Page 1 of 3 Farmers fight back against free
trade By Walden Bello
The 20th century was a terrible blight on
small farmers everywhere. In both wealthy
capitalist economies and in socialist countries,
farmers paid a heavy price for industrialization.
In advanced capitalist countries like the United
States, a deadly combination of economies of
scale, capital-intensive technology and the market
led to large corporations cornering agricultural
production and processing. Small and medium farms
were relegated to a marginal role in production
and a minuscule portion
of the
work force.
The Soviet Union, meanwhile,
took to heart Karl Marx's snide remarks about the
"idiocy of rural life" and, through state
repression, transformed farmers into workers on
collective farms. Expropriation of the peasants'
surplus production was meant not only to feed the
cities but also to serve as the source of the
so-called "primitive accumulation" of capital for
industrialization.
Today, perhaps the
greatest threat to small farmers is free trade.
And the farmers are fighting back. They have
helped, for instance, to stalemate the Doha round
of negotiations of the World Trade Organization
(WTO). This tug of war between farmers and free
trade is nowhere more visible than in Asia.
The triple threat to Asia's
peasantry Asian governments placed the
burden of industrialization on the peasantry
during the phase of so-called developmentalist,
industry-first policies. In Taiwan and South
Korea, land reform first triggered prosperity in
the countryside in the 1950s, stimulating
industrialization.
But with the shift to
export-led industrialization in 1965, there was
demand for low-wage industrial labor, so
government policies deliberately depressed prices
of agricultural goods. In this way, peasants
subsidized the emergence of Newly Industrializing
Economies. Peasant incomes declined relative to
urban incomes, and the resulting stagnation of a
once-vibrant countryside led to massive migration
to the cities and a steady supply of cheap labor
for factories. The farmers left in the countryside
were primarily poor and aging, and they formed an
increasingly small part of the national work
force.
In Thailand, for instance, a tax on
rice exports insulated the domestic market from
price movements in the international market,
depressing the price of rice and reducing the wage
costs of non-agricultural employers. A transfer of
real wealth from the countryside to the city took
place every year between 1962 and 1981, except for
1970. Not surprisingly, despite the image of
Thailand as an agricultural superpower, a large
percentage of the rural population remains poor.
In China, millions of peasants died of
starvation during the Great Leap Forward (1958 to
1960) as the government requisitioned grain
surplus to finance Mao Zedong's
super-industrialization drive. The chaos of the
Cultural Revolution (1966-1969) allowed peasants
to regain a degree of control over production
because the government was in crisis. Following
the death of Mao in 1976, Deng Xiaoping dealt with
the crisis by introducing the "household contract
responsibility system". Each family was given a
piece of land to farm, along with the right to
sell what was left over after a fixed proportion
of the produce was sold to the government at a
state-determined price. This led to peasant
prosperity that, as in Taiwan, stimulated
industrial production to fulfill rural demand.
But, as in Taiwan, this golden age of the
peasantry came to an end, and the cause was
identical: the adoption of urban-centered,
export-oriented industrialization. Primitive
capital accumulation for industry took the form of
requisitioning peasant surpluses via heavy
taxation. Currently, the various tiers of the
Chinese government foist a total of 269 different
taxes on farmers, along with often-arbitrary
administrative charges.
Not surprisingly,
in many places, taxes now eat up 15% of farmers'
income, three times the official national limit of
5%. Not surprisingly, too, while the economy has
been growing at 8-10% a year, peasant income has
stagnated, so that urban dwellers now have, on
average, six times the income of peasants. True
indeed is the observation of the rural advocates
Chen Guidi and Wu Chuntao that the urban
industrial economy has been built "on the
shoulders of peasants".
The typhoon of
trade liberalization The forcing of
peasants to subsidize industrialization was indeed
harsh. But at least trade policies at the time
helped to mitigate the pain by barring
agricultural imports that were even cheaper than
local commodities. Practically all Asian countries
with agricultural sectors tightly controlled
imports via quotas and high tariffs. This
protective shield, however, was severely eroded
when countries signed the Agreement on Agriculture
(AOA) and began joining the WTO starting in 1995.
The AOA forced open agricultural markets
by banning quotas, which were converted to
tariffs, and required governments to import a
minimum volume of each agricultural commodity at a
low tariff. At the same time, under the pretext of
controlling the heavy subsidization of agriculture
in developed countries, the AOA institutionalized
the various channels through which subsidies
flowed, such as export subsidies and direct cash
payments to farming interests in the northern
hemisphere.
As a result, the level of
subsidization of agriculture actually increased in
developed countries in the first decade of the
WTO. The total amount of agricultural subsidies
provided by the Organization for Economic
Cooperation and Development's member governments
rose from $182 billion in 1995 to $280 billion in
1997, $315 billion in 2001, $318 billion in 2002,
and almost $300 billion in 2005. The United States
and the European Union (EU) were spending $9-10
billion more on subsidies in the early 2000s than
they were a decade earlier.
For every $100
of agro-exports from the United States, government
subsidies accounted for $20-30. In the case of
the
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