The Agreement on Agriculture: change requires a hero's journey

by Aileen Kwa

This paper was presented Seminar on the Agreement on Agriculture co-organised by the South Centre, Institute for Agriculture and Trade Policy (IATP), Action Aid and Focus on the Global South.

I feel today as if we are witnessing a very frightening movie unfold. And we are at that point in time, where the music, loaded with suspense, is being played. And in a second, BANG, something catastrophic is about to happen (eg somebody is about to be murdered). And we are at that point just before the catastrophe hits.

And I feel extremely distressed, because we seem, as a collective, to be quite blas้ about the destruction that is about to descend.

I feel distressed because after Seattle, there was a mood of upbeatness, as sense of having had some amount of efficacy, that to an extent, we had put our foot down, and it made some difference to the turn of events. Today, I get the sense that we have returned to the pre-Seattle mood of becoming victims again. When I say that, I mean that we again get into this mindset where we think that well, theses are the realities at the WTO. For the most part, if the US and EU decide that they want X, then there is nothing much we can do about it. The most we can do is damage control.

And yes, what has been taking place here in Geneva since Seattle has been wearing down of the fighting spirit of the South. Since then, the WTO has been telling the public that negotiations are underway, things have been moving along. We know that in terms of texts or concrete positions, there hasn’t been much movement in positions.

BUT in fact, they are right. Something else HAS been happening. And that something is that the EU and US appear to look interested and to listen in developing countries’ concerns, but do nothing about it. They dangle the carrot in front of us, hold consultations on the issues of interest to us, such as implementation, but never in the end deliver. In the process, we are being tired out and worn down. It has diminished our fighting spirit, so that increasingly, we narrow down our vision of what might be possible. When before we might have had a bigger vision of what we wanted, that vision through this type of process gets slowly but surely strangled.

The second step in this process is that after wearing us down, one of the powers – maybe the EU, comes along and plucks a crumb that has been dangling before us and puts it in our hands. And by that point, we are so desperate and therefore so grateful for that crumb, that we open our arms and embrace the EU. In one hand, we receive crumbs, and with the other, we invite the other party into our countries and give them full rights to our markets and to exploit our resources.

Maybe this is just slightly pessimistic, but I think it is also quite a good reading of what has been happening since Seattle (or largely, what happens daily at the WTO). After some time, we become increasingly pragmatic. And pragmatism can mean several things:

1) That we narrow down our vision of what we really want. (eg, from extracting full equity and asserting our rights, we decide that we will accept extracting a tenth of what should be our fair share).

2) We accept crumbs given to us, and give away our jewels (we agree to give the other party just about anything they want in return for maybe just a bit of market access) because we have become so desperate.

3) Pragmatism also leads us to betray our compatriots. We act in our own interest and take a position that lets our compatriots down.

4) This is the worst level – but is unfortunately, intrinsic to the nature of the WTO. We become cannibals. We eat up our best friends, and think that this is normal. My oil palm producers can destroy your oil palm producers and increase their hardship and poverty, but so what?

Maybe, just maybe, there could be a different way? Let me come back to this later and now address where we are in agriculture.

The Importance of a Basic Level of Food Self-Sufficiency in Developing Countries

For the majority of developing countries the Agricultural sector is different from other sectors and requires particular care when formulating policies – especially those oriented towards liberalisation because

1) It is the main source of employment. For low-income countries (which make up the majority of WTO members), it accounts for 70 –80 per cent for the labour force. It is about 30-40 per cent for middle income countries, and only 4% for high-income countries.

The crux of the matter is that it would be impossible for governments to provide stable jobs and income to the rural masses, if agriculture, as a source of livelihood AND food security is destroyed. In order words, if governments are to implement import policies to replace local production, there must be alternative employment.

The reality is that for the majority of the rural population in developing countries, access to food is secure only if they have the means to produce their own food.

2) Local food production is crucial for most developing countries because to import food aggravates the already tight budgets of developing countries, and in the long run, can lead to aggravating debt problems. And the other problem here when budgets are tight is that the country becomes very vulnerable to price fluctuations (over which they have no control). Slight fluctuation in prices can lead to food shortages.

3) Food Security, National Security and Political Sovereignty

The Question of Political Sovereignty: There is no surer way for the US or EU to keep a developing country under their thumb, then when that country has neglected it own food production capacity and is directly dependent on them for food.

This is WHY the EU’s CAP came into being. And the same goes for Japan and US. Japan continues to support their rice farmers even when their production costs are many times the cost of rice from Thailand. Yes, they are concerned about their small farmers. But that is not the crux. The crux is political sovereignty. What alternatives do I have when I need urgent food supply, but at the WTO, I’m opposing new multilateral rules in government procurement? How strong can my opposition be?

National Security: There is no better way to get an internal conflict started or to have political instability when there is shortage of food. Under GATT Article XXI, national security issues are exempted from the WTO trade disciplines. Food security is inextricably linked to national security and, for developing countries, should also be treated in the same manner.

4) Broad-based development in most developing countries necessitates that the rural sector is not neglected, but in fact developed. But when I say agricultural development, though, I do not mean industrial agricultural development, and the production of cash crops. By agricultural development, I mean giving the support to small farmers so that they can firstly sustain their own needs, and secondly trade their surpluses.

Improving the welfare of the rural masses is important for the overall development of a country because it stimulates the broader economy. When the rural masses are so poor that they do not have purchasing power, they do not constitute an important market for domestic industry. This in turn means that domestic markets are too small to stimulate economic activity, so that production is largely directed toward foreign markets and urban elites.

When this happens, there is a lack of structural incentives at the national level, to provide better living standards for the poor. Poverty then becomes a vicious cycle that in itself is an obstacle to development.

Developing Countries’ Agricultural Liberalisation Experiences

Agricultural liberalisation either through structural adjustment or WTO has not had a positive impact on small farmers, food security, livelihood security and rural employment. In many cases, it benefits a very small group of the bigger exporting farmers. However, small farmers have tended to become increasingly disenfranchised.

In conducting 14 country case studies of WTO agricultural liberalisation, the FAO has come up with these dismal results:

1) Few studies reported improvements in agricultural exports in the post UR period. The typical finding was that there was little change in the volume exported, or in diversification of products and destinations. And NOTE THIS: Developing country agricultural exports as a percentage of world exports today are slightly below the levels they were in the 1970s.

2) Food imports were rising rapidly in most cases. Some regions were facing difficulties coping with import surges due to ‘detrimental effects on the competing domestic sectors’ On the whole it was observed that while liberalisation brought about an almost instantaneous surge in food imports, these countries were not able to raise their exports due, amongst other factors, to supply-side constraints.

3) There was a ‘general trend towards the concentration of farms in a wide cross section of countries’ While the concentration of farms led to increased productivity and competitiveness, in the absence of safety nets, the FAO found that this process marginalised small farmers and added to unemployment and poverty.

4) For many developing countries, key agricultural sectors that were vital for the economy in terms of food supply (i.e. also food security), employment, economic growth and poverty reduction, were being seriously eroded due to the inability to compete with cheap imports.

Developing countries on the whole are not benefiting economically from agricultural liberalisation. The balance of payments situation has worsened. From a socio-economic perspective, the levels of food insecurity, unemployment and poverty have deteriorated.

Case Studies

We have implemented our export-oriented policies, but what is happening? More and more countries are becoming net food importers. Isn’t it ironic, that we are so caught up in thinking about markets abroad, that we have actually forgotten that we have our own markets at home, and we give our own markets away freely?

PHILIPPINES: Take the Philippines for example. The Philippines used to be fairly food self-sufficient. In some years before becoming a WTO member, it was even a net food exporter. They used to have good regulations for their small farmers – for example, the Magna Carta for Small Farmers, 1991 which prohibited the importation of agricultural products that were produced locally in sufficient quantities. This legislation offered blanket production to small farmers through measures such as quantitative restrictions. However, since 1995, tariffs and quantitative restrictions have been dismantled. The country is now on the whole, a net food importer. Rice and corn, the staples, and traditional products which small peasants planted are now being imported. Millions of peasants are facing drastic drops in income because of the cheap corn and rice imports.

The projects peasants have undertaken attempting to export high-value agricultural products unfortunately have largely been a failure. (I will come back to why these projects fail later).

The Philippine government has admitted that 350,000 jobs are lost annually, mainly from labour intensive traditional crops – corn, rice and sugar. In the corn sector alone, 45,000 jobs are lost each year.

KENYA: Kenya used to only import 12% of its cereal needs. Now it imports 35% of its cereal consumption. The food bill has increased 47% between 1991-1996. This is problematic for countries when they have drastic falling terms of trade. Kenya today can buy only พ of what it could buy with the same amount of exports in 1980.

SRI LANKA: The FAO reports that more than 300,000 jobs have been lost as a result of cheap imports and therefore drops in production of onions and potatoes for example.

THAILAND: Thailand is Asia’s only net food exporter. One gets the image of Thailand having bounteous food production. But in fact 25-30 per cent of its population are chronically undernourished. Small peasant rice farmers (are integrated into the world economy) but they are caught in a cycle of vicious debt – between the borrowing from the government banks and the loan sharks.

Farmers just cannot make ends meet because of tariff reductions and cheaper imports. Farm gate prices are falling to chronically low levels. In 1997, the price of palm oil was 4 Bht per kg. In 1999, it was 0.75 Baht per kg. Rice before the economic crisis was 8,000-10,000 baht per tonne. It is now 4,000 Bht.

In contrast, the price of fertilizers, pesticides and herbicides have risen by as much as 40% between 1997-1998.

Rice farmers lament that when all the bills are paid, there is not enough left over to buy food, or look after their families’ needs.

Small Farmers and Why Export-Oriented Agriculture Does Not Bring Wealth

Why is this happening? According to the theory, once our farmers increase our exports, we should be able to pay for imports and have more left over. Eventually, farmers will be better off and there should be food security and general development.

But in reality, experience on the ground has shown that engaging in export products which are foreign to small farmers, which require technological know-how that is not locally available or familiar, AND which requires expensive inputs that are imported, is fraught with so much risk, that the small farmers very often end up in debt and many even lose their land as a result (if they had some to start with!). The bigger farmers do survive and do well. And then you have the situation of the bigger farmers increasing in size, and greater poverty and disenfranchisement at the level of the small farms.

In converting to new export oriented cash crops, small farmers face unfavourable economies of scale. The costs are prohibitive, and are higher for small farmers, and the risks – pest infestations, huge price fluctuations, the high quality standards demanded in the importing market – are extremely high. Only the big farms have the financial capacity and access to technology to weather the unpredictable price fluctuations and environmental hazards. Too often, the big farms gain and the small farmers find themselves in debt and gradually squeezed out of the sector.

The hazards and risks include the following:

The other consequence of the industrial agricultural model is its environmental unsustainability. As a result of huge inputs of fertilizers and pesticides, the land quality becomes less and less productive. Farmers get into the pesticide treadmill (needing more and more fertilizers to get the same output), which becomes financially difficult for small farmers, and ecologically unsustainable. This again has livelihood implications for those living off the land.

Agriculture that Works for Small Farmers

What type of agriculture works for small farmers? For most developing countries, small farmers require support, not to produce for the export market, but to convert to agro-ecological, organic or sustainable agricultural methods and produce for themselves and the local market.

It may come as a surprise, but this type of small-scale farming is in fact MORE productive and therefore MORE efficient than industrial farming.

In contrast to the industrial, chemical and mechanical-intensive model of food production, small-scale food production in developing countries can be characterized as follows:

1) Intensive use of biodiversity rather than external inputs

2) Use of crop-livestock integration and cooperation, rather than that of competition between crops, livestock and humans

3) Use of intercropping and polycultural methods, rather than monocultural production

4) Use of internal inputs for both crops and livestock, such as local labour, knowledge, and organic fertilizers, rather than importing expensive external inputs – chemicals, foreign knowledge, machinery.

Socio-economic, Development and Food Security Implications

Perhaps the most important dimension of small-scale, environmentally sustainable food production is that it can provide a decent livelihood for small farmers, with fair returns to their labour - if there is a supportive larger policy environment. These systems have the potential to offer economically favourable rates of return since the costs of inputs are not exorbitant.

Question can arise as to whether the small farmers will be able to produce sufficient food for themselves. Projects in alternative production methods in fact commonly result in increases in production of 50 – 100 per cent. In some of these systems, yields of crops that the poor rely on more – rice, beans, maize, cassava, potatoes, barley – have been increased by several-fold, relying on labour and know-how more so than on expensive purchased inputs. For example, some projects emphasizing green manures and other organic management techniques can increase maize yields from 1-1.5 tones per hectare (a typical highland peasant yield) to 3 – 4 tones per hectare.

Furthermore, not only are yields increased, but crops in fact display more stable levels of total production per unit area than the industrial systems. For example, the yield variability of cereal / legume polycultures is much lower than for monocultures of the components.

Small farmers’ food security is therefore increased because yields are more stable. Also food security is assured when small farmers are not constantly at risk to lose their entitlements, such as their land, which provide them with food and income.

In sum, the potential benefits to small farmers include increases in food supply, increases in incomes, reduction of poverty, reduction in malnutrition and general improvement to small farmers’ overall livelihoods.

Ecological Implications

Small-holder, environmentally sustainable production methods in fact conserve the soils as well as ensure better water management and harvesting. These methods also enhance biodiversity. Genetic diversity in turn increases resistance to pests and diseases.

For example, researchers have compared crops which have been organically grown with those under chemical intensive methods, only to find that pests were commonly absent in the organically grown crops, while the chemical intensive plots showed relatively high levels of pests. The same results were also true when comparing plant diseases, soil quality and soil erosion. For example, fewer earthworms (their quantity is an indicator of soil quality) were found in fields planted with chemical intensive methods as compared to the organically planted crops.

Small farmers also tend to invest more labour into their land, and tend to use the land in such a way as to maintain its long-term production sustainability when it belongs to the family. This is in contrast to big corporate farms which use land as a factor of production and source of current and short-term future profits.

 

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The Big Picture: Putting Development at the Centre of the Multilateral Trading System

I would like to refer you to Dani Rodrik’s work, where he talks about the need to shift from a ‘market access’ mindset to a ‘development’ mindset at the WTO. Essentially, this means that we should stop evaluating the trade regime, from the perspective of whether it maximises the flow of trade, and ask instead – whether or not the trading arrangements – current and proposed, maximise the possibilities of development at the national level.

He bases his argument on his research which shows that there is in fact no compelling evidence to show that reductions in trade barriers systematically and unambiguously leads to superior economic performance. Firstly, he says, governments need to devise DOMESTIC investment plans to kick-start growth and also establish institutions of conflict management. Liberalisation tends to be successful only if there is firstly a strong and vibrant local economy as well as existing governmental institutions which take on substantial responsibility in building physical and human capital.

He also talks about the need to get economic history right and the success of import substitution policies which were used for two decades by developing countries until the early 1970s. These policies in fact worked very well in terms of raising domestic investment and productivity.

The message is that before opening up our economies, we really need to a healthy domestic economy that can withstand liberalisation. Otherwise, openness instead could lead to deindustrialisation. For the developed countries, history shows us that their growth first took place as a result of stimulating their domestic economy. Trade and exports were follow-on effects of growth and a robust economy.

RECOMMENDATIONS

Today, I would like to challenge you to firmly put on the table, at the WTO, your positions (not those that will benefit your corporations in developing countries at the expense of the masses in poverty), but positions that will bring broad based development to your country.

If we rethink all our WTO agreements from the point of view of what will bring development, it is likely that our proposals will be quite radical.

Many of you will think that this is undoable. But what is the alternative? If we lose our vision of what we need for REAL development, and take on a damage control attitude, we will be heading for another new round, for even less tariffs and protection of our agricultural sector, for opening up our countries to services from foreign providers … and then the new agreements – government procurement, investment, competition.

There is no new round that is less onerous than the round before. Each round calls us for bigger commitments and therefore, for developing countries, brings us fewer benefits. What will the situation be for developing countries, for the poor when we implement a more severe version of the Uruguay Round in 5 - 10 years? We know, already, that the likely outcome will be more of what is already happening now, so that the poor will become poorer.

So here are my recommendations which I challenge you to take up:

1) For developing countries – Allow developing countries to take on multilateral undertakings, rather than bind them to a single undertaking structure. This has bound developing countries to take on commitments that have been destructive to their economies. It is only a 5-year old structure. Instead, for developing countries, a multilateral trading system that has separate trade agreements which countries chose from – to be signatories or not to be signatories should be seen as the only adequate and meaningful form of Special and Differential Treatment. Developing countries do not need TRIPS, nor TRIMS, and for many, not even agriculture. Trade can still take place. But we can do so on our own terms.

2) Institutional Reform / Transparency: We need to look at the rule of consensus. Amongst players that are unequal, consensus is in fact domination. Consensus does not allow us to propose. We do not get listened to. Our proposals, if not supported by the US or EU, fall on deaf ears. It only allows us to oppose, and even then, with great difficulty. We know, for example, that less than a handful of developing countries can oppose the US. Voting is already in the rules. Insist that we use the Vote and that we use it frequently. We need to categorise decisions and bring the vote back for important decisions. Voting that is confidential is more likely to give us back our voice.

AGRICULTURE DEVELOPMENT BOX:

1) Firstly, for developing countries, without being bound by the single undertaking, countries should be able to opt out of the agricultural agreement altogether. This would be suitable for countries, which have no capacity to compete, but are predominantly agrarian.

2) Use the positive list approach. List and liberalise only those products which we are competitive in, or which we export.

3) Use tariffs to counter the exporters’ subsidies (of all forms). We do not need to open our markets to dumping.

4) Much greater flexibility for products which are consumed locally (we can exclude them from being imported and also should be allowed to provide subsidies). Similarly, protection should be given to products produced by small farmers. The local markets should first be the right of the local producers.

5) All forms of subsidies in developed countries should be collapsed into a single box and reduced.

6) Transnational corporations receive the bulk of subsidies from OECD countries. Because they are already anti-competitive, make it WTO-illegal that they receive government supports of any form.

Conclusion

The outlook for developing countries today at the WTO is extremely bleak. More of the same of these current policies will mean plunging millions, even billions into severe poverty.

The alternative is intellectually simple: To defend our own rights and needs. We can work the technical details out within agreements. But it is courage that we need and a persevering fighting spirit. This is no less than a hero’s journey… and a collective hero’s journey at that.

I just want to end with a few words which I hope can inspire you. It is by Nelson Mandela in his inaugural speech. He has fought some formidable battles and maybe some simple truth from him can set us, at least, in the right direction.

In the passage, he makes references to ‘God’. If you do not ascribe to any God, feel free to substitute it for other words like universe or a larger force, the light, love – whatever you feel comfortable with.

‘Our deepest fear is not that we are inadequate.

Our deepest fear is that we are powerful beyond measure.

It is our light, not our darkness, that most frightens us.

We ask ourselves, ‘Who am I to be brilliant, gorgeous, talented and fabulous?

Actually, who are you not to be?

You are a child of God, your playing small doesn’t serve the world.

There’s nothing enlightened about shrinking so that other people won’t feel insecure around you.

We are born to make manifest the glory of God that is within us.

It’s not just in some of us; it’s in everyone.

And as we let our light shine, we unconsciously give other people permission to do the same.

As we are liberated from our own fear,

Our presence automatically liberates others.’

---- Nelson Mandela 1994.

So go forth, expand yourself, and fight the hero’s journey.

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APPENDIX

Case Study 1: Agricultural Liberalisation in Kenya

Kenya is an NFIDC. The average daily food consumption is less than 2,000 calories. Almost half the population is chronically undernourished. Agriculture supplies 30 per cent of GDP and 55 per cent of total merchandise exports. The sector also employs 77 per cent of the population. Food imports absorb 17 per cent of foreign exchange earnings.

Kenya had structurally adjusted parts of its agricultural sector since 1979-80. 1993 however, saw the implementation of significant and wide-sweeping liberalisation policies. All government controls over food pricing and marketing were removed. By 1995, with the Agreement on Agriculture, government bans on food imports were removed and tariffs on all products have been bound at 100 per cent.

Since then, domestic production of staples such as maize, wheat, rice, and milk have generally declined, while food imports have surged. For example, the country imported no maize at all between 1987 and 1991. In 1997 and 1998, maize imports hit levels never before experienced, at 1.1 million tonnes and 0.8 million tonnes respectively. According to the figures on cereals (white maize, wheat and rice) in Tables 1 and 2 in the Appendix, Kenya imported 12 per cent of its cereal consumption in 1990, producing 88 per cent of consumption domestically. By 1998, it imported more than 35 per cent of its cereal consumption.

At the same time, the country has attempted to move into new export areas, such as horticulture, but with only measured success due to the high costs of inputs and the EU’s high tariffs during certain seasons. Not surprisingly, the food import bill is increasing rapidly, from an average of US$164 million between 1985-1990, to US$302 million between 1991-1996, ie a 47 per cent rise. Agricultural exports too have increased, but by a smaller degree, from US$727 million to $965 million during that period – a 25 per cent increase.

Kenya however is not well placed to make these purchases. According to the World Bank Development Report 1998, Kenya’s terms of trade have declined by about 75 per cent since the 1980s so that Kenya today can buy only three quarters of what it could buy with the same amount of exports in 1980.

According to researcher Nyangito, ‘the availability of food imports allows consumers to access food cheaply…However, most Kenyan consumers depend on agriculture directly or indirectly. Food imports reduce the market for domestic agricultural products and leave the majority of farmers and workers in agriculture-related industries with no alternative sources of income…This problem is made worse by limited employment opportunities (agricultural or industrial)…’

Ref: FAO 1999 FAO Symposium on Agriculture, Trade and Food Security: Issues and Options in the Forthcoming WTO Negotiations from the Perspective of Developing Countries, Paper No 3: Synthesis of Country Case Studies, Geneva 23-24 September 1999.

Nyangito, H 1999 ‘Impact of Uruguay Agreement on Agriculture on Food Security: The case of Kenya’, Institute of Policy Analysis and Research, Nairobi.

Murphy, S 1999 ‘Trade and Food Security: An Assessment of the Uruguay Round Agreement on Agriculture’, CIIR, London.

Case Study 2: Sri Lanka’s Increasing Dependence on Food Imports

Sri Lanka is also an NFIDC. Agriculture supports halve of its population, and contributes to 22 per cent of GDP and 21 per cent of merchandise exports. Food consumption averages 2,300 calories per day, an estimated 25-30 per cent of the population is undernourished.

The government has been implementing structural adjustment policies since the late 1980s. As a result, much of government support to agriculture has already been removed. Bound tariff levels for agricultural products are at a uniform rate of 50 per cent. However, the applied rates for most of these products are 35 per cent or less.

There have been marginal increases in exports as a result of post-UR improved market access. However, the exports have not come close to matching the import increases. According to the FAO study, the impact of the AoA has been more pronounced in the area of food imports. Food imports have witnessed significant increases since 1996 as a result of tariffication and the relatively low tariff bindings for these products. The surge in imports has led to a decline in domestic production in a number of food products, resulting in a clear drop in rural employment. It was reported that a loss of 300,000 jobs occurred as a result of a drop in production of onions and potatoes. The FAO concludes that flexibility in support in the short to medium term is necessary in order to sustain agricultural development and food security.

Ref: FAO 1999 FAO Symposium on Agriculture, Trade and Food Security: Issues and Options in the Forthcoming WTO Negotiations from the Perspective of Developing Countries, Paper No 3: Synthesis of Country Case Studies, Geneva 23-24 September 1999.

Case Study 3: Liberalisation Dismantles the Philippine Agricultural Sector

Since becoming a WTO member in 1995, the Philippine government stepped up its campaign to embrace the free trade agenda. Sweeping policy changes have been made to the agricultural sector. While previously there was legislation in place to encourage local food production, particularly of staples such as rice and corn, these have been dismantled. Significant amongst these were the Magna Carta for Small Farmers, 1991, which prohibited the importation of agricultural products that were produced locally in sufficient quantities. This legislation offered blanket protection to small farmers through measures such as quantitative restrictions.

The other major policy shift central to Estrada’s food programme has been the encouragement of farmers to convert lands from staple foods to non-traditional ‘high value crops’ for export. Acreage planted to rice and corn have been slashed by more than half, from 5 million hectares to 1.9 million hectares, freeing up land for the production of cut flowers, mangoes, eucalyptus, asparagus etc.

Concurrently, as tariffs and quantitative restrictions have been dismantled, the Philippines has been inundated with imports of staple foods that they have traditionally produced themselves. Rice imports have skyrocketed, from 200,000 tons in 1993, to 2.2 million tons in 1998. A similar scenario is true for corn, beef and pork.

At the same time, the already minimal amounts of government subsidies for staples have dropped further, from 6 to 3 per cent in rice from 1995-98, and for corn, from 2 per cent to zero.

Income from exports has not materialised. Many of the experiments with high-value crops have failed miserably. For small holder farmers who have lost the markets in rice, corn or pork, conversion to these crops requires too high a financial outlay, and knowledge that is foreign.

That the high-value agricultural exports have not been successful can be gleaned from the numbers. While in the 1980s, the Philippines was in fact a net food exporter, (there was a $6.7 million surplus in 1988), the trend has now been reversed. Instead the trade deficit has been increasing every year, from 42 million in 1994, to 670 million in 1998.

Poverty is on the rise as farmers of staples, such as rice and corn are being out-priced and are quickly losing their hold on the local markets to imports. Imported corn is only half the price of locally produced corn. It is not uncommon to find Mindanao corn farmers leaving their harvest to rot in the fields because the prices have sunk so low that it would not be worth their while harvesting and selling the corn. The other phenomenon is that corn and rice lands are left empty as small farmers cannot afford conversion to higher-value export crops.

As of 1998, 75 per cent of peasant families in corn production have been living under the poverty line. The situation is set to worsen as 12 million corn-producing families are facing further drops in income. When pressed for specifics, the Philippine government has admitted that 350,000 jobs are being lost annually, mainly from the labour intensive traditional crops like corn, rice and sugar. In the corn sector alone, 45,000 jobs are being replaced each year. The result of dismantling the traditional agricultural sector is evidenced in the high migration rate to the city from the rural areas, as well as the stream of women migrant workers that leave the country for employment abroad.

Sources:

Integrated Rural Development Foundation, 1999, ‘Five Year After GATT: What have we got?’, Occasional Paper No. 1-99.

Mendoza 1998 ‘Gender, Growth and Globalisation: Women in a Changing Rural Landscape’, Philippine Peasant Institute Briefing Paper Vol VI No. 1, July.

Bello 1998 ‘The GATT Agreement and Food Security: The Philippine Case’, Paper presented at the International Workshop on WTO Agreement on Agriculture, New Delhi, April 30-May 2.

Various interviews with Philippine NGOs, Feb 2000.

Case Study 4: Thailand - Hunger, Poverty and Debt amidst Plenty

Thailand is well known for its bounteous food production, particularly the export of its Jasmine rice. It is in fact Asia’s only net food exporter, accounting for at least 35 per cent of the world’s rice exports. In addition, Thailand exports rubber, sugar, cassava and chicken meat.

However, behind this abundance, the flip-side is that the majority of Thai farmers have been putting up with very low standards of living. By the early 1990s, 40 per cent of the rural population lives below the poverty line. Food insecurity is a reality even for the rice farmers. According to the FAO, daily food supply on average is about 2,400 calories, with an estimate 25-30 per cent of the population chronically undernourished. The rural crisis has been going on for several decades, set in motion by the commercialisation of agriculture as well as the subordination of this sector to industrial development. However, the crisis has worsened in recent years as a result of further liberalisation coupled with the on-going effects of the 1997 financial crisis.

There are a total of 5.7 million farming families. Of these, 4.7 million have no land or inadequate land to sustain them. Because of price volatility and the increasing costs of inputs, most Thai farmers find themselves in a chronic cycle of debt. The Ministry of Finance has estimated that the total farm debt is at Bht 15 billion (or $405 million), with 4.77 million families owing money to the banks. This figure does not include debt owed to loan sharks. About one third of farmers owe debts to loan sharks amounting to 5 billion baht, with interest rates as high as 25 per cent. (These are official figures published in the media. NGO estimates are much higher, with about 12 million farmers in debt, as of 1998, owing a total amount of Bht 400 billion, or $108 billion, i.e. an average of $9,000 per farmer).

A typical story is like that of the 62-year-old farmer who hung himself outside the government house in Bangkok in 1998. He had borrowed Bht 200,000 (or $5,405) and pledged to pay back the loan at Bht 270,000. However, because he was not able to pay off the loan on time, the amount increased to Bht 370,000. He borrowed the Bht 370,000 from a relative to repay the loan, and lost his land to the relative. Most small farmers are in a similar debt trap where one loan is taken to pay off the previous loan.

One of the main reasons why farmers cannot make ends meet is that farm gate prices have been falling to chronically low levels. In 1997 - 98, the price of palm oil was Bht 4 per kg. In 1999, the price dropped to Bht 0.75 per kg. The price drop is due to opening up of the Thai market to palm oil from Malaysia. Similarly, the price of rice before the economic crisis was Bht 8,000-10,000 per kg. It is now Bht 4,000 per kg. Rice was also one of the items that Thailand had to liberalise due to AoA commitments. The tariff on rice is being lowered by 0.2 per cent every year until 2003. In addition, prior to the AoA, importation of foreign rice was prohibited unless it was imported by the government. This is not the case today. Thailand must import up to 250,000 tones of rice a year by 2004. In a similar vein, the price of milk has also been greatly depressed in the last 2 years as a result of opening the market to EU subsidised milk powder (see case study 4).

As farm gate prices are on a rapid decline, the cost of farm inputs – fertilizers, pesticides and herbicides – have risen by as much as 40 per cent between 1997-1998.

Farmers are finding it impossible to make ends meet. Rice farmers are lamenting that when all the bills are paid, there is not enough left over to buy food or look after their families’ needs. Rural public health clinics saw the number of cases of stress-related illnesses increase by more than 100 per cent in 1997-98, with many suffering from an overdose of low-quality alcohol or mind-numbing drugs.

Sources

Bello et al 1999 ‘A Siamese Tragedy: Development and Disintegration in Modern Thailand’, Zed Books, London.

FAO forthcoming, ‘Implementation of the Agreement on Agriculture in Thailand’.

Bangkok Post Feb 8 1999 ‘BAAC has extended B7.4 bn to almost 124,000 farmers’, 25 Jan 1999 ‘Jobless farmers issue dire threat: Plan to seize forest land to make a living’, 25 June 1998

‘Shattering the rice bowl: Thailand’s farmers are suffering, will the ‘nobility’ ever pause to care? 25 June 1998 ‘Northeastern farmers groups muster 2,000 for city rally’.

Interview with Phitthaya Wongkul, Chairperson of Thai Development Support Committee (TDSC), Feb 2000.