Ag Subsidies?

Cancun. The UK Guardian has launched a new campaign blog website ] focused on eliminating Agricultural Subsidies using the WTO with a specific look at the upcoming Cancun Ministerial. It’s a welcome contribution to the world of advocacy journalism which many alternative journalists/activists have been pushing for years. The problem is that their call for cutting ag subsidies in the name of the third world poor is flawed as a campaign goal.

The basic claim is that if we eliminated the very large agricultural subsidies which exist in the First World we would be raising the cost of these goods and therefore giving more money to Third World farmers.

There are definitely people, movements, and governments in the Third World who say this is exactly what they need. They are allied with some NGO’s in the north and many more traditional pro-neoliberal capitalists as well. They say, they want to export their way in to growth, and the subsidies are preventing them from doing that.

I distinctly remember sitting in on a meeting in Quito where members of campesino organizations i was working with debated FTAA and Agricultural Subsidies with Nina Pacari, the International Affairs Minister for Ecuador from the Pachakutik Party (a leftist indigenous / campesino party). It wasn’t a public meeting, rather Mrs Pacari was meeting to discuss political policy with some of the core organizations which make up her party. Because of the nature of the debate in that moment it was easy to see the debate about Agricultural Subsidies and Free Trade.

The Campesinos demanded that Ecuador pull out of the FTAA and seek economic development not based on multinational owned industrial agriculture, which in Ecuador means Banana Plantations and Industrial Flower Production. The export agriculture which would benefit from the elimination of First World Ag Subsidies are in fact giant corporations which are either owned by Third World Oligarchies or Multinational Corporations.

I stood there and listened to a room full of Campesinos who knew exactly what it was like to be in the third world, working in agriculture for less than $2 a day and they said very clearly that they did NOT want Agricultural Subsidies eliminated. They want economic and political justice. They want an economic system for their country where they can own and control the means of production.

Reducing Agricultural Subsidies to assist the creation of export oriented corporate industrial agriculture in fact hurts campesinos. It puts more power and wealth in to the domestic oligarchy who rob campesinos of their land and labor. The Ag Subsidies argument today is like arguing that we need to help black slaves in America by increasing the profits of the slave-owning plantations.

Pacari did not agree with the Campesinos who got her elected. She said that the only reasonable course of action was to ask for Ag Subsidies in the First World to be eliminated. If Ag Subsidies were eliminated then, rightly, Ecuador would be exporting more, would run a trade surplus bringing money in to the country. In theory this money could be used for meeting the human and social needs of the country.

She said that geopolitically Ecuador was in a difficult position. As part of the < >Andean Community of Nations they did not have much power or support in trade negotiations. Peru and Colombia are run by Neoliberals and Neofascists respectively and Bolivia and Venezuela were looking to Mercosur and ignoring the ACN. This ignores the fact that Venezuela is controlled by Chavez, a leftist who has no problem playing power games with the US, Lula in Brazil who had just taken power, and a majority of Colombia was actually in the hands of FARC and the ELN. She said that Ecuador was a weak and poor country. She’s right, a fact that the campesinos know more than anybody. She said that because Colombia and Peru were even more pro-free trade that Ecuador had to make the best of a bad situation.

A fundamental shift in power was not possible, all we could do was try and increase export earnings in the hope that some will trickle down to the workers.

What she didn’t say is that Ecuador, like many third world countries doesn’t have a great record of wealth trickling down. To bring in export industries the government exempts these ‘export earning’ industries from taxes. Beyond that the Government invests incredible amounts of money in infrastructure development. If you travel across the Ecuadorian Andes at night you see giant glowing greenhouses which use tremendous energy to allow for a 24 hour a day growing cycle of roses.

The monster projects to develop and provide electricity for Ecuador aren’t giving power to the campesinos or urban poor. They ‘sell’ at a loss this electricity to multinationals who might bring dollars to the country to pay the debt incurred when building the power plant. This industry is really there for the workers right? It’s to bring development to the people. In Deflowering Ecuador [ article: & audio interview: ] from Jan 2002 Mother Jones, Ross Wehner explains the real effects of the Export Flower Industry in Ecuador. Along with slightly higher wages the workers get a heavy dose of cancer, miscarriages, and neurological damage. The end result of this kind of development is further exploitation of workers and more money flowing in to First World private and development banks to pay for the power plants and other massive ‘development oriented’ infrastructure projects. Although they aren’t very public about it when trying to promote themselves as egalitarian, the World Bank and IMF make a profit out of the ‘help’ they give the Third World.

The worst part of these trade deals is what it does to domestic power balances within third world countries. With the end of colonialism the First World realized it was cheaper and more effective to not directly control colonies. It seemed having direct colonial administration provided easy targets for attack. It was better to have a domestic elite within each post-colony which could manage things. Thus an oligarchy which is allied with the post-colonial powers replaced direct colonialism. Oligarchies control the land and economy of most Third World Countries. They are the ones who benefit from the elimination of Ag Subsidies because they can use their money and power to drive campesinos from their land converting subsistence and farming for local production in to export oriented industrial ag.

The workers, remember those poor campesinos who make less than $2 a day, they loose power. When you have less power, you have less ability to make demands. In the First World the industrialists did not create such as the weekend, a 40 hour work week, paid vacations, health care coverage, and worker safety protections. Those gains were won by people who organized themselves in a powerful movement which could demand and win rights and benefits. Eliminating Ag Subsidies will make it harder, not easier for Third World Ag workers to win their struggle for economic and human rights.

So what should we be demanding?

The elimination of Agricultural Subsidies is the neo-liberal solution. It says that the problem is we are not neo-liberal enough, we have not gone far enough in opening up to free trade. It’s like saying that Argentina’s economy collapsed because they did not follow IMF dictates with enough detail, even though everything down to the street signs was privatized.

If we made the global commodity trade in agricultural products really fluid then by the magic of the market a rising tide will lift all boats. The problem is that ignores the essential reason why agricultural subsidies were introduced domestically within First World countries. The fluctuations of the market can be incredibly damaging to the development and sustainability of an agriculture industry. To make agricultural production function within a market economy you need price stabilization. That is the fundamental purpose of Ag Subsidies. A farmer, or in reality today, an Ag. corporation operates on cycles which can not be synchronized with the market. If they were, then one year they would reap huge profits, only to go out of business, or starve the next year. Then when demand for the commodity came back there would be nobody left to produce it.

This boom bust cycle of commodity markets which accompanies trade liberalization can be incredibly destructive. It is what drives thousands of campesinos from the country side to the urban slums. Over time, eventually there is going to be a year where the prices for their products are so low that they either starve or abandon their land and agriculture to move to the city searching for work. Perhaps ironically, this cycle is part of the reason why there are so many underemployed urban poor willing to work in sweatshops.

Within the First World the destructive cycle of the market has been muted by Agricultural Subsidies which stabilize prices. In bad years a farmer gets money from the government so that she will be around next year to products which are needed. The elimination of Ag. Subsidies would over time destroy the agricultural economy of the First World. Ag. represents a tiny percentage of any First World economy which is why folks rightly say the subsidies can be eliminated without much damage.

The question is what replaces the system of domestic subsidies in the First World? The neoliberals, Kick-AAS campaign, and some NGO’s want to replace them with free trade. Where the market failed domestically in an earlier era of liberal markets, it will magically succeed on a global scale with neoliberal markets.

There have been solutions proposed which can provide the commodity price stability on a global scale to replace domestic first world price subsidies. One is to revive the ideas which were proposed in the Non-Aligned Movement in the 70′s when they proposed that the UN Commission on Trade and Development (UNCTAD) enforce price stability on an international scale. This would allow developing countries to avoid the most painful extremes of boom and bust cycles.

An international commodity market stabilization program, instead of the simple elimination of agricultural subsidies would be a reform that would slowly bring more power and wealth to campesino agricultural producers who live on less than $2 a day. It does not bring us justice or equality, but it will give more power power to activists in the third world who struggling to make a truly just and egalitarian world a reality.


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