Security Issues - WTO and Agricultural Co-ops in Asia (1998)
(Source: Co-op Dialogue, Vol. 8, No. 2, July-Sept, 1998, pp.1-5)
01. “Essentially, food security, means that all people at all times have access to safe and nutritious food to maintain a healthy and active life. This definition implies three dimensions to food security, namely, availability, access and stability and various levels of aggregation i.e., global, national, household and individual. It thus becomes obvious that achievement of universal food security at the individual level, which implies achievement at the more aggregate levels, is constrained or facilitated by a combination of social, political and economic conditions.
And, it is clear that the relevance of these conditions to food security at one level of aggregation is not restricted to the state of conditions at the same level of aggregation. That is, for example, the ability to achieve food security in one country can be affected by conditions economic, political and social etc.) in other countries; as the world economy becomes more integrated it becomes more difficult for a country to insulate itself from the decisions and actions of others.
At the same time, this same integration offers the potential for spreading the effects of production shortfalls in one country over the world and thus greatly reducing the negative impact on food security in any one country.
02. “Because they affect agriculture, global, national, and local shifts in national political and economic relations and structures have implications for food security. First, how food is to be produced and distributed are fundamental concerns of national economies and contribute to ongoing policy debates about how to restructure economic and political systems.” (Food and Agriculture Organisation of the UN WFS-96/Tech.5).
03. Food security is also affected by population growth, poverty, deforestation, environmental degradation, over-fishing, refugees, climatic changes, concentrated resource ownership and/or management, and disease. Nations increasingly understand that most of these problems cannot be resolved by one country or a group; they transcend national borders, spreading instability and suffering throughout the region and around the world. Population growth is probably the single most important global trend influencing food security.
04. Food security has now become an important issue which is before the international community. Well over 800 million people are food insecure; almost 40,000 people die every day due to malnutrition. Food security is a fundamental prerequisite for maintaining the international order and socio-economic stability. Stable food availability at the national, regional and household level is a cornerstone of nutritional well-being. Strengthening food production base is necessary for improving nutrition in most low-income and food-deficit countries. In addition, agriculture, including fisheries and forestry and related rural industries, provides income for the landless and their families, who are often among the most nutritionally vulnerable groups. Some of the most urgent problems to be addressed today are: the need to increase the productivity and living standards of small-scale producers and the disadvantaged; the need to maintain returns to producers that will enable them to adopt productivity-enhancing and labour-optimising technologies and the need to give adequate support to agriculture within development budgets which are already strained.
Food Production and Marketing - Some Problem Areas
05. In developing countries of this Region, crops and animal production, fisheries and forestry are direct sources of food and provide income with which to buy food. Virtually all communities in the world however remote, rely on markets to some degree. Therefore, the terms of trade, the efficiency of marketing systems, the existence of fair prices for producers and consumers, the status of a household as net food buyers or sellers and the assets the family owns, including the amount and quality of land available to it, are all important determinants of nutritional status. Landless labourers and their families, who obtain food with wages which are often irregular and uncertain, are among those most threatened by food security.
In countries where necessary land reforms have not been implemented the tenants on small farms form another highly vulnerable group. In urban areas where people purchase most of their food, the poor are vulnerable to food price fluctuations, and to changes in employment conditions and in the level of their earnings.
06. In the year 2000 for an expected population of 3,144 million in the Asia-Pacific Region, the demand for food-grains is estimated at 830 million tons. As against this, the anticipated production is 811 million tons leaving a deficit of 19 million tons. In 2010 the population of the developing countries of Asia is expected to be around 3,729 million.
The demand for food-grains is placed at 959 million tons and the production is estimated at 927 million tons leaving a gap of 32 million tons. Even though the Region is expected to generate enough supply of food-gains to meet the demand without significant imports by 2010, it is estimated that still over 200 million people will suffer from chronic under-nutrition.
07. The slow down in agricultural output is due to several factors. Some of these are: Limited availability of new farmland; reduced water resources; increased consumption of food-grains due to increase in population; depletion of world food stocks; pressure on food consumption among developing countries; adverse effects of environmental changes; lack of appropriate technologies in crop protection and inadequate post-harvest systems and facilities; unfair trading practices in international markets, and unfavourable international practices and regulations.
World food production is also known to have declined due to unfavourable lending practices adopted by international lending institutions which often resort to arm-twisting of governments to adopt certain methods and strategies as a precondition to qualify for loans.
Some other factors which also influence food security are: shifting or unclear political decisions of various governments especially in developing countries; inadequate agricultural research and facilities; lack of access to farm technology, improved seeds and other farm inputs; economic crisis; political instability; lack of incentives and proper planning for self-help and voluntary groups among farmers; shortage of farming population due to old age or due to lack of interest among the younger generation in agriculture; inadequate farm extension and guidance services; persisting poverty in developing countries; and slow progress in the implementation of land reform programmes.
World Trade Organisation-WTO
08. The agreement establishing the World Trading Organisation (WTO) came into force on January 01 1995.
In many ways, the WTO is different from its predecessor, the General Agreement on Trade and Tariff (GATT). WTO members have to accept all obligations of GATT and other relevant agreements. The agreements constituting the WTO are multilateral in character and involve commitments for the entire membership.
The WTO also incorporates the mechanisms of consultations, safeguards, fair trading, disputes settlement and enforcement of settlements. Countries cannot veto judgements against them. It has also been found that until now most of the settlements reached under the banner of the WTO have gone in favour of developing countries. But still the powerful partners have been having their way. It is also assumed that the WTO agreements would serve the interests of developing countries.
Agriculture has been the main interest of the developing countries, and, therefore, in the near future trading in agricultural products will come under a sharper focus. It rests with the developing countries to watch their interests more carefully while entering into international trading agreements. It is also likely that questions like subsidies and patents will continue to persist and politicians might try to confuse the issue to gain some short-time advantages.
09. The World Trade Organisation (WTO) provides a permanent forum for consolidation and negotiation on an ever-broadening agenda affecting global trade and investment in goods and services. The stakes in international trade are high. It has been estimated that by 2000 world trade in merchandise goods and commercial services will exceed US$ 8 trillion - or $2 trillion more than in 1995. By then the WTO may have more than 130 member-countries, accounting for about 95% of the world trade.
10. The general impression among many in developing countries is that the WTO is a power block with the leadership of the United States, European Union and G-8 Group. It is feared that the developed countries would withdraw the existing preferential treatment and would expect greater access to markets in developing countries. Many developing countries hoped that the WTO would provide them with greater security in their negotiations and disputes, but the developed countries often resorted to unilateral action to settle disputes, thus leaving the developing countries to fend for themselves.
World Trade Organisation and Farmers’ Organisations
11. All countries in the world today are trying hard to gain access to market, some to bring advantages to their farmers and some others to feed their populations. It is expected that through the globalisation of trade in food-grains process there will be a fair distribution of food.
Farmers’ organisations including agricultural co-operatives consider that dumping of imported food-grains would result into certain difficulties for the local farmers - imported commodities would be cheaper and would consequently usher disaster to the local products.
Some countries feel that globalisation would result into spread of farm technology and contribute to higher production of food in other countries. From the foregoing discussions, the following main points have emerged:
01. Co-operative institutions and farmers’ organisations have been deeply involved in the chain of food production, its processing and marketing, and their activities relating directly to the consumers as well as the producers;
02. The means of production, quality of farm inputs, quantum of farm credit, provision of education, training and extension, have not only been traditional but also grossly inadequate and antiquated;
03. The level of farm technology in crop protection (through crop insurance, farm extension etc.) and post-harvest (through application of appropriate technology etc.) needs extensive improvement to be self-sufficient in food production;
04. Although the governments have promoted a variety of farmers’ organisations (co-operatives, farmers’ organisations, farmer companies) their continuity of existence and sense of purpose has not been sustained enough. Such institutions are the closest to the farmer-producers and can play an important role in growing more food for the people. Instead, they appear to have been used for achieving short-term political advantages (loan waivers etc.);
05. There is a virtual absence of ‘agro-processing for value-addition’ in the agricultural co-operative sector, which invariably has attracted private enterprises of all types (national and multi-national) to enter the food processing sector;
06. Almost all farmers’ organisations and agricultural co-operatives have been unanimous on the following points:
6.1 Establishment of infrastructure for enhanced food production has to be done by the government. Farmers, as individuals or their respective organisations, do not have the required capability and capacity. This infrastructure includes: farm roads, irrigation, grading, warehousing, shipment, electricity etc. Joint ventures are, however, a good possibility;
6.2 With the opening of the market, as a part of WTO agricultural agreements, local farm production and local farmers would suffer if adequate safety-nets are not installed. In the absence of such safeguards, the developing countries might consequently turn into dumping grounds for the surplus products of developed countries at cheaper prices resulting into the collapse of domestic farming structures and farmers suffering losses;
6.3 In order to effectively participate in the “consensus” exercise, farmers of developing countries need adequate and realistic empowerment through effectiveness and efficiency of their own organisations duly supported by the respective governments. There cannot be any ‘consensus’ among the unequal;
6.4 For developing countries in the Asian Region international agricultural trade agreements are not on a priority agenda. Increase in domestic agricultural production to cater to the home requirements, its processing and marketing within the Region is considered to be on high priority to sustain the interest of farmers in agriculture and to avoid possible social and political conflicts;
6.5 Farmers’ organisations should have greater access to farm input supplies in sufficient quantities and at reasonable prices (e.g., fertilisers, farm chemicals, improved seeds) through their local increased manufacture. A certain amount of subsidies are essential (developed countries also give incentives, concessions and provide subsidies to their farmers).
07. Food security cannot be ensured through imports alone. Self-sufficiency in domestic production is a security for itself.
There is an urgent need for the international organisations, e.g., the WTO and the FAO, and the national governments to earnestly review the implications of free trade in agricultural products and incorporate necessary changes in their policies and programmes to the advantage of food-importing and developing countries.
08. The Region has a positive potential to produce food for others provided
there are firm requests and agreements which are transparent, just and
Such arrangements should improve local technology, expand agricultural research opportunities, farm extension and develop professionalism in agriculture.
09. There is a strong need to initiate an intimate and sustained dialogue between the respective governments and a variety of farmers’ organisations on one hand, and among the farmers’ organisations themselves on the other, to discuss and understand the implications of WTO agricultural trade negotiations with a view to overcome the anticipated problems which might arise out of such negotiations.
10. Countries which are prone to food deficiency either due to shortage of land but having farm experience and advanced farm technology (e.g., Japan and Korea), increased population or other reasons should discuss food security issues with other countries in the Region (e.g., India, the Philippines, Thailand and Sri Lanka) which have potentials to increase food production but possessing limited means.
Challenges before Farmers’ Organisations
12. The present day agricultural co-operatives in the Region, particularly in the developing countries, are now faced with several challenges vis-a-vis the multinational companies.
13. The membership of a majority of these co-operatives consists of small, marginal and resource-poor farmers. They have no bargaining power as individual units. Their sole objective is to produce more and market more to meet their consumption and production requirements. They cannot invest in high-tech farming. In this endeavour they expect: timely supply of fertilisers, farm chemicals, farm extension, farm credit, irrigation facilities and marketing intelligence.
In increasing farm production chemical fertiliser alone is a contributory factor up to 40-50%. India happens to be self-sufficient in chemical fertiliser to the extent of 80%, and is the third largest producer and user after the United States and China. Farm production level in India is, however, among the lowest in the world. The Indian Farmers’ Fertiliser Co-op Limited (IFFCO) holds 13% market share, and co-operatives as distributors of the material is around 31% as compared with other outlets. Primary agricultural co-operatives in the country satisfy almost 50-60% of farm credit requirements, although farm extension services are grossly inadequate. In other countries of the Region chemical fertiliser production rests in the hands of either the State or private enterprises. Agricultural co-operatives have generally been used as distribution points.
14. The challenges faced by agricultural co-operatives in developing countries in the face of globalisation and open market systems can be classified as under:
- Need to improve professional management skills of those who provide advisory or guidance services to co-operatives and of the managers and some key members of primary level co-operatives;
- Establishment of a marketing intelligence system within the Co-operative Movement to enable the farmer-producers follow market trends and plan their production and marketing strategies;
- Assured supply of farm inputs (quality seeds, chemical fertiliser, farm chemicals, credit and extension services);
- Establishment of business federations through co-operative clusters to undertake primary agro-processing, marketing of local products and to cover financial requirements;
- Be aware of quality controls and standardisation of farm products to be able to compete effectively in the open market;
- Participate in efforts to conserve natural resources, positively influencing farm production and rural employment.
- Need for providing information to the farmers and farmers’ organisation on the implications of restructuring, globalisation and WTO agreements.
15. Food security issues concern all - governments, farmers’ organisations including agricultural co-ops, business enterprises and the individual farmers. It is a national issue as much as international. Governments are obliged to review and redefine their current food security-related policies and arrangements. Farmers’ organisations or governments alone cannot take decisions without the support and collaboration of individual farmers. Producers need to be educated and explained the importance of falling in line with the international trends in trading in food-grains without compromising on national interests and security.
It becomes, therefore, the duty of the national or secondary federations of farmers or of the agricultural co-ops to explain to their constituents what are the implications of WTO agreements on agriculture and how they could safeguard their own and national interests. In the era of globalisation, vigilance, quality, quantity and flow of information are of great importance. Any slippage would spell disaster for farmers and farming.
* Dr. Daman Prakash is the Director of Agri-coops Management Training Project of the ICA Regional Office for Asia and the Pacific, New Delhi