The Africa Group at WTO has taken a stand for fair trade prices for farm products in the document "Modalities for Negotiations on Agricultural Commodity Issues Proposal Submitted by the African Group to the Special Session of the Committee on Agriculture."1
As far as I can tell, The Africa Group consists of the following countries: Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Cote d'Ivoire, Democratic Republic of Congo, Djibouti, Egypt, Ghana, Guinea, Kenya, Lesotho, Libya, Madagascar , Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone , South Africa, Sudan, Swaziland, Tanzania, Tunisia, Uganda, Zambia, Zimbabwe.2 More than half of these countries are Least Developed Countries. LDCs are 70% rural. They’re farming countries, in need of fair trade, living wage farm prices, to stimulate their economies.
In the document, the Africa Group stated: “The problems which African countries encounter in taking effective policy measures for alleviation of poverty and for improving living conditions in rural areas are compounded by the long term trend of declining prices of primary agricultural commodities and their volatility which adversely affect both producers and exporters.” Note here that it first emphasizes long term “declining” prices, then adds the part about “volatility.” Part of volatility refers to high prices, especially when they arrive rapidly.
Quoting GATT, the Africa Group document highlights “action through international arrangements ‘to stabilize and improve conditions of world markets’ in commodities,” including “measures ‘designed to attain stable, equitable and remunerative prices for exports of such products’….”
The document further focuses on the problem where “the distortion of prices is the result of oversupply … in international markets.” Solutions can be found involving “the producing countries themselves” in “management of supplies … through control over production and/or imposition of restrictions on exports.” They then call for legal clarification to help in the achievement of supply management under GATT.
NFFC with the Africa Group
In recognizing the problem of long term declining farm prices, the Africa Group is speaking the same language as the National Family Farm Coalition in the U.S.3 In fact, these concerns have been part of the US family farm justice movement throughout history. Most recently, since the 1950s, the National Farmers Organization was formed around this very issue. NFO protested against the lowering of price floors and reduction supply management in the U.S.4 These policies started in 1953. Price floors for major commodities were lowered from 1953-1995 and then eliminated, along with supply reduction programs.5 Also eliminated in 1995 were topside programs for reserve supplies to be paced on the market when prices rise too high.
Because the US has long been the dominant farm commodity exporter,6 we’ve been the price leader for major commodities.7 We can set world prices. For corn and soybean market shares, for example, we’ve been bigger than the Middle East in oil.8
On the other hand, the major farm commodities lack price responsiveness on both supply and demand sides.9 That’s the economic cause of the low farm prices we’ve usually had for 140 years.10 Free markets don’t work very well at all for farm commodities. Prices and supplies don’t self correct very quickly or very much at all under most market conditions for the groups of major commodities grown in the various regions of the US. When prices are low, people don’t eat 4, 5, 6 meals per day, and farmers don’t stop planting all of their farms. Farmers still have whole farm costs to cover, like property taxes.
For this reason, the policies of NFFC’s Food from Family Farms Act are needed (price floors and ceilings, supply management, including reserve supplies).11 These were the programs of the New Deal, and the Steagall Amendment of 1941. The US had fair trade, living wage farm prices every year 1942-1952. The recent higher prices aren’t nearly as high as the true fair trade prices of that era. Adjusted for inflation, the average of yearly average prices 2007-10, $4.00, for example, is less than one fourth the average yearly price for 1947, $17.37 (in 2010 dollars).12 The reduction and elimination of these programs is a major policy cause for the low farm prices on world markets that caused poverty in the countries of the Africa Group.
The solidarity between the US family farm justice movement and the nations of Africa is surely confirmed by the similar relationship between NFFC and La Via Campesina. Via Campesina’s major policy document shows strong support for the approach of NFFC, as my blog “Via Campesina with NFFC: Support for Fair Farm Prices” documents.13
EWG Misunderstands the Policy Concerns of the Africa Group
A recent press release from the Environmental Working Group and ActionAid14 introduces a map15 of global “hot spots” in the global food crisis. This is surely a well-intended and useful tool. In the analysis of the food crisis, however, recent higher farm prices are identified as causes, but not the long history of low prices. No support is given for the major concern of the Africa Group regarding “the long term trend of declining prices of primary agricultural commodities,” the long term contributor to their poverty that they emphasized in the document cited here. Just the opposite is the focus of EWG and ActionAid: a push for a return to much lower farm prices. No standard of fair trade, living wage farm prices, neither too high nor too low, is even suggested.
We’ve seen that the global food poverty crisis involves a raging dilemma. First, almost nonstop for nearly 60 years, farm commodity prices have declined.16 From 1998-2005, then, we had 8 of the 10 lowest corn prices in recorded history, for example (back to 1866).17 This was devastating to developing farming countries like those in the Africa Group. Only occasionally during this 60 years of increasing devastation, (for a few years during the 1970s, during 1996, and again for the past four years,) have farm prices been much higher.
EWG and ActionAid correctly tell us how “In all but three of the countries highlighted by the map [as “high-risk”], average income is just $2 a day and people spend at least 55 percent of their income on food.”18 That is, they tell us how desperate the poverty is. What they fail to do is give us any hint of the long term causes of that incredibly severe poverty in these farming countries over the past 60 years.
EWG and ActionAid make no mention of support for the market management tools of NFFC, not even for topside price ceilings and reserve supplies that are related to the one side of the dilemma which they address. EWG supported none of these policies in work on the 2008 farm bill. Today EWG reports that they have an email list of 1,000,000 addresses.19 They’re ready for advocacy. Africa, beware!
The Call for Low Prices and Overproduction to Run Farmers Off of the Land
The US family farm justice movement has been fighting agribusiness exploitation for well over the past 50 years, and also back prior to the New Deal. One example of the agribusiness mindset is the document, “An Adaptive Program for Agriculture,” from the Committee for Economic Development, a think tank with 200 corporate members.20 That program called for a drastic lowering of price floors on corn, rice, cotton, wheat and other commodities, in order to run “one third” of US farmers off of the land “in a period of not more than five years.”21 That was the goal for the decade, and they complimented themselves in a 1974 report for accomplishing their goals, through the US Congress. That didn’t just hurt US farmers. It hurt farmers all over the world. That was a policy cause for the “long term trend of declining prices” that has played a major role in food poverty all across Africa.
By getting rid of farmers, CED directly helped the agribusiness output complex to buy farm commodities for cheaper and cheaper prices, thus implicitly subsidizing them. They also helped the CAFO complex, by giving cornfed livestock an advantage over grassfed. This took livestock off the land, and took both flexibility and this value added income away from farmers. CED helped the agribusiness input complex by helping them to sell more products to farmers, as set aside programs were reduced and eliminated, and as livestock pastures and hay and straw fields were plowed up for row crop production. Along the way, in driving so many farmers off of the land and into cities in the US, the CED also helped to drive down urban wages.
Today agribusiness is fighting against the higher prices we’ve had for a few years. They are calling for all out production to “feed the world,” to save places like Africa from food shortages. The main 60-year (or 140 years in the US,) problem has been world food surpluses, however, not food shortages. We don’t ever want world food shortages, of course, but we must take a balanced approach, with both topside and bottom side protections.
The question of agribusiness, “Can we feed the world?” is the wrong question for addressing the root causes of the food poverty crisis. Instead we must ask: How can we end food poverty? The countries of the Africa Group are farming countries. They need the economic stimulus, the wealth and jobs multiplication of fair trade, living wage farm prices. They also need major assistance to overcome the devastating poverty from nearly 60 years of declining farm prices. Part of that assistance must be food aid to prevent people from starving while farm prices are higher.22
In calling for increased supply and lower prices for Africa and LDC countries everywhere, agribusiness is really repeating the old arguments of the CED report. They see LDCs, with their large number of farmers, as places where they can sell more inputs, take away more of value added livestock, and help keep global farm prices cheap to bolster their profits. They can replace millions of African farmers with pesticides. They can replace tons of free livestock manure with fertilizer sales. They can replace nitrogen from powerful legumes like berseem clover hay fields in resource conserving crop rotations (in livestock systems), with annhydrous ammonia that they sell. They can make Africa dependent upon the GMOs that they alone control. At the same time, they can drive millions of farmers off of the land and into the urban ghettos, where they can drive down urban wage levels.
You don’t fix 60 years of decline, a quarter century solid devastation from below cost farm export dumping in a few years. The decades of US farm export dumping have fostered and contributed to numerous other economic, political, technological, environmental and social problems. We lost money on US farm exports for a quarter century, pumping billions of dollars of below cost farm commodities out to other countries. As the document from the Africa Group makes clear. Those practices did not “save” Africa. They drove it ever deeper into poverty.
EWG and ActionAid, in also calling for more production and lower prices, in also asking “How can we feed the world?” are also putting Africa at risk. A few years of higher prices have had a devastating impact around the world, that is one pole of the raging dilemma of the global food poverty crisis. Yes, they’re correct about that. That is one part of the problem. What they miss is the other pole, the one prioritized by the Africa Group in 2006, the nearly 60 year decline in the prices of farm commodities. Food sovereignty arrives only when we manage this dilemma well.
1. “Modalities for Negotiations on Agricultural Commodity Issues, Proposal Submitted by the African Group to the Special Session of the Committee on Agriculture,” Communication by the African Group. World Trade Organization. Committee on Agriculture Special Session. TN/AG/GEN/18. 7 June 2006, http://www.wto.org/english/forums_e/public_forum_e/comm_position_afr_group_june706.pdf.
2. Informal African WTO Trade Ministerial Meeting,“Consolidating the Development Dimension,” Cairo 28 October 2009, http://www.iatp.org/tradeobservatory/library.cfm?refID=106957, p. 1, footnote 1.
4. Willis Rowell, Mad as Hell: A Behind the Scenes Story of the NFO, 1984; Willis Rowell, The NFO: A Complete History, Ames, IA: Sigler Printing and Publishing, 1993.
5. See charts showing the data of the lowering of price floors for several commodities in my YouTube videos, “Michael Pollan Rebuttal 1: Debunking Pollan’s Corn Subsidy Argument,” and “Michael Pollan Rebuttal 2.” Find sources for price floor data here: USDA:ERS: Program Provision for Program crops: A Database for 1961-90, http://www.ers.usda.gov/publications/ages9010/. For earlier years, see USDA-NASS: Agricultural Statistics Annual, http://www.nass.usda.gov/Publications/Ag_Statistics/ (various issues).
6. Daryll E. Ray, “Agricultural Policy Questions VI: Are Exports Likely To Be A Long Term Driving Force
Behind T he United States’ Grain And Soybean Markets?” Policy Matters, Vol. 5, No. 3, p. 3, http://www.agpolicy.org/archive/policy/pmvol5no3.pdf.
7. Daryll E. Ray, Daniel G. De La Torre Ugarte and Kelly J. Tiller, Rethinking US Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide, Agricultural Policy Analysis Center, The University of Tennessee, p. 24.
8. “Farm Bill 2, The Farm Crisis,” “America’s Stake in the 1985 Farm Bill,” 5:34-5:58 http://www.youtube.com/user/FireweedFarm#p/c/A1E706EFA90D1767/7/6VdFNHWLGxM, League of Rural Voters, 1985.
9. Daryll E. Ray, It's Price Responsiveness! It's Price Responsiveness!! IT'S PRICE RESPONSIVENESS!!!” Policy Pennings # 248, 5/6/05 Agricultural Policy Analysis Center, The University of Tennessee, http://agpolicy.org/weekcol/248.html.
10. Daryll E. Ray, “Agricultural Policy for the Twenty-First Century and the Legacy of the Wallaces,” Agricultural Policy Analysis Center, The University of Tennessee, 2004, http://agpolicy.org/pubs/RayLecture2004FromGretchen1st.pdf.
11. “Food from Family Farms Act: A Proposal for the 2007 U.S. Farm Bill,” National Family Farm Coalition, http://www.nffc.net/Learn/Fact%20Sheets/FFFA2007.pdf
12. Sources for this kind of data crunching include: “Historical Track Record – Crop Production,” http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1593; “Measuring Worth,” http://www.measuringworth.com/calculators/uscompare/result.php?use%5B%5D=GDPDEFLATION&year_source=1947&amount=2.16&year_result=2009. Cf. www.ers.usda.gov/Briefing/FarmIncome/Data/Constant-dollar-table.XLS.
13. Brad Wilson, “Via Campesina with NFFC: Support for Fair Farm Prices,” zspace, 9/16/10, http://www.zcomm.org/via-campesina-with-nffc-support-for-fair-farm-prices-by-brad-wilson.
14. Patricia Brooks and Donald Carr, “New Map Reveals Hot Spots in Emerging Global Food Crisis,” ActionAid and Environmental Working Group (EWG), 3/3/11 and 3/18/11, http://www.commondreams.org/newswire/2011/03/03-0. See also the comments by Brad Wilson.
16. See note 12 for documentation.
17. This is in constant dollars. See note 12 for documentation.
18. See the press release, note 14.
19. “EWG Fans More Than One Million Strong,” 3/1/11, http://www.commondreams.org/newswire/2011/03/01-8.
20. Committee for Economic Development “An Adaptive Program for Agriculture,” (1962), http://www.normeconomics.org/adaptive.html.
21. Ibid., p. 59.
22. Sophia Murphy and Kathleen McAfee ,
U.S. Food Aid: Time to Get it Right, Institute for Agriculture and Trade Policy, July 27, 2005, http://www.iatp.org/iatp/publications.cfm?accountID=451&refID=73512.
FOR FURTHER READING
Carin Smaller, “On the Right Path to Development: African Countries Pave the Way,” IATP, June 19, 2006, http://www.iatp.org/tradeobservatory/genevaupdate.cfm?messageID=120055