Liberalization of Trade and the Right to Food

“National efforts will often remain of limited impact in combating malnutrition and food insecurity unless the international environment, including not only development assistance and cooperation but also trade and investment regimes or efforts to address climate change at a global level, facilitates and rewards these national efforts."

-- Prof. Olivier De Schutter

Full document, including case study on Brazil: PDF

Free Trade to Feed the World

The liberalization of the international markets is sold to the world population as a remedy for all the world’s problems and the yellow brick road to global development. In the case of food supply: the idea that agricultural commodities can simply travel from food-surplus regions to food-deficit regions seems, at a first glance, to be the ideal solution to world hunger. If a country does not have sufficient stock, they can buy it from those that have produced too much.

Unfortunately, the global food price crises of 2008 and of 2010-11 have already illustrated the global imbalance. Before trade can contribute to the realization of the right to adequate food, a wide range of measures must be adopted [De Schutter]. In the world today, there are about one billion people facing food insecurity. About half of them are actually growing food themselves as small-scale independent farmers. In the other half there is a large part (estimated to be two hundred million people) of waged workers, employed on large plantations, who are not sufficiently well-paid to feed themselves in dignity (source).

The problem with the free market theory is that it does not stimulate a transfer of food-surplus regions to food-deficit regions. The only thing that the liberalization of the trade does guarantee, is that commodities will flow from regions with the most efficient way of production to the regions with the necessary purchasing power and the desire to acquire these commodities. There is no consideration of the philosophy “from each according to their ability, to each according to their need”.

Food is not a luxury product, it is a basic need for survival. The concept of allowing it to be susceptible to the whims and noise of market fluctuations, is an ethical outrage: a straight violation of our basic human rights. Without adequate nutrition or sufficient food supply, there simply is no possibility of life, let stand a life in dignity.

The World Trade Organization (WTO): the Agreement on Agriculture

Originally, before the WTO replaced the General Agreement on Tariffs and Trade or GATT in 1995, agriculture was never formally exempted from the trade agreements, but it was not until the Agreement on Agriculture that trade in agricultural commodities and food got seriously influenced by the process of trade liberalization. The Agreement on Agriculture was enforced starting from the 1st of January 1995 and in summary imposes three sets of obligations [De Schutter, 2009-a, article 5.1]:

Member states must

1.  increase market access for agricultural products;
2. reduce the level of domestic support;
3. reduce existing export subsidies and may not introduce new export subsidies not already in operation in the 1986 - 1990 base period.

The positive news is in the final set of measures: subsidizing the export of agricultural products is the most harmful form of subsidies for developing countries as it will lead to the import of subsidized (and therefore cheaper) products on their domestic markets, undermining their local production.

In the short run, the consumers in the developing countries would enjoy lower pricing, but it leads to an addiction to imported, low-priced food which is not sustainable in the long run. Local production would be discouraged and the process makes the country enter a vicious circle of less local food production and increasing dependency on imports from the international markets. This addiction makes the country vulnerable to fluctuations in international pricing of agricultural products.

This last point is unfortunately the only measure that favors developing countries. Both the first and second obligation imposed by the Agreement on Agriculture have strong negative effects for developing countries and weaken their position as they will first have to open their market for food imports from other countries, even if their local production would be sufficient to support themselves, and secondly are forced to tune down the support of their local food production.

Notice also that the measures are calling for a reduction in subsidies, but that these reduction guidelines are calculated in percentages as compared to the base period of 1986 - 1990. This reduction in percentages favors the countries that already had a high level of government assistance during that time.

For this reduction in percentages that the members agree on, there is a distinction made between developed countries, developing countries and the least developed countries (LDC), making the restrictions less severe for the developing countries (and canceling them for the LDCs). This seems positive as the developing countries are in theory allowed to keep a higher level of public support, but this perception is misleading in two ways: the reduction is calculated in percentages on the base period (making it possible for developed countries that previously had a high subsidy percentage to give more financial support when calculated in absolute numbers) and in practice it is difficult for developing countries or LDCs to even offer that amount of allowed financial backing as they might not have sufficient financial resources in the first place.

By emphasizing that “the right to food imposes on all States obligations not only towards the persons living on their national territory, but also towards the populations of other States” (source), it is shown that the international trade agreements are contradicting with the human rights objective.

If a state is faced with a conflict between these interests, it generally chooses to follow the trade agreements at the expense of human rights, as these trade agreements are backed by the threat of economic sanctions [De Schutter, 2009-c]. To avoid this dilemma, the human rights objective has to be included within the trade agreements themselves.

Especially for this reason, the Special Rapporteur calls on states to not accept agreements under the WTO framework which would be incompatible with their right to food obligations [De Schutter, 2009-c]. Trade agreements need to recognize that food is a basic need and cannot be treated as any other tradable commodity. The domestic producers of developing countries have to be shielded from the competition from industrialized countries.

In his Report on Promotion and Protection of All Human Rights after his mission to the WTO, Prof. Olivier De Schutter presents four substantive recommendations on how to make  the international trade system “human-rights-compatible" [De Schutter, 2009-c]:

1.  States need to prepare national strategies for the realization of the right to food, in which the role of trade should be determined in reference to human rights and development objectives.
2. There is need for a collaborative multilateral trading system that does not impose on States commitments that are contrary to their human rights obligations, thereby emphasizing the importance of ensuring that States have sufficient policy space to realize their right to food.
3. The perspective from the right to adequate food requires a shift from abstract aggregates (such as GDP measurements) to focusing on the needs of the vulnerable and food insecure.
4. Emphasis is needed on the unique value of safe, nutritious, healthy, culturally appropriate and sustainable food as a fundamental right for all. Impacts on health, nutrition and the environment should therefore be fully integrated in trade discussions.

Favoring Small-Scale Farming

Development through application of the human rights encourages a policy that focuses on the most vulnerable within society. Related to the right to food, it is sadly ironic to realize that the majority of the people that face hunger, are producing food themselves. Of the approximately one billion people that are hungry in the world today, 50% consists of smallholders (farms of 2 hectares or less), 20% are landless laborers, 10% are pastoralists, artisanal fishers or forest users and the remaining 20% are urban poor [De Schutter, 2009-c].

Any trade agreement that does not benefit these people will encourage violations of the right to food.

In his article ‘The Politics of Hunger’, Prof. Paul Collier [Collier, 2008] pleas to encourage large-scale commercial farming as a way out of hunger. It is indeed interesting to think about growing crops in huge quantities, making use of the economies of scale to compete other corporations in the international markets.

Unfortunately, this conclusion is a bit hasty. Large-scale farming will be able to produce bigger volumes of food, making the overall price lower, but this will come at a cost. There will only be three ways to be able to run such a commercial agriculture for a competitive price in the international markets and that is either by strong governmental support (which is strongly discouraged by the trade agreement of the WTO and most likely not affordable by developing countries), by a high level of automation or by employing laborers who are willing to work for meager allowances.

Neither of these options will provide a decent livelihood for the families who were originally cultivating on a small scale, as for allowing large-scale farming to happen, the smallholders will be gradually dispossessed from their cropland in favor of the larger entities.

Secondly, industrial farming stimulates monocultures, which will exhaust the land and will make further agriculture more expensive as it needs special fertilizing and similar measures. On the other hand, small-scale farming may not be as competitive on an international scale, but it can be more productive per hectare as family farms tend to grow several different crops and raise animals on the same land.

What Prof. Paul Collier overlooked, is that agriculture is not only about producing crops or creating an extra commodity for export, it is also a way to develop the rural areas and providing an income for the poorest of society. Choosing for large-scale commercial farming will make them either jobless or exploited workers.

During the last three decades, small-scale farming has not received the support that it should be having. A dualization has been taking place where governments favored the more industrial, large-scale farming while practically abandoning the smallholders. For the latter, this situation was devastating and forced them to migrate to the urban areas where they had to live in slums.

To feed these new urban poor, a demand for cheap food is created. If the domestic production is insufficient or too expensive, food will have to be imported from outside to avoid political unrest. The imported food will likely be subsidized in the country of origin, gradually pushing what is left of the domestic farmers out of the market as they cannot compete with these prices.

This vicious circle cannot be stepped out of unless there will be more protection and support for the small scale farmers, and these measurements would be contradicting the WTO’s Agreement on Agriculture.

As a state, it is also desirable to build up at least a minimum of locally produced food for the following main reasons:

• the provision of work and income of the population
• dependency on cross-border trade implies vulnerability to price fluctuations
• dependency on cross-border trade motivates longer supply chains which have serious implications on climate change and consumers health and nutrition [DEFRA]

Conclusion

Fighting hunger is not only about increasing production, it is also about improving people's access to food.

In the case of Brazil, a major food producing country with a high GDP of over 10,000 USD per capita, the unequal distribution of wealth within its society has resulted in part of its population suffering from extreme poverty.

The problem is not the food production, the problem is people’s lack of an adequate income: millions of people can simply not buy decent food. Also, 90% of the food production is cultivated within the southern part of Brazil while 60% of the food-insecure live in the northern and north-eastern region [Kilpatrick].

In 2003, the project Fome Zero was introduced by former president Luiz Inácio Lula da Silva. The program recognizes that the support for small-scale agriculture can lead to poverty reduction and an increase of food security. The program lifted 20 million Brazilians out of poverty [UN].

Despite Brazil’s increasing concentration of large-scale agriculture, 24% of the cropland is used for small-scale farming, which is responsible for 38% of the domestic food production, holds 74% of the rural employment and produces the majority of Brazil’s domestic food supply [Kilpatrick].

A focus on large-scale agriculture can stimulate Brazil’s economy and export capabilities as long as the commodity prices in the international markets stay relatively high, but for the development of its own population, a domestic food supply has to be guaranteed and will need investment in family farming to be sustainable. This small-scale agriculture will improve the overall access to food and will stimulate both rural development and employment.

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