Workshop on Sustainable Agriculture and Food SecurityBali, Indonesia
PANEL 3: Advocacy and Grassroots Initiatives in Food Security, Food Sovereignty and Sustainable Agriculture: Intensifying the People’s Challenge to Globalization and Agriculture Liberalization
Panel 3 is divided into two with three speakers for the first batch and four speakers for the second batch. The first batch of speakers are: Marie Cecille Thirion of Solagral from France, Aileen Kwa of the Focus on Global South (FGS) based in Geneva, and Dwi Astuti of Bina Desa/Indhrra from Indonesia. The next batch of speakers are Arze Glipo of the Integrated Rural Development Foundation of the Philippines (IRDF), Veeraphon Supha of the Assemply of the Poor (AoP) from Thailand, Rik Thijssen and Imam Suharto of VECO-Indonesia, and Dr. Russ Dilts of Community IPM in Asia. The panel is chaired by Nugroho Wienarto who is Programme Coordinator of Community IPM in Indonesia and Jayson Cainglet of IRDF Philippines.
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Workshop on Sustainable Agriculture and Food SecurityBali, Indonesia
INCREASING PUBLIC SECTOR INTERVENTION
IN AGRICULTURE: DEVELOPING APPROPRIATE
POLICY INSTRUMENTS AT THE NATIONAL AND INTERNATIONAL LEVEL
Marie Cecille Thirion
Solagral, France
Public intervention in agriculture in the EU and US
EU and US are heavily subsidising their agriculture. To give you some ideas, I will go through the recent evolutions of the agriculture policies of these two countries.
The US had adopted a policy in 1996 which aim was to diminish the subsidies in 7 years and decouple them. The result was bad. From less than 8 billions dollars, the amount of the subsidy budget raised to 28 billions in 2001. More other, the producer debts increased. From the food security point of view, it is also important to underline that the level of stocks is very low since it has been transferred to the private sector. The private sector has no interest in keeping high stocks since it is very expensive to manage and they prefer dealing with options on the stock market.
In reaction to the failure of the reform, the US Congress very recently adopted a new farm bill. It is reintroducing the counter cycle payments that is a technical name for intervention prices. This law has also confirmed the decoupled payments as well as the support to export credits. The result from this new policy should be an increase of public spending for agriculture of more than 70%. It should also reinforce the concentration of farming land since 66% of the subsidies should go to 3% of the farmers.
Concerning the EU, an important policy reform was done in 1992 since the CAP (Common Agriculture Policy) was far too expensive, since the European population was more and more aware of the environmental impact of agriculture and since EU had taken some engagements within the WTO agreement to reduce its public intervention. 10 years after, the EU is doing a mid-term review of its policy in order to see if the CAP is in accordance with its objectives, i.e. promoting a multifunctional and co-operative agriculture. This means that the EU agriculture should answer the production aspect but also functions not related to the sailing on the market of products such as food safety, environment, employment, maintaining people on the whole territory, taking care of the rural areas. So it is the right time to force the EU to have a new approach of its agriculture. The move is already visible in many countries such as the northern countries (except Denmark), Germany. The countries that are not interested in changing are France and the other southern countries of Europe that benefit a lot from the CAP.
As an example, I will give you some information on the cereal common market organisation. From 1962 to 1992 European prices were very high benefiting from high intervention prices as well as high tariff barriers. When the international market prices are low, the EU gives export subsidies to the exporters and implements a variable tax on imports. In 1992, the intervention prices on cereals were to be decreased by 35% in three years (down to 100 Euro per tonne). To compensate, some decoupled subsidies were given to the farmers (around 45 Euro per tonne in 1995). More over, 15% of the agriculture land were to be set aside. In 1999, the reform was deepened with a new reduction of the intervention price of 15%, the compensation of 50% of these reductions by direct subsidies. But the impacts of this reform were not the one presented. The agriculture didn't become more extensive. The concentration of agriculture land wasn't stopped. The average size of a European farm is 27 hectares.
Concerning imports, the EU has launch in 2001 an initiative for the LDCs. It is giving free entry to all agricultural products from the LDCs. But they are some exception for banana, sugar and rice. For these products, free entry will be given only in 2009. This reflects the protectionism of the European agriculture policy.
Multifunctionnality of agriculture
Until 1986 agriculture was out of the international trade negotiation since it was considered as a specific activity with a role that was going beyond the simple problem of trade. In the Agricultural Trade Agreement of WTO signed in 1994, the multifunctionnality of agriculture was recognised through the non-trade concerns. Was only mentioned Food security and environment. In the Doha agreement also recognises the multidimension of agriculture since it mentions that the future agriculture negotiation should take into account the different proposals of member states on non-trade concerns. The type of functions that were presented was much wider including employment, rural development, and food safety.
What are these non-trade concerns? They are functions that the people want the agriculture to fulfil but that the market cannot take in charge. We can rapidly review these main functions and see why the public intervention is necessary.
Concerning food security, the problem should be taken in a broader sense including regulation of offer in developing countries. It must be underlined that the CAP was identified as the priority for the European construction and that its main purpose was to increase food independence of the region. In the same line, the importance of the subsidies given to the American farmers shows the strategic aspect of agriculture. It cannot be the low prices of the international market, the weakness of the place of agricultural exports within the export balance of EU and US or the low percentage of the population concerned by agriculture (around 10% of the population) that explains such an important implication of state. Therefore, we can see that food security is in the first state considered as a social contract between the population and the state. It is the responsibility of the state to assure that food is available within the country at a price compatible with the consumer means. The liberalisation of market was suppose to answer this problem but the instability of international market, the instability and low level of exports revenues of most developing countries underline the market failure in responding to this demand. Therefore, it becomes crucial that each country manages to maintain a certain level of production for its own consumption. This level is to be determined according to the agricultural potential of the country, the diversity and the level of exports.
WTO agreement does not give anymore the possibility for developing countries to protect their agriculture against the market instability. The richest countries can react to this instability and the decreasing of international prices through direct subsidies. But this increases the decrease of prices. On the other hand, developing countries cannot afford direct subsidies. Therefore, the farmers directly support the instability and the low price. This not bearable by the EU and US farmers so it is evident that it cannot be supported by farmers from the developing countries.
The main issue is to have recognised in the trade agreement the right of the countries to support their agriculture production and protect their market for food security raisons.
Another important issue is employment and poverty reduction. Half the world population lives in rural areas as well as 70% of the poor people. Therefore agriculture is the main employer in many countries. It is the responsibility of the state to redistribute the national wealth. Therefore, it is its responsibility to assure that the agricultural activity assures the farmers for minimum revenue. This can be done through the stabilisation of the national market (since most of the poorest farmers are involved in basic food production) and to protect it from imports that are under the production price. Moreover, public intervention should focus on answering market failure to address the needs of the poor farmers in terms of access to services (i.e. credit, land tenure, and inputs). In developed countries, the issue is more to keep a certain level of employment in agriculture to maintain some activity.
The main issue is to have recognised within the trade agreement the role of agriculture for poverty reduction and the national policies aiming at poverty reduction in rural area's should not be undermined by international agreement.
An issue of importance for developed countries but that should also be considered seriously by the developing countries is Food safety. Food safety cannot be assured by the market since individual consumers or farmers cannot estimated the integral quality of a product and identify possible germs, toxins. There should be a public intervention to assure research, systematic follow-up, information gathering, regulation of production and trade. The different measures that can be considered for food safety are: i) the code of conducts for production, ii) embargoes supported by norms, iii) labelling, iv) precaution principle.
The implication of state on food safety for internal market but also for exports is essential. Nevertheless, it is to be recognised that the norms imposed by developed countries on imports are strict and difficult to respect since they don’t take into consideration the production and processing methods of developing countries. More other, most of the norms are establish without transparency. Some are even done only on a protectionist basis. For example, some norms concerns only imported products but are not implemented on locally produced products. Last but not least, the norms usually address the final product and do not address directly the production method. This has changed recently in Europe after the food safety crisis that has hit the region since two years.
The main issue is to have more transparency in the establishment of norms. It shouldn't be unilateral initiatives but international ones. Moreover, they should be action to reinforce the capacity of developing countries to implement these norms for export products but also for the national market.
The last issue concerns environment. It is ease to understand that agriculture has negative but also positive effects of environment through pollution but also the maintenance of the countryside. Public intervention is needed since market prices do not internalise environmental negative or positive impact. The public intervention is done in developed countries through direct and targeted subsidies (green box). For developing countries, this option is not possible. The only way is to have tariff barriers, to have preferential access to northern market and, at the same time, implement environmental national regulation.
The main issue is first to decide if environmental problems and regulations should be discussed in WTO or should be limited to the discussions within the International Environment Agreement. Nevertheless, the definition of norms and the impact on trade distortion have to be address within WTO.
The main stake of the international negotiations
Referring to what have been said before, we can assure different points:
a)The market cannot produce most of the functions other than production that are attributed to agriculture. This is even truer with the agricultural market being distorted by the subsidised agriculture of EU and US that are the main actors on this market.
b)Multifunctionnality is a problem for both developing and developed countries.
c)Public intervention is needed but should be framed.
Therefore, liberalisation cannot be considered as the unique solution. Some public intervention should be authorised. Nevertheless, these functions should not be used by some countries to protect some specific lobbies and implement measures that do not respond to the demand for other agricultural services.
In order to avoid these problems, new principles should be included within the WTO negotiations such as flexibility, accessibility (especially for developing countries), real efficiency, sustainability and transparency. To answer all these principles, the two main constrains are: the conformity with the WTO agreement and the budgetary limits.
To answer this, many countries, especially developing countries, are proposing to develop some derogatory systems. The all issue is then the definition of criteria to define who is concerned or not to by the derogation. Some ideas are already circulating around with differentiation being made according to the wealth, to the destination of the product (local market versus export), to the way the instruments are used (more than the instrument, it can be the way it is used that can have distorting impact), to the geographical constrains (problem of landlocked countries), to the national priorities, to the level of influence on the international market (Cape Verde versus US).
Some developing countries (ex: Pakistan, Nicaragua, Kenya, Sri Lanka, Peru, Zimbabwe) are proposing to answer that problematic with a development box. This development box would allow developing countries to have access to policy instrument in order to: i) protect and reinforce their production capacity for food products, ii) to increase food security and access to food, especially for the poorest, iii) give to the poor employment in rural areas, iv) protect local farmers against low importing prices, v) give enough flexibility to allow support to small farmers in order to increase their productive capacity, vi) end dumping.
Specific propositions are attached to this demand. First of all access to market: Developing countries would like, among other things, that developed countries reduce their tariff barriers and stop dumping. The second demand is on internal support to agriculture. The developing countries would like, among other things, that all subsidies are put in one box and are reduced, whiteout having categories.
This proposal is interesting but it doesn't answer:
i)the problem of multifunctionnality in developed countries
ii)the preoccupation of having real multifunctional policies
Therefore, some work must be done to insure that the development box do not serve only the more productive farmers in developing countries. This could be done through regular independent evaluation of the impact of national/regional policies on non-trade concerns that have been identified as national priorities.
Moreover, some flexibility could be given to developed countries in order to support multifunctional agriculture, only if some follow-up is done first to make sure that the priority announced is met by the national agriculture policy, and secondly avoid distortion on the market that are harmful to developing countries.
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LIMITATIONS AND PROSPECTS OF ONGOING AGRICULTURAL NEGOTIATIONS IN THE WTO:
Linking Post-Doha Initiatives to Rio+10
Aileen Kwa
Focus on Global South (FGS)
(transcription)
Let me give you an outline of what I want to say. First, I want to give you a brief sense of what is going on in Geneva in terms of the agriculture negotiations this year. And then look at some positions of the ASEAN countries as well as positions of some of the developing countries. Maybe touch very briefly on development box. And look at the problems developing countries have in the negotiation process and why they have such difficult time putting their concerns into the negotiation and have it reflected in the negotiations. And, looking at the 5th ministerial and what we should do.
In October last year, some NGOs in Geneva had a conversation with Mike Moore, the Director General of WTO. And in our conversation, that is prior to the Doha ministerial which took place in November, he said that he was really so worried and he said that he hopes all countries would come together to have a compromise so that they can have a successful Doha ministerial.
So the question I posed to the director general of WTO was: “Why is a compromise a starting point? Is that the right strategy, given all the problems that developing countries have had since the Uruguay Round? Isn’t it more important that instead of looking for a compromise between the US position and the developing countries position, and the EU position and the developing countries position, we instead look at what are the needs of developing countries and then look at how the WTO can make changes to its agreement to meet the needs of developing countries?”
Now, he got very angry at me. And he said, “How can you say that the Uruguay Round agreements were not in favor of developing countries when there are some countries that are exporting billion of dollars in rice and others are exporting much more in textile.”