September 24th 2005

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Articles from this issue:

EDITORIAL: Telstra sale: not a 'done deal'

NATIONAL AFFAIRS: Could Australia cope with a natural disaster?

CANBERRA OBSERVED: Are new anti-terror laws good for Australia?

INTELLIGENCE: Past espionage failure spooks US partnership

STRAWS IN THE WIND: New Orleans - a cracked society / Unemployment / Costello's new constituency / Liberal leadership / Potemkin politics

TAIWAN: Taiwan's tax system keeps money in the family

UNITED STATES: Judge Roberts impresses at US Senate hearing

AGRICULTURE: Unbridled globalism harms poorer nations

SPECIAL FEATURE: How the sex industry destroys society (Part 2)

THEATRE: Play's one-sided slant on Bush and the Iraq War

Who is to blame for New Orleans tragedy? (letter)

Tony Blair and the Iraq War (letter)

Family Law's five-fold disaster (letter)

OBITUARY: Frank Rooney - R.I.P.

BOOKS: UNSPEAKABLE: Facing Up To Evil in an Age of Genocide and Terror, by Os Guinness

MAKING 'BLACK HARVEST': Warfare, film-making and living dangerously in the Highlands of Papua New Guinea

Books promotion page

Unbridled globalism harms poorer nations

by Ken Francis

News Weekly, September 24, 2005
Helping poor nations to develop their economies is greatly impeded by the unfettered penetration of developing economies' food markets by agricultural products from Western nations, warns Dr John Hodge, a former UN Food and Agriculture Organization official.

A leading authority on livestock production has recently called for a new approach to the world trade in agricultural products, and the removal of agriculture and food from the arena of free trade and regulation by the WTO.

In a paper proposing strategies on how to sustainably feed the world's poor people, Dr John Hodges writes: "The exploding population, shrinking world and growing inter-connections of life have turned food into a global crisis needing dedicated national and international leadership and wisdom."

Time bomb

Hodges, formerly a professor of animal genetics at the University of British Columbia, Canada, and official at the UN Food and Agriculture Organization in Rome, warns that finding a solution to the ethical and political time bomb of world food supply is not going to be easy, as the answer will involve scientific as well as what he describes as "new socio-economic, political and ethical dimensions".

Agricultural production in the West expanded in the period since 1945, under the influence of intensified use of capital and external farm inputs such as machinery and fertilisers.

Governments, however, began to recognise that intensive food production on a broad scale is actually economically insecure and politically sensitive and, in response, introduced means to protect the domestic industry from import competition.

As a result, large surpluses over domestic market requirements have become common, and these surpluses are then dumped in export markets at low prices where they compete with locally-grown produce.

Dr Hodges' recent paper in the Livestock Production Science journal (92, 2005), challenges the view that famine and poverty will be addressed by shipping food produced in the West to nations which are unable to produce enough for themselves, and that free trade in agricultural products will facilitate development in poor countries.

While he recognises that economic globalism may have benefits for other, non-agricultural, economic activities, he believes that globalisation of trade in agricultural products is entirely inappropriate.

His chief argument is that the supply of abundant cheap food available in the West is not the result of free trade policies, but rather of protectionism and the availability of subsidies for agricultural production.

Hodges asks how anyone now, in 2005, could believe that free trade in food could prove to be the saviour of the poor in undeveloped countries, seeing that free trade was not the driver of the West's transformation from rural to advanced economies. Taking the argument further, he postulates that free trade and the globalisation of food supply for underdeveloped nations will be counterproductive, and may actually fail to reduce poverty and may accentuate the frequency of food shortages.

The incidence of famine in Africa and other parts of the developing world is never far from the media in the richer nations. More than any other issue, the question of access to adequate nutrition will divide the world into two camps - the Survivors and the Others. The Survivor nations benefit from abundant wealth and influence, as well as an abundance of agricultural produce, while the Others languish in poverty with the prospect of famine owing to their lack of economic and political power.

An analysis of the world's population reveals that, of the current total population of 6.5 billion people, 1 billion live in the West, 0.4 billion live in the successor nations to the USSR, and 5 billion live in the developing countries.

The demographics of the developing nations offer the key to possible solutions to the crisis of world food production and distribution. People in the developing nations are often poor, as indicated by the fact that some 2.6 billion of them, or over half, live in the "least developed" group of nations. About 4 billion, or 80 per cent, live in rural settings, and the majority are farmers. These nations are youthful, with some 2.8 billion, or 45 per cent, under 24 years of age.

Spending on food

Looking at the socio-economic situation in different countries, in subsistence economies 80 to 90 per cent of the disposable family income or labour is spent on providing food; while in most developing countries the proportion is 30 to 80 per cent; and in the West the amount is 10 per cent.

According to Hodges, the first objective of a sustainable world food system is to "ensure that the world's poor people do not also become hungry". Achieving this goal is made more difficult by the fact that, in the coming decades, developing countries will expect to see a further 3.5 billion people added to their populations, with a total of 8 billion located on the land in rural areas. A positive aspect of the situation lies in the fact that poor people in rural pursuits are not necessarily hungry, and would generally have enough to eat except when harvests fail or war or civil violence disrupts production.

However, the economies in developing countries are susceptible to weaknesses induced by unbridled free-market capitalism or globalism. For example, globalism may cause a number of problems in the economy, including alienation of land ownership from the farmer into the hands of local or foreign corporations; and depression of the price of labour owing to competitive pressures between job-seekers. As a consequence, there are reduced opportunities for the rural poor to accumulate capital and thereby improve their use of local resources to produce surplus food and fibre for sale for cash within their own country.

Empowering the poor

It is the "empowerment of the poor", measured by the capacity for the poor to become involved in the cash economy, that drives the processes reducing the incidence of poverty across the broad population. This position has often been supported by the World Bank (as in its 2000 study, "Making transition work for everyone: poverty and inequality in Europe and Central Asia".)

The process of empowerment enables the poor rural population to commence the movement towards income levels that permit them to feed, clothe and educate their own families and to provide opportunities for other members of their communities. Furthermore, members of a rural community may be more inclined to remain in their village rather than migrate to a worse form of poverty in the urban shanty towns that ring major centres, as the prospect of local economic development drives the opportunity for local jobs and business enterprise.

The main enemy of the empowerment process is the unfettered penetration of the food market in developing countries by agricultural products produced by Western nations, facilitated by the free-trade arrangements of the World Trade Organization (WTO), combined with the concentration of land ownership in the hands of ruling elites or foreign corporations.

As Hodges puts it: "Any economic system which separates the poor from their land or takes away their market for selling food inevitably perpetuates poverty, increases hunger and adds to the threat of famine. Globalising agriculture and food on the basis of free trade runs that risk." He adds that, while cheap food is attractive, price may be a secondary consideration to the need for a "sustainable and consistent supply of food".

Hodges provides an extensive analysis of capitalism, its origins and shortcomings, and while acknowledging the overall success of capitalism and its contribution to the creation of wealth, recognises that such wealth is not always equally shared and that where regulation is lacking, capitalism is "ruthlessly biased in favour of those already holding capital".

He emphasises that capitalism requires suitable regulation and income redistribution programs, if it is to be an ethical system and distribute its benefits to all participants.

In a similar vein Hodges provides a critique of the WTO, its ideology and mandate in support of universal free trade and the unrestrained movement of capital across national borders. He provides an historical analysis of the path by which the economies of the West have evolved into sources of cheap and abundant food.

The history of agricultural production in Great Britain provides an interesting study in the political and social struggle between those seeking to introduce policies of protection for agriculture on the one hand and free trade on the other.

The free-trade régime prevailing in the UK during the 1920s and 1930s, which encouraged the import of cheap food, combined with the loss of rural enterprises during the Depression, reduced Britain's capacity to produce enough home-grown food. As a consequence, during World War II, the nation nearly starved and rationing became the order of the day, lasting until 1954.

Subsequently, as governments realised that imported food could not always be relied upon, they introduced measures to build up the capacity of the country to produce food for the domestic market. Thus, an array of subsidies, grants, support services and research and development incentives were introduced to encourage production in defiance of the principles of free-market economics.

The intervention of governments in subsidising food prices and encouraging production within the new emerging system of large factory-farms had the effect of fundamentally redesigning the food supply chain. The quality of food products came to be determined more by the needs of the supply chain, such as increased shelf-life, and less by traditional features, such as flavour, which were valued by the consumer.

Family grocers displaced

Subsequently, food sales have become dominated by increasingly monopolistic national and international supermarket chains, at the expense of family grocers and other small shops. Fast food and pre-packaged meals have achieved a prominent place in the market.

Competition between chains is increasingly based on price, and agricultural producers have been drawn into a cycle of accelerating production efficiency with ever decreasing returns at the farm gate. By 1999, US farmers were receiving only an average of 20 per cent of the retail price paid by consumers.

This seemingly attractive trend towards providing cheap food was not achieved without cost. While food for the family in the West may take less than 10 per cent of the cash in the budget, the hidden costs resulting from environmental degradation, pollution, loss of food quality and safety, and the destruction of rural communities are not immediately obvious, but are no less real. Low-priced food at the supermarket checkout carries a hidden price that society will have to pay in the future.

The question arises as to how the true cost of food may be brought into the retail price and whether the consumer will be willing and able to pay that price.

A number of approaches are suggested:

  • Introduce laws and regulations that provide for the certification of the food production system as being sustainable - that is, that the production system is safe, healthy and does not degrade the countryside or the social fabric of the rural community.

  • All food retailers must purchase their stock from certified sources or pay a financial penalty.

  • Introduce payments to farmers, not for production, but for their activities as stewards caring for the natural resources of the countryside.

These proposals should not be dismissed as radical or impractical. We should compare them with similar measures used in the production of industrial goods.

As for the consumer's ability to afford such measures, it may be noted that an increasing proportion of the household budget is allocated to discretionary items including restaurants and cafés as well as numerous household items. The situation of families with low disposable incomes must be addressed by other welfare initiatives.

These proposals should not be dismissed as radical or impractical. We should compare them with similar measures used in the production of industrial goods. There, the consumer is expected to pay the full cost of production, including pollution-control measures, occupational health and safety expenses, superannuation contributions for workers and numerous other public and private benefits.

  • Ken Francis

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