[GJM] Fw: [globalnetnews-summary] Rising Prices Reinforce Need for Food Security Policies

[mary rose]

This article emphasizes how the subsidizing of export products by the U..S. 
(and other developed countries) has crippled the developing countries in 
food security. For instance, subsidies here in the U.S. permit the export 
and sale of food to other countries far below cost of production in the U.S. 
and far below what farmers in developing countries can grow and retail food. 
Thus local production in developing countries has been curtailed and those 
countries have become dependent upon imports for their food supply.  And 
this is where the crux of food shortages and starvation occurs.  It is not 
that these countries cannot produce enough food for themselves, except in 
cases such as Australia where droughts have devastated agricultural 
regions,.it is that developing countries have been forced to stop producing 
food and become dependent upon developed countries (mainly U.S. and Europe) 
for food.  Then, on top of this, we see the Commodities Markets operating 
where food commodities are held off the market by investors in order to 
increase the price of stocks. These practices have greatly contributed to 
the ability of the U.S. to become the most prosperous nation in the history 
of the world in just the short time since the end of World War II.  But it 
is also why the U.S. has done more environmental damage in the same amount 
of time than has been done at any time in past recorded history.

Below, is an excerpt from this article that sums up the whole scenario in a 
nutshell.  This

"Rice output in (Ghana) in the 1970s could meet all local needs, but by 
2002, imports made up 64 percent of domestic supply. Rice output in the 
Northern region fell from an annual average of 56 000 tonnes (in 1978-80 to 
only 27 000 tonnes for the whole country in 1983. In 2003, the US exported 
111 000 tonnes of rice to Ghana. In the same year, the US government gave 
$1.3 billion in subsidies for rice. A government study found that 57 percent 
of US rice farms would not have covered their cost if they did not receive 
subsidies. In 2000-2003, the average costs of production and milling of US 
white rice was $415 per tonne, but it was exported for just $274 per tonne, 
a price 34 percent below its costs."

Yet, U.S. Americans have been led to believe that the U.S. was this great 
country giving aid to these developing countries. I use to wonder why, when 
I saw all these starving children on the TV commercials, we weren't helping 
the people in these areas to raise their own food because I knew that 
through organic farming it was possible to grow food in a way that restored 
soil even in the most damaged of the dry and arid regions.of the world. 
Yet, now the revelations come that it was all being done to ensure that the 
great American lifestyle continued.  But sooner or later the chickens come 
home to roost and we are all learning the downside of economic manipulation. 
The greatest tragedy being that we also exported the Great American 
lifestyle to countries like China and India, and now these countries too 
want to live as we have here in the U.S.   mary rose

mary rose


----- Original Message ----- 
From: "GlobalCirclenet" <webmaster at globalcircle.net>
To: <globalnetnews-summary at lists.riseup.net>
Sent: Tuesday, July 15, 2008 9:46 AM
Subject: [globalnetnews-summary] Rising Prices Reinforce Need for Food 
Security Policies



"Suddenly, the paradigm of food security has shifted back to the traditional 
concept of greater self-sufficiency instead of relying on cheaper imports. 
In the immediate period, emergency food supplies have to be shipped to 
affected countries, but the long-term solution must include increased local 
food production."

"The current food crisis has been precipitated by a number of factors 
including climate extremes, such as the drought that has drastically cut 
wheat harvests in Australia, the rising cost of inputs, especially oil and 
oil-based products (fuel, chemical fertilizers and pesticides) and above 
all, the switch of land use from the production of food to bio-fuels."


ISIS Press Release 15/07/08
Rising Prices Reinforce Need for Food Security Policies
http://www.i-sis.org.uk/risingPricesFoodSecurity.php

The new key to food security is self-sufficiency, not trade, and policies 
are needed to expand local food production and invigorate the agricultural 
sector particularly in developing countries

Food Futures Now , *Organic *Sustainable *Fossil Fuel Free, How organic 
agriculture and localised food, and energy systems can potentially 
compensate for all greenhouse gas emissions due to human activities and free 
us from fossil fuels
Desperate measures to cope with soaring food prices revive debate over food 
security

In response to rising world food prices, some food-importing developing 
countries have lowered their tariffs to mitigate the high prices of imports. 
At the World Trade Organisation (WTO), agricultural exporters are 
questioning the need for the instruments of special products (SP) and 
special safeguard mechanism (SSM) designed to protect food security, 
livelihood, and rural development against trade. But the G33 group of 
developing countries and its members say that their case for SP and SSM has 
grown even stronger, as the food crisis is due to inadequate production in 
many developing countries, forcing them to increase their dependence on 
imports that has now become so costly.

Although importing countries can cut tariffs to reduce prices now, in the 
longer term their farmers will need local markets and incentives for them to 
revive agriculture production.

The current crisis has also revived the debate over food security. In recent 
years, international financial institutions have promoted the view that 
cheaper imports make local food production no longer a matter of necessity, 
and many developing countries reduced food production on the advice of those 
agencies.

The rise in food prices in the past two years has increased the cost of 
imports and inflated food prices in local markets. This was exacerbated by 
shortages experienced in countries placing import orders, for rice, for 
example, only to find supplies cut by export restrictions. The ensuing 
street protests in many countries have added a considerable sense of urgency 
to the worsening situation.

Suddenly, the paradigm of food security has shifted back to the traditional 
concept of greater self-sufficiency instead of relying on cheaper imports. 
In the immediate period, emergency food supplies have to be shipped to 
affected countries, but the long-term solution must include increased local 
food production.

This raises the question of barriers to local food production and how to 
overcome those barriers.
Barriers to local food production for self-sufficiency

The current food crisis has been precipitated by a number of factors 
including climate extremes, such as the drought that has drastically cut 
wheat harvests in Australia, the rising cost of inputs, especially oil and 
oil-based products (fuel, chemical fertilizers and pesticides) and above 
all, the switch of land use from the production of food to bio-fuels.

However, a more important contributing factor is the decline in agriculture 
in many developing countries that has been happening over the past decades, 
in most cases, due to the structural adjustment policies of the IMF and 
World Bank. The countries were asked or advised to dismantle marketing 
boards and guaranteed prices for farmers' products; to phase out or 
eliminate subsidies and support for fertilizer, machines, agricultural 
infrastructure; and to reduce tariffs of food products to very low levels.

Many countries that were net exporters or self-sufficient in numerous food 
crops experienced a decline in local production and a rise in imports that 
had become cheaper because of the reduced tariff. In addition, some imports 
are from developed countries that heavily subsidize their food products. 
Consequently, the local farmers were subjected to unfair competition, and in 
many cases, failed to survive.
How Ghana's agriculture was destroyed by the World Bank and the IMF

Ghana is a case in point. From the 1960s through to the 1980s its policies 
to promote self-sufficiency in food had involved the government actively 
encouraging the agricultural sector through marketing, credit and subsidies 
for inputs. This had facilitated an expansion of food production for 
example, in rice, tomato, and poultry.

But from the mid-1980s onwards and especially in the 1990s under World Bank 
and International Monetary Fund (IMF) conditionalities - programmes for 
economic and political reform attached to the provision of funds - the 
policies for self-sufficiency were reversed. The subsidy for fertilizer was 
eliminated, and its price rose very significantly. The marketing role of the 
state was phased out. The system of minimum guaranteed prices for rice and 
wheat was abolished, as were many state agricultural trading enterprises and 
the seed agency responsible for producing and distributing seeds to farmers, 
and subsidized credit also ended.

Simultaneously, applied tariffs for most agricultural imports were reduced 
significantly to the present 20 percent. That, on top of the dismantling of 
state support, left local farmers unable to compete with imports 
artificially cheapened by high subsidies, especially in rice, tomato and 
poultry.

Rice output in the 1970s could meet all local needs, but by 2002, imports 
made up 64 percent of domestic supply. Rice output in the Northern region 
fell from an annual average of 56 000 tonnes (in 1978-80 to only 27 000 
tonnes for the whole country in 1983. In 2003, the US exported 111 000 
tonnes of rice to Ghana. In the same year, the US government gave $1.3 
billion in subsidies for rice. A government study found that 57 percent of 
US rice farms would not have covered their cost if they did not receive 
subsidies. In 2000-2003, the average costs of production and milling of US 
white rice was $415 per tonne, but it was exported for just $274 per tonne, 
a price 34 percent below its costs.

Tomato was a thriving sector, especially in the Upper East region. As part 
of a privatization programme, tomato-canning factories were sold off and 
closed, while tariffs were reduced. This enabled the heavily subsidized EU 
tomato industry to penetrate Ghana, and displace the livelihoods of tomato 
farmers and industry employees.

Tomato paste imported in Ghana rose from 3 200 tonnes in 1994 to 24 077 
tonnes in 2002. Local tomato production has stagnated since 1995, while 
tomato-based products from Europe made inroads into African markets. In 
2004, EU aid for processed tomato products was 298 million euros, and there 
are many more millions of euros in indirect aid (export refunds, operational 
funds for producer organisations, etc).

Ghana's poultry sector started to grow in the late 1950s, reaching its prime 
in the late 1980s and declined steeply in the 1990s. The decline was due to 
the withdrawal of government support and the reduction of tariffs. Poultry 
imports rose by 144 percent between 1993 and 2003, and a significant share 
of this were heavily subsidized poultry from Europe. In 2002, 15 European 
countries exported 9 010 million tonnes of poultry meat for Euro 928 
million, at an average of Euro 809 per tonne. It is estimated that the total 
subsidy on exported poultry (including export refunds, subsidies for cereals 
fed to the poultry, etc) was Euro 254 per tonne.

Between 1996 and 2002, EU frozen chicken exports to West Africa rose 
eight-fold, due mainly to import liberalization, practically wiping out the 
half million chicken farmers in Ghana. In 1992, domestic farmers supplied 95 
percent of Ghana's market, but this share fell to 11 percent in 2001.

In 2003, Ghana's parliament raised the poultry tariff from 20 to 40 percent. 
This was still much below the bound rate (allowed by the World Trade 
Organisation) of 99 percent. However, the IMF objected to this move and the 
new approved tariff was not implemented. The IMF representative in Ghana 
told Christian Aid that it pointed out to the government the raising of 
tariff was not a good idea, and the government reflected on it and agreed. 
Many farmers groups and NGOs in Ghana have protested to the government.
WTO completes the debacle

Some developments in the trade negotiating arena are also a source of 
concern. The Doha negotiations at the World Trade Organisation (WTO) are 
mandated to substantially reduce domestic support in developed countries. 
But to date, that has not materialised.

Another source of concern is the new US Farm Bill. According to several 
analyses, including those oif the US administration, the Bill will continue 
the present system of subsidies, and will even expand support in some ways 
for several commodities. For example, the Bill guarantees that 85 percent of 
the domestic market for sugar will be met by local production.

The Bill also allows a farm family with an income of up to $1.5 million to 
obtain subsidies, compared to the limit of $200 000 per farmer proposed by 
the Bush administration. The Bill thus 'locks in' the US system and its 
levels of subsidies for the next 5 years, and also constrains what the US 
negotiators can offer in the WTO Doha negotiations.

A major loophole in the WTO agriculture agreement is that countries are 
obliged to reduce their bound levels of domestic support that are deemed 
'trade distorting' but there are no constraints on the amount of subsidies 
deemed non-distorting or minimally distorting, which are placed in the 
so-called Green Box.

Recent studies have shown, however, that many of the Green Box subsidies are 
also trade-distorting. The Doha negotiations are unlikely to place new 
effective disciplines on the Green Box. Therefore, the major subsidizing 
countries can change the type of domestic subsidies they give, while 
reducing the "trade-distorting subsidies" and continue to provide similar 
levels of farm subsidies.

Meanwhile, the developing countries are being asked to reduce their 
agricultural tariffs further. The Chair's proposal at the Doha talks is for 
a maximum 36 percent tariff cut for developing countries, and 24 percent for 
small vulnerable economies. This is sizable, and compares with the 24 
percent cut in the previous Uruguay Round.

Most developing countries are advocating that the instruments of SP and SSM 
be set up as part of the WTO talks to promote food security and farmers' 
livelihoods and rural development. SP would exempt important food products 
from tariff cuts or at least allow for more lenient cuts. SSM would enable a 
developing country to impose an additional duty on top of the bound rates in 
situations of reduced import price or increased import volume, in order to 
protect the local farmers. However, there is considerable opposition from 
some exporting countries to having these instruments that can work in an 
effective way.
Free trade agreements reduce tariffs even further

In the bilateral or regional free trade agreements involving developed and 
developing countries, the developing countries are asked to reduce or 
eliminate their tariffs by even more. For example, in the Economic 
Partnership Agreements between ACP countries and the EU, the ACP (group of 
African, Caribbean and Pacific less developed countries) are asked to 
eliminate their tariffs on 80 percent of their tariff lines over different 
time periods, among which are agricultural products.
Key policies and measures for food security

The economic and trade policies followed by many developing countries, often 
at the advice of international financial institutions, or as part of 
multilateral and bilateral trade agreements, have contributed to the 
stunting of the agriculture sector in developing countries. In order to 
increase food production in developing countries for food security, a number 
of policies and measures need to be implemented.

   1. Developing countries must be allowed to provide adequate support to 
their agriculture sector and to have a realistic tariff policy to advance 
their agriculture, especially as developed countries' subsidies are 
continuing at a high level. The developed countries should quickly reduce 
their actual levels of subsidy.
   2. The agriculture policy paradigm in developing countries must be 
allowed to change. Countries should have the policy space to expand public 
expenditure on agriculture. Governments in developing countries must be 
allowed to provide and expand support to the agriculture sector.
   3. Developing countries should place high priority on expanding local 
food production. Accompanying measures and policies should thus be put in 
place. The countries should be allowed to calibrate their agricultural 
tariffs in such a way as to ensure that the local products can be 
competitive and the farmers' livelihoods and incomes are sustained, and 
national food security assured.
   4. The proposals of developing countries (led by the G33) on special 
products and special safeguard mechanism at the WTO should be supported. 
Effective instruments that can meet the aims should be established.
   5. The policies of the World Bank, IMF and regional development banks 
should be reviewed and revised as soon as possible, so that they do not 
continue to be barriers to food security and agricultural development in 
developing countries.
   6. The actual levels (and not just the bound levels) of agricultural 
domestic subsidies in developed countries should be effectively and 
substantially reduced. There should also be new and effective disciplines on 
the Green Box subsidies to ensure that this category does not remain an 
'escape clause' that allows distorting subsidies detrimental to developing 
countries.
   7. There should be a review of many of the FTAs between developed and 
developing countries, including the Economic Partnership Agreements between 
the EU and ACP countries. In light of the food crisis and the changing 
paradigm on food security, developing countries that have signed or are in 
the process of negotiating FTAs should ensure that the FTAs provide enough 
policy space to allow sufficiently high tariffs on agricultural imports to 
safeguard the principles of food security, farmers' livelihoods and rural 
development. Developed countries should also not make demands that adversely 
affect food production in developing countries.

Martin Khor is Director of the Third World Network, and this article is a 
revised and  edited version of part of a paper on food crisis and climate 
change presented at a round-table at the FAO Summit on Food Security in Rome 
on 4 June 2008. For further details see Khor M. The impact of trade 
liberalization on agriculture in developing countries: the experience of 
Ghana. TWN, Penang, 2008.