exports and new jobs, as hoped, but merely confirmed the status of the country as a net importer of agricultural products. Countless small farmers had to stop production because they could not keep up with tougher competition. According to Bello, the expectation that there would be a switch in production to higher-value products such as cut flowers or vegetables was not fulfilled, as farmers had been unable to take advantage of lower comparative. Farmers could not raise the necessary funds for high initial investments. Not only Bello sees growing poverty, uprooting and migration to cities, hunger and malnutrition as consequences of liberalisation. Zambia’s ambassador Love Mtesa and the Indian professor of sociology, Utsa Patnaik, also share this view because of their countries’ experience.
The closing report of the Berlin Workshop states that the liberalisation of agricultural trade will not help poor countries without additional support for environmental and social measures. Regional South-South trade was considered far more important than world trade for increasing food security. With a view to further discussions in the framework of the World Trade Organisation, the Report makes several policy demands. Core issues include:
– Priority should be given to liberalising the trade with products that are of particular relevance for farmers in developing countries. In addition, industrial nations should end the practice of imposing higher tariffs on processed products than on raw materials (tariff escalation). This step is essential to help disadvantaged countries to escape from their role as mere commodity suppliers.
– Poor countries should retain the right to protect markets for agricultural products particularly important for food security. However, this exception should only apply to countries which are affected by food insecurity.
– The obligation on poor countries to open their markets should depend on their particular stage of development. Specific problems faced by individual countries should be taken into account. To do so would require a more sophisticated system of classifications than has been applied so far to distinguish rich from poor nations or food importers from exporters.
– The sanitary and phytosanitary standards of industrial countries, which present a barrier to market access to many developing countries, must be made transparent and harmonised.
Silvia Richter
Internet:
http://www.policies-against-hunger.de
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