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(This article appears in the June 2, 2008, edition of The
Nation [New York]. It is being reprinted with permission
from The Nation.)
WHEN tens
of thousands of people staged demonstrations in Mexico
last year to protest a 60-percent increase in the price of
tortillas, many analysts pointed to biofuel as the
culprit. Because of US government subsidies, American
farmers were devoting more and more acreage to corn for
ethanol than for food, which sparked a steep rise in corn
prices. The diversion of corn from tortillas to biofuel
was certainly one cause of skyrocketing prices, though
speculation on biofuel demand by transnational middlemen
may have played a bigger role. However, an intriguing
question escaped many observers: How on earth did
Mexicans, who live in the land where corn was
domesticated, become dependent on US imports in the first
place?
Eroding
Mexican agriculture
The
Mexican food crisis cannot be fully understood without
taking into account the fact that, in the years preceding
the tortilla crisis, the homeland of corn had been
converted to a corn-importing economy by “free-market”
policies promoted by the International Monetary Fund (IMF),
the World Bank and Washington. The process began with the
early 1980s debt crisis. One of the two largest
developing-country debtors, Mexico was forced to beg for
money from the Bank and IMF to service its debt to
international commercial banks. The quid pro quo for a
multibillion-dollar bailout was what a member of the World
Bank executive board described as “unprecedented
thoroughgoing interventionism” designed to eliminate high
tariffs, state regulations and government support
institutions, which neoliberal doctrine identified as
barriers to economic efficiency.
Interest
payments rose from 19 percent of total government
expenditures in 1982 to 57 percent in 1988, while capital
expenditures dropped from an already low 19.3 percent to
4.4 percent. The contraction of government spending
translated into the dismantling of state credit,
government-subsidized agricultural inputs, price supports,
state marketing boards and extension services. Unilateral
liberalization of agricultural trade pushed by the IMF and
World Bank also contributed to the destabilization of
peasant producers.
A PLASTIC model of a human
skull biting an ear of corn is held by a demonstrator
during a protest against the North American Free Trade
Agreement (Nafta) in Mexico City in this January 31, 2008,
file photo. Protesters oppose the opening of Mexico’s
market to US corn and sugar as part of Nafta, and argue
that Mexico hasn’t done enough to protect them from
cheaper US commodities.
--SUSANA GONZALEZ/BLOOMBERG
NEWS
This blow
to peasant agriculture was followed by an even larger one
in 1994, when the North American Free Trade Agreement (Nafta)
went into effect. Although Nafta had a 15-year phaseout of
tariff protection for agricultural products, including
corn, highly subsidized US corn quickly flooded in,
reducing prices by half and plunging the corn sector into
chronic crisis. Largely as a result of this agreement,
Mexico’s status as a net food importer has now been firmly
established.
With the
shutting down of the state marketing agency for corn,
distribution of US corn imports and Mexican grain has come
to be monopolized by a few transnational traders, like
US-owned Cargill and partly US-owned Maseca, operating on
both sides of the border. This has given them tremendous
power to speculate on trade trends, so that movements in
biofuel demand can be manipulated and magnified many times
over. At the same time, monopoly control of domestic trade
has ensured that a rise in international corn prices does
not translate into significantly higher prices paid to
small producers.
It has
become increasingly difficult for Mexican corn farmers to
avoid the fate of many of their fellow corn cultivators
and other smallholders in sectors such as rice, beef,
poultry and pork, who have gone under because of the
advantages conferred by Nafta on subsidized US producers.
According to a 2003 Carnegie Endowment report, imports of
US agricultural products threw at least 1.3 million
farmers out of work—many of whom have since found their
way to the United States.
Prospects
are not good, since the Mexican government continues to be
controlled by neoliberals who are systematically
dismantling the peasant support system, a key legacy of
the Mexican Revolution. As Food First executive director
Eric Holt-Gimenez sees it, “It will take time and effort
to recover smallholder capacity, and there does not appear
to be any political will for this—to say nothing of the
fact that Nafta would have to be renegotiated.”
Creating a
rice crisis in the
Philippines
That the
global food crisis stems mainly from free-market
restructuring of agriculture is clearer in the case of
rice. Unlike corn, less than 10 percent of world rice
production is traded. Moreover, there has been no
diversion of rice from food consumption to biofuels. Yet,
this year alone, prices nearly tripled, from $380 a ton in
January to more than $1,000 in April. Undoubtedly the
inflation stems partly from speculation by wholesaler
cartels at a time of tightening supplies. However, as with
Mexico
and corn, the big puzzle is why a number of formerly
self-sufficient rice-consuming countries have become
severely dependent on imports.
The
Philippines provides a grim example of how neoliberal
economic restructuring transforms a country from a net
food exporter to a net food importer. The Philippines is
the world’s largest importer of rice.
Manila’s desperate effort to secure supplies at any price has
become front-page news, and pictures of soldiers providing
security for rice distribution in poor communities have
become emblematic of the global crisis.
The broad
contours of the
Philippines
story are similar to those of Mexico. Dictator Ferdinand
Marcos was guilty of many crimes and misdeeds, including
failure to follow through on land reform, but one thing he
cannot be accused of is starving the agricultural sector
of government funds. To head off peasant discontent, the
regime provided farmers with subsidized fertilizer and
seeds, launched credit schemes and built rural
infrastructure. In the 14 years of the dictatorship, rice
had to be imported only during one year, 1973, owing to
widespread damage wrought by typhoons. When Marcos fled
the country in 1986, there were reported to be 900,000
metric tons of rice in government warehouses.
Paradoxically, the next few years under the new democratic
dispensation saw the gutting of government investment
capacity. As in Mexico, the World Bank and IMF, working on
behalf of international creditors, pressured the Corazon
Aquino administration to make repayment of the $26-billion
foreign debt a priority. Aquino acquiesced, though she was
warned by the country’s top economists that the “search
for a recovery program that is consistent with a debt
repayment schedule determined by our creditors is a futile
one.”
Between
1986 and 1993, 8 percent to 10 percent of gross domestic
product left the Philippines yearly in debt-service
payments—roughly the same proportion as in Mexico.
Interest payments as a percentage of expenditures rose
from 7 percent in 1980 to 28 percent in 1994; capital
expenditures plunged from 26 percent to 16 percent. In
short, debt servicing became the national budgetary
priority.
Spending
on agriculture fell by more than half. The World Bank and
its local acolytes were not worried, however, since one
purpose of the belt-tightening was to get the private
sector to energize the countryside. But agricultural
capacity quickly eroded. Irrigation stagnated, and by the
end of the 1990s only 17 percent of the
Philippines’
road network was paved, compared with 82 percent in
Thailand and 75 percent in Malaysia. Crop yields were
generally anemic, with average rice yield in rice of 2.8
metric tons per hectare way below those in
China
and Vietnam, where governments actively promoted rural
production. The post-Marcos agrarian-reform program
shriveled, deprived of funding for support services, which
had been the key to successful reforms in
Taiwan
and South Korea.
As in
Mexico, Filipino peasants were confronted with full-scale
retreat of the state as provider of comprehensive
support—a role they had come to depend on.
And the
cutback in agricultural programs was followed by trade
liberalization, with the
Philippines’
1995 entry into the World Trade Organization (WTO) having
the same effect as Mexico’s joining Nafta. WTO membership
required the
Philippines
to eliminate quotas on all agricultural imports except
rice and allow a certain amount of each commodity to enter
at low tariff rates. While the country was allowed to
maintain a quota on rice imports, it nevertheless had to
admit the equivalent of 1 percent to 4 percent of domestic
consumption over the next 10 years. In fact, because of
gravely weakened production resulting from lack of state
support, the government imported much more than that to
make up for possible shortfalls. These imports, which rose
from 263,000 metric tons in 1995 to 2.1 million tons in
1998, depressed the price of rice, discouraging farmers
and keeping growth in production at a rate far below that
of the country’s two top suppliers, Thailand and Vietnam.
The
consequences of the Philippines’ joining the WTO barreled
through the rest of its agriculture like a super-typhoon.
Swamped by cheap corn imports—much of it subsidized US
grain—farmers reduced land devoted to corn from 3.1
million hectares in 1993 to 2.5 million in 2000. Massive
importation of chicken parts nearly killed that industry,
while surges in imports destabilized the poultry, hog and
vegetable industries.
During the
1994 campaign to ratify WTO membership, government
economists, coached by their World Bank handlers, promised
that losses in corn and other traditional crops would be
more than compensated for by the new export industry of
“high-value-added” crops like cut flowers, asparagus and
broccoli. Little of this materialized. Nor did many of the
500,000 agricultural jobs that were supposed to be created
yearly by the magic of the market; instead, agricultural
employment dropped from 11.2 million in 1994 to 10.8
million in 2001.
The
one-two punch of IMF-imposed adjustment and WTO-imposed
trade liberalization swiftly transformed a largely
self-sufficient agricultural economy into an
import-dependent one as it steadily marginalized farmers.
It was a wrenching process, the pain of which was captured
by a Filipino government negotiator during a WTO session
in
Geneva.
“Our small producers,” he said, “are being slaughtered by
the gross unfairness of the international trading
environment.”
The great
transformation
The
experience of
Mexico
and the Philippines was paralleled in one country after
another subjected to the ministrations of the IMF and the
WTO. A study of 14 countries by the UN’s Food and
Agricultural Organization found that the levels of food
imports in 1995-98 exceeded those in 1990-94. This was not
surprising, since one of the main goals of the WTO’s
Agreement on Agriculture was to open up markets in
developing countries so they could absorb surplus
production in the North. As then-US Agriculture Secretary
John Block put it in 1986, “The idea that developing
countries should feed themselves is an anachronism from a
bygone era. They could better ensure their food security
by relying on US agricultural products, which are
available in most cases at lower cost.”
What Block
did not say was that the lower cost of US products stemmed
from subsidies, which became more massive with each
passing year despite the fact that the WTO was supposed to
phase them out. From $367 billion in 1995, the total
amount of agricultural subsidies provided by
developed-country governments rose to $388 billion in
2004. Since the late 1990s subsidies have accounted for 40
percent of the value of agricultural production in the
European Union and 25 percent in the
United States.
The
apostles of the free market and the defenders of dumping
may seem to be at different ends of the spectrum, but the
policies they advocate are bringing about the same result:
a globalized capitalist industrial agriculture. Developing
countries are being integrated into a system where
export-oriented production of meat and grain is dominated
by large industrial farms like those run by the Thai
multinational CP and where technology is continually
upgraded by advances in genetic engineering from firms
like Monsanto. And the elimination of tariff and nontariff
barriers is facilitating a global agricultural supermarket
of elite and middle-class consumers serviced by
grain-trading corporations like Cargill and Archer Daniels
Midland, and transnational food retailers like the
British-owned Tesco and the French-owned Carrefour.
There is
little room for the hundreds of millions of rural and
urban poor in this integrated global market. They are
confined to giant suburban favelas, where they contend
with food prices that are often much higher than the
supermarket prices, or to rural reservations, where they
are trapped in marginal agricultural activities and
increasingly vulnerable to hunger. Indeed, within the same
country, famine in the marginalized sector sometimes
coexists with prosperity in the globalized sector.
This is
not simply the erosion of national food self-sufficiency
or food security but what Africanist Deborah Bryceson of
Oxford calls “de-peasantization”—the phasing out of a mode
of production to make the countryside a more congenial
site for intensive capital accumulation. This
transformation is a traumatic one for hundreds of millions
of people, since peasant production is not simply an
economic activity. It is an ancient way of life, a
culture, which is one reason displaced or marginalized
peasants in India have taken to committing suicide. In the
state of Andhra Pradesh, farmer suicides rose from 233 in
1998 to 2,600 in 2002; in Maharashtra, suicides more than
tripled, from 1,083 in 1995 to 3,926 in 2005. One estimate
is that some 150,000 Indian farmers have taken their
lives. Collapse of prices from trade liberalization and
loss of control over seeds to biotech firms is part of a
comprehensive problem, says global justice activist
Vandana Shiva: “Under globalization, the farmer is losing
her/his social, cultural, economic identity as a producer.
A farmer is now a ‘consumer’ of costly seeds and costly
chemicals sold by powerful global corporations through
powerful landlords and money lenders locally.”
African
agriculture: From compliance to defiance
De-peasantization
is at an advanced state in
Latin America and
Asia. And if the World Bank has its way,
Africa
will travel in the same direction. As Bryceson and her
colleagues correctly point out in a recent article, the
World Development Report for 2008, which touches
extensively on agriculture in Africa, is practically a
blueprint for the transformation of the continent’s
peasant-based agriculture into large-scale commercial
farming. However, as in many other places today, the
Bank’s wards are moving from sullen resentment to outright
defiance.
At the
time of decolonization, in the 1960s,
Africa was actually a net food exporter. Today the continent
imports 25 percent of its food; almost every country is a
net importer. Hunger and famine have become recurrent
phenomena, with the past three years alone seeing food
emergencies break out in the Horn of Africa, the Sahel,
and Southern and Central Africa.
Agriculture in Africa is in deep crisis, and the causes
range from wars to bad governance, lack of agricultural
technology and the spread of HIV/AIDS. However, as in
Mexico and the Philippines, an important part of the
explanation is the phasing out of government controls and
support mechanisms under the IMF and World Bank structural
adjustment programs imposed as the price for assistance in
servicing external debt.
Structural
adjustment brought about declining investment, increased
unemployment, reduced social spending, reduced consumption
and low output. Lifting price controls on fertilizers
while simultaneously cutting back on agricultural credit
systems simply led to reduced fertilizer use, lower yields
and lower investment. Moreover, reality refused to conform
to the doctrinal expectation that withdrawal of the state
would pave the way for the market to dynamize agriculture.
Instead, the private sector, which correctly saw reduced
state expenditures as creating more risk, failed to step
into the breach. In country after country, the departure
of the state “crowded out” rather than “crowded in”
private investment. Where private traders did replace the
state, noted an Oxfam report, “they have sometimes done so
on highly unfavorable terms for poor farmers,” leaving
“farmers more food insecure, and governments reliant on
unpredictable international aid flows.” The usually
proprivate sector Economist agreed, admitting that “many
of the private firms brought in to replace state
researchers turned out to be rent-seeking monopolists.”
The
support that African governments were allowed to muster
was channeled by the World Bank toward export agriculture
to generate foreign exchange, which states needed to
service debt. But, as in Ethiopia during the 1980s famine,
this led to the dedication of good land to export crops,
with food crops forced into less suitable soil, thus
exacerbating food insecurity. Moreover, the World Bank’s
encouragement of several economies to focus on the same
export crops often led to overproduction, triggering price
collapses in international markets. For instance, the very
success of Ghana’s expansion of cocoa production triggered
a 48-percent drop in the international price between 1986
and 1989. In 2002-03 a collapse in coffee prices
contributed to another food emergency in
Ethiopia.
As in
Mexico and the Philippines, structural adjustment in
Africa was not simply about underinvestment but state
divestment. But there was one major difference. In Africa
the World Bank and IMF micromanaged, making decisions on
how fast subsidies should be phased out, how many civil
servants had to be fired and even, as in the case of
Malawi, how much of the country’s grain reserve should be
sold and to whom. In other words, Bank and IMF resident
proconsuls reached to the very innards of the state’s
involvement in the agricultural economy to rip it up.
Compounding the negative impact of adjustment were unfair
EU and US trade practices. Liberalization allowed
subsidized EU beef to drive many West African and South
African cattle raisers to ruin. With their subsidies
legitimized by the WTO, US growers offloaded cotton on
world markets at 20 percent to 55 percent of production
cost, thereby bankrupting West and Central African
farmers.
According
to Oxfam, the number of sub-Saharan Africans living on
less than a dollar a day almost doubled, to 313 million,
between 1981 and 2001—46 percent of the whole continent.
The role of structural adjustment in creating poverty was
hard to deny. As the World Bank’s chief economist for
Africa admitted, “We did not think that the human costs of
these programs could be so great, and the economic gains
would be so slow in coming.”
Malawi
is representative of the African tragedy spawned by the
IMF and the World Bank. In 1999 the government of Malawi
initiated a program to give each smallholder family a
starter pack of free fertilizers and seeds. The result was
a national surplus of corn. What came after is a story
that should be enshrined as a classic case study of one of
the greatest blunders of neoliberal economics.
The World
Bank and other aid donors forced the scaling down and
eventual scrapping of the program, arguing that the
subsidy distorted trade. Without the free packs, output
plummeted. In the meantime, the IMF insisted that the
government sell off a large portion of its grain reserves
to enable the food reserve agency to settle its commercial
debts. The government complied. When the food crisis
turned into a famine in 2001-02, there were hardly any
reserves left. About 1,500 people perished. The IMF was
unrepentant; in fact, it suspended its disbursements on an
adjustment program on the grounds that “the parastatal
sector will continue to pose risks to the successful
implementation of the 2002/03 budget. Government
interventions in the food and other agricultural markets…
[are] crowding out more productive spending.”
By the
time an even worse food crisis developed in 2005, the
government had had enough of World Bank/IMF stupidity. A
new president reintroduced the fertilizer subsidy,
enabling 2 million households to buy it at a third of the
retail price and seeds at a discount. The result: bumper
harvests for two years, a million-ton maize surplus and
the country transformed into a supplier of corn to
Southern Africa.
Malawi’s
defiance of the World Bank would probably have been an act
of heroic but futile resistance a decade ago. The
environment is different today, since structural
adjustment has been discredited throughout
Africa. Even some donor governments and nongovernment organizations
that used to subscribe to it have distanced themselves
from the Bank. Perhaps the motivation is to prevent their
influence in the continent from being further eroded by
association with a failed approach and unpopular
institutions when Chinese aid is emerging as an
alternative to World Bank, IMF and Western government aid
programs.
Food
sovereignty: An alternative paradigm?
Defiance
from governments like Malawi and dissent from their
erstwhile allies are not the only ones undermining the IMF
and the World Bank. Peasant organizations around the world
have become increasingly militant in their resistance to
the globalization of industrial agriculture. Indeed, it is
because of pressure from farmers’ groups that the
governments of the South have refused to grant wider
access to their agricultural markets and demanded a
massive slashing of US and EU agricultural subsidies,
which brought the WTO’s Doha Round of negotiations to a
standstill.
Farmers’
groups have networked internationally; one of the most
dynamic to emerge is Via Campesina (Peasant’s Path). Via
not only seeks to get “WTO out of agriculture” and opposes
the paradigm of a globalized capitalist industrial
agriculture; it also proposes an alternative—food
sovereignty. Food sovereignty means, first of all, the
right of a country to determine its production and
consumption of food and the exemption of agriculture from
global trade regimes like that of the WTO. It also means
consolidation of a smallholder-centered agriculture via
protection of the domestic market from low-priced imports;
remunerative prices for farmers and fisherfolk; abolition
of all direct and indirect export subsidies; and the
phasing out of domestic subsidies that promote
unsustainable agriculture. Via’s platform also calls for
an end to the Trade Related Intellectual Property Rights
regime, or TRIPs, which allows corporations to patent
plant seeds; opposes agrotechnology based on genetic
engineering; and demands land reform. In contrast to an
integrated global monoculture, Via offers the vision of an
international agricultural economy composed of diverse
national agricultural economies trading with one another
but focused primarily on domestic production.
Once
regarded as relics of the pre-industrial era, peasants are
now leading the opposition to a capitalist industrial
agriculture that would consign them to the dustbin of
history. They have become what Karl Marx described as a
politically conscious “class for itself,” contradicting
his predictions about their demise. With the global food
crisis, they are moving to center stage—and they have
allies and supporters. For as peasants refuse to go gently
into that good night and fight de-peasantization,
developments in the 21st century are revealing the panacea
of globalized capitalist industrial agriculture to be a
nightmare. With environmental crises multiplying, the
social dysfunctions of urban-industrial life piling up and
industrialized agriculture creating greater food
insecurity, the farmers’ movement increasingly has
relevance not only to peasants but to everyone threatened
by the catastrophic consequences of global capital’s
vision for organizing production, community and life
itself.
*
Walden Bello (waldenbello@yahoo.com) is a senior analyst
at and former executive director of the Bangkok-based
research and advocacy institute Focus on the Global South.
In March he was named Outstanding Public Scholar for 2008
by the International Studies Association. He is also
president of the Freedom from Debt Coalition. |
