Agricultural Trade in the Aftermath of Doha
The definitive collapse of the WTO Doha Round is an overall setback for global food security, but the successful completion of the Doha Round would have entailed costs of its own. A recent study – The Promise and the Perils of Agricultural Trade Liberalization – Lessons from Latin America – by WOLA (the Washington Office on Latin America) and GDAE (Global Development And Environment Institute at Tufts University) points out how agricultural trade liberalization in Latin America has been considerably less than an unqualified success for the rural sector in the countries examined (principally Brazil, Argentina, Bolivia, El Salvador and Mexico).
The question the study seeks to answer is whether the sweeping agricultural trade liberalization undertaken, at the encouragement of the U.S., the IMF and World Bank, have resulted in sustainable rural development. And the answer is, “not really.”
There have been some gains: For example, Brazil is now the world’s leading soybean exporter. However, while production there has more than doubled since 1985, employment in the production and processing of soybeans has decreased by two-thirds, leading to the “hollowing out” of rural communities comparable to that experienced in much of rural America. The difference, of course, is that there are more economic alternatives for displaced workers in the U.S. – higher levels of education, greater mobility, a much larger and more diversified economy.
In Mexico there is no question that NAFTA has stimulated agricultural trade: For example, from 1994 to 2004 Mexico had doubled the value of its tomato exports. The development impact, however, has been problematic. Mexico’s agricultural imports from the U.S. – mainly corn and other staples – grew faster than its exports, leaving the country with a negative trade balance for the sector. Producer prices for maize, beans and coffee – the mainstay of small farms – have plunged to less than half of pre-NAFTA levels. Employment in export agriculture did not make up for losses in other agricultural sectors. From 1995-2005, Mexico lost half a million agricultural workers. (Many of whom are now illegally in the U.S.) And Mexico’s export sector itself became increasingly dependent on the multinational firms that dominate global agro-food chains.
The bottom line? Among the key points are the following:
Export agriculture, through expanded access to global markets, is not by itself a reliable engine for broad-based development that benefits the rural population.
Governments need to play an active role that emphasizes increasing productivity and, hence, incomes (instead of focusing on anti-poverty programs.)
Smallholders need government support and organization to ensure they benefit from new demand in niche markets and from the growing supermarket sector.
As we consider trade and development “post-Doha,” we would do well to keep these points in mind.
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