Perspective:
How to Manufacture
a Global Food Crisis
How “free trade” is destroying Third World agriculture—and who’s fighting back
(Excerpts from the article of the same title that appears in the June 2, 2008 edition of The Nation [New York]. It is being reprinted with permission from The Nation. Click here to read the full version.)
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.
This blow to peasant agriculture was followed by an even larger one in 1994, when the North American Free Trade Agreement went into effect. Although NAFTA had a fifteen-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 small-holders 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, with land under irrigation rising from 500,000 hectares in the mid-sixties to 1.5 million in the mid-eighties. Owing to these investments, the Philippines achieved self sufficiency in rice for most of the Marcos period, though in its last full year, 1985, it had to import over 500,000 tons. When Marcos fled the country in 1986, there were reported to be 900,000 tons 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.” Thus, structural adjustment, which was already in effect in the last years of Marcos, was tightened under Aquino.
Between 1986 and 1993 the equivalent of 8 percent to 10 percent of GDP 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, from 7.5 per cent of total government spending in 1982 under Marcos to 3.3 per cent in 1988 under Aquino. Even before Marcos left the country in 1986,the government’s “Masagana 99” rural credit program to which many observers attributed the rise in rice yields had already fallen victim to the IMF-World Bank adjustment program. But the Bank, Fund, and their 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 coverage stagnated at 1.5 million hectares. 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 the 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 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 to 4 percent of domestic consumption over the next ten 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 fourteen 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 Bryce-son 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.”
Food Sovereignty: An Alternative Paradigm?
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 small holder 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 agro-technology 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 twenty-first 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 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. He can be contacted at waldenbello@yahoo.com.
Political Brief
Status Symbol:
The Status of Visiting Forces Agreement with Australia is Up for Ratification at the Senate
Even as the petition challenging the constitutionality of the Philippines' Visiting Forces Agreement (VFA) with the United States awaits judgment at the Supreme Court, a similar agreement, the Status of Visiting Forces Agreement (SOVFA) with Australia, is inching towards ratification at the Philippine Senate.
Signed in Canberra in May 2007, the agreement still needs the approval of 2/3 of the Senate's members for the agreement to take effect. The executive department transmitted the agreement in November last year and the Senate's committee on foreign relations held its first public hearing last February. Committee Chair Sen. Miriam Defensor-Santiago has indicated that no further committee hearings may be necessary and that the agreement may soon be submitted to the plenary for deliberations.
Quandary
The proposed ratification of the SOVFA comes in light of the controversy over the only other Status of Forces Agreement the Philippines has. The actual application of the provisions of the VFA with the US was recently put to the test in the trial of US Marines accused of raping a Filipina in November 2005. US and Philippine government officials invoked the VFA's provisions to justify the holding of the accused under US custody upon arrest and in the entire duration of the trial. A Philippine court subsequently found one US Marine guilty and ordered him imprisoned in a Philippine jail in December 2006. US and Philippine authorities again cited the VFA to defy the judge's order. Under pressure from the US, which cancelled scheduled military exercises with the Philippines to express its displeasure with the Philippine Court's order, Filipino officials promptly spirited the convicted rapist out of the Philippine jail. He remains locked in a cell inside the US embassy complex in Manila, US officials claim.
In light of the controversy generated by the rape case, the push for the SOVFA has put the Philippine government in a quandary. In trying to sell the new agreement, Manila has categorically stated that it has learned its lessons and that the SOVFA rectifies the VFA's faults. With this claim, various government officials have in effect chosen to admit that the VFA is flawed.
Differences
The SOVFA indeed features some differences from the VFA, such as, for example, an entire section on "environmental protection" and on "mortuary affairs." On the whole, however, the SOVFA hews closely to the template of the VFA such that in certain portions, its provisions were seemingly copied word-for-word from the VFA.
On the controversial aspect of criminal jurisdiction, for example, the SOVFA and VFA are very similar. On offenses punishable under the laws of both countries, jurisdiction will be concurrent, meaning the offender becomes subject to both Philippine and Australian laws and processes. As with the VFA, the Philippines cannot exercise primary jurisdiction if the Australian side claims that an action was carried out in performance of an "official duty." Unlike the VFA, however, Australia must "consult" with the Philippines on whether an action indeed falls under "official duty" and the Philippines has the final say. If, for example, an Australian soldier were accused of being complicit in the killing of innocent civilians or of other human rights violations, their Filipino victims would not be able to sue him or her in Philippine courts once Australian authorities claim, and Philippine authorities agree, that the action was carried out on "official duty."
Custody
On the issue of custody, SOVFA also appears to have slightly deviated from the VFA.
The VFA states that custody of troops over whom the Philippines is to exercise exclusive jurisdiction remains with the US (unless otherwise "requested") from the commission of the offense until the completion of judicial proceedings. The SOVFA, on the other hand, gives the Philippines custody of the accused during the trial period. Pending investigation, however, the Philippines would be able to detain the accused only if he or she were already in the hands of Philippine authorities. If he or she were already in the hands of Australian authorities, however, he or she would remain with the Australians (though in Philippine territory).
Upon conviction, the SOVFA states only that the accused "shall be confined and serve his or her sentence in accordance with the laws of the Receiving state." With this provision, the Philippines can claim that holding the convict within Philippine territory is what is in accord with Philippine laws. It is interesting to note, however, that, unlike for the period prior to investigation or during trial when the SOVFA specifies where exactly the accused would be held, this particular provision fails to explicitly state where the convict would be confined. Why the provision did not simply say that the accused would be held in the Philippines could again lend it to differing interpretation.
For all the differences, however, the SOVFA essentially seeks the same objectives for Australian troops as the VFA does for American soldiers: to apply the concept of the "Law of the Flag" or the idea that a country deploying military forces abroad should apply its own laws to its soldiers - and not that of the country where they are to be deployed. In other words, to SOVFA aims "to the extent negotiable" to exempt Australian troops from being subject to the same laws of the Philippines by according them a different legal "status." While Filipinos or other nationals who are accused of committing offenses in the Philippines will have to go through the normal judicial process that applies to everyone in the country, troops covered under the SOVFA will not.
Covert operations
As with the VFA, the SOVFA is being described as the agreement that will authorize Australian troops to conduct exercises in the Philippines. President Gloria Macapagal-Arroyo claims that "The SOFA is for training and intelligence fusion, not for operations, not for boots on the ground." The text of the SOVFA however states that Australian troops may come "for combined training, exercises or other activities mutually approved by the Parties." What are covered under "other activities" is not defined.
In fact, even without the SOVFA, a small number of Australian troops have been deploying to the Philippines ostensibly to train Filipino soldiers since 2001. In July and August 2004, Australian Special Forces had already come for joint training exercises. In 2005, the Australian press even reported that Australian police were conducting "covert operations" in the country. This was followed by reports that elite Australian troops had joined US and Filipino soldiers in operations against alleged terrorists in Mindanao.
Even without the SOVFA, Australia can opt to continue sending troops to the Philippines, as long as the Philippine government consents. It wants to secure the SOVFA, however, because without it, Australian troops would be subject to the laws of the Philippines as ordinary tourists.
What Australia wants through the SOVFA is to secure the legal guarantees and exemptions the agreement accords to its troops when they do choose to deploy to the Philippines. This, in essence, is what Status of Forces Agreements such as the SOVFA and VFA wish to avoid. In itself, it is not the SOVFA that legally allows the deployments.
Diversification?
The SOVFA has been seen as a signal that the Philippines is diversifying its alliances. One popular analyst has claimed that the SOVFA is "breaking the monopoly of the United States as the historic guarantor of the country's external security."
This would be accurate only if Australia were not one of the most loyal allies of the United States. No other country has fought side-by-side the US in all its major wars in the past century, including most recently in Afghanistan and Iraq. Though it evidently has its own distinct interests, Australia's foreign policy has been inseparable from that of the US. As the influential American neo-conservative commentator Max Boot has pointed out, "We may be the global sheriff, but we need a posse to be effective, and Australia has been a stalwart member of that self-selected assemblage."
While Australia's new Labor government has fulfilled its electoral pledge to withdraw troops from Iraq, it is still unclear whether this signals a one-time deviation or a fundamental break in its foreign policy. Tellingly, the new government has pledged that its troops are to stay on with US and other troops in Afghanistan. It has also announced that a far-reaching military agreement that the previous conservative government signed with Japan, another US ally, will not be revoked. Australia's military relations with the US will presumably retain its alliance status.
Consolidation
In this light, the SOVFA seeks to strengthen, rather than break, the chain of US allies in Asia and the world. The military deployments, for which Australia wants to protect its troops through the SOVFA, are part of a larger push to further deepen the military relationship between Australia and the Philippines by expanding Australian military presence in the country.
In October 2005, Australian Defense Minister Robert Hill proposed that Australian troops not only train Philippine troops but also participate in maritime surveillance ostensibly against terrorists across the Sulu and Celebes Seas. Upon the signing of the SOVFA, Australia announced that it will give the Philippine military 28 brand new airboats worth $4-million for use in internal security operations. Along with the US, Australia is now helping the Philippines build radar stations, surface vessels, aircraft and communication equipment to patrol the country's southern borders.
