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Will Eliminating Subsidies Help Poor Farmers?

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Issue: 40 Section: Agriculture Geography: Canada Topics: nfu, trade agreements

October 27, 2006

Will Eliminating Subsidies Help Poor Farmers?

The NFU's Darrin Qualman discusses how corporate control of markets goes missing in discussions of "free trade"

by Dru Oja Jay

Cargill-owned grain elevators on Lake Erie. photo: Maureen Jameson
When discussion turns to the plight of the farmers of the world, especially in the Third World, the narrative is remarkably consistent. The story is one of rich countries--in Europe and north of the Rio Grande--that subsidize their farmers. These farmers are able to produce foodstuffs for artificially low prices, with prices driven lower still by their established scale and ability to invest in advanced technology. Poor countries, notably those in Africa and the Caribbean, are devastated when their markets are flooded with cheap rice, corn and other food products from rich countries.

WTO critic Joseph Stiglitz, CBC journalist Michael Enright, former Trade Minister Pierre Pettigrew and the Third World Network agree on the best course of action. So do the editorial boards of the Guardian, the Globe and Mail, much of the progressive press and the financial press. There is a near-consensus about the solution. To help Third World farmers, Europe, the US and Canada fulfill their part of the bargain at the WTO and remove subsidies for their farmers and reduce tariffs that deny Third World farmers access to their markets.

The only things standing in the way of prosperity for a billion poor farmers, this diverse chorus tells us, are the entrenched interests of farmers in rich countries and their hold on governments that refuse to open up their markets to foreign competition.

According to Darrin Qualman, director of research at Canada's National Farmer's Union (NFU), there's a problem: the narrative is a distraction and removing subsidies will do very little to help poor farmers.

"It's all just wrong. It's the wrong talk about the wrong topics," says Qualman. "The one thing they're not discussing at the WTO is what's causing the farm income crisis--corporate power taking out profits and impoverishing farmers."

Qualman says that one of the basic problems with the narrative is the central "mantra" that "market access" will help farmers in the majority world. A picture-perfect case study for why this is not the case can be found close by.

"Canada is probably one of the most successful countries in the world in terms of gaining market access--I can't imagine that there are many countries in the world that have been as successful at getting access."

"The net result has been the worst farm-income crisis in Canadian history."

Instead, Qualman says that all available data point to trade liberalization as being wildly enriching for those who have consolidated control over markets, but devastating to small-scale farmers. Farms are told to become more "efficient" in order to compete, while transnational agribusiness takes in huge profits by squeezing farmers and controlling distribution and retail channels.

As a general trend, Qualman says that "farm income around the world is inversely proportional to trade volumes and the number of trade agreements we sign."

"The WTO guys would say that it's directly proportional... They're just lying. All the data from the last 20 years says they're wrong."

It's not that poor farmers aren't being put out of business by subsidized crops. This, Qualman explains, is a natural side effect of putting a billion farmers into competition with each other by removing the ability of governments to regulate what enters their borders.

"Dumping shouldn't happen, but the problem isn't subsidies. You have to give poor countries the power to say no to these products." This means addressing the source of those policies: often the International Monetary Fund (IMF) and the World Bank, which use their leverage over poor countries to impose "free trade" policies.

Agribusiness has "merged and merged" at the transnational level, consolidating power and resulting in massive profits, while "the system has been altered such that all the farmers have been brought into competition with each other." Qualman says that the results are entirely predictable: "We have been put in a race to the bottom triggered by the dissolution of barriers."

Grain and oil seed farming provide the quintessential example. "Cargill [a US-based crop nutrient producer and distributor] will play canola farmers in Canada against soy farmers in Brazil, against palm oil producers in Indonesia." Because each region's farmers can be threatened with the threat of lower-priced product from their counterparts, the result is a massive power imbalance between farmers and distributors, with a predictable effect on profits: farmers are struggling to get by, while the consolidated agribusiness multinationals are showing record profits year after year.

In the abstract, Qualman agrees with the premise of the "free trade" crowd.

"Farmers would love to see the market distortions taken out, but we need to start with the highest-profit links in the chain"--the corporations deriving record profits from consolidating power over markets, not farmers in the First World, the majority world, who are losing money every year. "The WTO wants to just focus on one link."

"If they want to help farmers, we need to talk about breaking up cartels and breaking up the power of these near-monopoly agribusiness corporations."

In the end, the problem for farmers isn't about having better data or a more convincing argument to petition the government. Currently, "the government is largely hostile to the family farm and the needs of rural communities," so the problem is one of political clout. To oppose a global system that is stacked against them, farmers must organize globally.

"Farmers used to organize provincially, then they saw that the policy was made at the national level," says Qualman. "Now if you look at where policy is happening, you would say that farmers need to organize planet-wide."
This is a task of mammoth proportions, but the process has already begun, albeit slowly. The NFU is a member of Via Campesina, an international network dedicated to "uniting farmers toward common goals." Many Via Campesina members are currently dedicating their energy to fighting policies imposed by the World Bank and IMF on farmers, particularly in Asia and Latin America.

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