Free
Trade vs. Small Farmers
By Walden Bello
April 27, 2007
Fpif.org
The 20th century was a terrible
blight on small farmers everywhere. In both wealthy capitalist economies
and in socialist countries, farmers paid a heavy price for industrialization.
In advanced capitalist countries like the United States, a deadly combination
of economies of scale, capital-intensive technology, and the market
led to large corporations cornering agricultural production and processing.
Small and medium farms were relegated to a marginal role in production
and a minuscule portion of the work force.
The Soviet Union, meanwhile,
took to heart Karl Marx's snide remarks about the “idiocy of rural
life” and, through state repression, transformed farmers into
workers on collective farms. Expropriation of the peasants' surplus
production was meant not only to feed the cities but also to serve as
the source of the so-called “primitive accumulation” of
capital for industrialization.
Today, perhaps the greatest
threat to small farmers is free trade. And the farmers are fighting
back. They have helped, for instance, to stalemate the Doha round of
negotiations of the World Trade Organization (WTO). This tug of war
between farmers and free trade is nowhere more visible than in Asia.
The Triple Threat
to Asia’s Peasantry
Asian governments placed
the burden of industrialization on the peasantry during the phase of
so-called developmentalist, industry-first policies. In Taiwan and South
Korea, land reform first triggered prosperity in the countryside in
the 1950s, stimulating industrialization. But with the shift to export-led
industrialization in 1965, there was demand for low-wage industrial
labor, so government policies deliberately depressed prices of agricultural
goods. In this way, peasants subsidized the emergence of Newly Industrializing
Economies. Peasant incomes declined relative to urban incomes, and the
resulting stagnation of a once-vibrant countryside led to massive migration
to the cities and a steady supply of cheap labor for factories. The
farmers left in the countryside were primarily poor and aging, and they
formed an increasingly small part of the national work force.
In Thailand, for instance,
a tax on rice exports insulated the domestic market from price movements
in the international market, depressing the price of rice and reducing
the wage costs of non-agricultural employers. A transfer of real wealth
from the countryside to the city took place every year between 1962
and 1981, except for 1970. Not surprisingly, despite the image of Thailand
as an agricultural superpower, a large percentage of the rural population
remains poor.
In China, millions of peasants
died of starvation during the Great Leap Forward as the government requisitioned
grain surplus to finance Mao Zedong's super-industrialization drive.
The chaos of the Cultural Revolution allowed peasants to regain a degree
of control over production because the government was in crisis. Following
the death of Mao in 1976, Deng Xiaoping dealt with the crisis by introducing
the “household contract responsibility system.” Each family
was given a piece of land to farm, along with the right to sell what
was left over after a fixed proportion of the produce was sold to the
government at a state-determined price. This led to peasant prosperity
that, as in Taiwan, stimulated industrial production to fulfill rural
demand.
But, as in Taiwan, this golden
age of the peasantry came to an end, and the cause was identical: the
adoption of urban-centered, export-oriented industrialization. Primitive
capital accumulation for industry took the form of requisitioning peasant
surpluses via heavy taxation. Currently, the various tiers of the Chinese
government foist a total of 269 different taxes on farmers, along with
often-arbitrary administrative charges. Not surprisingly, in many places,
taxes now eat up 15% of farmers' income, three times the official national
limit of 5%. Not surprisingly, too, while the economy has been growing
at 8-10% a year, peasant income has stagnated, so that urban dwellers
now have, on average, six times the income of peasants. True indeed
is the observation of the rural advocates Chen Guidi and Wu Chuntao
that the urban industrial economy has been built “on the shoulders
of peasants.”
The Typhoon of Trade
Liberalization
The forcing of peasants to subsidize industrialization was indeed harsh.
But at least trade policies at the time helped to mitigate the pain
by barring agricultural imports that were even cheaper than local commodities.
Practically all Asian countries with agricultural sectors tightly controlled
imports via quotas and high tariffs. This protective shield, however,
was severely eroded when countries signed the Agreement on Agriculture
(AOA) and began joining the World Trade Organization (WTO) starting
in 1995.
The AOA forced open agricultural
markets by banning quotas, which were converted to tariffs, and required
governments to import a minimum volume of each agricultural commodity
at a low tariff. At the same time, under the pretext of controlling
the heavy subsidization of agriculture in developed countries, the AOA
institutionalized the various channels through which subsidies flowed,
such as export subsidies and direct cash payments to farming interests
in the northern hemisphere.
As a result, the level of
subsidization of agriculture actually increased in developed countries
in the first decade of the WTO. The total amount of agricultural subsidies
provided by the OECD's member governments rose from $182 billion in
1995 to $280 billion in 1997, $315 billion in 2001, $318 billion in
2002, and almost $300 billion in 2005. The United States and the European
Union (EU) were spending $9-10 billion more on subsidies in the early
2000s than they were a decade earlier. For every $100 of agro-exports
from the United States, government subsidies accounted for $20-30. In
the case of the EU, the figure was $40-50. While unsubsidized smallholders
in the developing world had to survive on less than $400 a year, American
and European farmers were receiving, respectively, an
average of $21,000 and $16,000 a year in subsidies.
With massive American and
European subsidies distorting global prices in a downward direction,
developing country agriculture became “non-competitive”
under the conditions of WTO-mandated trade liberalization. As the Food
and Agricultural Organization (FAO) notes,
instantaneous import surges following the adoption of the AOA in a number
of developing countries led to “consequential difficulties”
for “import-competing industries.” The report continued,
“Without adequate market protection, accompanied by development
programs, many more domestic products would be displaced, or undermined
sharply, leading to a transformation of domestic diets and to increased
dependence on imported foods.”
This historic shift to dependence
on food imports was, needless to say, accompanied by the displacement
of millions of peasants.
Even before the AOA took
effect, the World Bank was predicting that Indonesian farmers would
lose out under the new regime. Indeed, since 1995, farmers in rice and
other basic commodities have been marginalized. Meanwhile, competitive
pressures induced by trade liberalization led to the expansion of commercial
plantations at the expense of smallholders.
In the Philippines, corn
farmers, chicken farmers, cattle raisers, and vegetable growers were
driven to bankruptcy in huge numbers. In Mindanao, where corn is a staple
crop, many farmers were wiped out. As analyst Aileen Kwa has described,
“It is not an uncommon sight to see farmers there leaving their
corn to rot in the fields as the domestic corn prices have dropped to
levels [at which] they have not been able to compete.” With production
stagnant, land devoted to corn across the country contracted sharply
from 3,149,300 hectares in 1995 to 2,150,300 hectares in 2000.
In China, tens of thousands
of farmers, including those growing soybeans and cotton, have been marginalized
with China's entry into the WTO. Indeed, to maintain and increase access
for its manufacturers to developed countries, the government has chosen
to sacrifice its farmers. According to the Institute of International
Economics: “The challenge of managing the farm sector has grown
with China's WTO commitments in agriculture, which are more far reaching
than those of other developing countries and in certain respects exceed
those of high-income countries. The Chinese government agreed to reduce
tariffs and institute other policies that meaningfully increase market
access; accepted tight restrictions on the use of agricultural subsidies;
and pledged to eliminate all agricultural export subsidies. These commitments
went far beyond those made by other participants in the Uruguay Round
negotiations that led to the WTO's creation.”
In Sri Lanka, thousands of
small farmers staged street demonstrations to protest the import of
chicken parts and eggs, claiming they were being driven out of business.
The FAO concurred, noting that import surges on major food items like
chilies, onions, and potatoes made local production “precarious,
as reflected in the significant drop in areas of production.”
In India, tariff liberalization,
even in advance of WTO commitments, has translated into a profound crisis
in the countryside. Indian economist Utsa Patnaik has
described the calamity as “a collapse in rural livelihoods
and incomes” owing to the steep fall in the prices of farm products.
Along with this has come a rapid decline in consumption of food grains,
with the average Indian family of four consuming 76 kg less in 2003
compared to 1998 and 88 kg less than a decade earlier. The state of
Andra Pradesh, which has become a byword for agrarian distress owing
to trade liberalization, saw a catastrophic rise in farmers' suicides
from 233 in 1998 to over 2,600 in 2002. One estimate is that some 100,000
farmers in India have taken their lives owing to collapsing prices stemming
from rising imports.
Governments under
Pressure
The resistance to the new
regime so opposed to the interests of small farmers has come from several
sectors. At the international level, trade liberalization and other
anti-agriculture policies led to the formation of two blocs of developing
countries: the Group of 20 and the Group of 33. The G-20 put the developed
countries on notice that, unless they significantly reduced unfair domestic
support for agriculture, there would be no more concessions on market
access. The G-33 demanded exemptions from tariff liberalization for
certain products considered vital to agricultural production and employment
(special products or SPs). They also wanted the right to raise tariffs
and resort to other measures -- special safeguard mechanisms (SSMs)
-- to protect their products from surges of agricultural imports. When
the EU and the United States refused to compromise on these issues,
the WTO's Fifth Ministerial Meeting in Cancun in 2003 collapsed.
The Ministerial Declaration
of the Sixth Ministerial Meeting of the WTO in Hong Kong in December
2005 recognized the right of developing countries to designate SPs and
institute SSMs. However, the U.S. backtracking on this commitment as
well as its refusal to significantly reduce its domestic subsidies led
to the collapse of the Doha Round of negotiations in July 2006. Developing
countries simply could not provoke more discontent among their peasant
populations by opening their markets even more in exchange for cosmetic
reductions in the massive EU and U.S. agricultural subsidies.
The driving force behind
the positions some developing countries have taken in these multilateral
forums is the backlash in the countryside. In 2004, for instance, a
rural backlash against agrarian distress led to the unexpected defeat
of the BJP-led ruling coalition that had campaigned on the vision of
“India Shining.” India's rural electoral revolt was part
of a global phenomenon that put governments on notice that the countryside
would no longer accept policies that sacrifice farmer interests. In
Asia, protests in the form of land occupations, hunger strikes, violent
demonstrations, and symbolic suicides made rural distress a pressing
issue. In China, what the Ministry of Public Security calls “mass
group incidents” -- in other words, protest actions -- increased
from 8,700 in 1993 to 87,000 in 2005, most of them in the countryside.
Moreover, the incidents are growing in average size, from 10 or fewer
persons in the mid-1990s to 52 people per incident in 2004. Not surprisingly,
the current leadership increasingly sees the countryside as a powder
keg that needs to be defused.
Farmers' Internationale?
The suicide of the Korean
farmer Lee Kyung Hae at the barricades in Cancun in September 2003 was
a milestone in the development of farmers' resistance globally. Committed
under a banner that read “WTO Kills Farmers,” Lee's suicide
was designed to draw international attention to the number of suicides
by farmers in countries subjected to liberalization. He succeeded only
too well. The event shocked the WTO delegates, who observed a minute
of silence in Lee's memory. By adding to what was already a charged
atmosphere, Lee’s act was certainly a key factor in the unraveling
of the talks.
In December 2005, invoking
Lee's sacrifice, hundreds of Korean farmers tried to break through police
lines in an effort to storm the Hong Kong Convention Center. Some 900
protesters, the bulk of them Korean farmers, were arrested.
Both Lee and the Korean farmers
protesting in Hong Kong were members of Via Campesina, an international
federation of farmers established in the mid-1990s. Since its founding,
Via Campesina -- literally translated as the Peasants' Path -- has become
known as one of the most militant opponents of the WTO and bilateral
and multilateral free trade agreements. While there are other international
farmers' networks, Via is distinguished by its position that small farmers
must not only fight to survive in the current global system of corporate-dominated
industrial farming, they should lead the process to transform or replace
the current system. Commenting on the vision of Jose Bove the famous
French activist who dismantled a MacDonald's restaurant in his hometown
of Millau, France and other Via leaders, one progressive journal has
described the aim of the organization as the creation of
a Farmers' Internationale in much the same way that Communist and Social
Democratic groups sought to establish the Communist International and
Socialist International to unite workers in the 20th century.
The main battle cry of Via
Campesina, whose coordinating center is located in Indonesia, is “WTO
Out of Agriculture” and its alternative program is food sovereignty.
Food sovereignty means first and foremost the immediate adoption of
policies that favor small producers. This would include, according to
Indonesian farmer Henry Saragih, Via's coordinator, and Ahmad Ya'kub,
Deputy for Policy Studies of the Indonesian Peasant Union Federation
(FSPI), “the protection of the domestic market from low-priced
imports, remunerative prices for all farmers and fishers, abolition
of all direct and indirect export subsidies, and the phasing out of
domestic subsidies that promote unsustainable agriculture.”
Via's program, however, goes
beyond the adoption of pro-smallholder trade policies. It also calls
for an end to the Trade-Related Intellectual Property Rights regime,
which allows corporations to patent plant seeds, thus appropriating
for private profit what has evolved through the creative interaction
of the natural world with human communities over eons. Seeds and all
other plant genetic resources should be considered part of the common
heritage of humanity, the group believes, and not be subject to privatization.
Agrarian reform, long avoided
by landed elites in countries like the Philippines, is a central element
in Via's platform, as is sustainable, ecologically sensitive organic
or biodynamic farming by small peasant producers. The organization has
set itself apart from both the First Green Revolution based on chemical-intensive
agriculture and the Second Green Revolution driven by genetic engineering
(GE). The disastrous environmental side effects of the first are well
known, says Via, which means all the more that the precautionary principle
must be rigorously applied to the second, to avoid negative health and
environmental outcomes.
The opposition to GE-based
agriculture has created a powerful link between farmers and consumers
who are angry at corporations for marketing genetically modified commodities
without proper labeling, thus denying consumers a choice. In the European
Union, a solid alliance of farmers, consumers, and environmentalists
prevented the import of GE-modified products from the United States
for several years. Although the EU has cautiously allowed in a few GE
imports since 2004, 54% of European consumers continue
to think GE food is ”dangerous.” Opposition
to other harmful processes such as food irradiation has also contributed
to the tightening of ties between farmers and consumers, large numbers
of whom now think that public health and environmental impact should
be more important determinants of consumer behavior than price.
More and more people are
beginning to realize that local production and culinary traditions are
intimately related, and that this relationship is threatened by corporate
control of food production, processing, marketing, and consumption.
This is why Jose Bove's justification
for dismantling a MacDonald's resonated widely in Asia: “When
we said we would protest by dismantling the half-built McDonald's in
our town, everybody understood why -- the symbolism was so strong. It
was for proper food against malbouffe [awful standardized food], agricultural
workers against multinationals. The extreme right and other nationalists
tried to make out it was anti-Americanism, but the vast majority knew
it was no such thing. It was a protest against a form of production
that wants to dominate the world.”
Many economists, technocrats,
policymakers, and urban intellectuals have long viewed small farmers
as a doomed class. Once regarded as passive objects to be manipulated
by elites, they are now resisting the capitalist, socialist, and developmentalist
paradigms that would consign them to ruin. They have become what Karl
Marx described as a politically conscious “class-for-itself.”
And even as peasants refuse to “go gently into that good night,”
to borrow a line from Dylan Thomas, developments in the 21st century
are revealing traditional pro-development visions to be deeply flawed.
The escalating protests of peasant groups such as Via Campesina, are
not a return to the past. As environmental crises multiply and the social
dysfunctions of urban-industrial life pile up, the farmers' movement
has relevance not only to peasants but to everyone who is threatened
by the catastrophic consequences of obsolete modernist paradigms for
organizing production, community, and life.
Walden Bello is Executive Director of Focus on the
Global South, a Bangkok-based research and advocacy institute, and a
Professor of Sociology at the University of the Philippines at Diliman.
A longer version of this piece comes out in the April 2007 issue of
Global Asia. It is republished with permission.
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