UNCTAD Trade and Environment Review 2013

United Nations Conference on Trade and Development Press Release

The UNCTAD report is quite lengthy, but for those interested in agricultural policy and economics, peruse the contents to find an area of interest. The individual lead articles and subsequent commentaries aren’t as formidable as the document in its entirety.

Press Release Highlights:

The Trade and Environment Report 2013 warns that continuing rural poverty, persistent hunger around the world, growing populations, and mounting environmental concerns must be treated as a collective crisis. It says that urgent and far-reaching action is needed before climate change begins to cause major disruptions to agriculture, especially in developing countries.

The report, subtitled Wake up before it is too late: Make agriculture truly sustainable now for food security in a changing climate, was released today. More than 60 international experts contributed to the report’s analysis of the topic. The study notes that the sheer scale at which production methods would have to be modified under these proposals would pose considerable challenges. In addition, it would be necessary to correct existing imbalances between where food is produced and where it is needed, to reduce the power asymmetries that exist in agricultural input and food-processing markets, and to adjust current trade rules for agriculture.

The report stresses that governments must find ways to factor in and reward farmers for currently unpaid public goods they provide – such as clean water, soil and landscape preservation, protection of biodiversity, and recreation.

Climate change will drastically impact on agriculture, the report forecasts, primarily in the developing regions with the highest future population growth, such as sub-Saharan Africa and South Asia. Much slower agricultural productivity growth in the future and fast-rising populations in the most vulnerable regions will almost certainly worsen current problems with hunger, drought, rising food prices, and access to land. These pressures may easily lead to massive migrations, and to international tensions and conflicts over food and resources such as soil and water.

The report emphasizes that a shift is necessary towards diverse production patterns that reflect the “multi-functionality” of agriculture and enhance closed nutrient cycles. Moreover, as the environmental costs of industrial agriculture are largely not accounted for, governments should act to ensure that more food is grown where it is needed. It recommends adjusting trade rules to encourage “as much regionalized/localized food production as possible; as much traded food as necessary.”

The past strategy of relying on international markets to meet staple food demand, while specializing in the production and export of “lucrative” cash crops, has recently failed to deliver its desired results, because it has relied on low staple food prices and no shortage of supply in international markets, conditions that have drastically changed since the turn of the century, the report notes. Also, globalization has encouraged high levels of specialization. This has resulted in an increasing scale of production of a smaller variety of crops, and has created enormous cost pressures, the report states. All this has aggravated the environmental crisis of agriculture and has reduced agricultural resilience.

The Institute for Agriculture and Trade Policy (ITAP) submitted commentary to the UNCTAD Review detailing the impact of “free trade” agreements on global agriculture:

From Dumping to Volatility: The Lessons of Trade Liberalization for Agriculture by Ben Lilliston and Karen Hansen-Kuhn

B. United States Agricultural Policy: Freedom to Fail

Working in tandem with efforts to further liberalize trade, United States farm policy has retreated from its traditional role in managing agricultural markets. Over the past half century, the country’s agricultural policy has shifted from a system of supply management that helped moderate prices for both farmers and consumers, to a system more dependent on so-called free-market forces. This transition culminated in the 1996 Farm Bill (known as Freedom to Farm), which removed the last vestiges of supply and price management (except for sugar), ostensibly to allow farmers to respond to market prices and export to new markets overseas. But as farmers expanded production with no supply management, agricultural commodity prices collapsed. The following decade of low prices – often below the cost of production – not only led to increased dumping on export markets, but also spurred the United States Congress to attempt to compensate for its policy failure by approving a series of emergency subsidy payments, and ultimately making those payments permanent in the 2002 Farm Bill.

During this decade of low prices and increased dumping, United States farm subsidy payments soared, peaking in 200- and 2001, and again in 2005. But since 2005, payments to domestic farmers have steadily dropped as commodity prices have risen. Higher commodity prices have not necessarily meant higher profit for farmers. Costs of inputs, including seeds and fertilizer, have also dramatically increased, reducing the potential profits of small and medium-sized farmers in the United States (Wise, 2011; USDA, 2010). The cost/price squeeze accelerated the trend in United States agriculture away from small and medium-sized farms to very large farms that were able to spread costs over larger land areas. these large farms were also the beneficiaries of about 75 per cent of commodity programme subsidies. As a result, over the past 25 years, the number of small, commercially viable farms (with sales of between $10,000 and $250,000) has fallen by 40 percent, and that of very large farms (with sales of more than $1 million) has increased by 243 per cent (Hoppe, MacDonald, and Korb, 2010). Also during this period, the percentage of the United States agricultural production controlled by the top four firms in a given sector has increased substantially. For example, in beef packing it rose from 72 per cent in 1990 to 83.5 per cent in 2005 (Hendrickson and Heffeman, 2007).

Something to think about when thinking about the Farm Bill recently passed by the House: Feeding the base, Starving the Poor.

There are no government plans or significant resources focused on helping agriculture in the United States to transition towards more climate-resliient practices and production.

It is no longer about whether subsidies are right or wrong, but rather how best to invest public money and establish regulatory oversight to create the right food system. A new set of values must be injected into policy-making that gives priority to food security, farmers’ livelihoods, environmental sustainability and resilience, and democratic decision-making.

More from IATP’s summaries of the review and their own contribution to it, an excerpt:

The report’s findings are in stark contrast to the accelerated push for new free trade agreements, including the Trans Pacific Partnership (TPP) and the U.S.-EU Trade and Investment Partnership (TTIP), which expand a long discredited model of economic development designed primarily to strengthen the hold of multinational corporate and financial firms on the global economy. Neither global climate talks nor other global food security forums reflect the urgency expressed in the UNCTAD report to transform agriculture.

In 2007, another important report out of the multilateral system, the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD), with contributions from experts from over 100 countries (and endorsed by nearly 60 countries), came to very similar conclusions. The IAASTD report concluded that “Business as Usual is Not an Option,” and the shift toward agroecological approaches was urgent and necessary for food security and climate resilience. Unfortunately, business as usual has largely continued. Maybe this new UNCTAD report will provide the tipping point for the policy transformation that must take place “before it’s too late.”