Global Trade Mailing List Archive

[Andy Parnell <<address removed>>]

Dear Subscribers

I work for a Development Education Centre and have close links with Greenpeace (on environmental issues) and Oxfam (International Development) and my background is in exports and international trade. I am currently working on issues to do with Fair and Ethical Trade and increasing market access for the poor.

Here are some of my initial thoughts on the first part of the consultation questions:

1. OECD agriculture and trade policies
• 	 Are policy makers and trade negotiators exaggerating the impact of northern subsidies and trade barriers on poverty (compared to issues such as standards, value chain concentration, low productivity growth, water shortages and technology gaps)?

No. Lets take Sugarbeet, it has been so heavily subsidised that sugar producers in countries like Malawi cannot compete on conventional market terms in the EU. In fact, I met one the just last month from Malawi saying exactly that. The same can be said with Cotton in the USA. See www.maketradefair.com for details. Productivity of commercial crops has never been a problem. According to Frances Moore Lappe, Joseph Collins and Peter Rosset in their book 'World Hunger 12 Myths', they make it clear that there is enough food to feed everyone on the planet to 3,500 calories per day (enough to make us all fat). Commercial exports to 'Northern Markets' mostly go towards processed foods. 

I would agree that we need to put more resources in tackling the issues of water shortages, value chain concentration (e.g., processing in the country of origin) and some issues of technology gaps (e.g., solar dryers for processing dry goods on farm). Even with all these things in place (like Brazil nuts in Bolivia), the EU still increased its quality standards meaning that Bolivia could no longer export its Brazil Nuts from the Amazon to Europe. Sadly, the protection of the EU and USA markets hurts most of the other agricultural economies in the world. Farming across the world (whether Australia, South Africa or Wales for example) seems to be having the effect of driving farmers from the land wherever they are.


• 	 Is the distinction between trade distorting and non-trade distorting subsidies within the WTO based on evidence, or expediency for US/European trade negotiators trying to defend their farm policies?

One of the major problems with the markets for commodities is that there is a bottle neck in the supply chain as supermarkets and large multinationals squeeze down the supply chain to make their profits. This hurts farmers across the world, whether they are in Uganda or Wales. Even the subsidies going to 80% of the smaller farmers in Europe get taken off them as they get squeezed at the farm gate by the supermarkets. If there was some way to re-introduce competition by challenging the power of firms like Cargill,Nestle, Del Monte, etc who own huge swathes in the vertical supply chain (except for the farms themselves and the gang masters who work them), poverty may just go into decline. This bottle neck has been highlighted in the US potato and meat industry (Eric Schlosser's book, 'Fast Food Nation'), it has been highlighted by Banana Link (www.bananalink.org.uk) in Ecuador, by Oxfam in Spilling the Beans report and there are countless examples of this all over the world. An oligopoly of large multinational companies controlling the supply chain for global trade in commodities.

I do not have any proof, but it wouldn't be too hard to find the figures of most of the profits ending up in the hands of a very few companies. The net effect of all this is that the UK government, along with other OECD governments are subsidising a few large farmers and the rest of it ends up in the coffers of the multinational corporations. The poor in developing countries are excluded but just as bad, the very people the subsidies are meant to protect (the bulk of the farmers in Europe and the USA) are being forced off the land in droves.

In Wales, sheep went from 8 million to 11 million due to the subsidies based on head of population (CAP). The reform of CAP that has been announced is likely to take the sheep numbers back down to 8 million (good news for the environment). However, go down to the local supermarket and New Zealand lamb is what you'll find. You'll also find that the price is really high. Where do the Welsh sheep go? Many I suspect are shipped off to the Middle East (many Welsh farmers have told me this to be the case). This has caused artificially high prices and it's cheaper to buy a Kg of Beef in Wales than it is to buy an equivalent Kg of lamb.  In Australia, sheep exports also end up in Saudi Arabia. 

Yet sheep imports from developing countries is not likely to occur despite many such countries containing sheep. They could never compete with the subsidies given to sheep farmers in Britain or Europe. Clearly, something isn't exactly right here. Trade is not working for the poor in terms of trade in livestock. Non-tariff subsidies must be a major deterrent to third world exporters of livestock products for example. Its simple protectionism and is as plain as daylight.


• 	 Is agriculture in the North ever likely to become an exit industry, opening the way for increased developing country exports?

Its likely that some industries are already becoming an exit industry. Commercial fishing comes to mind but this won't pave the way for developing country imports (fish are scarce all over the place). The Banana Industry in Australia has collapsed due to drought and floods (climate change) but third world imports of Banana's into Australia are still not a mainstream option as yet despite the opportunity to do so. The dropping of sugar subsidies to sugar beet farmers in the EU could pave the way for sugar cane imports into the EU.  CAP costs Europe a fortune but consumers and the majority of farmers don't benefit from this. It simply ends up in the tills of the supermarkets and agri-business sector. If the EU dropped CAP, farming industries would likely 'bottom out' and this would pave the way for exports from developing countries, but is this increase likely to benefit poor producers? I honestly don't know...it probably depends upon how well you can manage supply.

Does anyone have any good case studies on markets that bottomed out in OECD nations where there was a significant increase in imports from developing countries in turn?

These are just my initial thoughts on the first section of questions in the consultation. More will follow yet I hope that this stimulates some thoughts on subsidies and global trade.

Kind regards




Andy Parnell HND BIB MSc M.A.I.Ex.
Business Links Coordinator

PEDEC/ CAADP
(Canolfan Addysg Amgylchedd a Datblygu Powys)
(Powys Environment & Development Education Centre)
12 Great Oak Street
LLANIDLOES
Powys
SY18 6BU

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