by Walden Bello**
Ever since the great national debate on whether or not the Philippines should ratify the GATT Uruguay Round in 1994, food security has been a controversial issue in economic policy. What is at stake in this process of policy formulation can perhaps be best appreciated by placing it in its international context. In this age of rapid globalization of agricultural markets, international trade is increasingly becoming the central determinant of domestic food security.
"Food security" first emerged as a concern in the 1970's among specialists and NGO's concerned at the shifting of more and more prime agricultural land in the South from the cultivation of food crops to the cultivation of export crops. It was feared that this could lead to a situation whereby, as it became more and more integrated into the international market, the agricultural sector would become less and less capable of supplying the population's food needs as production shifted to higher-priced export crops or crop-derivatives such as sugar, coffee, and palm oil.
In the 1980's and 1990's, however, food security was articulated as a response to stepped-up efforts by the US and the European Union to dump their ever-growing surpluses of grain, dairy, and meat products on third country markets, to the detriment of the small-scale agricultural producers that were responsible for the bulk of agricultural production in the South, newly industrialising countries like South Korea and Taiwan, and even advanced industrial countries like Japan.
Food security, then, became an attractive idea with which to counter the banner of free trade waved by the United States. The clash between the two paradigms became especially bitter during the last stages of the negotiations of the Uruguay Round of the GATT (General Agreement on Tariffs and Trade).
Food Security Versus Food Self-sufficiency?
Food security, as advanced by its proponents, has several elements, including the ability of a country to produce most of its basic food necessities, the survival and economic welfare of peasant producers, respect for the cultural preferences of consumers when it comes to food, protection of a country from the vagaries of world trade in grain and other foodstuffs, and the political stability of rural society.
Perhaps one of the best expressions of this expansive view of food security was provided by Korea's National Cooperatives Federation in defence of continued restrictions on rice imports. According to the Federation, with only 1.6 per cent of its work force engaged in agriculture, the US had relatively little at stake when it came to having its agricultural exports like rice restricted from entering some markets. On the other hand, in the case of Korea, rice “is a crop of paramount importance to our farmers. Because of our climate, most Korean farmers are engaged in rice cultivation, which takes place on more than 60 per cent of arable land, and provides more than 50 per cent of farm income. Rice is the life blood of Korean farmers. As one of the basic foodstuffs for the Korean people, rice is essential for food security, conservation of the land, and maintenance of rural society. “
Thus, free trade "reflects only the interests of the agricultural exporting countries, while neglecting the special conditions in other countries."
In response, US officials advanced the idea that food security should not be confused with "food self sufficiency." As US Secretary of Agriculture John Block put it at the start of the Uruguay Round in 1986, the "idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on US agricultural products, which are available, in most cases at lower cost."
The US position paper for the World Food Conference in Rome in November 1996 repeated the same theme, but went further to say that pursuing food self sufficiency could in fact be detrimental to food security: “While developing countries have often made the plea "give us trade not aid," they have also often adopted domestic and trade policies to protect domestic food production in pursuit of food self-sufficiency thereby reducing the contribution that trade could have made to economic efficiency and development. Pursuit of higher levels of food self-sufficiency has not been limited to developing countries but they are less able to bear the costs of foregone economic efficiency and, thus, such policies are relative more damaging to their economies and to food security. “
The aim here was implicitly to delink the interests of peasant food producers from mainly urban consumers, for whom the provision of food was seen as the key component of food security.
The GATT Agricultural Accord: Institutionalising Subsidies
The free trade-economic efficiency-food security argument was, however, robbed of much credibility when the GATT Agricultural Accord was finally negotiated in 1992. For the so-called Blair House Accord (named after the executive building in Washington where it was negotiated) was hardly calculated to promote the free trade in agricultural products that US representatives had claimed it would do. Instead, what emerged was an agreement negotiated principally between the European Union and the United States that would regulate their monopolistic competition for third-country markets.
Although the GATT Accord committed the developed countries to reducing their domestic support subsidies by 20 per cent and cutting their export subsidies by 36 per cent over 10 years, the remaining level of subsidisation would remain quite high. In fact, the subsidy to agriculture provided by the great variety of market-price and direct-income support mechanisms is enormous. As one study has noted, "with support per farmer as high as some countries estimate, it would almost be economically irrational for farmers to actually work their lands."
Let us, however, make use of the relatively conservative figures provided by the OECD (Organisation for Economic Cooperation and Development) for its member-countries. In 1995, subsidies to agricultural producers in the OECD--that is, the developed countries--came to around $182 billion while producer subsidies as a percentage of the total value of production came to 42 per cent in 1994 and 41 per cent in 1995. In 1994, subsidy transfers per farmer ("producer subsidy equivalents" or PSE's in OECD parlance) came to $16,000 in the US and $18,000 in the EU; in 1995, the first year of the implementation of the GATT Uruguay Round, the overall subsidy transfers in the US and Europe rose by five per cent instead of going down. For that year, 20 per cent of the cost of US farm production was financed by government subsidies totalling $25 billion. these are, as noted above, conservative estimates; according to the UNDP (United Nations Development Program) figures, which are based on less narrow criteria than the OECD's, subsidy per farmer in the US in 1995 came to $29,000--a figure that came to 100 times the $300 per capita income of corn producers in the Philippines.
A key reason that subsidisation will remain high despite the GATT Accord is that while market price support measures (such as export subsidies and minimum entry and intervention prices) will be reduced, direct income subsidies to farmers have been exempted under the so-called "Green Box" provisions of the agreement on the specious grounds that they are "decoupled" from production and thus "non-trade distorting."
In the European Union, these direct income payments are mainly based on output, the bulk of it via a "land set-aside program" which entitles each farmer to a subsidy when he/she withdraws 15 per cent of his/her land from cultivation. The idea behind the set-aside program is to restrict output, thus raising prices. In the United States, direct income subsidies have taken the form of "deficiency payments," which bridge the gap between a guaranteed floor intervention price (usually the market price) and a politically determined target price to support farm incomes. Deficiency payments make up the difference between a target price set by the United States Department of Agriculture (USDA) and the actual market price for the year, so that if the target price is $15 a bushel and the market price is $12, the USDA gives farmers $3 a bushel. Under the 1996 US Farm Bill, this system is being replaced by a flat rate, that is, "in bad years, farmers will get only predetermined payments, but in good years they'll get the same amount, even if they rake in far more than the market price of their crop." Deficiency payments are projected to average $5.1 billion a year between 1996 and 2002.
But the truth is that direct payments to European and US farmers are anything other than "decoupled" from production since, without them, agriculture would scarcely remain profitable. Deficiency payments, for instance, make up between one-fifth and one-third of US farm incomes. In other words, in advancing the notion of "decoupled payments," the EU and US were redefining the concept of subsidy "to bring world trade rules into line with their perceived self-interest and surplus dumping practices." Or as another economist pointed out, the Green Box provisions were tantamount to "taking away direct support of markets and replacing it with direct subsidisation of [Northern] farmers."
In contrast to this massive subsidisation of agriculture in the OECD countries, there have been negative producer subsidies or a transfer of resources from farmers to other economic groups in most developing countries like the Philippines. Findings from one study show that for 18 developing counties, "taxation" or negative transfer from agriculture amounted to an average of 30 per cent of the value of production from 1960 to 1984 as a result of both direct and indirect policies.
The institutionalisation of the system of subsidisation of Northern agriculture by the GATT Agricultural Accord has had two major implications for developing countries which are now required to eliminate trade restrictions and lower tariffs to developed country food exports. First of all, since the US and the EU are such massive grain producers and exporters, the world market price of grains has been greatly determined by the subsidisation of agricultural production in these two areas. International prices are thus depressed relative to prices of domestically produced grain in most developing countries where farmers are, for the most part, subject to negative producer subsidies. As one analyst has noted “The US is effectively in the position of a global price setter, with its domestic intervention price--or Loan Rate--being transmitted to world markets through exports. The EU follows US prices, traditionally with whatever subsidies are necessary to bridge the gap between US export prices and its traditionally higher domestic price. Thus the prices at which export activity takes place are the residual outcomes of farm policies in Europe and North America. “
How strong the pressure on world prices is exercised by the subsidised US price is illustrated in the case of wheat, where a 10 per cent decline in the US wheat crop would reduce world export supplies by six per cent, with the consequent upward movement of international prices.
Second, with the incentives they carry to overproduce, these massive subsidies have led to a more intense struggle between the EU and the US, to stake out third country markets on which to dump their products. The conclusion of the GATT or World Trade Organisation (WTO) Agricultural Accord, which was supposed to stabilise this monopolistic competition, did not make any difference in this regard. Indeed, export markets have become even more central to European agriculture following the institutionalisation of direct income subsidies in the GATT-WTO.
At the time of the ratification debate, one authoritative source said that the effect of direct payments would be to raise overall EU cereals output some 30 million tons above what it would be without such payments--a figure that is equivalent to around three times the EU's cereals exports in 1994! A more recent, 1997 report to EU farm ministers anticipates an even worse situation, with the surplus of wheat rising from its current level of 2.7 million metric tons to 45 million by 2005, and the total cereals surplus shooting up to 58 million metric tons. A key solution to the solution of subsidised overproduction, noted EU Agriculture Minister Franz Fischler, was intensified efforts at exporting grain.
After the Uruguay Round, the pressures for finding export markets owing to continued heavy subsidisation of agriculture have also increased in the US. US Trade Representative (USTR) Charlene Barshefsky admitted as much when she told the US Department of Agriculture (USDA) Agricultural Outlook Forum on February 24, 1997 that "[g]iven the limitations inherent in US demand-led growth, we must find new markets for American agriculture. We must open new markets to support the increasingly productive US agricultural sector."
She went on to reveal that today, "one out of every three farm acres in America is dedicated to exports. 50 per cent of our wheat acres, 57 per cent of our rice acres, 37 per cent of our soybean acres, 24 per cent of our corn acres, 35 per cent of out fruit and vegetable acres and 42 per cent of our cotton acres are dedicated to producing products for export." What she did not reveal was how the system of massive subsidisation centred on direct income payments permissible under GATT had created this export-dependent economy.
The "new markets" that needed to be opened were mainly in the Asia-Pacific, and in the view of the USDA, the plan is to have the region absorb 60 per cent of US agricultural exports by the year 2000, up from 40 per cent at present. As Kevin Watkins has emphasised, " it would be a mistake to underestimate the central role of the Pacific Rim in America's strategic vision for the future."
The GATT Debate Revisited
This is the international trade context that framed the debate around the ratification of the Uruguay Round in the Philippines in 1994. From the perspective of the opposition, it was not possible to speak about a positive impact of an opening up of the local agricultural market to international market forces when that market was marked by monopolistic control in basic grains and other foodstuffs. To GATT critics, the Accord would deliver a massive blow to self-sufficiency in the production of rice, corn, and other commodities which had already been eroded by cheap imports coming in under the USDA's Export Enhancement Program and as food aid under PL-480. Indeed, US agriculture's stake in GATT was underlined during the ratification process by several high- profile events, including the US trade negotiators' aggressive refusal to accept the Philippine corrections for minimum access volumes it had offered to GATT for pork, poultry meat, and live poultry, which had originally been estimated on the high side.
Pro-GATT advocates, however, appeared to be ignorant of the massive subsidies for northern agriculture represented by the Green Box measures, of the fact that these subsidies were distorting international prices, and of the reality that it was the tremendous pressure to dispose of these huge surpluses in third country markets like the Philippines that was principally driving the Agricultural Accord. Instead, they advanced efficiency arguments based on assumption of relatively free international markets.
While disconcerting to the critics, the pro-GATT side's assumption of freer international markets under GATT was nevertheless understandable, since in so far as the government could be said to have a strategic plan for agriculture, it was to leave it up to market forces to weed out inefficient producers and restructure the Philippine countryside. Prior to GATT becoming an issue, the agricultural bureaucracy had become dominated by technocrats and economists who felt that the main problem of Philippine agriculture lay in its highly protected character, and that the path to dynamism lay in eliminating protection, deregulation, and radically reducing the weight of traditional but "inefficiently produced" mainstays like rice and corn, which also happened to employ the bulk of rural producers. The Medium Term Agricultural Development Plan (MTADP) of 1992, for instance, envisioned focusing rice and corn production to 1.9 million hectares and freeing up some 3.1 million hectares currently planted to it for cattle raising and the cultivation of cash and commercial crops.
Key sectors of the agricultural technocracy became partisans of export-oriented high value-added agriculture, presenting cauliflowers, asparagus, and other high value-added crops as Philippine agriculture's passport to the 21st century--as "the export winners that will increase our share of world markets."
Another key component of the government technocrats' rationale for agricultural trade liberalization was that it would promote the interests of consumers by bringing in goods at lower prices. Implicitly, the picture was posed of inefficient, high-cost rural producers being coddled at the expense of long-suffering urban consumers, while rhetorically the agricultural modernisers claimed that liberalization would also be to the good of farmers.
Prior to the GATT ratification debate, the loosening of import controls over rice and corn had already been adopted as one of the instruments of this process that would at the same time weed out inefficient producers and promote "consumer sovereignty." Citing low production and natural calamities, the government imported rice every year in the period 1984-1994 (except in 1987), despite the absence of clear criteria on what constituted a food shortage. As for corn, despite a glut in local production in the early 1990's, key forces in government pressed for the liberalization of corn importation and remove the National Food Authority's (NFA) monopoly over corn importation in favour of private sector groups.
Thus, when GATT arrived for ratification, it was not surprising that the agricultural free traders saw it as a key instrument in their mission of agricultural transformation, with the Department of Agriculture chanting a mantra that consisted of the words "globalization," "competitiveness, "efficiency," and "prosperity." Statistical calculations were presented showing that signing on to the GATT would result in the creation of 500,000 jobs annually in agriculture. Pressed for specifics, the pro-GATT technocrats admitted that it was a net figure that included 350,000 lost jobs annually, mainly in the labor-intensive, traditional crops like corn, rice, and sugar. In the corn sector, the government admitted that 45,000 were going to be displaced annually, while in the case of rice, one NGO estimated that the minimum access requirement of 59,000 metric tons would translate into the displacement of 15,000 farming families annually.
High-Value Crops: A Viable Alternative?
So where would the new jobs that would absorb the displaced labor force come from? From the spread of the cultivation of high-value crops like cut flowers, asparagus, snowpeas, and broccoli, said the GATT proponents. It was not difficult for GATT critics to point out that there were several things wrong with this scenario, which had been painted without reference to the experience of countries that had pioneered in these high-valuer non-traditional agricultural exports (NTAEs).
First, for farmers to shift to high-value NTAEs requires investment that is simply not within the reach of small producers. For instance, in the case of cut flowers, data from Ecuador reveals an average initial capital investment of $200,000 per hectare. Annual input costs are also high, with the cost of agrochemicals alone coming to over $18,900 per hectare. In the case of snowpeas, broccoli, and cauliflower respectively, annual production costs, according to Guatemalan data, came to $3,145, $1,096, and $971 per hectare respectively, compared to $210 per hectare for corn.
Second, competitive advantage in these crops can only be achieved through significant outlays in technological support and research and development. As Conroy, Murray, and Rosset point out, NTAE cultivation is biased against small-scale producers and, instead, favours large producers and transnationals because "many traditional crops require considerable technological sophistication, relative to traditional production, as they are ether new to the region, require special care at harvest because of their perishability, or are being produced to meet the more demanding cosmetic quality standards of foreign consumers."
Moreover, the required technology is not only input-intensive but also knowledge-intensive, especially since they are temperate zone crops whose principal knowledge base is found in the North rather than in tropical countries. "As many are sold as fresh produce for US and European consumers," note Conroy, Murray, and Rosset, "cosmetic standards mean that they must be pest- and blemish-free, and health regulations limit acceptable levels of pesticide residues. This means that pest management and agronomic practices are delicate in nature, with little room for error." Also, successful large producers rely on foreign consultants for technical assistance, an option "clear not available to most peasant producers."
Given all this, the argument that displaced food crop producers will simply shift to producing commercial crops has, as Watkins points out “a somewhat surreal quality. The high capital costs of entry into commercial food markets and the importance of infrastructure, which is non-existent in the more marginal areas from which people will be displaced, means most of the benefits from commercial agriculture will accrue to more prosperous producers.”
He concludes that, for the Philippines, "a more realistic scenario for vulnerable staple food producers is more intensive poverty, displacement, and migration to urban centers."
The employment question was especially sensitive when it came to agriculture since recent figures show that two million farmers were engaged in corn farming while another two million, or about 34 per cent of all Filipino farmers, were rice farmers. Not surprisingly, to many farmers, what the Department of Agriculture calculations amounted to was trading sure job losses in the traditional crop sector for speculative job gains in the still-to-be-created high-value crop sector.
Coming under criticism for their easy writing off of millions of workers in the traditional crop sectors and what came across as a naive belief in the millions of jobs to be generated by the cutflower, asparagus, and other new high-value crops, the pro-GATT lobbyists retreated from their earlier confidently-held positions. They took back their projection that 350,000 rural jobs would be lost as a result of GATT and asserted that the 45,000 corn farmers they initially predicted would be displaced annually would simply shift from raising corn to growing silage for cattle. People monitoring agricultural trends immediately picked up a contradiction: how would the demand for silage grow when the Philippine cattle industry was actually contracting!
In the end, GATT proponents became more and more uncomfortable with their claims that Philippine agriculture would become more competitive under GATT discipline, and they resorted mainly to the argument that there was no choice but to ratify GATT because of potential trade losses should the Philippines not become a member of the WTO. Farmers were also assured that they would be eased into the new order through government expenditures for "safety nets" in the coming period of GATT-mandated liberalization. The expenditure figure given by the executive was $128 billion over four years, to be released at some $32 billion annually.
Post-Uruguay Round Developments: Deepening the Crisis
The Philippines' ratification of GATT produced the biggest change in agricultural policy in years. While some hailed the end of protectionism, others saw the beginning of the end for small farmers. Under the new GATT-WTO agricultural regime, the Philippines committed itself to eliminate quantitative restrictions or quotas on the imports of all agricultural goods with the exception of rice. While the quota was retained for rice, the country was required to grant "minimum access" to imports of that commodity. with the volume rising from one percent of domestic consumption in the first year to four per cent in 10 years. Department of Agriculture estimates put the minimum access volume (MAV) of rice at 30,000 metric tons in 1995, rising to 227,000 in 2004.
For other agricultural commodities, including corn and sugar, the Philippines was required to provide minimum access at low tariffs to a volume equivalent to three per cent domestic consumption in the first year, rising to five per cent in ten years. Beyond this volume, imports of a commodity can be taxed at higher levels, like 100 per cent or more. For corn the volumes allowed to come in at a low tariff of 35 per cent were 65,000 metric tons in 1995, rising to 212,000 in 2004.
In fact, rice importations in 1995 came to 245,000 metric tons--far above the MAV of 30,000 metric tons--partly in response to a rice shortage that was partially created by powerful cartel of rice wholesalers. Then, in what one observer characterised as a "knee jerk reaction" to the 1995 crisis, the government imported 884,000 metric tons, compared to a 1996 MAV of 62,000 metric tons. This was the highest influx registered in the 1990, despite the fact that rice production in 1996 was the highest--over 11 million metric tons--registered in the 1990's. Not surprisingly, the Philippine Peasant Institute saw the massive importation as a "dress rehearsal" for an eventual deregulation of the rice trade beyond GATT commitments.
As for corn, 130,000 metric tons were imported in 1995 and a record (for the 1990's) of 400,000 metric tons in 1996, mainly from the United States. Under MAV, only 135,000 metric tons of corn could come in at a relatively low 35 per cent tariff, with the government required to slap a 100 per cent tariff on corn imports beyond that level. However, a significant portion of the 265,000 metric tons of corn imports above the MAV level appears to have come in at the MAV 35 per cent tariff rate, thanks to an administrative order allowing expansion of the MAV limit during "shortages." This development owed itself to the strength of a growing alliance between foreign corn exporters and local end-users like feedmillers and livestock raisers that had a great interest in lower-priced corn imports.
Even as their market was invaded by foreign imports, the rice and corn smallholders continued to be deprived of the means to compete against them. The GATT safety net that the government had played up as a sort of Marshall Plan for local agriculture was simply proving to be an illusion.
First of all, it excluded any direct-income support payments such as those being provided European and US farmers by their respective governments, so that the word safety net to describe the program was, in fact, misleading. Moreover, there were very few, if any, directed programs aimed at upgrading the technological capabilities of farmers or preparing them on the ground for the shift to export-oriented crops that government policy was, after all, encouraging to do. For the most part, the programs funded were ones that would contribute very indirectly to upgrading farmer productivity, such as more farm-to-market roads or more irrigation facilities.
Second, the money to fund these already limited programs was simply not materialising in the quantities promised. As noted earlier, the promised fund would total P128 billion, to be released some P32 billion annually. According to agricultural expert Raul Montemayor, only 44 per cent of the P32 billion promised for 1995 was actually appropriated, and of this amount funding for new projects--that is, projects begun after the ratification of GATT--came to the paltry figure of P2.8 billion. In 1996, the proposed P34 billion was reduced to P14.6, and of this amount the funding for new projects was, at P2.2 billion, even lower than the 1995 figure. Thus, after two years, the GATT safety net fund had a shortfall of some P35 billion.
Not surprisingly, the combination of greater imports, lower prices, and few safety nets was likely to accelerate the displacement of thousands of rice and corn farmers, precisely the effect that the agricultural technocracy had hoped for but could not get to admit quite openly.
Evidence of an intensifying crisis for smallholding corn producers is accumulating. As Kevin Watkins noted after a field trip in Mindanao, "increasing imports of corn have been associated with a marked decrease in domestic corn production, and in the area planted. In South Cotabato, where most of Mindanao's corn is produced, there was a 15 per cent decrease in production last year [1994]."
A field trip to Bukidnon in 1996 revealed to MODE researcher Charmaine Ramos that indeed the bleak prospects for corn under the new regime was forcing people to shift to other crops, but not in the rosy fashion painted by pro-GATT advocates: "I found out that the Southern part of the province is steadily being converted from corn to sugar. But only farmers with relatively bigger farm lots are able to shift easily. Smaller farmers are forced to lease their lands simply because they have no means to finance the capital requirements of shifting to high-value crops."
One recent study shows that the stronger trend might not be the conversion of cornland to commercial crops but the conversion of cornland to real estate, industrial, and other non-agricultural uses, which is said to be taking place at annual rate of 26.5 per cent.
The Crisis of Agricultural Policy
Agricultural policy for the Philippines is in crisis. The various parts of such as policy -- trade, agrarian reform, technological upgrading, and food security--are very loosely articulated with one another. However, in so far as one can say that there is a common thread running through these different components, it is that of relying on market forces as much as possible--that is, "reforming" Philippine agriculture through accelerated deregulation and liberalization, though this process must be tempered by pragmatic political considerations.
The status of agrarian reform. As shown by the cases of Taiwan and Korea, agrarian reform is the key to a healthy and prosperous smallholder agriculture that is also efficient and productive. In some sectors of agriculture, particularly for the sugar industry, it is probably the main element needed to raise efficiency and productivity. These views are not shared by the government's agricultural specialists, who would prefer liberalization as the solution and who are, in some cases, quite sceptical about any immediate productivity gains from land reform. It is partly for this reason that the Comprehensive Agrarian Reform Program (CARP), is going extremely slowly, with the Department of Agrarian Reform (DAR) having distributed only 53 per cent of its 1987-1996 land distribution target, or 1.7 million out of 4.2 million hectares remaining to be distributed. Since most of the remaining land is private land, the main target of land reform, landlord resistance is likely to be fierce and political will is likely to be weak.
The record of the Department of Environment and Natural Resources (DENR), the other implementing agency for agrarian reform, is even worse, having distributed only 46 per cent, or 1.7 million out of the targeted 3.7 million hectares of public land.
Unless it is speeded up, CARP is likely to be sabotaged by the conversion of prime agricultural land to non-agricultural uses by rural elites, many of them taking advantage of a Department of Justice opinion which argues that lands classified as non-agricultural in town zoning plans prior to June 1988 are not covered by CARP. As of December 1996, the DAR had cleared a total of 46,929 hectares for conversion. In fact, whether or not they were cleared by DAR, land conversion was proceeding at an alarming pace, with one study claiming that sugarlands are being converted at an annual rate of 36.4 per cent, coconut plantations at 28.9 per cent, corn farms at 26.4 per cent, rain dependent rice paddies at 5.8 per cent, and irrigated lands at 1.1 per cent. Equally worrisome is CARP's being effectively reversed by the absence of any articulation with a trade policy and food security policy.
Food security policy.
As for food security policy, this had become a poorly managed policy of food stockpiling that has failed to adequately anticipate actual grain shortages; refuses to discipline the powerful cartels that control the trade in basic grains; often defines "shortages" in response to the needs, not of the population but of interest groups like corn end-users; and resorted to foreign imports of rice and corn primarily rather than to local production--a preference calculated to push the trade liberalization agenda of the government. As Francisco Lara has pointed out “The policy on trade...shows that most of the strategic reserves and buffer stocks will most probably come from external sources. The FSPA [Food Security Policy Agenda] states that importation can be resorted to if the local buying price goes beyond the price support ceiling offered by the NFA [National Food Authority]. This is in fact the local scenario. There are no clear-cut definitions of the term enough local production" nor are there any rules governing the movement or a calibrated response of NFA prices to the predatory tactics of traders. In short, it does not take a lot of foresight to recognise that the FSPA recommendation is nothing more than a formula for importation. “
In short, despite a rhetoric of concern about the fate of small farmers, the government's policy on agriculture and food security is driven by doctrinal liberalization, by a strong belief in the idea that greater exposure to the impersonal forces of the international market will guarantee greater efficiency in agriculture, bring about food security, promote consumer interests, and match farmers to activities in which they have they have a "comparative advantage."
There is only one major problem with this strategy. Given the fact that the free market in international agricultural trade is scarcely a reality, doctrinal liberalization would only result in expanding the position of subsidised US producers in the local market while consolidating the positions of EU amd US producers internationally. The likely result is not local competitiveness but the worst of all possible worlds: domination by subsidised foreign agricultural systems, loss of competitiveness in most commodities, and the silent destruction of vulnerable rural communities.
Formulating a New Approach
A new approach to food security is urgently necessary and it will not come from the current administration. With the upcoming elections and change of administration, however, this might be an appropriate moment for NGO's and other groups and individuals concerned with the future of Philippine agriculture to intervene in the political process to formulate and push for the adoption of a new strategy.
What could be the elements of a new approach?
Broadening the concept of food security. First of all, it must involve a more complex view of food security than making food available at low prices to urban consumers, which is the main element in the government's definition. It must include assuring the capability of a country to produce the bulk of its food necessities in order to protect it from the volatility of world trade at a time that tightening grains supplies appears to be the immediate future trend, a position which would translate into greater market power for the dominant agricultural exporters. As Lester Brown has pointed out, trends in world agricultural demand and supply indicate that "the world grain market soon will be converted from a buyer's to a seller's market." If this is the case, then "importing countries will soon find themselves competing vigorously for supplies of grain that never seem adequate. In such a world, the politics of scarcity will replace the politics of surplus, bringing the risk of grain export embargoes in countries trying to control inflationary food prices."
Food security must certainly carry as a key component the provision of food at reasonable prices to consumers, but this must be balanced by a concern for the survival of local producers, especially smallholder producers of rice and corn, in a world where they face cutthroat competition form subsidised northern producers.
Central to food security is the consideration of stability in rural areas, both political stability and demographic stability, and this can only be assured by policies that assure prices and purchasing policies that translate into the well-being of smallholder producers. Demographic stability for the rural areas is essential if we are to avoid the augmentation of the already burgeoning urban poor population by a significant number of the four million rice and corn farmers that are potential candidates for displacement by indiscriminate agricultural trade liberalization.
Finally, food security must include the dimension of ecologically sustainable agricultural production, for nothing could be more detrimental to the food security of future generations than the continuation of the soil and environmental degradation of agricultural land associated with chemical-intensive production of either food or export crops.
In short, food security policy must be part of a an integrated policy for sustainable agricultural development that serves the interests of smallholder producers, consumers, and future generations of Filipinos.
A strategic approach.
The second key proposal is for government and NGO's to replace the current posture of doctrinal deregulation and yielding more and more ground to uncontrolled market forces in the determination of policy. This is not to return to the old protectionist policies, nor is it to oppose all moves to deregulate and liberalise. It is to move beyond the antiquated polarities of protectionism versus liberalization to a strategic food security and agricultural policy. This is simply applying the approach and methods of industrial policy to agriculture. Such an enterprise is of some urgency, since the big agricultural powers have more explicitly defined their policies not simply as pushing for free markets but as state-led strategic trade approaches that directly benefit one's exporters. USTR Charlene Barshefsky, for instance, has said “There are some who believe that simply opening markets on a global scale is the be-all-and-end-all, no matter how it is done or no matter who benefits. I subscribe to a different view. It is imperative that we open markets in a manner consistent with the rules of the WTO, but we must make sure Americans benefit directly from the process, and to do that Americans must drive the rules of the new global landscape and the opening of markets.”
In agricultural trade policy, this translates, in her words to a USTR-led "aggressive campaign to open agricultural markets around the world....”
Elements of a Strategic Policy for Agriculture and Food Security
A strategic trade policy covering the interrelated areas of agriculture, agricultural trade, and food security must take a leaf from Barshefsky and be put into motion as an offensive strategy, with external and domestic prongs.
The external thrust. Externally, the first order of business if to stand one's ground against bilateral threats, such as the one recently uttered by Barshefsky on the Department of Agriculture's standing by its corrected MAV figures for pork and poultry: "The Philippines continues to place barriers in the path of US exports of pork and poultry. We have had enough." The appropriate response to this is to call the US bluff, to say "We have had enough of your bilateral threats. And if you want to haul us before the WTO, so be it."
The government must also be aggressive in invoking provisions of the GATT Uruguay Round to defend its farmers, such as restricting corn coming in under MAV volumes by resorting to anti-dumping provisions, especially when the price of rice or corn diverges significantly from local prices. Sanitary and phytosanitary considerations to protect the health of the population are recognised by the GATT-UR Accord, and they may be legitimately invoked against the heavily chemically treated imports of fruits and vegetables, in the process assisting one's own fruit and vegetable growers. If the Japanese and Koreans can convincingly utilise such measures against US products, why can't the Philippines?
Philippine officials must approach the WTO rules in the same way a good defence lawyer approaches criminal law, which is to exploit the ambiguities of the system for its clients--that is, for the country's small farmers.
These tactics must be part of a broader strategy coordinated with the Cairns Group and with Southern countries aimed at eliminating the Greenbox provisions for direct income subsidies for Northern farming groups and other inequitable measures, while pushing for longer schedules and looser rules for adjustment to GATT by the developing countries. Such a coalition and strategy must be constructed now to be able to be a factor influencing the WTO's review of the Agricultural Accord that is scheduled to take place in 1998 or 1999.
Part of the agenda of such a coalition might be the creation of a "Fund for the Competitiveness of Less Developed Country Producers." This would be a Fund to provide direct income payments to agricultural producers in the South displaced by market openings, which they could either use to improve their competitiveness, finance their survival needs, or facilitate their transition to other occupations. This fund would be provided by the EU and the United States, and their contributions would be tied to their level of import penetration of the agricultural market of a country. Penalties would also be a source of funds, so that rises in the levels of grain production in the EU and US--which effectively means increases in surplus that must be exported--could be "taxed," while decreases in production levels could be rewarded through various mechanisms.
Domestic components.
The domestic component of such a strategic policy must be part of a broader policy for a strategic transformation of the agricultural sector--as opposed to a free-market transformation, where government abdicates its critical management role. A central element of this policy is a more strategic use of agricultural trade to achieve desirable outcomes in agricultural development. Strategic trade policy could include lowering tariffs on fertilisers and other inputs for grain production to enable corn and rice farmers to produce with lower costs (even as, of course, R&D efforts are intensified to develop less chemical-intensive and more ecologically sustainable production technologies).
Another element of strategic trade policy may be to temporarily lower the tariffs on sugar imports while at the same time accelerating the agrarian reform process in sugarlands. This will have the effect of a double squeeze on the sugar hacenderos, whose preference to invest in conspicuous consumption instead of measures to improve productivity is largely responsible for the higher price of local produced sugar. At the same time, it will provide a historic opportunity for land to pass to sugar workers' cooperatives, which, given appropriate levels of government support and innovative self-help initiatives, can probably manage the industry more productively. Of course, tariff levels must be raised once the reform process is underway, so as to provide strong incentives for the land reform beneficiaries to increase their productivity.
Accelerated land reform in rice, corn, and coconut lands must also, of course, take place concurrently, and land conversion must be frozen and rolled back. It must be remembered, of course, that while land reform may well be a precondition for productivity increases, it is not a sufficient condition, and the necessary credit, extension, and technology assistance services must be present, following the Taiwanese land reform example.
A strategic policy for agriculture that integrates trade and development must also, as the Philippine Peasant Institute points out, begin to focus on the (as yet largely underdeveloped) linkages between the agricultural and food-processing industries. Currently, local farmers often find themselves pitted against end-users like hog raisers and poultry farmers, who prefer cheaper foreign to local imports. The interests of both can, however, converge through the use of trade and price management that ensures that the price spread between imports and local commodities is not too great; directed R&D efforts to raise the quality of local commodities, so they can compete on quality though disadvantaged in price; massive infrastructure investments so as to reduce transportation costs for small farmers; and even micro-efforts on the part of the Department of Trade and Industry, for instance, "to match producers with markets."
If such steps are taken to forge tighter domestic forward linkages, the effects could be quite significant. In a study by economist Orville Solon, for instance, it is claimed that “The food processing sector reveals itself as a key which could turn on the dynamics of the agricultural sector with considerable effects on industry. A 20 per cent increase in the final demand for food processing alone will require increases in the output levels of traditional domestic crops (17.19 per cent); traditional export crops (18.18 per cent); non-traditional domestic crops (5.82 per cent); non-traditional export crops (3.95 per cent); livestock and poultry (12.04 per cent); fisheries (2.8 per cent); food processing (18.16 per cent); wood and paper (4.43 per cent); chemicals (3.46 per cent); construction (3.82 per cent); transport and communications (3.06 per cent).”
Furthermore, as part of a strategic plan for agriculture, the intervention capabilities of the NFA must be strengthened, so it can put into motion a sophisticated process of calibrating its purchasing of grain at reasonable farmgate prices for farmers and its provision to consumers at reasonable wholesale prices. Proposals to eliminate the NFA's sole authority to import rice or to trim its interventionist role in other areas would amount, like so many other proposals from free traders, to a cure worse than the disease. What is needed is a thorough revamp of the NFA and other agencies in the agricultural bureaucracy -- a program of reform that would include the institution of higher pay levels to reduce temptations on the part of bureaucrats to succumb to pressures and bribes not only from cartels but also from end-users who constantly pressure them to declare a shortage in this or that grain or foodstuff in order to increase import levels.
Last, but not least, a strategic policy for food security, agricultural trade, and agricultural development must not be put into motion by government alone. A structure of participatory decision-making on food security and agricultural issues must be created that includes the multiple actors with a stake in a sound strategic agricultural policy. Francisco Lara of MODE advances the interesting proposal that "Food Security Councils" be formed that would include representatives of farmers groups, consumers, government, agriculture-oriented NGO's, small and medium food processors, and other stakeholders.
Such a body can be tasked to draw up the national food security, trade, and agricultural development plan; create clearcut criteria to determine situations of grain shortage that might justify the higher importation of grain and other foodstuffs; monitor import price levels and make decisions on invoking "anti-dumping measures"; monitor and accelerate agrarian reform; determine and monitor implementation of government expenditures for agriculture; and determine and promote research and development in sustainable development agricultural technology.
Of course, NGO's must be careful lest such a Food Security Council turn into another Philippine Council for Sustainable Development (PCDS), an government-NGO grouping that has been justly criticised as being simply a government propaganda machine for its largely rhetorical sustainable development initiatives and providing a "sustainable development" facade for its anti-environmental economic liberalization program.
The foregoing sketch of a "New Deal" for agriculture may well be incomplete. The important point to stress in conclusion is that what such a strategic policy amounts to is bringing agriculture and food security from its peripheral, orphan status to the very center of attention of government, civil society, and the private sector. Only such a strategic policy, and not one of do-nothing liberalization as foreign agro-monopolies eat up our local market and throw millions of our farmers out of work and reduce them to the edge of survival as members of the urban semi-proletariat, can arrest the deepening crisis of the Philippine countryside.
*This article first appeared under the title "Strategic Policy for Food Security" in Public Policy, Vol. 1, No. 1, October-December 1997. A great many of the ideas advanced here are not original. I have borrowed them--shamelessly--from people and organizations who know a great deal more about food security, agricultural trade, and agricultural development than me, particularly Kevin Watkins of Oxfam UKI, Francisco Lara, Ces Ochoa, Jocelyn Cajuiat, Au Regalado, Charmaine Ramos, and other members of the staffs of MODE and the Philippine Peasant Institute. The manner in which the ideas are brought together--the "ensemble"--is, of course, my doing, and for the shortcomings of this effort I take full and sole responsibility. I must also note here that I owe the notion of a "strategic policy" for food security and agriculture to an unlikely source: United States Trade Representative Charlene Barshefsky.
**Walden Bello is co-director of Focus on the Global South and professor of sociology and public administration at the University of the Philippines.
Footnotes