FREE TRADE VERSUS FOOD SECURITY

October 1996

THE WORLD FOOD SUMMIT: FREE TRADE VERSUS FOOD SECURITY

The World Food Summit, as described by FAO, has a lofty and seemingly altruistic objective. It aims "to renew the commitment of world leaders at the highest level to the eradication of hunger and malnutrition and the achievement of lasting food security for all". Some analysts, however, feel that there is a certain degree of self-protection in organising this massive, high-profile event. According to a document put out by the lobbying group Rural Advancement Foundation International (RAFI), "The Summit, at its best, is a tactically defensive move intended to shore up eroding support for food security and agriculture in the face of evaporating economic resources and multiplying pressures to abandon food self-sufficiency in favour of WTO agricultural trade liberalisation". The first Ministerial Meeting of the World Trade Organisation (WTO), to be held in Singapore in December this year, cast its shadow over the Rome Summit long ago.

The Food Summit will endorse a policy statement and a Plan Of Action with the immodest goal of moving the world towards universal food security. Several drafts of the Plan have already been circulating, which has undergone numerous changes and suffered an epidemic of square brackets (text which could not be agreed upon) spreading across its pages. The tortured text reflects the many conflicts of interest that arise when the worlds of agriculture, technology and trade meet in the complex arena of food security. The various different drafts provide a clear indication of where the heat of the battle will focus at the Summit.

The March 1996 version was heavily biased towards trade liberalisation as the key to achieving food security. It came under massive criticism in a series of regional meetings with Governments and NGOs organised by FAO. So a new (June) draft was drawn up which reflected the results of these regional meetings and was more balanced. Trade liberalisation was still given priority, but at least some other topics were prominent as well. Among these were the recognition of poverty as the root cause of hunger, and commitments to give more attention to land and water rights, to pursue land reform policies, to encourage under-utilised crops, to promote mixed farming and community-based food security programmes, and a timid attempt to address the problem of external debt. But the draft did not even include FAO's own Agenda from the Action Plan adopted in Leipzig or the provisions on Farmer's Rights from its International Undertaking on Plant Genetic Resources.

The June draft, which was prepared by the Bureau of FAO's Committee on World Food Security (CFS), was again radically changed by the Inter-Sessional Working Group (ISWG) - a CFS sub-committee - at the end of July, resulting a in a new draft. The ISWG left the Plan in tatters, with about 80% of the text left in square brackets. This draft (document CFS:96/22/2, dated August 1996), which was full of contradictions and disagreements, was then passed on to the Committee on World Food Security (CFS) at its sessions in September and October. (See Box)

Some of the controversial issues already visible in July will probably be disputed right into the Summit. These include the role of free trade, the place of civil society, the multiple functions of agriculture, increased and stable funding for agricultural research through the budgets of development assistance, solutions for the debt problem and the proposal to create debt swaps for research and food security programs, and the role of technology and investment. Within the trade section one topic still to be negotiated is the question of environmental concerns that could unfairly affect market access for developing countries.

The interests of the World Bank

To understand the roles of different actors in the fight over wording for food security and agricultural biodiversity, it is wise to watch out for the World Bank. The Bank, thanks to its fat coffers, plays a crucial role in the different fora where agricultural policies are discussed. In response to a request from its new president, the Bank's view of food security and agricultural trade has recently been articulated in a document entitled "From Vision to Action in the Rural Sector". This document _ written by a Vicepresident (and chairman of CGIAR) _ outlines the Bank's strategy for tackling lender countries' "weak commitment" to rural development and proposes "three complementary high-profile initiatives at the international level". The Bank's proposal to eliminate what it sees as the myth of food self-sufficiency as a path to development in favour of trade dependence, and the roles of the new biotechnologies and the Consultative Group on International Agricultural Research (CGIAR) are also outlined in the document (see Box).

The action plan sees the Bank taking a high-profile role in the Food Summit and in the 1996 and 1998 WTO rounds on behalf of the CGIAR and other multilateral actors in order to promote further agricultural trade liberalisation. Indian activist and scientist Vandana Shiva calls this "the double speak of freedom and liberation". So-called free trade and trade liberalisation actually "rob Third World peasants of their basic freedoms - to have livelihoods, to have access to land and water, to be free to select, breed and conserve their genetic diversity according to their own needs and the needs of their ecosystem".

NGO concerns at the Food Summit are not only directed at the free trade ideology being pushed by World Bank and WTO. Some NGOs are also concerned that FAO, finding itself in severe financial straight and holding an expensive Summit, has received substantial funding from the World Bank and that an unspoken quid pro quo will make it difficult for FAO to challenge the Bank's growing influence over agriculture in general and the CGIAR in particular.

The trade paradigm in trouble

The capers of the weather, and the laws of nature and the market economy are conspiring against the "Food Security through Trade" paradigm. After a decade of overproduction and sinking farm prices worldwide, there is now a severe shortage in the global food supply, which is over-dependent on US exports and US grain trading companies. Extreme weather conditions and a fungal disease, known as Karnal Bunt, have wiped out nearly 50% of the US crop. In 1996, at least 118,000 hectares of wheat monoculture were quarantined because of the fungal attack. Drought conditions in South and Central United States created erosion conditions that have been characterised by climatologists as being worse than the Dust Bowl of the 1930s. And Pioneer Hi-Bred's best-selling corn variety, Pioneer 3394, has been shown to be highly vulnerable to gray leaf spot disease. Genetic uniformity of the different corn varieties sown in the US, and the extremely high a market share (15%) of Pioneer 3394, let the disease become such an epidemic that even the pro-business magazine Business Week ran a story about the dangers of genetic uniformity called `The Catastrophe Lurking in America's Farmlands'.

Short supply in the US and a strong demand from the world market, especially China, translates into higher prices. This could easily mean increased hunger and poverty in many countries that depend heavily on US grain exports. Egypt for example, buys 48% of its imported wheat from the US, and Sub-Saharan Africa has already faced a 50% increase in the cost of imported cereals. The current high prices will add, according to FAO estimates, $3 billion to the food bill of developing nations.

Countries in which governments have surrendered food security programs based on self sufficiency to the whims of the global market are now in severe trouble. Mexico is just an example: the Mexican government eliminated policies that encouraged domestic production and began - with the coming into force of the NAFTA Agreement _ relying on the ability to purchase cheap U.S. grain. Now Mexican demand for imported grain is rising just when prices are high: imported corn is averaging $180 per ton this year, compared with $90 per ton in 1995. By the end of June, 1996, corn imports had totalled $615 million, compared with $365 million spent on imported corn during the entire year of 1994. The food crisis is already affecting the poor: in late May, over 400 men, women and children stopped a grain train in the settlement of Monterrey and carried its cargo off to their homes. Shouting "We're hungry!", women hauled off the contraband in buckets and two-year-old children carried it across the tracks in plastic bags. At the end of the day, 40 tons of corn had disappeared into the community of San Nicolás de la Garza. And this was no isolated event. "For hungry people in Mexico, trade-led food security policy isn't working", says Karen Lehman from the Institute for Agriculture and Trade Policy in Minneapolis.

Transnationals hold the reins

As a result to the US crop failure, multinational grain traders such as the US giants Cargill and Continental Grain are turning to other producers. India's wheat exports have increased dramatically. Under the free trade regime introduced in India, exports of cereals in percentage of total exports have increased from 1.4% in 1990-91 to 3.4% in 1995-96. This might sound like good news for India. But, as Vandana Shiva says: "Cargill and Continental Grain are buying wheat at $60 to $100 per tonne from India and selling it at $230-240 per tonne on the international market, making a neat $130-170 profit per tonne, while India is loosing $100m in exports because of the concentration of power in the hands of five merchants of grain".

In a world where 20 transnational companies control most of the worlds agricultural trade, it does not make much sense to describe countries as economic units. It is the corporations that buy, trade and sell the staple food worldwide, create shortages and surpluses, manipulate supply, demand and commodity prices, suck money from international organisations for emergency food relief, manage most food aid and carry out commercial food transactions made by governments. It is commonly said that it was the top executives of these companies who wrote the terms of the GATT Agreement, and their companies are the ones that push for and profit from trade liberalisation. For the agriculture negotiations, former US President Reagan appointed a life-time executive official of the Cargill company - by far the world's largest agribusiness corporation - to draft the US proposals and to serve as chief official negotiator. It comes as no surprise therefore, that the rules of global trade favour transnational agribusiness over all other interests.

Additionally, the same companies are able to cream off a healthy proportion of the subsidies on food in developed countries. Officially, the Uruguay Round agreement calls on WTO members to reduce subsidies, direct and indirect, for domestic farm programs. All subsidies, referred to as `Aggregate Measure of Support' (AMS), should be reduced by 20% within six years after 1 January,1995, for industrialised countries and 13.3% within 10 years for developing countries. As the US-based Women's Environment & Development Organisation (WEDO) points out, the US and the EU "manipulated the formula so that they will be able to increase their agricultural subsidies if they so choose". Current US support for farm programs already amounts to $8 billion. However, the AMS relevant for WTO calculations is set at $20 billion. Even a reduction of 20% means that by the year 2000 the US will still be allowed to subsidise agribusiness up to $16 billion - double current levels of support.

Agribusiness companies have a direct link to FAO and the Food Summit. Which is why NGO concerns over where the Food Summit is heading were strengthened by rumours that FAO had showed willing to allow trade policy access to agribusiness transnationals in return for millions of dollars in sponsorship for the Summit.

Big Agribusiness TNC do not really do business in food. They deal in agricultural commodities as raw materials to be deconstructed and reconstructed into some value added product for the market in order to produce a profit for the corporation. The globalised industrial system may have worked well to make Agribusiness Corporations wealthy and may produce quantities of food, but it cannot produce the justice required to ensure that everyone is adequately nourished.

Agribusiness TNCs have the clear objective of reducing the role of national and state governments to that of mere facilitators.

As Brewster Kneen clarifies in his book "The Invisible Giant": "In this scenario, the World Bank and the IMF bear responsibility for financing with national funds, the global infrastructure required by capital and development of the global market. The World Trade Organisation (WTO) [...] is to replace the United Nations for world governance, the UN itself being assigned the role of a welfare agency responsible for law and order. Its specialised agencies, such as the FAO, the Codex Alimentarius and WIPO, will be taken over by WTO and their mandates redefined in term of trade issues. Such moves will effectively eliminate the UN as a voice and a forum for the marginalised and all those whose perspective is not that of the corporate boardroom." This, in a sense, is the real issue on the table at the Summit: will the FAO resist the assaults of the free traders?

Food insecurity through trade liberalisation

In the South, the different elements of trade liberalisation often translate directly into food insecurity. Among these elements the following have the most severe impacts on peoples livelihood. In addition they easily result in internal migration, urban growth and environmental destruction:

* undoing land reform and allowing concentration of land ownership

* privatising water

* introducing monopoly control on seeds through IPRs

* diverting land from food to cash crops for exports

* diverting food from local to global markets

Volatile prices and globalisation are creating an unstable, insecure and costly food system and undermine the ecological security of agriculture, the livelihood security of farmers and the food security of both poor and affluent consumers. "We in the South Asian subcontinent have more than the World Bank indices as our guide. We have our history", says Vandana Shiva. "India's worst famines took place when India's economy was most integrated though the globalisation of the colonial period."

Right now, neither the FAO Food Summit Action Plan nor even less the free trade advocates of WTO talk about such issues. With the Summit happening just weeks before the Ministerial session of the WTO in Singapore (December 9 - 13), some NGOs are afraid that the Summit could even become a high-profile apologia for the Uruguay Round. But with sky-rocketing grain prices and the dropping food aid commitments, the WTO agricultural accord and the concept of trade liberalisation must be questioned. Not only the South should challenge the USA's edict that the poor should forget about food self-sufficiency and rely instead upon the `generosity' of the marketplace. Some other large grain-importers, like Japan, may oppose the WTO-ideology as well.

Biotech companies and the CGIAR are quick in offering `solutions' to the obstacle of shortages and high prices: the `new' green revolution, i.e. genetically altered seeds that are supposed to produce more yields, should solve these problems. (See the article on IRRI's `superrice' in this Seedling) Other quick `solutions' are promoted by the advocates of population control.

The real challenge, however, is to create stability in the global food system by eliminating those factors which create volatile swings from overproduction to shortage, and from low to high prices. Policies at all level have to promote stability in food production. For this, nations need more space and flexibility in response to fluctuating markets. We need to change global trade rules. The Uruguay Round Agriculture Agreement expires in the year 2000. Governments from the South and NGOs should be prepared to engage in the debate and to influence the outcome of the re-negotiations.

Basing agriculture on diversity

One factor that would create more stability in the food system is to base agriculture on diversity and self reliance. This means saying `no' to seeds from multinational monsters and highly processed food that has travelled from some centralised production facility. The concept of basing agriculture on diversity - genetic diversity, multilines and mixtures of varieties but also diverse farming methods like intercropping, polycropping, biological pest management and agroforestry - is mentioned in the "Global Plan of Action for the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture" adopted in June in Leipzig.

However, these concepts - as shyly they are mentioned in the FAO documents of Leipzig - are missing in the Action Plan for the Food Summit. As Martin Khor from Third World Network wrote in FAO's journal `Ceres': "There is increasing awareness the supposed high productivity of the Green Revolution is at best a gross exaggeration and at worst a misleading myth. (...) There is evidence ecological farming can be high yielding - higher yielding in fact than the Green Revolution method." However, FAO is not ready to recognise the increasingly clear signals that sustainable ecological agriculture, not uniform genetically engineered plants, is increasing food security.

The challenge for NGOs lies in not only documenting some occasional successes but in getting more systematised and coherent evidence on what ecological agriculture that is based on diversity can do and offer. Table 2 on ecological farming in relation to yields that can be expected gives a preliminary idea of what we have to systematise.

Table 2: Ecological Farming Methods and Traditional Varieties give higher yields. Some examples:

A call for a Food Security Convention

Many NGOs are pushing agriculture in an ecological direction, building on diversity and taking farmers knowledge and needs as a starting point for agricultural research. But NGOs also want changes at the macro-economic level. As the `Institute for Agriculture and Trade Policy' (IATP ) declares. "Food is just too essential to be handled as a tradeable commodity in the global economy; it should be governed by rules and institutions that make sustainable food security, not commodity sales, the primary goal of international agriculture policy.". In the FAO/NGO Consultation, held in Rome from September 23 - 27, NGOs called for a Global Food Security Convention and proposed a series of actions. Some of them include:

* further develop and implement the "Right to Food" as a human right

* promote agricultural production and distribution systems based on biological diversity

* enable local , national and regional self-sufficiency in staple foods

* establish a global network of local, national and regional grain reserves to store food for times of shortage and famine and in order to stabilise prices

The `Leipzig Commitment to Agricultural Biodiversity,' which was unanimously approved by all NGOs present, takes this idea a step further with its commitment to strengthening "systems of decentralised food reserves at the household and community levels".

Many NGO propose to use the Food Summit to challenge the `food security through trade' paradigm and to shape the debate for the process leading to the renegotiating of the GATT agriculture agreement in the year 2000. In the words of IATP: "Our goal should be to initiate a long-term, co-ordinated, international campaign to get food out from the control of the World Trade Organisation and create a new system to guarantee food security."

Sources:

* How secure is our Food? Food security & Agriculture Under the New GATT & World Trade Organization. WEDO Primer No.4, New York 1995. (to order this document send an e-mail to [email protected], or Fax: (212) 759 8647.

* The Leipzig Process, Occasional Paper (June 1996), Rafi.

* FAO Internet home page: http://www.fao.org/WFS/homepage.htm

* Diverse sheets and proposals of the Institute for Agriculture and Trade Policy (IATP), Minneapolis, Minnesota, USA.

* Vandana Shiva, Globalisation, Food Security and Sustainable Agriculture, Report of an International Conference, New Delhi, India, July 30 & 31, 1996.

* Brewster Kneen: Invisible Giant, Cargill and its Transnational Strategies, Pluto Press, London 1995.