Amongst the various speeches given during the UMP assizes held on 21 January 2010 on the theme of food security and independence, we wish to comment on that made by Doaa Abdel Motaal, the Counsellor in charge of Agriculture in the Cabinet of the Director-General of the WTO.
1Whilst her speech had the merit of underlining the virtues of international trade insofar as it helps bring peoples together, it made no mention of the destabilising effects that occur in the event of over-liberalisation and insufficient regulation, as demonstrated in the conclusion.
Momagri’s Editorial Board
“The debate on food security is of crucial importance. It started when humanity first appeared and will only finish when humanity disappears, since for as long as we exist we will have to think about this question which lies at the heart of our survival.
The figures presented during this conference on the number of people on the planet who still suffer from hunger, and quoted by Mr. Diuof, show just how far short our response to this questions falls, and just how far we still have to go on the way to achieving true food security.
It is not possible, in my opinion, to talk of food security without addressing:
- rational agricultural policies;
- rational nutritional policies;
- rational environmental protection policies;
- rational social development policies;
- and polices relating to research and development and technological innovation, which play a vital role in agriculture.
Of course, international trade policy also has a role to play in food security at a global level, but international trade in itself cannot guarantee food security. It is only one instrument in what ought to be a varied toolkit. What role does international trade play in the context of food security? International trade is, in my opinion, an instrument which can, if correctly deigned and used, help ensure food security.
Before developing this point, however, I would like to go over the reasons underlying the multilateral trade system itself, as it is not possible to fully assess the contribution international trade makes to food security without referring to certain fundamental aspects.
- The multilateral trade system was set up in the aftermath of the Second World War.
- It was set up in reaction against the ‘every man for himself’ attitude that was prevalent in the world.
- It was set up to embody the explicit wish to attach less importance to national borders and instead emphasise the need to unite peoples and cultures around the planet. It was set up to enable the movement of people, goods, and services around the world.
- This was the vision of world peace that the founders of the multilateral trade system sought to anchor in reality.
- A ‘dependence’ between nations and their ‘interdependence’ – so as to give concrete form to our highest values and ideals.
To return to the specific aspects, what concrete form do these values and ideals take in international trade when it comes to food security?
International trade can:
- increase food ‘availability’ in the world by enabling supply to meet demand and by broadening the source of supply;
- make food products ‘more affordable’ for the poorest populations on the planet by intensifying international competition and encouraging economic growth;
- and increase the ‘diversity’ of foodstuffs – by allowing us here in Europe to consume our beloved pineapples all year round.
As regards food availability, you no doubt remember the serious droughts and fires that occurred in Australia in 2008 and 2009 and which are still going on today. In 2008 droughts stopped Australia from honouring a large number of grain delivery contracts it had signed, but thanks to international trade other countries rapidly stepped in to make up for the resultant shortfall. Countries such as the Ukraine played a vital role. I am Egyptian. A few years ago a UNDP report hit the headlines in my country, indicating that Egypt would need two or three Niles if it were to become wholly self-sufficient in food. According to the report each grain of rice imported to Egypt equates to a precious drop of water saved. This drew attention to the importance international trade has for ‘virtual water’, via trade in agricultural produce. I am sure that you also know the case of Saudi Arabia, the desert kingdom which had to put an end to its experiment with growing grain that it had been carrying out for 30 years, due to the heavy price paid in terms of depletion of its water resources. Thanks to international trade Saudi Arabia is now able to meet its food needs.
Let’s now look at the question of the affordability of food produce. Developed countries devote between 15 and 20 percent of their income to food. But it is important to remember that in developing countries food still accounts for between 50 and 60 percent of the average citizen’s income. There has been worldwide progress here and money spent on food in Bangladesh and India now only represents 50 percent of income, as against 64 percent in 1990, but 50 percent is still a very high figure. The affordability of food produce is still a major preoccupation around the world.
That leads us to food diversity. I took part in the Copenhagen Climate Summit and have to admit I was surprised to see how much ecologists insisted on the argument of ‘food miles’. They argued it was a reason to reject food diversity. It would be more in our interest to consume local produce. At Copenhagen I replied that 1) it was somewhat surprising that the debate only concerned food miles and not the miles covered by industrial products. Both surprising and dubious, in fact, and that 2) the entire life cycle of products needed to be taken into account. Studies show, for example, that green beans grown in Kenya and shipped to Europe have a smaller carbon footprint than European green beans.
Having talked about the importance of international trade, it is worth bearing in mind that agricultural produce only accounts for 4 to 6 percent of world trade, and that two-thirds of this trade has nothing to do with subsistence farming but instead concerns transformed and semi-transformed products.
Nevertheless agriculture is ‘special case’ for the WTO. Some Members certainly would like to be more fully integrated and others less integrated in the Organisation rules, but what everyone agrees on and admits is that it is a ‘very special issue’. What do I mean by that? I mean that agriculture continues to occupy a very special place for the WTO and that the Organisation rules governing it are very different to those applying to industrial products. You only need to remember that average worldwide tariffs on agricultural produce are four times higher than average global tariffs on industrial products to appreciate that agriculture is a special issue. And you only need to consider WTO rules on agricultural subsidies that authorise astronomical green box subsidies that are wholly without equivalent when it comes to industrial products. Even in the Doha Development Agenda agriculture is treated as a special issue. Both developed and developing countries will enjoy a certain level of flexibility as regards sensitive and special produce with wholly new safeguard mechanisms.
Is our ‘agricultural interdependence’ perfect? Far from it. I found it particularly moving when I attended a certain number of bilateral meetings at the WTO Ministerial Conferences late last year, between Pascal Lamy and Trade Ministers from some of the poorest countries on the planet. One of these countries, Yemen, told Mr. Lamy that it wanted to join the WTO primarily for reasons of food security. During the food crisis Yemen found itself deprived of rice, its staple foodstuff, largely because countries adopted the ‘every man for himself’ approach and banned exports. Export restrictions are clearly one area where greater political will is needed, especially given that the World Food Programme experienced shortages of staple products.”
This speech has the merit of insisting on the specific status agriculture has, even at the WTO. Nevertheless the points emphasised call forth two observations. Firstly, at no stage does Doaa Abdel Motaal refer to one of the fundamental characteristics of agricultural markets – the volatility of prices. Yet this is a vital issue in the debate about liberalisation since, as momagri recently pointed out in one of its articles, several expert reports show that volatility is an intrinsic characteristic of agricultural markets.
2Given this, it is reasonable to consider that unregulated market liberalisation to increase trade would also result in increased price instability, with the well-known and particularly harmful effects this has on the viability of agriculture.
Secondly, whilst it is the case that international trade does increase food availability around the world as well as the diversity of food produce, the question of the ‘affordability’ of food produce emphasised by Doaa Abdel Motaal requires further thought. Intensifying international competition by opening trade borders should theoretically result in a drop in the price of products, in this instance agricultural raw materials, thus granting better access to foodstuffs for consumers and poor populations in particular. Nevertheless, it needs to be remembered that in a large number of developing countries the poorest populations and hence those most affected by hunger are farmers – for whom the drop in prices would result above all in a drop in income. It is a vicious circle. And so as things stand the risk is that this policy will lead to the disappearance of millions of local farmers, especially in developing countries, who do not have the requisite levels of productivity to resist competition from modern farms in developed and emerging countries. But this competition will also affect developed countries, especially in Europe where a certain number of farmers already find themselves in a dramatic situation as the markets no longer enable them to earn a living. Hence a fair number of countries would lose their food security, and whilst it may be supposed that imported food produce would initially be cheaper, there is no guarantee that this would hold indefinitely. And without viable local agriculture no government would be in a position to react.
And so despite the attractive and justified points made about international trade, what is needed is to adopt balanced policies which take local imperatives into account. In short, to adapt theory to reality rather than
vice versa.
Momagri’s Editorial Board
1 Cf. momagri, ‘Food security and independence, a major challenge for humanity’ 5 April 2010
2 The threats tied to opening up unfettered markets, 8 March 2010