Appeal to governments and international institutions[1]

Brussels, May 2009

REGULATING AGRICULTURAL MARKETS:

A NECESSITY REEMPHASIZED BY THE CRISES

In May 2009 representatives of farmers’ organisations from Europe, Africa, the Americas and Asia met with economists inBrusselswith the support of development NGOs to analyse the global situation with respect to food and agriculture and discuss proposals for overcoming the crisis (see list of participants below). All the participants noted an enormous discrepancy between the simplistic view underlying institutional responses and the reality on the ground. They issued

the following appeal:

The current financial crisis and economic recession are masking the food price crisis which arose in 2007-2008. Yet the causes of that crisis – and the dangers it harbours – have not gone away. There can be no solution to the food crisis without the regulation of agricultural markets.

ideological blindness

Economists D. De la Torre of the University ofTennessee,USA; B. Daviron of CIRAD,France andL. Bourgeois of APCA,Franceall concurred on the origins of the crisis. The food price surge of 2007-2008 cannot be explained away bysudden shocks on the supply or the demand side. Agricultural policy reforms implemented since the structural adjustment era and the GATT/WTO negotiations on agriculture (liberalisation of international trade, tariff reductions, decoupled aids and domestic price decreases) had gradually reduced world stocks – particularly those of the main producer countries (EU, US, China). In already vulnerable developing countries with negative food balances, this discouraged farmers from making investments and increased food dependency. The situation was further aggravated in 2006-2008 by agri-fuel production portending future competition between food and energy crops for available land. Financial speculation on rising agricultural prices followed, causing prices to soar.

J.M. Boussard of INRA, France, presented a deeper economic analysis showing that the commonly adoptedhypothesis that liberalising world agricultural marketscan reduce price instability only hold true in specific circumstances (external shocks such as droughts etc.) which are not consistent with the present situation. The current shocks are mainly dueto market mechanisms themselves, i.e. producers’ reactions to falling or rising prices combined with production lead times in a context of low demand elasticity(endogenous dysfunctioning).

In the present circumstances liberalisation policieshave actually accentuated the volatility of agricultural markets – a fact illustrated by the recent crisis. Such uncontrolled fluctuations are dangerous for producers, workers and consumers. They are also more costly than market regulation.

N. Koning from the University of Wageningen in the Netherlandshighlighted the fact that regulation was needed at two levels: the national or regional level (destined to remain the most important) and the multilateral level.

O. De Schutter, the United Nations Special Rapporteur on the Right to Food, stated thatrules relating to human rights and particularly the right to food are intended to prevail over all other international commitments. In practice this is far from being the case. The policies determined by WTO rules are detrimental to vulnerable population groups and the chief beneficiaries of the “liberalisation” of world trade are transnational companies. Hunger is not receding but increasing. Despite this, the international institutions (WTO, OECD, FAO, World Bank, etc.) continue to refute any analysis that questions the dogma of deregulation and liberalisation of agricultural markets.

Proposals

Internationalinstitutionsand States bear much of the responsibility for the food crisis. It would be irresponsible of them to persist in deregulating agricultural and foodstuff markets. Governments must guarantee the right to food and make food sovereignty the basis for agricultural and food policy from now on.

Necessary measures:

  • Stabilising agricultural prices at levels that allow farmers to make a living, and stabilising food prices at reasonable levels for consumers.
  • Ensuring access to food for all.
  • Ensuring access to resources(land, water, seed, etc.) for all farmers.

To stabilise agricultural and food prices at adequate levels, a series of instruments will be needed:

Internal instruments:

  • Market regulation is crucial.A supply management policy for agricultural products is necessary to avoid the alternative of surpluses or shortages. Customs tariffs must be sufficiently high and adjustable to ward off excessively low-priced imports. A storage policy (local «cereal banks,» on-farm storage, public stocks etc.) is needed to attenuate annual variations and should be designed strictly for counter-cyclical market regulation purposes. It will also be important to have specific supply-management instruments (production quotas, set-aside, etc.) and guidance instruments to influence structures and modes of production to make them sustainable.
  • Farmers must receive support to strengthen their market power vis-a-vis the big firms that supply them or buy, process and sell their produce. This means that mechanisms to ensure price transparency will be necessary(price observatory). Furthermore, competition rules must be applied discerningly (allowing consultation, inter-trade agreements, organisation within sectors, etc under the supervision of the public authorities) rather than indiscriminately in a way that strengthens monopolies and oligopolies dealing with large numbers of producers.
  • Access to resources[2] and means of production (land, water, seed, credit, mechanisation, etc.) must be facilitated for small family farms. However, there will also be a need for additional instruments to protect local communities from land grabbing. Where the concentration of land ownership impedes access to land, land reform is imperative.

External instruments:

  • The right to protect internal markets implies a duty to respect other countries’ economies which proscribes dumping in any form (economic, social or environmental). Consequently, the current WTO rules need to be reconsidered.
  • Supply management must also be introduced at international level through product agreements. The latter must maintain sufficient stock levels of products vital to food security. They must also lead to the establishment of fairer trade rules for tropical products (coffee, cocoa, etc.) traded from South to North in markets dominated by a small number of enterprises (oligopolies).

The signatory organisations, conscious of the scale of the challenge ahead, call on other farmers’ organisations, trade unions, consumer organisations, researchers and all other stakeholders to elaborate converging strategies to convince political decision-makers to halt policies of deregulation.

[1] This appeal is a continuation of the process of the Dakar declaration and the Chapecó appeal

[2] See theChapecó appeal*ó (