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US reaps profit, sows
disaster
By Emad Mekay
WASHINGTON - US agricultural companies are
selling crops to the world market at prices well
below their cost of production, which is one of
the most damaging of all anti-competitive trade
behaviors, says a new report. According to the
Institute for Agriculture and Trade Policy (IATP)
based in Minneapolis, Minnesota, 10 years after
the passage of the World Trade Organization (WTO)
Agreement on Agriculture, which prohibits dumping,
the United States still engages in the practice on
a large scale, leading to an oversupply that has
driven commodity prices down worldwide.
The practice threatens the livelihood of
millions of farmers in developing nations and
benefits only a select few major transnational
agribusiness firms, based mostly in the US and
Europe, the institute says. "It's clear that the
WTO Agreement on Agriculture is doing nothing to
address agricultural dumping and its severe
consequences for farmers around the world," said
IATP president Mark Ritchie. "The low global
prices caused by dumping hurt farmers around the
world, including the US ones. It's time for trade
negotiators to put this issue front and center."
Once hailed as a victory for farmers
around the world, the report says the WTO rules
have actually made it more complicated in practice
for smaller, poorer countries to establish grounds
for anti-dumping duties because of the
requirements needed to demonstrate harm.
"Underlying technical challenges for using the WTO
to stop dumping is the political reality of the
multilateral trading system that makes it
difficult for small countries to challenge
powerful economic players like the US," says the
report, titled "WTO Agreement on Agriculture: A
Decade of Dumping - United States Dumping on
Agricultural Markets".
Meanwhile, the US
Chamber of Commerce is pressing the George W Bush
administration to crack down on China for
copyright violations. In its annual report, the US
Trade Representative details what it deems unfair
trade barriers, even as Washington urges other
nations to ease their own import regulations,
especially on US agricultural products. The US
argues that providing predictable market
conditions for key US agricultural commodities to
the world is critical to US farmers.
The
IATP report recommends that importing countries,
especially in the developing world, should have
the ability to immediately impose anti-dumping
duties to bring prices in line with the cost of
production. The report, released last week, looks
at prices from 1990-2003 for the five biggest
export commodities grown in the US and sold on the
world market: wheat, corn, soybean, rice and
cotton. Using data from the US Department of
Agriculture and the Organization for Economic
Cooperation and Development (OECD), IATP found
that in 2003, agricultural exports from US-based
global food companies were sold well below the
cost of production.
Wheat was exported at
28% below its cost of production and soybeans at
10% below cost. Corn, cotton, and rice were also
dumped at 10%, 47% and 26% respectively. The
report warns that the problem could put farmers
out of business in developing nations. "If farmers
can't get a price that covers expenses, then it's
difficult to stay in business," says the report.
"Farmers in other countries are hurt because
dumped exports push them out of local markets and
eliminate their ability to export."
US
dumping, the report finds, threatens food
security, poverty reduction and the ability to
generate foreign exchange for developing nations.
As domestic production falls, these countries
become increasingly vulnerable to fluctuating
prices and the availability of imports. The
effects are felt around the world in places as far
apart as Jamaica, Burkina Faso and the
Philippines. The report says that the real
beneficiaries of dumping are multinational
agribusiness firms such as Cargill, Bunge Ltd and
Archer Daniels Midland, which dominate
agricultural commodity purchasing, transportation
and processing in the US.
These companies
are able to buy inputs and commodities at
extremely low prices. Low prices in the US, along
with increased global production, help keep world
commodity prices down. "While global food
companies have greatly benefited from the low
prices for the raw materials of their products,
farmers around the world, including US farmers,
are going out of business," says the report. The
US is now the world's largest agricultural
exporter. The value of agricultural exports equals
nearly one-fourth of farm cash receipts in the
country. One out of every three acres (1 acre is
0.4 hectares) is planted for exports. US farmers
export 45% of their wheat, 34% of their soybeans,
71% of their almonds and more than 60% of their
sunflower oil.
(Inter Press
Service) |
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