“Food Security, Agriculture Policies, and Globalization: Lessons from USA and India”

by Ingolf Vogeler

for the Institute for Social and Economic Change in Bangalore, India, on 5 January 2005

I want to talk about issues relating to food: food security, agricultural policies, and food trade in a time of increasing globalization. What are the complimentary and contradictory relationships between these three issues in general and how have these issues played out in the USA, and how are the lessons from the USA relevant to India?

Food security

We eat to live; we live to eat. Food is fundamental to our well-being; hence, the premier importance of agriculture in any society. Individuals, families, clans, tribes, and governments are responsible for feeding themselves – if one social unit fails to feed itself a larger social group often provides assistance. Food security is thus the basis for all functioning societies and, conversely, food insecurity is one of many characteristics of “failed” states. For the Food and Agricultural Organization of the United Nations, “food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life” (FAO, 2004). Food access refers to one of several ways to feed people: sufficient and productive land to grow food; employment with sufficient income to buy the necessary food; and/or government programs which provide direct food assistance or indirect financial support to buy sufficient food.

USA Agriculture

Agriculture provides the raw materials for food; hence, the structure, variety, and productivity of agriculture are of primary concern to governments.

USA Presidents have praised the importance of agriculture. President George W. Bush’s statement reflects this long tradition:

“The success of agriculture contributes to the strength of this nation. It is in our national interests, in our national security interests that we have a strong farm economy. And the farmers of America contribute to the values of our nation, and to the generosity of our nation. And farming is our first industry, the industry that feeds us, that clothes us and, increasingly, provides our energy.”

Yet the actual US farm sector is in crisis.

USA Farm Characteristics

Historically, agriculture worldwide was characterized by under production given the needs of people – hunger was wide spread and re-occurring. With the industrialization of agriculture, agriculture in the Minority World/Rich countries became too productive visa via the capitalist market for domestic food: resulting in generally lower commodity prices, farm bankruptcy, and farm closures. Although farmers only represent about 1% of the USA population in 2004; the structure of agriculture is highly skewed towards the largest-scale farms:

Land and farmland:

2% of farms with $500,000 or more sales (the largest category of the USDA) operate 13% of the land

6% of all landowners control over 50% of farmland

[by comparison in Venezuela: fewer than 5% of all landowners control over 75% of farmland]

Farm sales: (see Figure 1)

2% of farms with $500,000 or more sales generate 50% of gross farm sales

9% of farms produce 73% of farm sales.

Hunger in the USA

Despite the abundance of USA agriculture, the USDA Economic Research Service’s annual report on household food security found that poverty has increased and that hunger and food insecurity rose for the third year in a row (1999-2002). Food insecure households face limited or uncertain availability of food.

Rates of food insecurity and hunger in the USA increased slightly from 2001 to 2002. In 2002, 34.9 million people lived in households that were food insecure, 1.26 million more people than in 2001. This number includes 13.1 million children. The number of people living in households where someone was hungry also increased by 300,000 to 9.3 million. About 567,000 kids lived in homes where children were hungry, 100,000 more than the year before. 11.1 percent of USA households were food insecure at some time during the year and 3.5 percent of households were hungry at some times during the year (Household Food Security in the United States, 2002).

Food Trade

Despite food insecurity and hunger in the USA population, the USA government promotes the export of food. The USA is very dependent on exports for its agricultural products. International markets take a large share of basic commodities such as wheat (45 percent) and soybeans (34 percent) as well as high-value processed products such as sunflower oil, almonds, and dried plums, which rely on exports for well over sixty percent of sales. Overall, exports account for 25 percent of total farm sales (see Figure 2) -- double the percentage for the economy as a whole.

Figure2

The argument for trade is based on the concept of comparative advantage – all countries can raise their standards of living through specialization and trade. If countries can grow or make commodities cheaper and better than other countries, both the selling and the buying countries will be better off. That is the theory. But countries consist of actual individuals and communities. How do they fair? The theory of comparative advantages recognizes that there are winners and losers within countries and that in the aggregate winners exceed losers. Abstractly and statistically such trade would then make sense from a national perspective, but the actual lives of real people are conventionally ignored. How do small-scale corn-producing farmers in Mexico, for example, survive if cheaper USA corn imports flood their domestic market? Even if urban food consumers can purchase food more cheaply because of such trade, food prices might only be temporarily lower until local competition is eliminated and then food prices rise again.

The USA government and food industries espouse and preaches “free trade” to other countries in their support of globalization and trade agreements, such as NAFTA, FTAA, and WTO, particularly to Third World countries to solve their unemployment and poverty conditions.

Almost everybody loves to win at trade, but they oppose trade when they loose. The USA government, in particular, strongly supports rhetorically “free” trade, especially when the USA wins. But when trade imbalances occur, the USA is quick to accuse other countries of “dumping” policies, currency manipulations, and overt or “hidden” subsidies.

USA Farm Subsidies and Their Impact on Trade

President George W. Bush, a self-proclaimed advocate of free trade, signed the 2002 farm bill which provides for a huge increase in financial support for USA farmers and thus distorts and violates international trade agreements (see Figure 3).

This will wreck the chances of liberalizing agricultural trade around the world, and illustrates the USA’s rhetorical support for free trade in general but not the practice of a subsidy-free agriculture. The 2002 farm bill raised the level of federal subsidies by over 80 percent — conservatively estimated at an additional $82 billion over 10 years. The bill extends, or reintroduces, subsidies on a host of farm products from honey to chickpeas. In the US, the Secretary of Agriculture is required by law to provide income and price support for 20 specified crops, including wheat, rice, corn, sorghum, barley, oats, cotton, milk, peanuts, sugar, tobacco, soybeans, and other oilseeds.

For the USA's biggest crops -- soybeans, corn and wheat -- it invents new payments that are related to prices and production and hence are highly trade-distorting — exactly the opposite of what the WTO is all about. And the consequences of USA agricultural subsidies restrict trade with Majority/Third World countries such as West African cotton farmers and rice cultivators in Southeast Asia. USA subsidies per farm will soon reach three-to-four times European levels. Nor will the much-loved small farmer benefit: three-quarters of the subsidies will go to the biggest and richest 10 percent of farmers.

International grain prices are lower because of huge subsidies being provided for both agriculture as well as freight. Take the example of cotton. In the USA, 25,000 cotton growers produce $3 billion. The USA government provides these farmers a subsidy of $4 billion a year. In addition, companies are subsidized by $180 million to buy cotton from farmers.

The monumental subsidies on cotton depress the global cotton prices. Brazil's case against US cotton subsidies in the WTO shows that cotton subsidies lower the international price by a little more than 40 percent. The negative impact is therefore being borne by cotton growers in India (and elsewhere in the developing world) who find the imported cotton cheaper than the price at which they harvest. This holds true for almost all agricultural commodities (Sharma, 2004).

In 2003, the Total Support Estimate (TSE) to agriculture in OECD countries was about $350 billion — almost $1 billion a day — the bulk of which was accounted for by the European Union ($137 billion), the United States ($94 billion) and Japan ($56 billion). Although these subsidies increased the price of Western crops, trade restrictions prevented Majority World farmers from selling their lower-priced crops to the West (Damodaran, 2004).

USA Trade Agreements and their Consequences: Lessons from the USA

All USA governments have aggressively argued for free trade and negotiated several multilateral (WTO) and bilateral trade agreements. The consequences of these trade agreements on USA and foreign farmers reveal the hypocrisy of free trade as it is actually practiced.

North American Free Trade Agreement (NAFTA). In 1993, when NAFTA was being debated by Congress, farmers were told that they would gain access to Mexican and Canadian markets, allowing them to export their way to prosperity by selling their surplus corn, chickens, and other agricultural products in these globalize markets. Nearly every rural member of Congress voted for NAFTA. Since NAFTA, Public Citizen's Global Trade Watch found that 80 percent of the foodstuffs coming into the USA are products that displaced the crops raised in the USA. NAFTA allowed multinational corporations to increase production in Mexico, where they profited from farm labor paying sub-poverty wages of $3.60 a day, freely using pesticides banned in the USA, and then shipping those farm products back into the USA markets without any tariffs, quotas, or effective food-safety restrictions.

The official statistics of the decline in the USA's farm-export shows the impact of NAFTA:

· Wheat exports to Mexico and Canada fell by 8%, and prices dropped 28%.

· Corn exports fell by 11%, and prices dropped by 20%.

· Soybean exports increased by 16%, but prices dropped by 15%.

· The poultry trade surplus with Mexico and Canada fell by 14%.

· Cattle and beef fell from a $21 million surplus to a $152 million deficit.

· The grain and cereals surplus fell by a third.

· The fresh and frozen vegetables deficit more than doubled to $1 billion.

· The fresh-fruit trade deficit nearly quadrupled.

· Frozen fruit fell from a $9 million surplus to a $37 million deficit.

· The dairy deficit nearly doubled to $796 million.

The Public Citizen's report documents similar trade declines in most other commodities, from asparagus to zinnias. With these declines, the income of USA farmers has plummeted 35%, from $59 billion in the years before NAFTA to a projected $41 billion this year. Under NAFTA, the USA lost farms at a rate six times steeper than were lost prior to the 1993 agreement.

Global Trade Watch found that even though Canada's food exports to the USA and Mexico more than tripled during the NAFTA years, farmers didn't get the gains. Indeed, farm income there fell by 17% in these years, and farmers' debt zoomed up by half.

The beneficiaries were the processors and exporters, which are the same companies that operate in the USA: ADM owns more than half of Canada's wheat-milling capacity, for example, and Tyson owns 66% of the beef-packing plants there.

The situation is worse in Mexico, where corn is the staple crop and corn tortillas the staple food. NAFTA devastated the small corn farmers there -- for it allowed the export giants to suddenly dump millions of tons of surplus USA corn into their market. The export companies now ship 15 times more USA corn into Mexico each year than they did prior to NAFTA, and these imports have cornered 25% of the market there — up from only 2% pre-NAFTA times.

At the same time, as a price for joining NAFTA, Mexico had to alter its constitution to eliminate its historic ejido land-reform program that protected small farmers and guaranteed a price floor for them. With no price floor and a deluge of imported corn, the price paid to Mexican farmers for their corn has plummeted by almost half since 1993 — far below what it costs them to produce it.

The result is that an estimated 15 million rural Mexicans have been forced out of farming, lost their ejidos, and migrated to cities or to the USA. Perversely, the price that Mexican consumers pay for corn tortillas — central to the diet of all families and essential to the food security of the poor — has jumped by half.

Even more perversely, despite Mexico’s identity with its cultural corn heritage and its former self-sufficiency in this staple, it now is dependent on foreign suppliers for corn. Whenever ADM, Cargill, and the other giant corn shippers can get a better price elsewhere, or whenever there is a corn shortage due to poor crops in the USA (as happened in 1996), Mexico is thrown into a food crisis and food insecurity for millions.

As Global Trade Watch writes in its report: "Post-NAFTA Mexico no longer has policies to ensure it can feed itself." Welcome to "the New World Order," as former USA President George Bush described his global vision of corporate-controlled trade. NAFTA, WTO, FTAA, and the rest of the current free-trade agreements are failures because they are corporate schemes whose goal is to drive down costs (particularly labor and environmental costs) and push profits up (The Hightower Lowdown Newsletter, September 2001, Vol. 3, No. 9, and Public Citizen).

Bilateral USA trade agreement with Vietnam. When is a catfish not a catfish? When it comes from the Mekong Delta instead of the Mississippi Delta, say Congress and the Bush administration. Late last year, in what trade experts say was a tiny piece of a broader protectionist trend, USA politicians moved to block burgeoning, low-cost Vietnamese catfish imports that were increasing market share from catfish farms in Mississippi, Alabama, Arkansas, Louisiana and other Southern states. Five Southern senators slipped a five-line paragraph into the mammoth agriculture appropriations bill to decree that the whiskered fish from Vietnam's Mekong Delta can not be imported under the name "catfish," even though they are very similar to the species raised in farm ponds in the Mississippi Delta. President Bush later signed the bill.

The Vietnamese, with the ink barely dry on their new bilateral trade agreement with the USA, protested, saying their fish met health standards and that they were competing fairly — and wasn't that what free trade was all about? The nominally free-trade Bush administration has moved to limit open trade in ways that have enraged allies, provoked threats of retaliation, and convinced some free-trade advocates that the President has abandoned his free-trade principles.

Bilateral USA trade agreement with Australia. California dairy farmers, Great Plains and Midwest beef producers, North Dakota sugar beet grower, and Florida sugar producers received special protect in the 2004 free-trade agreement between the USA and Australia, despite Australia’s support of the USA’s second Iraq invasion and the interests of Australia’s own farmers and ranchers. Consequently, USA consumers pay three times higher sugar prices than the world market, and farmers in Australia and, particularly in needy monoculture sugar-producing and export-depending countries, such as those in the Caribbean, are deprived of markets.

World Trade Organization (WTO) rulings against the USA. The WTO ruled in 2002 that the USA used illegal subsidies to export its products to the European Union (EU). The WTO authorized the EU to impose up to $4 billion in retaliatory tariffs on USA goods until the tax breaks were removed. In the USA House of Representative’s 2004-corporate tax bill, “manufacturing” was defined to include farmers, film-makers, and oil refiners. It also offers a $9.6 billion “buy-out” to USA tobacco farmers. These kinds of pro-business laws make a mockery of “free” trade and fair domestic policies.

Agricultural Subsidies by Major Countries

The USA is not the only country that subsidizes its agriculture and contradicts free trade rhetoric and policies. Although farm subsidies, measured as a percentage of the value of farm output, have been declining in most countries since the late 1980s, they still remain enormous (see Figure 4). The European Union spent $121 billion supporting agriculture in 2003, while the USA lavished $39 billion on its farmers. Japan, South Korea, Iceland, Norway, and Switzerland all provide farm subsidies that are worth well over half of national farm output (The Economist, 3 July 2004).

Instead of offering free trade, rich countries perversely provide foreign aid to poor countries. The European Union’s annual dairy subsidy per cow is $913 yet their aid per African person is only $8. Japan’s annual dairy subsidy per cow is $2,700 and its aid per African person is only $1.47 (The New Internationalist, No. 364, January/February 2004, p. 20).

Even supporters of globalization, such as Joseph Stiglitz, Nobel Prize-winner and former chief economist at the World Bank, and George Soros, a billionaire former currency trader, admit that despite many benefits, the current economic system is harming the poor around the world in particular and democracy in general. “Countries are effectively told that if they don’t follow certain conditions, the capital markets or the IMF [International Monetary Fund] will refuse to lend them money. They are forced to give up significant parts of their sovereignty and thus the ability to determine their own priorities, such as food security, health, education, and employment policies (Stiglitz and Soros).

Under strict orders from the IMF and World Bank, Haiti froze credits and eliminated subsidies and tariffs that protected national food production. Rice farmers, once the majority, soon became landless, poor, and urban. Today, Haiti imports all of its rice from the USA. In Venezuela where oil-revenues allow Hugo Chavez to resists international capital, food autonomy is being given top priority because 65 percent of basic foods are imported.

We come to the profoundly obvious conclusion that trade does not eliminate hunger! If rich countries practiced real, unadulterated free trade – especially for those commodities in which the Majority/Third World has a clear comparative advantage — instead of simply advocating it in theory and rhetoric, then it would go some way to rectifying some of the injustices of the present and, even the past, world trading system.

India’s food Policies and Practices

The issues of food security, agricultural policies, and food trade have been thoroughly discussed and debated among academic researchers, activists, and government agencies and officials in India. India does not need to learn from the West to solve itself problems, but it does not to hear and heed the advice of its own progressive professionals and activists.

The responsibility of each country is to feed its own people with sufficient calories and protein for health with culturally appropriate and varied foods. All incentives, programs, policies, and subsidies are valid to achieve food security within each country. Food can not be exported before food security is achieved at home. Human need for food requires that agriculture be given priority to trade considerations, whether in food, manufactured goods, or services.

Agriculture accounts for the livelihood of 70 percent of India’s population. Clearly, agricultural and food prices and policies should be critical to Indian governments at all levels. Providing price supports, agricultural credit, irrigation projects, and agricultural extension assistance are justified to achieve food and employment security. After all, historically and contemporarily, wealthy countries have and continue to support their agriculture sector and food supply. Genetically-modified foods are also not the answer to hunger and malnutrition.

India’s Finance Minister (Jaswant Singh) said that India cannot lower subsidies to its farm sector as food security and welfare were more important to the country. Yet only about 7 percent of total government spending goes on food and fertilizer subsidies, compared with 14 percent on defense and 26 percent on paying debt interest (BBC News, 24 November, 2003).

Despite the rhetoric, the Indian government is not meeting food needs of its own population. From the early 1990s to 2001, food grain “absorption” [consumption?] dropped to levels lower than during World War II years. About 40 percent of the rural population of India has the same food grain consumption level as Sub-Saharan Africa. Today, average rural families eat about 100 kilograms less food per year than they did in the early 1990s. About 43 percent of India’s children below three years suffer from malnutrition; 46 percent are stunted (Patnaik, 2004).

Yet the government allowed 63 million tons of grain to rot in its own granaries and exported and subsidized the price of 12 million tons of grain that was not made available to the Indian poor. Ironically, between 1876 and 1892 -- during the great famines -- between 12 and 29 million Indians died of starvation while the British government exported food to England (Roy, 2004B, p. 74).

The International Food Policy Research Institute, a Washington-based policy watchdog, determined that Indian farmers have been losing nearly $1.1 billion annually to their counterparts in rich countries. The total lost of agriculture-related income for developing countries because of trade-distorting subsidies that enrich farmers and traders of developed countries amounts to $24 billion. The USA is responsible for a third of all distortions to agricultural economies of developing countries. All European Union countries put together were responsible for about half of the distortions, while Japan and other high-income Asian countries caused another 10 percent of income loss (The Economic Times, 2004, September 27).

Theoretical Explanations: Galtung’s Core-Periphery Model

Galtung’s Core-Periphery model nicely explained the contradictory and inconsistent behavior of governments regarding food security, agricultural subsidies, and food trade. The Minority World of the Center-center dominates the discussions, meetings, laws, programs, and international agreements within countries and between countries. In either case, Center-center actions favor their respective elites: large-scale producers and multinational corporations. Consequently, while millions of people go hungry and small-scale farmers go out of business in the USA, for example, large-scale producers and multinational corporations are disproportionally subsidized to export food at the same time that trade tariffs and agreements restrict food exports from poor countries from earning benefits. Meanwhile, in the Center-periphery, small-scale farmers, despite receiving only small amounts of agricultural subsidies, suffer the negative consequences (see Figure 5).

	Center-center: Minority World · e.g., USA, EU, Japan governments, banks · Food corporations; large-scale producers
	Center-periphery: Minority World · Rural communities · Smaller-scale farmers
	Periphery-center: Majority World · e.g., Mexico, India governments, banks · large-scale food producers, exporters
	Periphery-periphery: Majority World · Rural communities · Smaller-scale farmers, landless families

Likewise, similar unequal relations exist in the Periphery as well: the Periphery-center expressed as national governments, urban elites, banks, and corporations dominates and decides the fate of the Periphery-periphery, unless it resists. Because the elites of the center in both the Center and Periphery share a harmony of interests, the weakest populations in the peripheries in both the Center and Periphery suffer the most from this international market economy. The greatest suffering in terms of hunger, malnutrition, underemployment, unemployment, and forced rural-urban migration occurs in places like rural India (see center-periphery model).

Appropriately, the Indian radicals Vandana Shiva (2000) and Arundhati Roy (2004A) argue that grass-roots movements must resistance the domination of their own Periphery-center and the Center-center institutions in all their forms within and between countries -- whether in the form of domestic governments and corporations or international corporations and agreements. Only then can we achieve food security and prosperity for the peoples of the world, regardless of location, whether in India or the USA.

Bibliography

1. BBC News. 2003. 24 November. Web: http://news.bbc.co.uk/1/hi/business/3232922.stm/

2. Damodaran, Harish. 2004. “Farming in US and India — the ground reality on subsidies,” Business Line, Sep 25.

3. Derber, Charles. 2003. People before Profit. New York: Picador.

4. Hightower, Jim. 2004. The Hightower Lowdown Newsletter, various issues in 2004. Web: http://www.hightowerlowdown.org

5. Household Food Security in the United States, 2002, Food Assistance and Nutrition Research Report #35, Economic Research Service, U.S. Department of Agriculture, October 2003. Web: http://www.ers.usda.gov/publications/fanrr35/Q&Afanrr35.pdf

6. Public Citizen. 2004. Web: http://www.citizen.org/

7. Patnaik, Utsa. 2004. Workshop: Policies against Hunger III: Full liberalization of agricultural trade jeopardises food security. Web: www.policies-against-hunger.de/typo3/ fileadmin/Inhalte/Vortr_ge_pdf/09_PATNAIK_PAPER_.pdf

8. Rowell, Andrew. 2003. Don’t Worry [It’s Safe to Eat]: The True Story of GM Food, BSE and Foot and Mouth. London: Earthscan.

9. Roy, Arundhati. 2004A. “Do Turkeys Enjoy Thanksgiving? A Global Resistance to Empire,” Z Magazine,” January.

10. Roy, Arundhati. 2004B. “Repression and violence in India,” Z Magazine, July/August 2004, pp. 70-75. Material from this article appears in her book, The Ordinary Person’s Guide to Empire. Boston: South end Press.

11. Sharma, Devinder. 2004 “Against the grain,” India Together. August. Web: http://indiatogether.org/2004/aug/dsh-farmprice.htm Also, see his book, GATT to WTO: Seeds of Despair.

12. Shiva, Vandana. 2000. Stolen Harvest: The Hijacking of the Global Food Supply. Boston: South End Press.

13. Soros, George. 2004. George Soros on Globalization. New York: Public Affairs.

14. Stiglitz, Joseph. 2004. Globalization and Its Discontents. New York: W. W. Norton & Company.

15. The Economic Times. 2004. “West's subsidies cost Indian farmers $1.1bn,” September 27. Web: http://economictimes.indiatimes.com/articleshow/859065.cms/

16. The New Internationalist. 2004A. No. 364, January/February. Web: www.newint.org/

17. The New Internationalist. 2004B. No. 368, June. Web: www.newint.org/

18. UN Food and Agricultural Organization. 2004. Web: http://www.fao.org/fcit/insec.asp/