15 August 2005

15.08.05. A Sketch for a New World Food Order, H. Pietila

HilkkaPietilä, M.Sc. Finland

Contact: hilkka.pietila@pp.inet.fi


A Sketch for a New World Food Order

The Future of Nordic Agriculture in Global Perspective?*)

Summary

The cultivation economy, utilizing the growth potential of living nature in various ways, is the foundation for everything else in human economy. Due to huge differences in regional and local climatic conditions at the globe the application of free trade is unthinkable in the trade of agricultural products. In order to take into consideration the particular nature of cultivation economy we need a New World Food Order, which is constituted of three arrangements:

- a reform of the UN agencies dealing with food and agriculture, including

international trade;

- clustering agricultural products according to their human importance;

- categorization of countries according to their position vis-à-vis the food

production and agricultural trade.

Through these arrangements the detrimental effects of present trade policies on the world food supply and agriculture might be avoided and the food production become more self-reliant, sustainable and globally more equitably located and distributed.

Introduction

Guaranteeing the food security to all people in this world of abundance and disparity should be the topmost concern in all trade and agricultural negotiations. Still millions of people have to face hunger and starvation in Africa and other places in the world. The world food situation and the negotiations on agricultural policies and trade relate to each other essentially and inseparably.

I would like to discuss the so called liberalization of agricultural trade and its consequences to agriculture in general and particularly to building up the food security to all in this world. What are these consequences both internationally and to agriculture of individual countries? Parallel to the term ‘agriculture’ I use in this paper also the term ‘cultivation economy’, which covers all the production where humanity do utilize the living potential of nature, i.e. agriculture, animal husbandry and forestry.

The trade liberalization ultimately implies that also the trade on agricultural products should be submitted to international competition. However, submitting cultivation economies to international competition in trade is fatal both economically and ecologically because of extreme differences in natural climatic conditions in various parts of the world. The terms of nature cannot be adjusted and equalized. And Mother Nature is not going to attend the WTO negotiations, her terms are not negotiable.

*) This paper was first presented in the 22nd Congress of Nordic Association of Agricultural Scientists, July 1-4. 2003. Turku, Finland

Free trade and agriculture - an impossible equation.

The biological facts and factors are self evident to farmers and agricultural researchers. They face the miracle of life every day in their work. But free trade principles are founded on prevailing economics, which does not recognize the facts of life sciences, biology and ecology. Under the pressure of transnational corporations the economists and trade negotiators don’t want to see the decisive distinction between the cultivation economy and industrial production.

It is crucial for the fate of humanity that we understand the particular terms of living nature and adjust our cultivation and trade accordingly. Cultivation economy is in fact an interface between the human economy and the economy of nature, it is interaction between human beings and nature, where we should profoundly understand the biological terms of ecology, and to be wise enough to take them carefully into consideration.

Cultivation economy can also be called a living economy, while it is regenerating and sustainable, if the ecological terms are taken into consideration. However, such unpredictable elements like rain and sunshine, warmth and frost are playing fundamental role in this economy, and their amount differs drastically in various climatic zones of the globe. The microbes and mycelia in the soil and insects and pests are also unpredictable living actors in the environment. Finally the natural genetic combinations in plants and animals dictate their perseverance and productivity. Therefore it is limited, how much the productivity and output of this production can be predicted and controlled by human means. Manipulating the properties of plants and animals has already been brought to the extreme and thousands of varieties have been killed in striving for making cultivation economies more competitive.

Industrial production can also be called extraction economy or dead economy, because it was originally based on manufacturing of non-renewable, non-living natural resources - minerals and fossils - which are extracted from the earth. Today it processes also raw materials produced by cultivation economy, like timber, crops, meat, coffee, cotton etc. The industrial production is not dependent on the terms of nature, therefore its productivity and efficiency can be improved as long as the raw materials are available. Its driving force is profit, not the human needs and wellbeing.

The fundamental problem is, that economics as science is based on the logic of industrial production, extraction and manufacturing of 'dead elements', non-renewable energy and resources. When this logic is applied to the living production like cultivation economy and the demands of ever increasing productivity and competitiveness are imposed on agriculture and husbandry, the system is bound to run into difficulties, as we see today, and ultimately to disaster.

Nevertheless, this is exactly what is taking place now both in agricultural and trade policies in Europe as well as globally. This misperception and mismanagement of cultivation economy is the reason why no solution has been found for food problems and why agriculture is such an

insurmountable problem in international negotiations. And now when we are reaching the limits of the arable potential of the planet, these problems are becoming alarming.

When we see the profoundly different nature of cultivation economy in comparison with the industrial economy, we must understand that the same liberation and competition policies

cannot be applied on agriculture as on industrial economy. And when the issue is feeding the humanity, the satisfaction of basic needs for all, we have to understand that the trade on agricultural products should be regulated, not liberated.

The World Food Authority to be established?

The World Trade Organization, WTO has been the object of harsh criticism for several years for its total incompetence to handle the agricultural trade. The international civil society has claimed for several years that negotiations on agricultural trade should be taken away from the WTO. What would then be an alternative forum for administration and negotiations on food trade and the global agricultural policies in general?

In the UN system there have been four agencies to deal with agriculture and food issues: The Food and Agricultural Organization, FAO, the World Food Program, WFP, the International Fund for Agricultural Development, IFAD, and World Food Council (until 1992). No one of these agencies has a mandate to deal with agricultural trade.

The paradox of the situation is that these four organizations own all the knowledge and experience in agricultural development and world food problems since 1946, but they are not mandated to deal with agricultural trade. The forum for trade negotiations, including agricultural products, is the WTO, which seems to be totally dominated by transnational business interests. Therefore the negotiators do not want to know or care about the particularities of agriculture and food problems.

The time is due to reform the UN food and agriculture agency system. The existing agricultural development agencies should be reconstructed to constitute a single new kind of agency with the mandate to administer global food policies and supply of provisions in a comprehensive manner. This new body should be more than an ordinary specialized agency like FAO. It should be able even to operate the emergency arrangements for countries where the food supply does not work and food security is jeopardized.

The new agency should also be given the mandate to become the forum and administrator of agricultural trade negotiations in stead of the WTO. This agency will then coordinate, follow up and develop the food and agriculture policies from cultivation, conservation and transportation to trade, distribution and consumption, i.e. to function as the World Food Authority.

There is already an Agency within the UN system, which has a mandate to operate in its respective field in the manner scheduled above. It is the International Sea-Bed Authority, which is administering the implementation of the United Nations Convention on the Law of the Sea, i.e. the utilization of “the Common Heritage of Humanity”, the deep sea mineral and other resources, which don’t belong to any state or company.

The World Food Authority should together with national governments administer the utilization of the greatest “common heritage of humanity”, the growth potential of living nature, for wellbeing and satisfaction of basic needs of all people.

Food or Commodities?

The sustainable development is the key-word in development discussions today. However, the only way of making human economy sustainable is to adjust it to the basic terms of ecology, the economy of nature. These terms are laws of nature and all human efforts to change them will remain futile.

Today the agricultural products are treated in trade as if they were equivalent to minerals and fossils or industrial products. The agricultural trade negotiations should always take the origin of the products - the geographic area and climate were they are produced - into consideration. Also the relative importance of various products vis-à-vis basic human needs should be recognized.

The cultivation economies do not produce only human necessities, but also raw materials as well as luxury products. Therefore the products should be diversified and clustered in trade according to their importance in human life and economy, and different rules and terms should be established for various categories of products according to their necessity value. The crude categories could go for instance along the following lines:

Diversification of the agricultural products according to their human value

1) The necessities like food and feed products:
grain, rice, milk and milk products, meat, fish, fruits, groundnuts, soya, maize, vegetables, etc.

2) Raw materials for industry and construction;
timber, cotton, wool, rubber, jute, hides, etc.

3) Luxuries, stimulants and drugs, (primarily for Northern market);
coffee, tea, cocoa, sugar, tobacco, furs, coca, hemp, cannabis, opium, etc.

From the human basic needs point of view, these categories vary drastically in importance. If the first category were a universal priority, food problems would have been solved a long time ago. Raw materials for instance for paper, textiles and construction are also necessities, but in this category there are alternatives for many products. The third category of products could possibly be submitted to the supply and demand mechanism, since these products are nobody’s basic needs.

In present globalizing trade the principle is that the supply and demand and the competitiveness of products will set the priorities and prices in international trade. With this principle the global food problems will never be solved. Meaningful priorities and commercial values do not coincide, since the market mechanisms respond only to demand, not to poor people's hunger.

Export or Import?

One of the major reasons to the persistence of world food problems is the structural adjustment policies of the World Bank and IMF, which has been applied and required from developing countries since 1980s. These policies have forced many countries to restructure their agriculture towards cash crops export production, even at the risk of their own people starving. The payment of debts has been made the first priority and a prerequisite for further loans.

The emphases on export production has also lead to growing needs in the developing countries to get better access of their products to the market in the North. Therefore there has been constant pressure by developing countries in the WTO for lifting all subsidies and protection from the agricultural products in industrial countries.

If these demands finally will be adopted, the food production in the North will drastically decline. Ultimately it might lead to a situation, where the poor people in the South will be harnessed to grow food, raw materials and luxury products for the rich in the North and they themselves be starving while not being able to buy the food they produce.

The demands are addressed to Northern countries without any distinctions. However, many countries here do need protection and subsidies due to the harsh climate and for supplying their own people. This is an issue particularly in Nordic countries, first of all in Finland. If we once will have to lift all protection and subsidies from our agriculture, it will imply the end of food production here very soon.

However, in this world of huge food shortages it would be insane to force any country, capable to feed its own people, to end its food production. That will only mean increasing demand and higher prices on the food market, and more hungry people in the countries, which are not able to grow, neither buy food.

Straitjacket or liberation?

With the view of finally assuring food security to all countries, it is obvious that food trade should be regulated rather than liberated. Very clear distinction should be made between the production for basic domestic needs – like food - and for export. The countries should be free to support and protect food production for the needs of their own people. But there should be rules and regulations for agricultural production for export and trade.

Free trade in necessity products is rather straitjacket than liberation for many countries, because it is threatening the basic provisions for their own people. For several traditionally self-reliant countries it would imply the end of domestic food production and total dependence on supply and import from the world market.

Self-reliance and self-sufficiency in food supply should be the ideal aim in all countries, which have been and still are capable to feed its own people. After all, most of food in this world is eaten in the country where it is produced. Only very small proportion of food production crosses the borders at all, according to some calculations only 5-10 % of food is traded.

Therefore not only products but also the countries should be diversified in trade according to the aims and policies of their agricultural production and the needs in supplying their own people. The following is just one proposal, what kind of groups there might be used in order to give fair and appropriate treatment to various kinds of countries in trade:

Countries classified according to their agricultural policies

1) Self-reliant Countries, which aim only for self reliance in providing food for their own people;

2) Import Countries, which are not able to produce enough food to feed their people and have to import food in exchange for their exports;

3) Export Countries, which have developed strong factual food exporting capacity - even by way of subsidies and protective measures.

The countries should fix publicly their agricultural policy aims and assess their geographic and climatic prerequisites, which should be taken into consideration when decided in which group each country belongs. An international agreement should be negotiated, where these classifications and the status of each country is confirmed according to its respective goals in agricultural policies.

The countries, which are only aiming to self reliance in food, should have the right to protect and subsidize their domestic production according to their climatic conditions. With internal regulation of subsidies and food prices these countries would be able to assure, that everybody can afford to eat and the farmers will have decent livelihood.

With international arrangements food security should be assured to the second category of countries, which are not able to produce and possibly not even to buy enough food for their people.

The exporting countries may accept submitting themselves to the rules of supply and demand and international competition in international trade of their products, but they should not be permitted to limit the rights of deficient countries to subsidize and protect their domestic production. With these rights these countries will also be able to prevent dumping into their food markets.

All efforts should also be made to decrease excessive and unnecessary transportation of food between countries and continents. The extensive transportation and excessive manufacturing are very harmful to food products, since their nutritional and health quality only deteriorate the more they are traded and processed. The more people have to use imported food the less they know where and how their food is produced and how it has been handled.

To establish and administer these kinds of arrangements the World Food Authority is needed. Together these kinds of arrangements could constitute a New World Food Order, NWFO, with the aim of finally supplying basic food to all people and guarantee food sovereignty to all countries. It would also help to preserve the healthy and sustainable agriculture and food production in as many countries as possible.


Contradictions and Conclusions

Globally there are great contradictions in the situation today. A very mixed group of countries, the CAIRNS group – most of which are located in optimal climatic conditions - fight for free trade with the view of bigger gains in their export. Since the developing countries have been forced to direct their agriculture towards export production, they are now claiming for easier access to the market in the North. Therefore they make general claims for lifting all agricultural protection and subsidies in industrial countries.

The Integrated European market implies that the member states open their agriculture for free trade within the EU, therefore the famous Common Agricultural Policy has been approved. However the natural differences even in this region are so wide, that now the various EU governments are constantly claiming for complicated and bureaucratic systems of exceptions, exempts, particular support measures etc. in order to cope with present situation. The problems will further deteriorate when the Central and Eastern European countries will become members of the EU. The common agricultural policies as such cannot be applied even in an area like Europe – not to speak about the common trade policies on agriculture in the whole world.

The agricultural policies in Nordic countries reflect the differences which are quite significant even between them. For instance, in Finland the survival of agriculture is at stake. For the Finnish farmers it is an issue of life and death that the government will succeed in waging the delay tactics in the EU negotiations. The most persistent farmers work hard and invest heavily for making their production more efficient and “competitive”. Still all these measures are mere delay struggle. If all regulations, support and protection of agriculture will eventually be lifted here, Finland will be the first European country, where farming will die.

These contradictory demands exemplify insurmountable conflicts of interests in global agriculture, food production and trade. These problems will persist as long as the economics applied on cultivation production is the one stemming from dead extraction economy.

Today both are needed:

- the delay struggle in present agricultural negotiations within EU and WTO as efficiently as possible;

and

- long term work for a new kind of economics, and new institutions and agreements, which will comprehend the particular characteristics of cultivation and production based on living nature.

Ultimately the production of food is basic for the future of humanity as a whole. The fate of agriculture should not be dictated by business interests but by the needs of people. The law of supply and demand is not a law of nature, it will never end the poor people’s hunger, neither will it guarantee food for all.

References:

Pietilä, Hilkka. 1997. The triangle of the human economy: Household – Cultivation – Industrial production. An attempt at making visible the human economy in toto. Ecological Economics, Journal of the International Society for Ecological Economics. Volume 20 No.2, 113-127.

Pietilä, Hilkka. 2002. Basic Elements of Human Economy. A Sketch for a holistic picture of Human Economy. Communication and Cognition. Volume 35, Number 1&2, pp.7-36.

Pietilä, Hilkka. 2002. “Cultivation and Households: The Basics for Nurturing Human Life”, in Human Resources Policy and Management, edited by Eleonora Barbieri Masini in Encyclopedia of Life Support Systems, Eolss Publishers, Oxford, UK.

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