Health Supreme by Sepp Hasslberger

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July 07, 2005

Agribusiness: Farming Subsidies Destroy Food Security

The European "Common Agricultural Policy" and its related monster, US grain and meat export subsidies, have been a cancer on our food production pathways, eating into food quality by stimulating industrial scale production that depletes the earth's mineral wealth. Even more importantly, these policies are driving large numbers of our small farmers off their farms which have, for thousands of years, been the mainstay of food production and have provided relative food security. Today, farmers are paid either to NOT produce, or are given subsidies even when overall production of a commodity, like milk, exceeds demand.

Foods get imported and exported for no other reason than to obtain the subsidies - often one country imports a similar amount of produce as it exports. Transport costs and subsidies are wasted for no result other than enriching those on the top of the food chain. Small farmers in Europe and the US do not qualify for the subsidies that are largely reserved for the big producers. As a consequence, many of them move into the cities and try to find other jobs.


And even more importantly, the farmers of developing nations suffer because they cannot compete with highly subsidized imports from Europe and the US. This makes a mockery out of our "foreign aid", often linked with conditions to buy so much grain or rice from the "donor" country. Aid has been accused of ruining the economy of the poorest developing nations by creating debts that have become an almost insurmountable barrier to economic development.

The World Trade Organization and the UN's Food and Agriculture Organization are not helping to re-balance things. Indeed they are beholden to huge financial and industrial interests. It seems that free trade has been given the status of a sacrosanct principle - but only as long as the direction of trade is from the rich to the poor countries. The subsidies make sure of that, as well as the rules worked out in international Committees and Commissions such as the Codex Alimentarius, which only days ago passed guidelines for supplements that favor big business and free trade over small producers and over people's health.

ISIS Org's Rhea Gala describes the agricultural disaster-in-waiting in her recent article "Agriculture without Farmers". The Institute of Science in Society is organizing a conference to discuss what to do. The Sustainable World International Conference will take place on 14 and 15 July in Westminster, London (see program here).

See the article here...

- - -

Agriculture without Farmers

The WTO and EU agricultural policies are sweeping farmers off the land in droves and threatening world food security. Rhea Gala

The full paper with references is posted on ISIS members’ website. Details here

Farming has evolved over thousands of years with the farm as the basic unit of local community and culture. Its practice was shaped everywhere by geography and the creative skills of the farmer to be optimally productive. Since the arrival of the tractor and the industrial ‘green revolution’ of the 1940s, small family farms have lost out to big industrial farms, and much of the local knowledge accumulated over the millennia has disappeared

Trade policies benefit agribusiness: Small farmers everywhere are impoverished

In industrialized countries like the UK where the population is largely urban, 200 000 farms have disappeared between 1966 and 1995. The annual UK Common Agricultural Policy budget of £3bn gives 20 percent of farmers (large agribusinesses) 80 percent of subsidies. Government figures show that 17 000 farmers and farm-workers left the land in the year 2003, having failed to make a living.

While only 5 percent of the population in the European Union (EU) are still farming, at least half a million farm-workers were still leaving the land annually before the EU was enlarged by 15 new members in May 2004. It is now likely that Poland alone will lose up to two million agricultural livelihoods as a result of joining the EU. EU figures suggest that half of north European agriculture will disappear within a generation, as it continues to be squeezed out by the institutions that claim to give it support.

In the US, between 1950 and 1999, the number of farms decreased by 64 percent to less than two million, and farm population has declined to less than 2 percent. Ninety percent of agricultural output is produced by only 522 000 farms. Canadian statistics similarly reveal that farm numbers have decreased by 10 percent between the 1996 census and 2001; there were less than 247 000 farms in the country in 2001.

This relentless process of consolidation drives the heart out of the countryside, causing social and economic decay, and replaces it with an intensive industry that cares nothing about plant or animal diversity, quality or compassion in farming, but is solely interested in bringing down prices.

‘Free trade’ policies made by and for the rich countries of the North not only destroy the livelihood of small-farmers at home, they also encourage the dumping of subsidized goods (selling at less than the cost of production) from the North onto the markets of the poor South, distorting local markets, and leaving farmers in developing countries also unable to compete.

This has become a global scandal, as 75 percent of the population in China, 77 percent in Kenya, 67 percent in India, and 82 percent in Senegal still depend on farming for their living. These numbers are plummeting, however, as families dispossessed of their land are driven to the cities, where they may find themselves unable to afford to pay for the food they used to grow.

Agribusiness degrades the environment while governments do nothing

‘Free trade’ policies of World Trade Organization (WTO) promote overproduction of agricultural commodities causing damage to wildlife depleting soil, water, and fossil fuels; and at the same time compromising food quality, with substantial repercussions on public health. They also greatly exacerbate global warming in many ways, not least the millions of unnecessary food-miles added to agricultural commodities. Professor Jules Pretty of Essex University estimated that the total external costs for conventional agriculture in the UK, paid for by the taxpayer, added up to £2.34bn for the year 1996.

The UK government remains a chief obstacle in the fight against international poverty and environmental degradation, despite its seemingly green credentials on climate change, and its recent high profile in tackling poverty in Africa. That is because the UK continues to espouse an economic model that promotes privatisation and trade liberalisation as the key to reducing poverty and protecting the environment, although that model has proved to have the opposite effects. The UK has been at the forefront of EU efforts to push through an aggressive ‘free trade’ agenda at the WTO.

Transnational corporations (TNCs) have been allowed to gain control of supply chains and exert a stranglehold on global food security through a process of ownership of seed, proprietary chemicals, and other inputs, as well as virtual monopoly of food processing and retail outlets. Yet our governments are refusing to rein in the increasing power of TNCs that have been swallowing each other up until only a handful remain.

The Agreement on Agriculture of the WTO and the Common Agricultural Policy (CAP) of the European Union are largely responsible for precipitating this global catastrophe in our food production system.

The Common Agricultural Policy of the European Union

When the EU introduced the CAP in the early 1960s, it struck a deal with the US under the framework of the General Agreement on Trade and Tariffs (GATT) negotiations. The US accepted the new border protection mechanisms put in place by the EU for food, in return for a commitment by the EU to allow unlimited import of feedstuffs from the US at zero tariff. The EU agreed because it was still a net importer of food and feedstuffs; but only 15 years later, the EU itself was producing large surpluses of grain and animal products as a direct result of this deal.

The zero tariff for feedstuffs enabled Europe’s huge surpluses of the 1970s to be dumped on developing countries, creating a major global problem. Feedstuff imports from the US had led directly to the industrialization of animal production in the EU and its associated environmental problems.

The CAP, which aimed to "ensure a fair standard of living for the agricultural community", has for many years provided direct aid to farmers based on area, production, and number of livestock units (animals). This policy gave large monocultural farms enormous subsidies, caused massive overproduction that lowered prices, drove small farmers out, and consolidated the power of agribusiness. TNCs have become vast selling seed, pesticide, machinery etc to farmers at great profit, buying produce at below the costs to farmers, and selling it on to consumers on a huge scale and at enormous profit.

The CAP reform of 2003 introduces a new system of single farm payments that ‘decouples’ the link between support and production. It comes into force in 2005-6 except for new member states, and its stated aim is to ensure greater income stability for farmers, leaving them free to decide what they want to produce in response to demand, without losing their entitlement. However, this is not the effect it will have.

Farm business consultants Andersons and the National Farm Research Unit predict a further 30 percent decrease in British cereal growers and another 35 percent decrease in dairy farmers when the new single farm payments kick in. These payments will be lower than the previous payments made to smaller farms; yet prices for produce currently remain near or below the cost of production.

A survey of English farmers showed that 87 percent did not want subsidies, only a fair return on their costs of food production. DEFRA figures showed average farm income in 2002 at £10 000; with farm-gate prices having risen just 2 percent in the last seven years. Meanwhile, supermarket prices have risen by 21 percent, and in 2002-3, Tesco’s profits were 60 percent of total UK farming income.

CAP reform was also greeted with dismay abroad. NGOs such as the Catholic aid agency CAFOD and Oxfam said it would mean "dumping as usual" for developing countries.

CAP has positively encouraged the most senseless and environmentally destructive "food swaps"

• Britain imported 61 400 tonnes of poultry meat from the Netherlands in the same year that it exported 33 100 tonnes of poultry meat to the Netherlands. Britain imported 240 000 tonnes of pork and 125 000 tonnes of lamb, while it exported 195 000 tonnes of pork and 102 000 tonnes of lamb
• In 1997, 126 million litres of liquid milk were imported into the UK and at the same time 270 million litres of milk were exported out of the UK. Twenty three thousand tonnes of milk powder were imported into the UK and 153,000 tonnes exported out
• In 1996 the UK imported 434 000 tonnes of apples, nearly half of which came from outside the EU. Yet over 60 percent of the UK’s own apple orchards have been grubbed up since 1970, largely as a result of EU subsidies

The WTO Agreement on Agriculture

US agricultural policy has traditionally promoted cumulative growth and privatisation of seed at taxpayer’s expense. That has wrung all the profit out of farming and into trading, processing, and retailing, controlled by a few TNCs. Research shows the share of the US agricultural economy going to farmers declined from 41 percent in 1910 to 9 percent in 1990, while farm input and marketing industries’ shares increased by a similar amount.

As small farmers are pushed out, others enlarge their operation, for example, in the US pig industry a quarter of all producers went out of work between 1998 and 2000, leaving just 50 businesses controlling 50 percent of all US production. Yet, independent pig farmers produce more jobs, more local retail spending, and more local per capita income than larger corporate operations; and profits generated by small producers (of any commodity) are more likely to remain in the community and benefit the local economy.

As in Europe, these policies have led to low plant and animal genetic diversity, low prices, many failing small farms, and environmental degradation, and because they are geared towards maximising export, similar effects are spreading all over the world. Seventy percent of the world’s poorest people, who directly depend on the land, are forced to compete with the rich nations.

The 1996 Freedom to Farm Bill followed by the 2002 US Farm Bill produced a vast structural price-depressing oversupply of major agricultural commodities in an attempt to comply with WTO rules. The Agreement on Agriculture (AoA) came out of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations between the US and the EU (1986-94) that led to the founding of the WTO. It provides the rules governing international agricultural trade and, by extension, agricultural production.

The AoA is based on the firm ideological belief that trade liberalization brings net benefits to all participants. By removing barriers to trade, regional specialization will increase and regions will specialize in whatever their agriculture can produce more cheaply than others. It dictates that when products are exchanged, everybody gains because the combined cost of production is less than if each region had produced its own. In practical terms, this means promoting exports and limiting the right of countries to follow a policy of food self-sufficiency.

The aim of the AoA is to reduce the use of the following three methods that favour domestic production

• Border protection against imported products (the cheapest and most widespread method used)
• Internal support measures for domestic producers (mainly used by developed countries with taxpayers money)
• Export subsidies (used exclusively by developed countries)

But the US negotiating position claims the right to spend tens of billions of dollars to compensate farmers for market failures rather than addressing those failures directly. In 2003, over half of the compensation went to less than 2 percent of farmers, again benefiting only very large businesses. Furthermore, developed countries maintain the right to continue with several forms of support that are now illegal for any other country to introduce.

The US, with its chronic overproduction in major commodities, always needs new export markets, and its policies therefore affect production everywhere. For example, rice, the staple of most of the poor nations, is grown on around 8 000 farms in the US; half of it in Arkansas where the biggest 332 rice farms, each over 400 hectares in size, produce more rice than all the farmers of Ghana, Guinea, Guinea-Bissau, Niger, and Senegal combined.

In 2003, the US’s crop of 9m tonnes of rough rice cost farmers $1.8bn to produce. Farmers received only $1.5bn from rice millers, but were sustained by government subsidies, which totalled $1.3bn. Between 2000 and 2003 it cost on average $415 to grow and mill one tonne of white rice in the US, but that rice was exported around the world for just $274 per tonne and dumped on developing country markets at a price 34% below its true cost.

Surpluses may also be designated ‘food aid’ and monetized, i.e., sold on the recipient country’s market to generate cash. Most US programme food aid is sold to recipient countries through concessional financing or export credit guarantees. The US is nearly the only country that sells ‘food aid’ to recipient countries; other donors give it in grant form, but both strategies reduce prices both for developing country exporters and for smallholders in importing countries, and deepen and prolong the depression in world market prices.

Current agriculture policies undermine human rights

The WTO’s stated aims are to raise living standards, ensure full employment, and raise incomes; and the AoA is specifically meant to further the WTO’s aims by "establishing a fair and market oriented agricultural trad system". But a report by the Institute for Agriculture and Trade Policy released in March 2005 accused WTO agriculture policies of undermining huma rights; by promoting a trade liberalization agenda that overrides efforts to improve livelihoods in four ways.

• Promote the ‘right to export’ over human rights
• Fail to tackle corporate control
• Allow export dumping at artificially low prices to continue
• Lock developing countries into an uneven playing field

Using data from the US Department of Agriculture and the Organization for Economic Cooperation and Development (2003), the report describes how exports from US-based global food companies were dumped onto world agricultural markets.

• Wheat exported on average 28% below cost
• Soybeans exported on average 10% below cost
• Corn exported on average 10% below cost
• Cotton exported on average 47% below cost
• Rice exported on average 26% below cost

This dumping has greatly increased since the inception of the AoA, and prices have dropped to new lows; but as all WTO members have ratified at least one of the international human rights treaties, these instruments could be used when designing trade policies.

The policies of international agribusiness

The laws that bind international trade derive from the ideology of international agribusiness whose common interest lies in opening up developing country markets. Close links with governments and academia are exploited to persuade policy-makers and the public that trade liberalization is clearly in the best interest of developing countries.

Agribusiness is at the heart of creating US trade policy, thanks to the Agricultural Technical Advisory Committees for Trade. Members appointed in 2003 were selected, according to former US Trade Representative Robert Zoellick, to "coincide with the continuation of the Bush Administration’s aggressive push to open foreign markets to US agricultural products.... Coordinating with our agricultural community will continue to be important as the tempo of negotiations for global, regional, and bilateral trade agreements intensifies."

In the US, as in many countries, there is a fast-revolving door between top posts in agro-industry and government; and agribusiness sits in the top ten of industry donors to candidates and political parties in US elections, contributing over $340m to campaign funds since 1990.

Policies reinforce industrial agriculture at the expense of sustainable agriculture

During this multinational bonanza, industrial agriculture and its policies are placing enormous stress on the world’s small farmers and the renewable resource base, especially water and soil. Moreover, the local knowledge and plant genetic diversity most needed to truly sustain the world are being lost. Recent research has demonstrated the resilience and productivity of many traditional agricultural practices that have withstood the test of time.

It has also documented the damage done when small, diverse organic farms, that have only one third of the hidden costs of non-organic agriculture, are pushed off the land by distorted markets, and replaced with large monocultures oriented towards export production. But government policies tend to emphasize a handful of major crops that require large fertilizer and pesticide inputs, and ignore resource conserving crop rotations for which farmers receive no government incentives, or sustainable practices such as growing clover or alfalfa to enhance soil fertility. They also perpetuate chemical-intensive agriculture by funding research on chemical fixes for agricultural problems, to the exclusion of research on more sustainable options.

Sustainable systems are especially able to compare favorably with conventional systems when the comparison includes a full cost accounting of the environmental and public health harms and benefits of each system; but these costs are usually externalized, or paid by society rather than the polluter.

There needs to be dedicated support for sustainable food production by small farmers who have served us well for thousands of years; and a curbing of the power of multinationals who serve only themselves. In spite of spin from politicians about ‘making poverty history’, their trade liberalisation policies can only continue to ruin local economies everywhere while serving the global elites.

The International Commission on the Future of Food and Agriculture suggests the following changes to agricultural trade policy that would help make the world a much fairer and healthier place:

1 Permit tariffs and import quotas that favour subsidiarity. This means that whenever production can be achieved by local farmers using local resources for local consumption, all rules and benefits should favour that option; thus shortening the distance between production and consumption. Trade should be confined to whatever commodities cannot be supplied at the local level, rather than export trade being the primary driver of production and distribution.

2 Reverse the present rules on intellectual property and patenting. These strongly favour the rights of global corporations to claim patents on medicinal plants, agricultural seeds, and other aspects of biodiversity, even when the biological material has been under cultivation and development by indigenous people or community farmers for millennia.

3 Localize food regulations and standards. Rules that benefit global food giants, such as irradiation, pasteurization, and shrink-wrapping also negatively affect taste and quality; and industrial processing has led to an increased incidence of food poisoning and diseases in farm animals. Each nation should be allowed to set its own high standards for food.

4 Allow farmer marketing/supply management boards. These let farmers negotiate collective prices with domestic and foreign buyers to help ensure that they receive a fair price for their commodities. Less than two years after the North American Free Trade Area (that dismantled the government price regulation agencies) went into effect, Mexican domestic corn prices fell by 48% as a flood of cheap US corn exports entered the country. Thousands of farmers have been forced to sell their lands.

5 Eliminate direct export subsidies and payments for corporations. Although the WTO has eliminated direct payment programmes for most small farmers, they continue to allow export subsidies to agribusinesses. For example, the US Overseas Private Investment Corporation funded by US taxpayers, provides vital insurance to US companies investing overseas. Even loans from the IMF to Third World countries have been channeled into export subsidies for US agribusiness.

6 Recognize and eliminate the adverse effects of WTO market access rules. Countries need new international trade rules that allow them to re-introduce constraints and controls on their imports and exports. These would prevent heavily subsidised Northern exports from destroying rural communities and self-sufficient livelihoods throughout the South. Many people now working, for example, for poverty wages at Nike and other global corporate subcontractors are refugees from previously self-sufficient farming regions.

7 Promote redistributive land reform. The redistribution of land to landless and land-poor rural families is a priority. This has promoted rural welfare at different times in Japan, South Korea, Taiwan and China. Research shows that small farmers are more productive and more efficient, and contribute more to broad-based regional development than do the larger corporate farmers.

Come and have your say at our Sustainable World Conference in Westminster, London July 14-15, 2005

See also related:

G8 SUMMIT: Behind This New Interest in Africa
Sanjay Suri
GLENEAGLES, Scotland, Jul 5 (IPS) - Powerful western nations are committed to developing Africa but more as a market for their goods, a leading agricultural economist says. "There is talk of the need for action by way of aid, debt cancellation and trade," Devinder Sharma, long-time campaigner for the rights of farmers in the developing world told IPS. "An impression is given by (U.S. President) George Bush and others that of the three, trade is the real answer to Africa's problems. But actually trade is the problem." In four African countries -- Burkina Faso, Mali, Chad and Benin -- whose economies are based on cotton production, U.S. cotton is being dumped into the market and livelihoods are being lost, all in the name of trade, said Sharma. U.S. cotton prices are cheap because 25,000 U.S. cotton farmers get four billion dollars a year in subsidies, he added. "This is obviously depressing the market in Africa, and other countries. Then they ask farmers there to diversify and go for other crops." One cotton grower in the U.S. state of Arkansas received subsidies worth six million dollars, equal to the combined annual earnings of 25,000 cotton farmers in Mali, Sharma said.

How The G8 Lied To The World On Aid ?The truth about Gleneagles puts a cloud over the New York summit

Food and Energy Security: Local Systems Global Solidarity
British Parliamentarian Alan Simpson offers a brilliant analysis of what's wrong with current national and international policies on food and energy and why we must break all the rules

When corporations rule the world Science in Society editorial

REFORMING GOVERNMENT SUBSIDIES TO BENEFIT SUSTAINABLE AGRICULTURE JULY: OCA has begun mobilizing its forces to reform the forthcoming 2007-2012 Farm Bill. Currently, 80% of the U.S. Taxpayers' $20 billion annual agriculture subsidies go to large corporate and factory farms. OCA is gathering support from citizens and policymakers on federal, state, and local levels to change the subsidy system to support family farms and transition to organic agriculture. As an example of how to do this, in
July, Woodbury County, Iowa, became the first county in the nation to offer tax incentives to organic farmers. County Supervisors approved up to $50,000 in tax credits for each farmer converting from conventional to organic agriculture.

February 2007: US wants India to help break WTO deadlock
"In US we have created an export culture throughout the country. We, too, are working for opening up of global markets and ensure access to our markets and choices to our consumers," he said and added "India is a leader of the developing world and should take initiative in breaking the deadlock." Gutierrez also said India, apart from opening up its markets should put in place a strong intellectual property regime.

Leading USA-Based Hunger Organization Rejects U.S. Food Aid is a Form of Colonialism--Not Charity
One of the largest international aid organizations in the world turned the food aid industry on its head recently by declaring that they will turn down 46 million dollars in food subsidies from the U.S. government.The United States budgets 2 billion dollars a year in food aid, which buys U.S. crops to feed populations facing starvation amidst crisis or those that endure chronic hunger. But the U.S.-based CARE International has forfeited its substantial slice of the food aid pie that is the U.S. "Food for Peace" program, claiming that the way the U.S. government distributes food hurts small poor farmers in the very communities and countries the program is supposed to help.

Why Food Aid Should Be Bought Locally, Not Shipped Halfway Around the World
Meet Khalida Mahmoud, a 29-year-old woman whose farming family was driven into worsening poverty, after U.S. food aid poured into her home region of eastern Sudan. That's not how food aid is supposed to work, but just look at the policy: your tax dollars are used to buy grain from U.S. factory farms, the same giant corporations that already receive $26 billion in tax subsidies. Then the grain is transported halfway around the world, using thousands of gallons of fossil fuel and releasing tons of harmful carbon emissions into the atmosphere. The transport typically takes months while hungry people grow more desperate.

Once the food finally arrives, it floods agricultural markets, destabilizing fragile local economies. Small farmers are the first to go bankrupt.


posted by Sepp Hasslberger on Thursday July 7 2005
updated on Tuesday October 19 2010

URL of this article:


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Readers' Comments

The International Commission on the Future of Food and Agriculture suggestions will help. The Iroquise about 1050AD developed a constitution for controlling the relations between Nations and even a conquered Nation had more control than we allow.

Posted by: Mark Schindler on July 11, 2005 09:46 AM



The article should have mentioned the effect of agribusiness subsidies on exacerbating the gross cruelty to farm animals on factory farms. Tax money goes to promote veal and gestation crates, battery cages, forced molting, debeaking without painkillers, tail docking, the use of bovine growth hormone, and numerous other abuses condemned even by conservatives such as Matthew Scully, and even Pope Benedict XVI. While smaller and particularly organic farms can treat farm animals with a modicum of kindness, giant agribusinesses treat sentient animals as mere machines for the production of meat, eggs, and dairy. By moving to a more plant-based diet and boycotting at least the worst of the abuses (veal, foie gras, battery eggs, and the like), at least we can do something as food consumers.

Posted by: Stephen Mendelsohn on July 29, 2005 06:13 AM


Good Service

Posted by: Frank Johnson on August 6, 2005 12:31 PM


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