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WTO-SPECIAL: Family Farming Vs. Agribusiness in Brazil

Mario Osava

RIO DE JANEIRO, Dec 2 2005 (IPS) - The farm subsidies that underwrite the “dumping” of products on a market at below cost and that distort international trade should be abolished, but not the support for family farming that forms part of rural development and food security policies.

Representatives of associations of small farmers and civil society groups that fight against subsidies and agricultural protectionism will take that argument to the Dec. 13-18 sixth World Trade Organisation (WTO) ministerial conference in Hong Kong.

An agreement that merely expands access to rich markets could exclusively benefit agribusiness exporters and the large corporations that control prices and markets, said Adriano Campolina, regional director of Action Aid, an international non-governmental development agency.

And the results could be even worse if industrialised countries agree to reduce the dumping of products at artificially low prices in exchange for greater liberalisation of developing country markets. In Brazil, for example, that would only favour large farming interests, which account for 15 percent of farmers, and not the remaining 85 percent, consisting of family farms, he said.

Such an accord would broaden the external market for soybeans and other agribusiness products, while leading to an increase in food imports, thus intensifying the competition faced by family farmers and driving down prices on the domestic market, he told IPS.

If concessions to the European Union (EU) and the United States are made in the services sector, by lowering non-agricultural tariffs, “Brazilian society as a whole will suffer” from an increase in unemployment in industry and the domination of areas like sanitation, banks and other services by foreign corporations, Campolina argued.

But there is no prospect of an agreement in Hong Kong given the dissatisfactory offers set forth by the different parties, especially the EU’s proposal for phasing out agricultural subsidies, said the activist.

“The current format” of the negotiations constitutes “a setback with respect to Doha” – where the present round of WTO talks was launched at the fourth ministerial conference in 2001 – and makes any agreement in Hong Kong unlikely, added Campolina.

The Brazilian government and the world’s developing countries should not accept any accord that “endangers national sovereignty to adopt rural development policies,” said Alberto Broch, vice president and director of international relations in the National Confederation of Agriculture Workers (CONTAG).

CONTAG, a federation of associations of rural labourers and small farmers, presented a document to the Foreign Ministry urging that access by exporters to rich markets not be obtained by sacrificing “the protection needed by family farms,” Broch commented to IPS.

Eliminating the protectionism that leads to dumping would benefit everyone by boosting exports and domestic prices, he acknowledged. But, he added, it must be kept in mind that there are different agricultural sectors in any given country, which require different treatment, because small farmers are “vulnerable and must sell their output fast since they lack the conditions to store their products” while waiting for prices to rise.

The difference between small-scale farming and large-scale agribusiness was highlighted at a congress held last week in Luziania, a city near Brasilia, by the Federation of Family Agriculture Workers (FETRAF), a CONTAG competitor.

Brazilian small farmers have more in common with their counterparts in Europe than with big Brazilian agricultural producers, which is why the real dispute is not between developed versus developing nations, but rather between family farms and agribusiness within each country, the congress participants stressed.

But according to Gilman Rodrigues, head of international negotiations at the Brazilian Confederation of Agriculture and Livestock (CAN), which groups together large producers, this is a mere “ideological” question introduced into international negotiations.

An end to trade-distorting subsidies would benefit everyone in Brazil, he maintained, pointing to the example of the dairy industry. If it were not for the heavy subsidies paid out to European farmers – some 48 billion dollars annually – Brazil would not import milk from Europe, and not only would prices rise on the domestic market, but the potential for exports would be bolstered as well, even for small producers, he said.

Much of the milk produced in Brazil comes from the family farming sector, whose problem “is not its size, but the quality of the products,” especially since the obstacles of scale are often overcome by joining together in cooperatives and other associations, maintained Rodrigues, a cattle rancher.

There is no danger that the “social subsidies” or support for small producers in Brazil will be eliminated through the WTO negotiations, he said. The financing provided by the National Programme for Strengthening Family Agriculture (PRONAF), which offers soft loans to small farmers, accounts for only three percent of the total value of the country’s agricultural production, which falls far short of the limit established by international rules, he explained.

Neither PRONAF nor the competitiveness of Brazilian agricultural exports can be wielded as arguments – as the United States has attempted to do – to weaken the demands made by Brazil and the Group of 20 (G-20) developing countries for reductions in the subsidies paid to farmers in the wealthy industrialised nations.

Subsidies in the United States and the European Union are granted according to “volume of production, which encourages producing more and increasing land ownership by buying up land from small farmers,” which is an entirely different matter from the credit offered by PRONAF and other support for family farming, he commented.

Rodrigues described the prospects of the Hong Kong meeting as “grey”, but added that since WTO conferences tend to bring surprises, he is hoping for a good surprise, because the situation “could not get any worse.”

Campolina believes that if any agreement is reached in the WTO – something he considers improbable – it would only benefit rural development if anti-dumping measures are accompanied by policies adopted in the developing countries to “curb the abuse of corporate power,” preventing transnational corporations from controlling the market while fostering the full productive capacity of family agriculture.

The activist noted that Brazil’s stance, including its defence of family farms, is a relatively new one, brought about by the insistent demands of associations of small farmers and other non-governmental groups and strengthened by its participation in the G-20, where India plays a pivotal role as well. Indonesia, Pakistan and Kenya are other developing countries that steadfastly support this position, he added.