Agricultural Trade and Food Security
By Stephen Greenberg
THE DANGERS OF INTERNATIONAL TRADE
Food security defined
In 1996 the World Food Summit Food officially defined food security as existing when: “All people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life” 1 .
Accordingly, three pillars underpin food security:

food availability,

food access and

food utilisation 2 .
Food acces s and Amartya Sen’s exchange entitlements
Food access is similar to Amartya Sen’s ‘exchange entitlements’. Sen’s concept of
“exchange entitlements” simply points to the set of things a person is able to swap for what they own or the relationship between the assets a person has and what those assets can be exchanged for 3 . Sen puts forward that availability of food as well as the individual’s ability to exchange their assets (including labour power and the productive use of resources) for a “commodity bundle” that includes sufficient food must be considered when looking at food security.
What entitlement do individuals have to available food?
People may have entitlements through direct ownership of food or through the ability to exchange something else owned by the individual for food not directly produced by the individual. Food insecurity can occur “either because one has produced less food for own consumption, or because one can obtain less food through trading by exchanging one’s commodity (which may include money from selling labour power) for food” 4 .
Policy aimed at improving food security can thus look to either of the following:
 strengthening the individual’s assets or “endowments”, or

improving their exchange entitlements, or both.
This takes us beyond the truism that food security is based on a combination of an ability to produce food and an ability to buy food. It considers the relationship between the two more closely, and the relationship between access to income and the possibility of converting that into enough food.
1 FAO (1996) “World Food Summit Plan of Action”
2 Novib (2001) Towards food security: Novib’s position on food security and lessons learned . Novib,
The Hague, p.7.
3 Amartya Sen (1982) Poverty and Famines: An Essay on Entitlement and Deprivation. Oxford
University Press, Oxford, chap 1.
4 Sen, p.51

THE ROLE OF TRADE IN ENHANCING FOOD SECURITY
The definition of food security provided at the World Food Summit in 1996 describes the vision, but not necessarily the way to get there. Agricultural trade is seen by many as a key element in securing both availability of and access to food.
The Summit declared that “trade is a key element in achieving food security. We agree to pursue food trade and overall trade policies that will encourage our producers and consumers to utilise available resources in an economically sound and sustainable manner” 5 .
This paper focuses on the role of agricultural trade in enhancing or undermining food security. It puts forward that trade should be less important to other activities in building food security. But insofar as there will be trade in food, recommendations are made seeking to eliminate the negative effects and enhance any potential positive effects of trade on food security.
Global food consumption
Most food produced in the world is consumed in the country of production as seen with the following percentages:

Wheat is the largest export cereal crop, yet just 17% of total wheat production is traded internationally.

Beef is the largest exported animal crop with just 10% of total production being traded.

Soya beans, around which much of the global feed industry revolves, has an export share of 30% of total soya production 6 .
However, these figures indicate a sharp increase from two decades previously.
The theory of international trade
Theoretically, free international trade allows the supply of goods to where they are demanded at least cost. The theory of comparative advantage holds that a country with a comparative advantage in a certain product will benefit by exporting that product and importing those products in which it does not have a comparative advantage. International trade in food allows countries unable to produce for themselves to buy from other countries at the lowest cost.
It also allows countries to produce something of greater value for export, and use some of the money earned to import products for which their opportunity cost of production is greater. For example, it may be economically more advantageous to build a factory on a piece of land and export the products, than to use the same piece of land to produce food crops that could be imported for less than the income received from the manufactured goods.
The reality of international agricultural trade
5 FAO (1996) “Rome Declaration on World Food Security”, p.1
6 Peter Einarsson (2000) Agricultural trade policy as if food security and ecological sustainability mattered: Review and analysis of alternative proposals for the renegotiation of the WTO Agreement on
Agriculture . Global Study No 5. Forum Syd, Stockholm, p.10

Imports and exports of developed and developing countries
The theory of comparative advantage would thus predict that the industrialised countries should produce and export processed and manufactured goods. Raw materials including agricultural products would therefore be imported. However, industrialised countries are the major exporters of most traded agricultural products 7 .
Industrialised countries dominate exports of the following:

wheat

coarse grains

soybeans

meat and

dairy products 8 .
Industrial countries are also the major importers of agricultural products, with the exception of wheat and coarse grains.
Developing countries 9 therefore import staples and export other agricultural products.
Overall, industrialised countries dominate international trade in food, and they account for a greater percentage of exports than the theory of comparative advantage would predict. One reason for this is that most developed countries protect their agricultural industries. More detail on this will be presented later, in the discussion on the World Trade Organisation ( WTO) and the EU’s Common
Agricultural Policy (CAP).
International agricultural trade thus does not work as the theory predicts it should, and there are a number of reasons for this.

The ability to influence world market prices:
World prices should reflect the balance of world demand and supply.
However, there are a number of barriers to this. For some products, individual countries have such a large number of buyers or sellers that they can have a disproportionate effect on world market prices 10 . This is related to tendencies towards monopolisation or “cartelisation” of branches of agriculture. While consumers should benefit from cheaper imports, they may stand to lose in the long run if trade liberalisation gives more power to monopolies 11 .
This refers to the influence of corporate hegemony – the “unmentioned agenda” of the ownership, control and concentration of the food and agricultural industry 12 . This concentration of ownership and control leads to distortions in the structure and price mechanism of the world market. An important aspect of this is “planned scarcity” to stabilise food prices at the
7 Paul Brassley (1997) Agricultural Economics and the CAP: An Introduction. Blackwell Science,
Oxford, p.86.
8 Einarsson, p.11-12
9 Throughout the paper, ‘developing countries’ includes least developed countries.
10 Brassley, p.91
11 John Madeley (2000) Trade and hunger – an overview of case studies on the impact of trade liberalisation on food security . Global Study No 4. Forum Syd, Stockholm, p.14
12 ETC Group (2001) “Globalization, Inc. Concentration in Corporate Power: The Unmentioned
Agenda”. ETC Group Communique, No 71.

highest possible level over a prolonged period, thus allowing multinationals to accrue the largest profits possible 13 .

Subsidisation of production in industrial countries:
While it is assumed food commodities will be sold on world markets at the price of production, industrial countries subsidise production to undermine this.
The result of subsidised oversupply is to drag the world market price below the costs of even the most efficient producers. Government policies and resource transfers to producers gives industrialised countries the “competitive advantage”. This means that developing country producers are unable to compete regardless of their efficiency. Therefore, available resources to provide support to producers become critical in determining whether a country will be a net exporter or a net importer of agricultural products.

International trade in agriculture is problematic in terms of pricing.
Exports make up only a small proportion of most food and agricultural commodities, as discussed above. Countries usually produce first for their domestic markets and then export what is left. Thus, in years of shortage they will export less than normal, and in years of surplus they will export more than normal. If there is a variation of 5% from the norm year to year in a market where only 10% of the product is exported, this can result in a 50% increase or decrease in export volumes from year to year 14 .
Since food and agricultural products have a low price elasticity of demand 15 , prices will be highly volatile. This means that a small drop in the volume being traded can result in a rapid increase in the price, and that a small rise in volumes traded can result in a rapid drop in the price.
Causes of debt in developing countries
This volatility creates problems food importing countries, since they cannot be sure of a stable supply or how much the food will cost them. As noted earlier, developing countries are the main importers of wheat and coarse grain – staple crops.
In fact, one direct causes of the current debt of developing countries 16 is the conversion of the agricultural economies from self-sufficiency in staples to becoming food-importing countries. This conversion took place in the post World War 2 period combined with the wheat crisis in the early 1970s. In turn, the indebtedness has led to structural adjustment and underdevelopment.
13 Susan George (1977) How the Other Half Dies: The Real Reasons for World Hunger . Penguin,
Harmondsworth, p.139.
14 Brassley, p.92
15 A low price elasticity of demand means that, while there is an inverse relationship between price and demand (the cheaper a product is, the more likely people will be to buy it), the movement in demand does not move as rapidly as the opposite movement in price. This is the case for food and agricultural products because people have to eat regardless of the cost of food. Likewise, once people have enough food to eat, they are not likely to buy much more even if the price is very low.
16 See Harriet Friedmann (1994) “Distance and Durability: Shaky Foundations of the World Food
Economy”, in P. McMicheal (ed.) The Global Restructuring of Agro-Food Systems . Cornell University,
Ithaca.

The theory of free trade
Free trade is based on the principle of supply and demand. Accordingly, a demand for a commodity is apparently best met through the mechanism of the free market not controlled by government intervention.
Effective demand
However, the demand itself is always qualified when dealing with the market, since the market only responds to “effective demand”, i.e. the ability to pay for the commodity at prevailing prices. This ‘effective demand’ excludes most of the world’s population that lacks a “market-based entitlement” and is unable to purchase food as a commodity.
Indeed, the market system is more likely to remove food from areas where the needs for it are greatest, since “effective demand” comes from those able to pay for the food, and not those unable to pay.
17 Therefore, using current economic mechanisms, trade fails to distribute food to where it is really needed. Since the market is based on ownership rights, legal exchanges and so on, “the law stands between food availability and food entitlement”.
18
From a production point of view, theoretical comparative advantage and incentives for higher production are fairly meaningless when the conditions for increased production are not present, and the resources necessary for production are inaccessible.
The reality of free trade
International trade in food may end up only benefiting those with access to productive resources at scale, and those who are in the market to purchase food. Therefore, trade liberalisation may – and does – result in greater power to larger producers including multinational corporations, at the expense of small and resource-poor producers and consumers.
Food security requires the sustainable use of productive resources, because unsustainable use means that production will decline in the long term. From an ecological perspective, sustainable agriculture rests on the preservation of the productive capacity of natural systems, and the minimisation of non-renewable resources.
However, there is a growing contradiction between trade and sustainable resource use. It is increasingly difficult to meet the requirements of sustainable agriculture the further physically removed food production and consumption are from one another.
This is because to retain high production levels with minimal use of non-renewable resources, agriculture must be based on optimal use of locally available resources.
Large-scale production based on regional specialisation and long distance transport undermines this possibility 19 .
There are many consequences of international trade in food as it happens in pr actice. It has an influence on both exports and imports. Since “effective demand”
17 See Sen, pp.160-62
18 Sen, p.166
19 Einarsson, p.7.

dictates what should be produced, production is skewed towards the requirements of those with resources.
Simply put, producers in developing countries are more likely to produce cash crops for export to lucrative markets in industrialised countries (or even domestically) than produce staples. Government subsidisation of producers in the industrialised countries reduces the world price. This has a negative effect on producers in the countries without subsidies, since developing countries have to compete against subsidised products. At the same time, subsidised exports from industrialised countries results in the dumping of surpluses in developing countries, mainly to the long-term detriment of local primary as well as secondary (processing) production.
The relationship between food security and international agricultural trade
Many questions therefore need to be asked concerning the relationship between food security and international agricultural trade:

What are the underlying reasons for trading in food?

Is it to generate foreign exchange, or to ensure that all people have enough food to eat?

Who leads the agenda and for what motives?
As it stands at present, trade policy in every country generally reflects commercial interests 20 . It is not countries that trade, but companies, and this suggests that trade negotiations are carried out by governments on behalf of particular corporations.
Overall, a distinction needs to be made between food security concerns and agricultural export concerns. The “right to export” that underpins trade agreements is not compatible with food security 21 .
In recent times, there has been an increasing alignment of international agreements.
It has become impossible for international negotiations to be held without reference to other discussions and agreements made elsewhere by the same parties. The
World Summit on Sustainable Development (WSSD) is one in a line of upcoming meetings of governments to deal with issues of global scope.
The power of the WTO, and its position as the only enforceable agreement, has established trade as the over-riding priority for international agreements. The role of trade in enhancing or undermining sustainable agriculture, and hence food security, will therefore have to be dealt with at the WSSD.
Group for Environmental Monitoring’s position
Group for Environmental Monitoring’s (GEM) position on engaging with international fora is to “strive for equity and environmental justice by contributing to the formulation and implementation of integrated local, national and international policy.
There is a philosophy to use resource economics tools to influence the national and global policy within the existing “conventional wisdom” paradigm while at the same time attempting to “shift that paradigm”. From this perspective, the issue is how to use positions within the formal framework to strengthen the ability and space of people to develop alternatives parallel to or outside the formal framework. This can
20 Nicola Borregaard & Mark Halle (2001) “Striking a Balance for Trade and Sustainable
Development”, WSSD Opinion, May 2001 (IIED), p.3
21 Einarsson, p.34

be achieved not only by creating legal space, but also by allowing people to begin to set up practical alternatives that will eventually supersede the top-down and corporate driven globalisation of the present.
With this approach in mind, key issues relating to the global processes will be spelled out, followed by the South African government’s positions in these processes and a consideration of the potential impacts on food security of these positions.
Recommendations on positions in the global processes, with specific regard to agricultural trade, will then be provided.
This will be followed by a consideration of how these recommended positions may contribute to creating the necessary alignment with forces seeking to shift the
“conventional paradigm”.
INTERNATIONAL PROCESSES REGARDING TRADE AND FOOD SECURITY
World Trade Organisation negotiations on the Agreement on Agriculture
The WTO was formed in 1995 as a result of the Uruguay Round of negotiations of the General Agreement on Trade and Tariffs (GATT). Although GATT was first signed in 1947, agriculture was first included in 1987 at the start of the Uruguay
Round. The negotiations on agriculture were extremely problematic, given that the
US, EU and Japan were unable to agree. Finally a private deal between the US and
EU was tabled in 1992.
Agreement favours the United States
It is widely accepted that the agreement favoured the US in particular, and was based on the domestic reforms the US and EU were already carrying out as well as the opening up of third country markets. The US government, representing the interests of its corporations, assessed that the loose and flexible GATT arrangements should be replaced by a far more powerful and wide-ranging WTO.
US decides World Trade Organisation to replace GATT arrangement
Developing country delegations were extremely weak in the negotiating round, and most felt they had no choice but to sign. Most were driven by the fear of being further isolated from world trade if they did not sign, and also by the promise of a rulesbased system that would protect weaker countries from the big trading powers 22 . This remains one of the key arguments for the need to launch a new round, as will be shown later.
One most important result of the Uruguay Round was the loss of trade policy as a tool for development. The import substitution path, followed by most industrialised countries at one time or another in their history, has been removed by the agreement. Trade Related Investment Measures (TRIMs) undermine the ability of individual states to apply local content and other policies regarding the development of productive forces, as well as labour and environmental standards.
23 Trade Related
Intellectual Property Rights (TRIPs) prevent technological diffusion and reduces incentives for local innovation.
24
22 Walden Bello (2000) “Why Reform of the WTO is the Wrong Agenda” (mimeo), p.5-6
23 Dot Keet (2000) Alternatives to the WTO regime: a Discussion Paper on Tactics and Strategies .
AIDC, Cape Town, p.24
24 Bello, p.6

In the same way, the agricultural agreement has resulted in the loss of trade policy as a tool for developing the agricultural sector. Essentially, the Agreement on
Agriculture (AoA) aimed to reduce the use of border protection, internal support and export subsidy measures to favour domestic production. It required creating tariffs and reducing all protection measures, minimum market access and the removal of internal support from production volumes.
25
Clause on “special and differential treatment”
An important part of the Uruguay Round negotiations is the “special and differential treatment” (SDT) clause. This clause also applied to the AoA.
Negotiated during earlier GATT rounds, this clause was included as a trade-off for developing countries accepting many unfavourable Uruguay Round agreements.
26
SDT theoretically takes into account the special needs of developing countries, and allows for differential obligations based on these needs.
The reality of “special and differential treatment”
The reality of SDT is that it has not been carried out as agreed and is largely a “best endeavour” clause. In practice, SDTs:

do not have the force of possible sanctions behind them.

do not carry the same weight as other WTO commitments concerning reconciling different commitments entered into under WTO agreements 27 .

SDT rights are therefore often lesser to other WTO principles and thereby rendered fairly meaningless.
The principle of SDT has been reduced to a temporary measure to allow weaker countries to “catch up’ and fulfil the necessary WTO commitments.
28 Part of current negotiations is the status of SDT clauses. While some suggest that it should only enter into discussions as a ‘cross-cutting’ issue where applicable, others argue that it should be treated as a separate area that must be fully negotiated on a par with the other main issues.
29
South Africa is classified as a developed country
The basis of distinguishing developing from developed countries for the purposes of
SDT is Gross Domestic Product (GDP). This has meant, for example, that South
Africa is classified as developed, along with the US and EU. This is regardless of the massive income inequalities internally which place the majority of the population in
‘underdeveloped” status.
The result is that South Africa does not have access to SDT rights. While SDT in agriculture allowed for differential obligations in tariff reductions for developing and
25 Einarsson, p.14
26 Keet, p.16
27 European Research Office (2001) “EU Positions on WTO Agreement on Agriculture Negotiations, update Oct 2001”, p.4.
28 Keet, p.16
29 WTO (4 Oct 2001) “WTO Agriculture Negotiations: The issues, and where we are now”. Briefing document, Information and Media Relations Division, WTO Secretariat, p.12.

industrialised countries, the latter manipulated the agreement to actually increase their levels of support to agricultural producers.
For OECD countries, overall subsidisation to agriculture rose from $182 billion at the birth of the WTO in 1995 to $362 billion in 1998.
30 They were able to do this partly as the result of loopholes they managed to negotiate in the Uruguay Round.
Government subsidies
A standard measure of government support is the Producer Subsidy Equivalent
(PSE), which measures the total support to agricultural producers as a result of agricultural policy. In the Uruguay Round of GATT, a different measure, called the
Aggregate Measure of Support (AMS), was used to identify support to producers.
The AMS excludes transfers that do not affect producer prices or production levels 31 .
It therefore refers only to those support measures that are “market-distorting”.
This has allowed industrialised countries in particular to continue providing support that are considered to be non-, or only minimally, trade distorting. These measures form the basis of the ‘green’ and ‘blue’ boxes in the Agreement on Agriculture (see
Box 1).
By partially linking green and blue box subsidies to environmental improvements, both the EU and US have managed to split civil society opposition to the subsidy regime. In both the EU and the US, leading environmental organisations have expressed their support for a shift in subsidies to those supporting environmentally sound practices. Two examples follow:

In the US, environmental and wildlife groups are providing support for the
“Lugar Bill” that aims to phase out crop support programmes and put twice as much money as allowed by US law into support for farm conservation programmes.
32

In the EU, the World Wildlife Fund (WWF) argues that, although steps should be taken to ensure that environmental measures do not serve as covert protectionism, national expenditure on environmental measures should not be limited.
33
While in principle these approaches need not be faulted, the shifting of subsidies still has negative influences on developing country producers. Despite the fact that such direct payment subsidies are not directly linked to production, their sheer size does ultimately distort the production regime, since they shift the supply curve to the left.
In other words, they encourage farmers to continue producing even if the prices they receive for their produce are below the costs of production, because they can use the government subsidies to make up the difference. The result is a greater volume of indirectly subsidised commodities on the world market, and a continuation of artificially depressed prices.
This point was implicitly recognised by the EU’s Agriculture Commissioner Fischler in
August 2001 when he criticised the US’s domestic support system. Fischler asserted
30 Bello, p.10
31 Brassley, p.89-90
32 AgriBusiness Examiner, No 132 , 8 Nov 2001
33 Richard Perkins (2001) Sustainable development should be the objective for a new Agreement on
Agriculture . WWF, Gland, p.3

that the US’s farm relief aid “inevitably impacted on production and hence prices in both the US and international markets” 34 . In turn, this discourages production in those countries absorbing the exports.
The “green box” subsidy
In order to qualify for the “green box”, a subsidy must not distort trade, or at most cause minimal distortion. These subsidies have to be government-funded (not by charging consumers higher prices) and must not involve price support. They tend to be programmes not directed at particular products, and include direct income supports for farm ers not related to (are “decoupled” from) current production levels or prices. “Green box” subsidies are therefore allowed without limits, provided they comply with relevant criteria. They also include environmental protection and regional development programmes.
The “blue box” subsidy
The “blue box” is an exemption from the general rule that all subsidies linked to production must be reduced or kept within defined minimal (“ de minimis” ) levels.
It covers payments directly linked to acreage or animal numbers, but under schemes, which also limit production, by imposing production quotas or requiring farmers to set aside part of their land. Countries using these subsidies — and there are only a handful — say they distort trade less than alternative amber box subsidies. At the moment, the blue box is a permanent provision of the agreement.
Source: Information & Media Relations Division, WTO Secretariat, 4 Oct 2001
As indicated in Box 1, blue box subsidies are linked to production, but are exempt from reductions. This only served to benefit the US and EU who were relying on such support during the Uruguay Round negotiations. However, subsequent reforms in the
US mean that only the EU is using the blue box to any substantial degree.
The Peace clause
Related to these exemptions is the so-called Peace Clause, that says that until the end of 2003 green and blue box measures and export subsidies cannot be challenged in the WTO dispute settlement body, even though they violate the basic principles of the agreement.
35 One reason for the rush to conclude further negotiations is that blue box measures will be open to dispute when the Peace
Clause expires.
Signatories to the AoA agreed to further negotiations on reforms as part of the agreement, and this is legally binding. Therefore, negotiations on agriculture started in January 2000 despite the collapse of broader negotiations in Seattle in 1999. A number of articles in the Agreement are only valid for the implementation period (5
34 Fischler, EU DG Agriculture Press Statement, 17 August 2001
35 Einarsson, p.14

years), including special safeguard provisions and the Peace Clause.
36 Until March
2001, member countries made submissions on the content for further negotiations.
Submissions and proposals on export competition, domestic support, market access, non-trade concerns and development were made by 121 countries made. Relevant aspects of the EU and South African proposals will be spelled out in the text that follows.
Common Agricultural Policy (CAP) reform in the European Union
Reform of the Common Agricultural Policy (CAP) in the EU provides a good example of the way industrialised countries have used planned domestic reforms as the basis of their negotiating positions in the WTO AoA. While in principle this cannot be faulted, they have been presented as compromises and used by the industrialised countries to squeeze concessions from developing countries, particularly on market access and trade liberalisation.
The CAP was established in 1958 to encourage increases in agricultural productivity in many European countries, specifically to ensure domestic food security. Market forces determined the prices received by producers, but these were controlled within certain upper and lower limits to encourage stability.
If they rose above the upper limit, traders would import supplies from outside the EU.
If they fell below the lower limit, traders would sell into intervention stores where the government provided minimum prices, or exported the supplies with the aid of export refunds.
37 Variable import levies were used, adjusted weekly at a rate just enough to keep out imports from entering at a price below the minimum guaranteed price. Food was sold to consumers at the higher, protected price.
38 Budget costs only occurred when production increased above the level of domestic consumption.
The government needed to build up buffer stocks or to provide export subsidies to sell surpluses at below cost outside the EU. Initially, the import levies generally covered the administrative costs and export subsidies.
39
This system worked until the mid-1980s when there was a growing contradiction between structural surpluses, a fairly static domestic demand and the maintenance of guaranteed minimum prices for producers on the domestic market.
The result was a troubling overproduction, high domestic prices for consumers and rapidly expanding export subsidies to remove surpluses. This created a number of problems for the EU: 40

By the mid-1980s, 60% of the EU budget was going to agriculture, and of this
80% was going to larger farmers;

There was growing opposition from food exporting countries to what was seen as unfair competition;

Environmentalists had grown in power and were concerned about the ecological unsustainability of the existing CAP system.
36 Kato Lambrechts (Christian Aid, UK) (2001) “The WTO Agreement on Agriculture: Implications for
South Africa”, p.6. Paper presented to CRLS conference on International Agricultural Trade and Rural
Livelihoods, Somerset West, 9-11 October 2001
37 Brassley, p.129
38 Einarsson, p.24
39 Einarsson, p.24
40 Brassley, p.130

At about this time, the US pushed for agriculture to be included in GATT negotiations.
The US wanted reduced import tariffs and export subsidies, with direct payments to producers. This system – which was adopted in the Uruguay Round, as seen previously – allowed for more predictability in EU budgeting. But it also meant that the government had to carry some costs previously passed onto the consumer.
41
This was the basis of the 1992 CAP reforms.
By the time the WTO was formed, the reforms were in progress. The EU could claim that it had met its obligations under the AoA. As discussed above, the formulation of the blue and green boxes, in bilateral negotiations between the US and EU, was sold to the other countries in the GATT negotiations as the only possible solution to the impasse. It allowed the EU carry out the CAP reforms in its own chosen way. Since the EU’s direct payments fall into the blue box, they are thus exempt from reductions.
The shift from price support to direct payments aimed to reduce the internal price of agricultural products in the EU without undermining farm incomes. Lower prices have resulted in an increase in domestic consumption, a narrowing of the gap between EU prices and world prices and a reduction of surpluses.
42 According to the European
Research Office, the long-term aim of the ongoing CAP reforms is to:

reduce the real value of direct aid, so as to

encourage more efficient cropping patterns and improved competitiveness of basic agricultural products, and

gradually move to non-product specific direct aid payments to farmers.
43
Since internal EU prices will have dropped, the market will decline as a key export destination for agricultural products from other countries, including developing countries. The increased competitiveness of EU agricultural producers will also mean there will be an increase of exports from the EU (in both raw agricultural products and processed goods), and hence greater competition for other producers.
This programme can only be carried out if the EU is allowed to continue providing payments to its producers while restructuring the agricultural sector. The AoA allows the EU to do this through the blue box and peace clause, while at the same time constraining other countries from taking up this option.
In its current negotiating position, the EU is prepared to support a gradual reduction in farm support on condition that green and blue boxes remain. It also wants the indefinite continuation of the peace clause.
44 This is seen as essential to the shift from price support to direct farming aid that is the cornerstone of CAP reform.
45 In other words, the EU believes it should be allowed to continue providing massive levels of direct payments to farmers.
EU benefits from “special and differential treatment”
41 Einarsson, p.24
42 ERO & Oxfam UK (2001) “The Future of the Common Agricultural Policy: Implications for
Developing Countries”. ERO, Brussels, p.4
43 ERO & Oxfam UK, p.7
44 European Commission DG VI Agriculture (9 Oct 2000) “Note to the attention of the 133 Committee:
Outline of the EC Comprehensive Negotiating Proposal”
45 European Research Office (2000) “The EU Position on the WTO Agreement on Agriculture”. ERO,
Brussels, p.1

Behind this protectionist barrier, The EU is restructuring its agricultural sector so that when it brings the protective barriers down, its domestic producers will be able to compete internationally. This is a clear case of “special and differential treatment”, in favour of one of the richest and most industrialised trading blocs in the world.
The other pillar of the negotiating positions of the US and EU is to push for greater trade liberalisation and market access for their own products into other countries.
Both the US and the EU are major agricultural export economies, and they have used the negotiations to open markets for these exports, whether subsidised or unsubsidised. Built in to a new round of agricultural negotiations is further reform in a market-oriented trading system, 46 and this will be used by the industrialised countries to further establish their “right to export” while protecting domestic producers as far as possible.
SOUTH AFRICAN GOVERNMENT POSITIONS REGARDING FOOD SECURITY
AND AGRICULTURAL TRADE
Two parts of the South African government’s policies need to be considered:

Firstly we need to look at what the government is calling for in the international negotiations,
 Secondly the government’s policy and practice regarding agriculture and food security inside the country needs attention.
The WTO: Cairns Group and African Group positions
The South African government favours launching new WTO negotiations, believing these will benefit the agricultural negotiations. The government wants to concentrate on:

domestic support (including special treatment for developing countries)

export subsidies and market access.
South Africa has submitted four proposals as part of the Cairns Group, and one proposal as part of the African Group.
The African group’s proposal 47 calls for an operational and binding SDT. On market access, the group calls for “substantial reductions” in tariff escalation (for value added products) and tariff peaks. There are also proposals for the maintenance of current levels of bound rates (i.e. no reductions) on key staples and special measures to be taken to assist small-scale exporters to take advantage of quotas in industrialised country markets. It calls for a review of the Special Safeguard clause, and the adoption of an agricultural safeguard for developing countries as part of SDT.
On export competition, the African group calls for the substantial and progressive reduction of export subsidies by developed countries, with a view to their eventual elimination. It also seeks to strengthen the right already accorded to developing countries to subsidise the costs of marketing, internal transport and freight charges on export shipments.
46 WTO (1994) Agreement on Agriculture, Article 20
47 WTO Committee on Agriculture “WTO African Group: Joint Proposal on the Negotiations on
Agriculture”. G/AG/NG/W/142 , 23 March 2001

On domestic support, the African group proposes “the expansion of the scope of
S&D treatment in the area of domestic support [to] allow developing countries to employ policy measures which target the viability of small-scale and subsistence farmers, rural poverty alleviation, food security, as well as product diversificati on”.
It also calls for developed countries to substantially reduce trade and productiondistorting measures. It also appeals for green box criteria to be tightened to reduce distorting effects.
The basis of these proposals is the recognition that developed countries have far greater ability to provide domestic support than developing countries. The African group also proposes that food aid is in fully grant form, and that a mechanism be established to ensure that food aid does not disrupt domestic production in recipient countries.
In its proposal on export competition, 48 the Cairns Group argues that “price and quality are the only fair means of export competition and it is unfair to support exports through subsidised prices or subsidised terms of payment ”. It therefore calls for an end to all forms of export subsidy in agriculture, with a substantial reduction in the first year of implementation in outlays and volume of subsidies as a “down payment”.
It calls for SDT for developing countries, but still with the aim of eliminating their export subsidies, although over a longer period.
On domestic support, 49 the Cairns Group proposes major reductions ultimately leading to developed countries eliminating blue box supports, with SDT for developing countries. SDT provisions relating to domestic support should build on existing provisions, including enhanced green box provisions for developing countries which would address their specific concerns regarding food security, rural development and poverty eradication.
On market access, 50 the Cairns Group states its conviction that “better market access conditions in a world free of trade-distorting subsidies is essential for the development of developing countries”. This is because high levels of export and trade-disto rting subsidies “undermine efforts to become more competitive and export oriented and reduces the potential to gain from world trade”. Consequently, the
Cairns Group proposes “vastly improved market access opportunities for all agricultural and agrifood p roducts”. This includes cuts and reductions in tariffs, and their elimination where possible. The Group also proposes the elimination of access for developed countries to the special agricultural safeguard mechanism. Specific proposals are also made on tariff reductions and an expansion in the tariff quota volume for imports into developed countries. Significantly, the Cairns Group notes that access to markets is essential to stimulating economic growth to facilitate rural development and poverty elimination.
Underlying the proposals are a recognition that developing countries must be allowed to use the state to stimulate development, parallel with a belief that economic growth and trade is the key to the success of development, including food security. The importance of agricultural trade for food security, from this perspective, is the ability to use agricultural exports to generate foreign exchange for the country and to boost economic growth. Development programmes can be carried out from the increased revenue obtained.
48
WTO Committee on Agriculture, G/AG/NG/W/11, 16 June 2000
49
WTO Committee on Agriculture, G/AG/NG/W/35, 22 September 2000
50
WTO Committee on Agriculture, G/AG/NG/W/54, 10 November 2000

While there is some role for new entrants able to connect into the export market, virtually nothing is said about the simultaneous need to broaden the base of food producers inside South Africa. Little is said about the redistribution needed to achieve this. In the current framework, redistribution refers more to the wealth generated from growth (future wealth) rather than the redistribution of existing assets.
However, the withdrawal of the state from productive activity, and the concentration of existing assets in the hands of a wealthy minority suggests that even future growth is likely to benefit primarily those in control of existing assets.
Agriculture and food security in the New Africa Initiative
The New Africa Initiative (NAI) is a plan for sustainable growth and development in
Africa, with South Africa as one of the leading supporters it. Despite the constant changes of the NAI — the latest development being the New Partnership for African
Development (Nepad) — the core features of the plan are unlikely to change much.
Underpinning the plan is a commitment to good governance and market-oriented economies. As part of a “global partnership”, according to the NAI, Africa is offering a rich biodiversity and strong natural resource base and the potential for investment and new markets.
51 A “first priority” is to ease private investors’ concerns regarding
“insecurity of property rights, regulatory weakness and markets” (Part V, para 54.7 iii). Indeed, the newly formed African Unio n is said to be willing to “censure deviation from the norm” in political and economic matters (Part III, para 45) – and this can be taken to mean any deviation from liberal democracy and neo-liberal economic policy.
It is claimed that structural adjustment programmes (SAPs) in Africa were needed and correct, but did not take into account social development (Part II, para 24). A connection is therefore not made between the economic decline referred to in the plan and the SAPs.
The NAI states that: “the advantages of an effectively managed integration [into the global economy] present the best prospects for future economic prosperity and poverty reduction” (Part II, para 28).
At the same time, it recognises that there is nothing inherent in the process of globalisation that leads to a reduction of inequality and poverty, and that greater integration has led to the marginalisation of those countries unable to compete effectively.
The conclusion that is drawn is that African countries need to be able to compete better at a global level. Underlying Africa’s inability to compete effectively is the outflow of resources and unfavourable terms of trade (Part II, para 34). New markets inside Africa created by the meeting of basic needs are seen as the potential engine of global economic growth (Part II, para 38). This is closely aligned with the attempt to bring basic services into the realm of the market, a core feature of neo-liberalism.
Agriculture is one of five priority areas in the NAI, as is the promotion of:
“Diversification of production and exports, with a focus on market access for African exports to industrialised countries” (Part VI, para 48b).
Irrigation development, infrastructure, research and extension services and increased donor aid are identified as key considerations for improving agricultural productivity
51 NAI, Part VI, paras 56-60. ( www.mapstrategy.com
)

(Part IV, para 53.9). Since the natural resource base is seen as the most important of
Africa’s advantages, value-adding in agro-processing for export is one of the key strategies identified. Improved access to industrialised country markets for products in which Africa is competitive is seen as crucial for development in Africa (Part VI, para 53.11).
An indication of the broad orientation to the role of agriculture is evident from agricult ure being under the heading of “diversification of products and exports” in the action plan.
Food security and productivity increases with a focus on small scale and women farmers are amongst the objectives. In this regard, actions include security of water supply for agriculture (with a concentration on irrigation), the promotion of necessary land reform (although this remains undefined) and improved access to credit (Part V, para 54.5 i).
This is the only reference to redistribution of resources, and nothing is explicit about broadening the production base to include support to those outside of the market.
The NAI offers “broad-based support for the WTO” and calls for SDT for African countries in the WTO. A related objective is to ensure that preferential trade agreements already reached are not undermined by “further multilateral liberalisation” (Part V, para 54.6).
It does not go so far as to call for a new round of negotiations, since this is not the position of most African governments. The role of multinationals in the international agenda is not referred to at all.
Indeed, the only reference to multinationals is the need for governments to form a partnership with pharmaceutical multinationals to “secure access to existing drugs”
(Part VI, para 69). In this, as in the document as a whole, the initiative fundamentally accepts the current paradigm of globalisation as legitimate. It merely seeks to identify ways in which African countries can participate in the existing paradigm. It does not challenge the neo-liberal agenda that entrenches and increases inequalities.
FOOD SECURITY AND NATIONAL LAND AND AGRICULTURAL POLICY
From the National Department of Agriculture’s point of view the vision for agriculture is:

to enhance market access for South African products;

to encourage of the effective participation of old and new entrants into the sector;

to promote the increase in the supply of highly competitive products into domestic and international markets; and

to sustain the integration of the sector into the global economy in order to encourage internal and external competition 52 .
Own production
— an important pillar of sustainable livelihoods
The most recent statement of official agricultural policy was set out in a 1998 discussion document 53 . The document acknowledges the importance of improving household level food security as an objective of agricultural policy.
52 Gerda van Dijk (Director: International Trade, NDA) (2001) “Trade and Agriculture: Government’s
Vision and Negotiating Positions”, p.7. Paper presented to CRLS conference on International
Agricultural Trade and Rural Livelihoods, Somerset West, 9-11 October 2001

However, it claims that the contribution “own production” can make is limited by lack of availability of land and access to water 54 . Instead of pressing for rapid redistribution and improved access to these productive resources, the policy says that employment opportunities are the most critical issue for improving rural livelihoods and food security.
This statement shows that of the two pillars of food security – own production and income to buy food – government policy favours the latter. While it is true that access to sufficient income is a very important component in securing a livelihood, it may not always be adequate for purposes of household food security. Sen argues that “a fixed money wage may offer no security at all in a situation of sharply varying food prices (even when employment is guaranteed). In contrast, a share of the food output does have some security advantage in te rms of exchange entitlement” 55 .
As will be shown below, one of the influences of trade liberalisation has been price instability, and this suggests that increasing own production (and hence direct access to food outside of the market) is an important pillar of sustainable livelihoods and household food security.
Government policy, according to the document, must also take into account the
“problems faced by black farmers in general and resource-poor farmers in particular”.
It also considers that growth in agriculture will come about as the result of a more diversified farm sector. There is recognition of market failure, particularly with regard to small-scale farmers, and therefore the government is prepared in principle, to consider “selective support to encourage new investments in agriculture among land reform beneficiaries and other small scale producers”.
Nevertheless, the character of this support would focus on research, infrastructure development, food safety and other similar supports not directly related to production or distribution 56 . To achieve overall food security, the government approach is to:
“promote comparative advantage and the efficient use of productive resources, encouraging the development of regional and international trading links, for exports as well as imports, as required” 57 .
The objectives of agricultural trade policy are to:
”Enhance and maintain market access for agricultural products and ensure that the sector contributes its full potential to the export growth target as pired to in GEAR” 58 .
The department also points to the need for a policy conducive to stable and affordable supplies of agricultural commodities for the domestic market 59 .
Marketing of Agricultural Products Act of 1996
Probably the most important piece of legislation from a commercial agricultural point of view is the Marketing of Agricultural Products Act of 1996. This Act concludes the
53 Ministry for Agriculture and Land Affairs (1998) Agricultural Policy in South Africa: A discussion document . NDA, Pretoria.
54 MALA, “Agricultural Policy”, p.8
55 Sen, p.5
56 MALA, “Agricultural Policy”, p.10
57 MALA, “Agricultural Policy”, p.8-9
58 MALA, “Agricultural Policy”, p.19
59 MALA, “Agricultural Policy”, p.26

process of deregulation of the South African agricultural sector, initiated under apartheid, with the main objectives being:

to increase market access for all participants;

to promote efficiency in the marketing of agricultural products;

to optimise export earnings from agricultural products; and

to enhance the viability of the agricultural sector.
From these it is clear that the approach to agriculture is to enhance competitiveness and efficiency in the sector, with a strong element of global integration.
Government’s draft position paper on agriculture and food security
The government’s draft position paper on agriculture and food security, released in
September 2001, details these issues further 60 . It outlines a number of key objectives, and a few suggestions of the actions that may be pursued in trying to achieve the objectives.
The objectives are set out in broad terms and, unsurprisingly, focus on improved agricultural productivity and sustainable natural resource management. The paper sets out four conditions that must be met to achieve food security:

economic growth must resume

policies to slow population growth and rural-to-urban migration must be put in place

resources should be allocated for rural infrastructure, agricultural research and the provision of credit and assistance to farmers

methods need to be developed to manage natural resources and prevent environmental degradation
Issues absent from the paper
Many assumptions underpin the draft paper, and many crucial issues have been left out altogether. It is assumed that competitiveness and comparative advantage in the agricultural sector are sufficient to solve the problems of food insecurity. This is evident throughout the paper.
Of the issues absent are first those concerning redistribution of resources. Economic growth is assumed in itself to lead to improved food security for all households. But without a fair distribution of resources, this need not be the case, and is likely to lead to uneven results.
The paper asserts that agricultural growth can benefit the rural population (and hence food security) directly by providing opportunities for work, and indirectly through
“expenditure linkages with non-farm productive activities in the rural areas”. However, the direct benefit neglects to consider the quality of the livelihood that is created on the basis of agricultural employment.
The poverty and malnourishment of many farm workers and their families suggests that formal agricultural employment does not necessarily improve food security a great deal. Likewise, the supposed benefits of the multiplier effect in the broader rural
60 National Department of Agriculture (2001) “Draft position paper on agriculture and food security”, for presentation at WSSD SADC Prepcom, 3-5 September 2001

economy do not take into account the ownership of both agricultural and nonagricultural businesses in the hands of a rural elite. Most of the population is thus excluded from the benefits of ripple effects on the rural economy more broadly.
The “provision of assistance to farmers” is not more clearly defined. Given the government’s most recent agricultural and land reform policies it can be assumed that the bulk of assistance will go to a commercially oriented farming class rather than the broad base of subsistence producers who at present produce small amounts of food for themselves and their households.
This is reinforced by the stated aim of integrating resource poor livestock producers into commercial livestock marketing and processing. As one element of a broader strategy to diversify the base of producers in South Africa this is a positive contribution. However, there is little mention of expanding the base of producers.
This is most apparent with the omission of any mention of greater access to productive resources for existing or new food producers.
The draft paper recommends that the sustainability of small farming is improved, but it says nothing about the expansion of small farming to a larger base. Greater access to productive resources (land, water for productive use and genetic resources) is one important element in a food security strategy, yet this is not mentioned at all. The approach is premised on commercialising agriculture where it is not already commercialised.
The government’s position on agriculture focuses on market access, and the diversification of production for export. The paper explicitly mentions abolition of export subsidies, lowering of tariffs and reduction of tariff escalation, and a
“substantial reduction” of domestic support by developed countries to their agricultural sectors. It also mentions the transfer of knowledge and technology through foreign direct investment, although it does not specify the preferred content or purpose of the knowledge and technology to be transferred.
The pa per makes a case for “rule making in favour of developing countries” in the
WTO combined with the reduction of domestic support in developed countries. It is argued that trade rules must allow flexibility in developing countries to address their real devel opment needs, although neither these “real needs” nor the mechanisms whereby they will be achieved are spelt out.
The overall approach by government, therefore, is to ensure the global integration of
South African agriculture into the world economy by allowing the market to operate to encourage international competitiveness, and to remove ‘inefficient’ producers.
Agriculture is also considered to play an important role in generating foreign exchange, and therefore the global agricultural markets and the prices on these markets, should dictate what is locally produced. Constant growth is seen as the requirement for redistribution to take place, and this redistribution is thus premised on sharing the dividends of future growth rather than a redistribution of existing assets.
Redistribution is thus dependent on economic growth. Since prospects for growth in
South Africa are dependent on global growth if this strategy is followed, it ties South
Africa into strategies aimed to generate international growth. Under the current neoliberal framework, it is argued that global growth will best be achieved by increasing trade. Greater trade is therefore prioritised above other imperatives, since it is assumed that it will ultimately lead to poverty reduction and improved standards of living through the “trickling down” of wealth.

The practical application of the policy
So much for the policy. Now, what about the practice? With regard to own production, land reform and agricultural support are the most important parts of domestic policy. The post-apartheid land reform policy is in the process of being overhauled, with an important aspect of the new direction being captured in the Land
Redistribution for Agricultural Development (LRAD) sub-programme 61 .
The sub-programme focuses on land reform for agricultural use. Without going into too much detail, LRAD offers a sliding grant to land reform beneficiaries depending on how much capital they put in for themselves. The more a potential beneficiary puts in, the higher the contribution made by the government (although the lower the share the government grant will be in the total project cost). Therefore, while the programme clearly includes support for food security/subsistence agriculture, it favours support for commercial agricultural production. Amongst the objectives of
LRAD are to improve nutrition and incomes of the rural poor who want to farm on any scale and to stimulate growth from agriculture 62 . The programme states that at least one-third of land transferred through the programme must go to women.
The realities of land reform
Despite the rhetoric of land reform, the actual provision of resources to ensure that it takes place has not been forthcoming from government. In 1999/2000, the
Department of Land Affairs (DLA) spent a total of just 0,3% of all government expenditure on all its activities (of which land reform is only one part) 63 .
Decline in spending
Actual spending on land reform has declined from R358.27m in 1998/99 to
R103.68m in 2000/01. This is coupled with a decrease in the budgeted allocations for land redistribution and tenure reform in the Medium Term Expenditure Framework
(MTEF) from a projected R421.86m in 2001/02 to R339.48m in 2003/04. The main reduction is made in the allocations for land reform grants 64 . This suggests that, not only is there no plan to expand the land reform programme in the medium term, the programme is envisaged to shrink.
The total agricultural budget constitutes approximately 2% of the national noninterest budget (i.e. the budget remaining after interest repayments have been deducted), and is set to remain at this level in the medium term 65 . In terms of the
WTO Agreement, the South African government had to reduce its AMS by 20% based on levels of support in 1986-88.
Yet current levels of support are well below what was required. It can thus be said that “the principal constraints on government subsidies for the agricultural sector do not directly originate from the Agreement on Agriculture provisions, but rather from
61 Ministry for Agriculture and Land Affairs (2001) “Land Redistribution for Agricultural
Development: A Sub-Programme of the Land Redistribution Programme” (land.pwv.gov.za/ redistribution/lrad.htm)
62 LRAD, p.3
63 David Mayson (2001) “A critical analysis of the 2001/2002 budget for land reform in South Africa”, draft. SPP, Cape Town, p.3
64 All figures from Mayson, pp.4-5
65 Dept of Finance (2001) “2001 Medium Term Budget Policy Statement” (www.finance.gov.za/ documents/mtbps/2001/)

self-imposed government reform policies and its macroeconomic reform programme” 66 .
While it is difficult to work out the precise amount of the agricultural budget being used for small farmer development, this is also unlikely to have any major effect on the current situation. At a provincial level, there is little planning to improve the infrastructure or personnel requirements that LRAD requires to be successfully implemented 67 . The low budget allocations for the programme suggest that wealthier, commercial farmers eligible for the programme will access by far the greatest portion of the budget.
This is because they will receive larger grants and will also better be able to meet the technical requirements for accessing the grants (for example, business plans) than resource-poor farmers 68 . Establishing a target of only one third of land to women also works against support for small scale, food security-type projects, since more than
70% of existing subsistence producers are women 69 .
The programme will resultantly favour support to male commercial producers.
Therefore, there is little likelihood that LRAD will make any significant inroads into creating a broader base of producers and redistributing existing assets.
Regarding infrastructure development, while this is a priority both in the NAI and in
South African domestic policy, again the practice does not match the rhetoric. In
South Africa, the most recent example is that just 29,2% of the provincial capital expenditure budget for 2001-02 had been spent by September 2001 70 . This is on top of rollovers and returns to the national treasury of unspent budgets from previous years. Health, education and agriculture budgets in the provinces remain unspent and are returned to the national fiscus and represented as surpluses. One main reason for this failure to deliver is the lack of capacity that is a direct result of the gutting of the public sector through downsizing and retrenchments over the past few years.
A neo-liberal policy of reduction in state employment is therefore in direct opposition to improvements of public services and infrastructure development. The same applies to extension, training and research services in agriculture.
Likely consequences of the AoA for food security in South Africa
The influence of the current AoA can be measured in three ways 71 :

by the ability of the government to protect and promote the domestic agricultural sector;

by the ability of exporters to access the markets of developed countries;

by the influence of current multilateral subsidy disciplines in the AoA on South
African agriculture.
66 Lambrechts, p.17-18
67 Mayson, pp.5-9
68 See Stephen Greenberg (2000) “Land Reform Overhaul”, Land & Rural Digest No 13 , pp.21-23
69 Statistics SA and NDA (2000) An overview of the agricultural sector in South Africa . (draft report), p.57
70 Xolani Xundu, “Provinces’ spending is lagging”, Business Day , 2 November 2001, p.12
71 Lambrechts, p.1

It is important to recognise that the domestic agricultural sector is dualistic, with a core of white commercial farmers and a large periphery of semi-commercial and subsistence black farmers.
Without going into the history, it appears that the beneficiaries of an export oriented agricultural strategy will be the commercial farmers who historically have had high levels of state support as well as decades to build up their connections to international markets.
The Department of Agriculture itself recognises that “international trade opportunities created by globalisation… sometimes benefit mostly large multinational companies who have the means to pay the initial costs of utilizing the intern ational market” 72 .
The promotion of the domestic agricultural sector could well mean the consolidation of inequality, if redistribution of current assets is not a significant element of that process.
The impact of structural adjustment programmes (SAPs) in Africa cannot be separated from the impact of the AoA, since both are based on trade liberalisation, export orientation and state deregulation. This is very much in line with South Africa’s own approach to agriculture, as detailed above. Although the effects have been uneven on a national scale in many countries, the evidence shows that the impacts on the poor have been overwhelmingly negative 73 .
One of the most important of the impacts of trade liberalisation has been the dumping of cheap imports onto developing country markets. The imports are cheap not because of greater efficiency in production, but because producers are highly subsidised by their governments, as indicated in the discussion on CAP reform and the WTO above. This subsidisation has the effect of reducing prices below the cost of production of even the most efficient producers, since it encourages overproduction in the countries where there is subsidisation and allows the subsidised producers to sell at below the cost of production. While in the short term this may result in a lower food price, it undermines domestic production and thereby leads to greater poverty and food insecurity in the medium to long term.
Cheap imports also do not resolve the issue of access to food where there is no effective demand in the market i.e. from those who do not have the purchasing power and are most food insecure. In South Africa, the immediate losers are commercial farmers who are not subsidised by the government but who have to compete with subsidised goods from other countries. But cheap imports also inhibit the widening of the base of producers, especially when new entrants would be aiming to produce for the market.
The closure of marketing boards in Africa has had a negative effect on many smaller exporters and producers who are unable to guarantee sufficient volumes in advance to attract price premiums. The result is a shift from high input to low input smallholder agriculture, caused by the dissolution of parastatal systems and trade liberalisation 74 .
Inputs have increased in price, thus effectively becoming unavailable, while regulative, R&D and quality control functions have disappeared. Lack of guarantees for credit repayment to private input suppliers, and significant increases in input
72 Van Dijk, p.4.
73 Unless otherwise noted, the following points are taken from case studies detailed in Madeley (2000)
74 Phil Raikes & Peter Gibbon (2000) “‘Globalisation’ and African Export Agriculture”, Journal of
Peasant Studies Vol 27 No 2 , p.72

prices as a result of subsidy removal and devaluation, has meant that input use for cash crops has declined, with consequent declines in quality and hence revenues 75 .
“It appears to be the case”, say Shepherd and Farolfi of the UN Food and Agriculture
Organisatio n, “that the potential implications of major changes to the marketing system were not considered in advance, and are only now, at far too late a stage, really being considered” 76 .
Trade liberalisation has meant more food imports in developing countries – partly because of cost and partly because of legal requirements for greater access under the WTO and conditions applied to SAP loans. Related to this is greater priority on export crops that has resulted in a decline in the local production of food, in both quantity and variety, with negative effects on local and household food security.
An export orientation has also not necessarily resulted in farmers receiving higher prices for their crops. In Africa, case studies indicate the opposite, partly because of the power of traders in relation to the primary producers. The link between cash crop production for exports and increased use of agro-chemicals is well documented, and has increased soil degradation and accelerated the loss of biodiversity. These have been made worse by increases in mono-cropping and extractive forms of agricultural production. Trade liberalisation also increases the pressure of developing countries to export their natural resources 77 .
Marginalisation of small producers
An export orientation has resulted in the concentration of farms and the marginalisation of small producers. Vertical integration or “tight vertical co-ordination” has been encouraged, excluding of smallholders, because of lack of access to information and production inputs, economy of scale effects and high transaction costs 78 . The result is that resources are concentrated in high potential areas, and on farmers with more of their own resources – who tend to be male, with a resulting acceleration in spatial, social and gender differentiation 79 .
An increase in landlessness has also been noted. There has been a deepening differentiation between producers, because only those able to integrate production and exporting can guarantee the volume, quality and reliability required while at the same time supplying post harvesting services and engaging in product innovation 80 .
Transnational corporations have grown in power and increased control over resources as a result of trade liberalisation in agriculture. Private sector involvement in trading has also increased, with traders using their bargaining power to buy at low prices from farmers. At the same time this has not resulted in an increase in employment in trading.
The effect of trade liberalisation on women
75 Andrew Shepherd & Stefano Farolfi (1999) Export crop liberalization in Africa: A review . FAO
Agricultural Services Bulletin No 135. FAO, Rome, p.29 & 58
76 Shepherd & Farolfi, p.63
77 Borregaard & Halle, p.4
78 Shepherd & Farolfi, p.66
79 Henry Bernstein (1990) “Agricultural ‘Modernisation’ and the Era of Structural Adjustment:
Observations on Sub-Saharan Africa”, Journal of Peasant Studies, Vol 18 No 1 , p.9
80 Raikes & Gibbon, p.75

In most developing countries, women have felt the influence of liberalisation most sharply. Since women produce most food for own consumption, they have been disproportionately affected by the elimination of subsidies, the drying up of credit and the surge in cheap imports.
John Madeley estimates that up to 30 million jobs have been lost as a result of trade liberalisation in developing countries. This has had a number of ripple effects, including an increase in urban migration mostly by men, which in turn has put a greater burden on women remaining in rural areas.
It is apparent that trade liberalisation has made it increasingly difficult for small scale and resource poor farmers in Africa and elsewhere in the developing world to produce food. The result is greater food insecurity and increased dependence on imports for poorer sections of the population. In South Africa, trade liberalisation will certainly make it more difficult to build a wider base of food producers, especially when this is coupled with a reduction of government support to agricultural producers.
Leaving aside the issue of whether it’s possible or not for the moment, if international agreements are negotiated in favour of developing countries, they still merely create the breathing space to begin constructing alternative systems of production internally.
This means that domestic agricultural policy needs to be oriented to establishing and strengthening a broad and diverse base of local producers. This requires increased access to productive resources, and enhanced control over production decisions by local populations, especially those engaged in food production.
As indicated previously, national policy is more oriented to creating a commercial class of farmers combined with an export orientation in agri culture. As such, the ‘right to export’ takes precedence over food sovereignty.
Recommendations on negotiating positions to enhance food security
In order to meet GEM’s approach of influencing policy within the conventional paradigm while at the same time trying to shift that paradigm, policy recommendations should serve to strengthen the ability to shift the broader paradigm. The limitation of the issues over which the WTO can negotiate, and the inclusion of policies favourable to resource-poor food producers, can perform such a function.
If trade is to be used as a tool to enhance food security, it must contribute to increased equity among and within countries, and must lead to sustainable use of the environment and its resources 81 . Whether this is possible through negotiations or through altering the global balance of forces, or what precise combination of the two, is a tactical question for popular organisations to decide upon. The following recommendations, if adopted, may create space for resource poor farmers in the developing countries to begin to build up their own productive base and ability to produce food independently.

A significant reduction of domestic levels of support and an elimination of all forms of export subsidies to agricultural producers in industrialised countries is required. This is not an opposition to farmer support as a principle, but asks the question of which farmers are being supported, why and who bears the costs?
The “blue box” and the peace clause that goes with it should be abolished. These
81 Borregaard & Halle, p.2

have served as special treatment for the EU, allowing it to protect producers while it restructures its agricultural sector to become more competitive.
 The use of “green box” subsidies and the extent to which these uses have prejudiced producers in the developing countries needs to be analysed and resolved in favour of developing countries.

Developing countries, and countries with a significant resource-poor agricultural producer sector, should be given an unlimited opportunity to protect and support small scale and resource poor farmers. Rather than adopting the position of exemptions for domestic support in developing countries to create and strengthen the base of agricultural producers for a period, the position should be one of permanent exemption for support for food security and domestic food production.
In other words, domestic food and fibre production should be excluded from any agreements reached in the WTO.

Insofar as negotiations on agriculture continue, there should be permanent special and differential treatment in trade related issues for developing countries
– or any country with a significant resource-poor farming population — with SDT defined on the basis of agreed upon social indicators and not only on GDP 82 . The details of this should be negotiated as a separate issue in its own right. Existing
SDT provisions should be converted from “best endeavour” clauses into binding and operational elements of the agreement.

Increased market access in industrialised economies for agricultural products
(including value-added products) from developing countries should be included in any new agreement. This could include preferential access and the elimination of tariff barriers for specific categories of producers (small scale and resource poor).

The South African government needs to meet its commitments to its own population. In this regard, budgets and resources should be shifted to implement the rapid transfer of productive resources to those who have been dispossessed through colonialism and apartheid, and to providing meaningful support to resource poor food producers.
It is one thing to appeal for the theoretical right of developing country governments to support food production for local food security purposes. However, those same governments need to put this support into practice. In the South African context, a reliance on market mechanisms for both land reform and agricultural support to resource-poor farmers has meant that neither of these has yet been successful.
It is therefore recommended that the government increase the resources going to land reform and agricultural support, and develop a policy that allows for the rapid redistribution of existing resources and a programme of support to food and fibre producers for the domestic market.
This domestic support should build on the existing production base of subsistence and resource-poor producers first and foremost, and also expand the base of such producers. This means a policy able to increase the assets or entitlements of individuals – with particular emphasis on women – and to ensure that the exchange of these entitlements allows for a “commodity bundle” that includes sufficient food.
This may need further formal transfers from government as one element of
82 Borregaard & Halle, p.2

entitlements, for example through vastly increasing the value of social grants from the state.
AGRICULTURE AND THE WORLD TRADE ORGANSATION
Small farmers rally for the removal of agriculture
There is a strong move within global civil society to remove agriculture from the WTO negotiations. This is a position being adopted by mass-based peasant and small farmer movements around the globe, spearheaded by Via Campesina.
No new round of talks means the present imbalance remains
Those in favour of continuing with the multilateral agreements, including the South
African government, make the case for opening a new round of WTO negotiations to reach agreements on agriculture. The logic of the argument is as follows:
Multilateral agreements establish a set of rules that all countries must follow. The
WTO allows developing countries an opportunity to contribute to forming the rules.
To steer clear of a new round of negotiations on agriculture will mean that the current unacceptable system will remain in place.
Without such a set of agreed upon rules, the stronger countries will be able to do as they wish without being held to account – that might is right. Trade Minister Alec
Erwin was recently quoted as saying that if a new round was not launched,
“the world’s trading nations, it is feared, will walk away and start doing their own deals. The probability is that we would move back to what we had in GATT with a complex fabric of overlaying agreements. You would get a lot of complexity – the world would be chaos after th at” 83 . The logic continues that even if there is an imbalance of power inside the WTO, more space exists inside it than would exist outside to shape the rules of international trade.
The image presented by the global hegemonic powers is indeed a mesmerising one: an image of a possible world where all of humanity is inter-connected, with the free choice to select their method of interaction. It is an image of the “lions lying with the lambs”, where all negotiated agreements are mutually beneficial. It is an image of a world where gradually, in an orderly and rational way, all global problems are overcome through the wise stewardship of those with the knowledge and experience in these matters.
However, failing to win support through a positive approach, veiled threats and arguments that play on the insecurity of economically and politically weaker nations begin to appear. Those in favour of trade negotiations in the WTO work on the fear that failure to accept the necessity of new negotiations will result in isolation or outsider status.
Otherwise, the law of the jungle applies, with the powerful doing as they wish with no protection for the weaker. Interestingly enough, it is always the powerful themselves that have stoked this fear 84 . Industrialised countries have moved onto the offensive since September 11. They are using the instability generated by those events to push for a new round and attempt to draw a line between those who are for a new round
83 Alec Erwin, quoted in John Fraser “SA fears Afghan war could hurt trade round”, Business Day , 31
Oct 2001, p.2.
84 Bello, p.13

and against ”terrorist” instability, and those who are against a new round and, by implication, in favour of “terrorism” 85 .
The four points of Singapore
The industrialised countries assert that any further subsidy and domestic support reductions to agriculture must be premised on a new round of negotiations on other issues in the WTO. These issues have been referred to as the “four points of
Singapore” (the venue of the last Ministerial meeting where agreement was reached) and aim to negotiate on:

financial investment

competition among businesses

trade liberalization and

public enterprises.
The draft ministerial declaration for the Doha meeting in November 2001 includes these issues despite opposition from African and other developing countries, and also downplays developing country proposals for correcting the imbalances of the
Uruguay Round 86 . It indicates little change from the controlling nature of previous negotiations.
It is likely that certain agricultural reforms will be made the US and EU, since high levels of state support to the agricultural sectors in their economies are creating growing political and financial problems internally. But as far as possible, they will push for these to be carried out at the necessary pace for them to restructure their agricultural industries without causing a fundamental crisis.
This means retaining as much support as possible, and phasing it out when this suits them. The neo-liberal ideology underpinning industrialised country positions on a new round of trade negotiations has come under threat from a number of quarters in recent years, and there is a perceived attempt to bulldoze an agreement while it’s still possible.
The drive for alternative globalisation: Challenging the existing paradigm
Amongst progressive organisations in civil society, there is a strong disagreement with the aims of a new round of trade negotiations. Given the history and outcomes of previous rounds, where inequality and marginalisation for the majority have increased, there is a strong drive for an alternative form of globalisation where democratic, bottom-up and participatory agreements are reached between people around the world.
As it stands, the “consensus’ system of decision-making in the WTO operates to prevent democratic decisions based on ‘one country-one vote” or population size criteria. It was deliberately constructed to ensure that the Quad – the US, Canada, the EU and Japan — must agree before major decisions can be taken 87 . This calls
85 Porto Alegre 2002 Site Update Newsletter, No 13, Oct 30, 2001. This is also evident in the widening of the definition of ‘terrorism’, internationally as well as in South Africa, to include those who seek to destabilise or disrupt the smooth functioning of government. See, for example, Simphiwe Xako, Tamar
Kahn and SAPA “UN urges SA to finalise law”, Business Day , 20 Sept 2001, p.2
86 Tettah Hormeku (2001) “Text a slap in the face for African countries”, Business Day , 8 Nov 2001, p.11
87 Bello, p.11

into question the argument in favour of a fair rules-based approach, which also fails to acknowledge that unilateralism by the powerful continues despite the rules, with the strongest countries ignoring the rules when these do not favour them 88 .
The fundamental imbalance of power, and the shaping of the rules by the most powerful countries cannot be changed within the existing framework.
Far from the return of the law of the jungle if a new round is not forthcoming, a number of democratically developed alternatives exist. Regarding trade, and without underplaying the problems of GATT itself, one of the basic proposals is to revert to the GATT approach of facilitating rather than forcing international trade 89 .
Another proposal is to use other international agreements, that have been arrived at more inclusively, to deal with specific areas (such as en vironment, women’s rights or food security) on their own terms. Trade, as it relates to each of these areas, would then be discussed as a subordinate component of these areas rather than as the overarching imperative 90 . Since trade under capitalism is fundamentally based on competition between nations and peoples, it should not serve as the overarching basis for international agreements. Rather, agreements that stress co-operation and mutual interest should take precedence 91 .
More broadly, alternatives are perceived to be separate from the corporate-driven agenda and processes of the WTO and other existing multilateral agreements. The alternative is necessarily based on a decentralisation of decision-making, and the recognition of the need to maintain and enrich diversity. It also recognises the multiplicity of knowledges that cannot simply be reduced to one knowledge system perceived to be the most economically efficient.
It is important to note from these demands that the opposition is not so much against international negotiations and agreements in principle. Rather, they are against the inclusion of some key aspects in trade negotiations, and in favour of an overarching framework for any international conventions or agreements based on democracy and justice 92 . It is a misrepresentation to consider the current global civil society movement as “anti-globalisation”. Rather it is opposed to the particular form of corporate-led globalisation based on neo-liberal hegemony.
The aim of a significant section of civil society is to radically limit the power of the
WTO, reducing it “to simply another institution in a pluralistic world trading system with multiple systems of governance” 93 . This aligns with the approaches of diversity, decentralisation and democratisatio n. Others see the “chaos” of the previous system apparently so feared by Minister Erwin as an indicator of diversity and necessary flexibility in global governance.
This opens up a whole arena of discussion and practice on alternative political forms.
Con sequently, one of the five pillars of the “Right to Food” campaign, led by the Food
International Agrarian Network (FIAN), is “a broader debate on the need to develop
88 Keet, p.55
89 Keet, p.33
90 Keet, p.34
91 Keet, p.46
92 Keet, p.38-9
93 Bello, p.3

an understanding of democracy which includes economic and social rights” 94 . This indicates that the issue of food security cannot be separated from the broader issues of democracy and political power.
The five points of Attac
In response to the move by industrialised country governments to push for a new round at the WTO, economists linked to the global anti-corporate movement called the Association for the Taxation of Financial Transactions for the Aid of Citizens
(Attac) put out an appeal to the WTO to define five points, in place of the points of
Singapore 95 :

maintenance and development of public services in essential sectors like water, education, health;

definition of limits on genetically modified organisms, which have not been proven safe to health and the environment;

an end to patents on plants, animals, micro-organisms and genes;

proclamation of water and genetic patrimony as common assets of mankind;

modification of intellectual rights on drugs to favour poor countries
From this alternative list we can see that food, health and the environment are key concerns. All of these are interlinked when considering food security, since access to productive resources, the nutritional value of food and the ability of people to physically absorb the nutrients provided by the food need to be considered holistically when talking about food security. There are reams of suggestions from around the world supporting these and other basic demands. Another international network of organisations argues that “WTO Agreements must not apply to issues critical to human or planetary welfare, such as food and water, basic social services, health and safety, and animal protection”.
96 The fear is that including these social rights and needs in trade agreements opens the space for further corporate control over the basic necessities of life.
The argument from resource poor producers around the world to remove agriculture from the WTO negotiations is primarily based on the reality of increasing control of corporations over food production and trade. This control consequently undermines local production both by cheaper imports of poor quality subsidised food and the reorientation of production away from meeting local food needs and towards cash crops for export 97 . At the core of this alternative position is the concept of food sovereignty, which has been defined quite si mply as “the supremacy of food production and consumption over trade and economic policies”.
98
The basic demands, therefore, are:

No new round of trade negotiations, and a proper review of the influence of the previous agreements;
94 FIAN (2001) “The Right to Adequate Food in the Process of the World Food Summit Follow up”,
Policy Paper. FIAN is a network of farmer organisations from around the world, representing family farmers and peasants from countries in both the North and the South.
95 Porto Alegre 2002 Site Update Newsletter, No 13, Oct 30, 2001
96 Africa Trade Network et al . (2000) “‘WTO – Shrink or Sink!’ – The Turn Around Agenda”.
97 Kilusang Magbubukid ng Pilipinas Pamalakaya (KMP – Peasant Movement of the Phillipines),
“Peasants Demand: ‘End Global Hunger! WTO Out of Agriculture!’”, Press Release August 28, 2001
98 Action Group on Erosion, Technology and Concentration, quoted in Agri-Business Examiner No
131, 26 Oct 2001


The protection of basic social rights and needs, and their permanent exclusion from trade negotiations;

The exclusion of production sectors relating to basic needs from the realm of trade negotiations, including food and fibre production;

The prioritisation of international agreements dealing with environment, health, development, human rights, safety, indigenous people’s rights, food security, women’s rights, workers’ rights and animal welfare over trade agreements;

Use of the precautionary principle when introducing new processes and agreements;

The raising of special and differential treatment in favour of developing countries to a principle for all agreements;

The deconcentration, decentralisation and democratisation of institutional power and decision-making.