Emmanuel Coste has always pursued two activities at the same time. He is a sheep farmer but he is also involved in issues concerning the evolution of world agriculture. He is a member of various professional groups (FNO, COPA COGECA, FNCBV, Coop de France …), and has been kind enough to share with us his interesting thoughts on the philosophy that guides commercial agricultural negotiations within the WTO.
You are already a member of several professional organizations and yet you have just joined WOAgri as a founding member. Can you tell us why?
Because the questions that WOAgri is asking seem to me to hold the answers to the situation of all farmers in the world, and not a few special interest groups. And because WOAgri’s priority is to provide answers to deadlock situations experienced in the world of agriculture, by getting rid of preconceived ideas!
The first of these preconceived ideas concerns the impact of the liberalization of exchange applied to the agricultural sector. According to our analyses, we have to consider the risks of monopolistic drifts as well as the overall costs caused by the disappearance of less competitive agricultural exchanges!
One of the answers to deadlock situations is that we believe it is necessary to remove agriculture from the WTO, in order to avoid arbitration between “agriculture and services” as seems to be the case sometimes!
In fact it is inconceivable that international institutions decide to sacrifice one economic sector for the sake of another, especially as arbitration is carried out according to a short-term financial logic, ignoring the strategic and specific character of agriculture!
It is of course not a question of fearing famine in Europe, but the risk of a shortage of the supply of agricultural products in the event of conflicts or climatic disasters in the exporting regions, will become a sensitive issue if our leaders erase the concept of food independence from their minds!
Members of our profession, sheep farmers, have been the first victims of this liberalization of agriculture, which does not consider the specificity of the sector or its interaction with the rest of the economy (jobs, environment…). We were in fact the objects of historic bargaining in 1994, and no French or European decision-maker saw, or understood the consequences of the agreement, which allowed the entry, at zero import duty rate, of about 320,000 tonnes of ovine meat from Oceania and South America! The WTO decision, made with no consultation, had huge consequences for European breeders in terms of direct and indirect job losses.
Can you tell me why you are fighting for the rights of European breeders if, in the end, liberalization will benefit most people, especially the consumers?
Because the evolution of this matter has shown how “monopolistic drifts” can be caused by liberalization: New Zealand today has a monopoly on the world ovine meat market.
What happened in fact?
At first, the monopoly was created because of competitive advantages (the size of New Zealand farms and an efficient New Zealand agriculture/industry economic model). Then, this monopoly was reinforced thanks to government-supported market organizations.
Here we have a complete contradiction, because the liberalization of the exchange of ovine meat, instead of assisting the development of world exchange, has created conditions that favor the long-standing establishment of the New Zealand monopoly!
It is here that the comments of Michel Cicurel, chairman of Edmond de Rothschild Corporate Finance, in an article that recently appeared in Le Monde, stand out as the issues we should be focusing on today, as he says that the logic behind the liberal system is to expose situations of dominance that generate super profits!
Applying free exchange to the ovine meat sector has resulted in the exact opposite of what it was supposed to achieve, which is equal opportunity for everyone!
Wishing for the free exchange of products as sensitive as agricultural products, without taking into consideration the fundamental differences of competitiveness between regions (mechanized agriculture versus subsistence agriculture, intensive agriculture versus extensive agriculture…) can lead to situations of monopoly, penalizing de facto the development of others.
Those who acknowledge these contradictions and who propose regulatory systems to enable liberalism to provide its best, will do economic science and 40% of the active world population, which makes its living directly and indirectly from agriculture, a big favor.
This is why I am committing myself to the WOAgri movement.
Europe today produces 1,000,000 tonnes of ovine meat, for a total European consumption of approximately 1,280,000 tonnes, so could the decision made in 1994 be considered as positive for consumers because it enables the European market to obtain supplies at low prices? In other words, why is the lowest price not the right reference?
This is exactly the right question to ask.
Of course it is conceivable to look for the lowest prices for consumers, as long as this price is compatible with criteria such as quality.
These criteria evolve according to the times and society. Nowadays, all economic activity lies within the framework of sustainable development, which let us not forget, aims to reconcile economic and social progress and the preservation of the environment.
However, do prices of agricultural products that decrease regularly respect the criteria of social well- being? They certainly do not!
What should we think also of a system that encourages Brazil to become the world farm, while most of its farmers are paid a pittance, and other farmers in the country are clearing the ground in the Amazon to develop agricultural activities that will impoverish the land?
This is why I don’t think the lowest price can constitute in the long term a reference for world agriculture that respects the objectives of sustainable development!
What is worse is that I am convinced that the current liberalization of world agriculture will lead to the disappearance of many farms because its underlying logic reflects that of Ricardo, who, in the 19th century, praised the advantages of international trade and liberalization through the theory of comparative advantage. If we push this theory to an extreme, in the end only the Cairns countries will produce food for the whole world, which is totally unrealistic considering natural geographical and climatic limitations.
It is interesting at this stage to remember the other definition of sustainable development adopted during the Rio Conference in 1992, according to which development must satisfy the needs of the present without compromising the ability of future generations to satisfy their own needs.
However, we are today faced with political decisions which compromise the ability of future generations to satisfy their own food needs in the event of a health or geopolitical crisis.
The logic behind the desire for the lowest price is therefore not sustainable for the agricultural sector, which is completely specific and strategic. Contrary to the textile sector, and the sock market in particular, we cannot imagine a shortage in the supply of agricultural products without major consequences for the survival of populations and the maintaining of peace in the world!
Politically, a State cannot agree to renounce its food sovereignty and enter into a relationship of dependence, a situation we are already experiencing for energy!
I would like to finish with a news item: Argentina has just decided, for domestic reasons, to no longer export its meat and to keep it for its domestic market!
The issues we have discussed above therefore are far from unreal!
The abandoning of food sovereignty and a relationship of dependence are not the only risks we face according to you, because you are developing, within the WOAgri framework, the concept of collective costs?
Yes you’re right, we are working, within the framework of the construction of an economic model adapted to the agricultural sector, on the assessment and the taking into account of collective costs, which would result from the gradual disappearance of farms!
For example, the direct and indirect effects on employment are largely ignored. Even though a study carried out by the Breeding Institute for bovine, ovine and porcine productions estimated the impact of the European proposal made in October 2005 within the framework of the Doha round, to be 600,000 job losses!
We must also take into account the continuing rise in energy costs with a view to reorganize the world’s agriculture!
Although some people think that it is economically advantageous today to delocalize our agricultural production to countries with comparative advantages in terms of salary costs and farming surface areas, what will it be like tomorrow when we will have to add the cost of transport to the price of the agricultural product? All the experts, in particular those in maritime transport, will tell you that these costs, which have already risen considerably over recent years, will increase even further in the future!
Integrating the cost of Energy into future reflection on the evolution of world agriculture pleads in favor of maintaining regional agriculture! Instead of making consumers pay for the rising cost of transport, would it not be better to invest in the preservation of our farms?
To come back to the question of livestock farming, the vision that dominates all international debates is the ability to produce and to export, which ignores the values attached to agriculture (environment, cultural traditions, regional dynamism…) and the subjects of public health (cardiovascular illnesses, obesity, BSE, ovine encephalomyelitis, bird flu…) which consumers are becoming more and more interested in!
Finally consumer expectations and food traditions are different on each the continent, even though current evolution could lead to uniformity in consumption trends. In this respect, it would be logical to ask ourselves whether all people, whatever their culture, should eat the same things!
However, these issues are not usually included in international debates, as was notably the case during the World Meat Congress on 28th and 29th April this year in Australia.
If tomorrow the farmers in my department of the Haute-Loire sell their farms to tourists or abandon their land, a whole structure of craftsmanship and culture will gradually collapse! It also means that land maintenance, despite the CAP reforms, will disappear along with the farms!
Just as the economy is experiencing a revolution by recognizing the importance of sustainable development, it is time to commit ourselves to a regulated liberalism that respects the fundamental values of our society!
< 1This reasoning on the monopolistic drifts of liberalism is not specific to agriculture, and it is very interesting to note that in the energy sector, liberalization has enabled State monopolies to become market monopolies!