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Market access and the food crisis

By Devinder Sharma

While the World Bank and WTO say that more market access in developing countries is the only answer to the global food crisis, the UN’s ‘Economic and Social Survey 2008’ claims market liberalisation has actually contributed to the food crisis

It couldn’t have been better timed. The global food crisis is turning out to be a saviour for the agribusiness industry. More free trade and the fast-track adoption of genetically modified crops are being proposed as possible solutions.

US President George Bush, when asked what he and Prime Minister Manmohan Singh discussed at the recently concluded G8 Summit, said: “We discussed the need for a successful completion of the Doha Development Round of the World Trade Organisation (WTO).” His statement assumes importance given the several unresolved issues related to agriculture and non-agricultural market access (NAMA) that are likely to come up before the forthcoming WTO mini-ministerial scheduled for July 21-25, 2008, in Geneva.

George Bush’s emphasis on resolving these contentious trade issues comes at a time when the WTO is in a tearing hurry to reach an agreement before the end of the year. WTO chief Pascal Lamy says: “Free trade is the only answer for the global food crisis.” He has repeatedly called for an early completion of the Doha Development Round. World Bank chief Robert Zoellick too has been pressing developing countries to provide more market access for agricultural commodities from rich and industrialised countries.

While the World Bank and WTO are pushing hard for a further opening up of developing country markets, ostensibly to benefit agribusiness companies, the United Nations is not convinced. In its latest ‘World Economic and Social Survey 2008’, the UN says that on the contrary it is the system of protection for agriculture in advanced countries, over the past 40 years, that has been detrimental to agricultural development in many developing countries. And that this is one of the many factors that have contributed to food insecurity in some of these countries.

The report comes in the wake of an unprecedented food crisis being witnessed across the globe. Some 37 countries have faced food riots in the past one year, and the UN classifies 55 countries as vulnerable to serious food shortages.

Ironically, while the WTO is negotiating greater market access from developing countries, the UN says developing countries have already paid a price, in advance, at Marrakesh (where the WTO formation was agreed upon, in 1994), adding that there is actually no need for developing countries to make more market access concessions. It would seem therefore that WTO Director General Pascal Lamy and World Bank chief Robert Zoellick are only batting for the commercial interests of multinational corporations.

Already, agribusiness MNCs have shown stupendous gains in the first quarter of this year. At a time when the world is witnessing food prices that have increased by 300% in the past five years, the profits of agribusiness corporations have surpassed all expectations. In other words, while hunger has multiplied (the World Bank estimates an additional 100 million people are sliding into hunger), business for these corporations has zoomed.

Thanks to more trade in agriculture, the food deficit of developing countries has grown to a record US$ 11 billion a year. Some 40 years ago, developing countries were actually exporting food and had a surplus of US$ 7 billion in food trade. This turnaround in food fortunes is the outcome of more trade liberalisation.

The gains from unequal trade have been siphoned off by a handful of private corporations. Profits for Monsanto, the world’s largest seed company, were up 108%, while Cargill and Archer Daniel Midlands (ADM), the world’s largest food traders, registered profit increases of 86% and 42% respectively. Profits for Mosaic, one of the world’s largest fertiliser companies, rose 1,134%. No wonder India’s fertiliser subsidy bill has already crossed the Rs 100,000 crore mark.

The G8 also focused on the role of genetically modified (GM) crops in alleviating hunger in developing countries. A recent estimate by the Consultative Group on International Agricultural Research (CGIAR), the governing body of the 16 international agricultural research centres, suggested that biotechnology could contribute to major advances in crop productivity. Accordingly, GM crops could increase global yield potential by some 25% in the coming years.

Interestingly, the CGIAR study is not even being acknowledged by GM companies. Martin Taylor, chairman of Syngenta, one of the world’s biggest supporters of GM research, refutes the CGIAR claims. In an interview with The Guardian, he said: “GM won’t solve the food crisis, at least not in the short term.” His words contradict the statements of the G8 leaders who see tremendous possibilities for GM crops in addressing the world food crisis.

The political leadership in India too is in tune with the faulty projections and expectations. Parroting the flawed economic and scientific analysis being promoted by mainline economists and policymakers in western countries, the Indian government refuses to look beyond them. Both the Planning Commission and the Ministry for Science and Technology express great faith in what Thomas M Schoewe, vice-chairman of Wal-Mart International and chief executive officer of Wal-Mart International Stores has to say about opening up for more trade, and what Friedrich Berschauer, chairman of Bayer CropSciences AG, has to say about the potential of GM crops/foods.

Unfortunately what is not being realised is that the present agrarian crisis is more the outcome of an unjust trade regime and unwanted technologies that have little relevance to the needs of small and marginal farmers.

InfoChange News & Features, July 2008