Trade liberalization in agriculture results in worsening poverty, underdevelopment

“While our farmers and farm workers suffer from poverty, agricultural transnational corporations increased their profits three times.” – Ibon Foundation

By RONALYN V. OLEA
Bulatlat.com

MANILA – Decades of liberalization of agriculture did not bring development but losses in agriculture and further impoverishment of Filipino farmers.

This, in gist, is the analysis of economist Jose Enriquez Africa on the impact of the liberalization of agriculture on the Philippine economy.

In a forum organized by the Kilusang Magbubukid ng Pilipinas (KMP) and Resistance and Solidarity Against Agrochemical TNCs (RESIST), Africa, executive director of independent think-tank Ibon Foundation, discussed how free market policies worsened rural poverty.

Trade liberalization has resulted in the reduction of tariffs, or taxes imposed on imports, over the years. Africa said that the period between 1981 and 1994 registered the highest decrease in tariffs. From the average 42 percent tariff of imports in 1981 to 1985, it was reduced to 28 percent in 1991 and decreased further to 20 percent in 1994. In fact, Africa said, the World Trade Organization (WTO), which was formed in 1995, merely consolidated these tariff reforms.

By 1996, in compliance with the WTO, the tariff was pegged at 9.7 percent then down to 7.8 percent in 2006 and 6.1 percent in 2011. Today, tariff on imported agricultural products is only 8.7 percent.

Reducing tariffs, Africa pointed out, removes the protection on the local economy.

Add to this the low subsidy for farmers. Africa said only 5.9 percent of the national budget goes to agriculture, which includes compensation for landlords for lands placed under agrarian reform.

It is thus not surprising that Philippine agriculture has declined over the years. From the 22.6 percent share of agriculture, fishery and forestry to the national economy between 1990 and 1994, it went down to 16.8 percent in 2010.

Africa said that the WTO’s promise of additional millions of jobs in agriculture was proven false. From 1994, before the Philippines entered the WTO, there were 11.3 million jobs in agriculture, Africa said. By 2012, there were 12.1 million jobs. Africa added that in five regions – Davao, Bicol, Caraga, Eastern Visayas and Northern Mindanao – some 693,000 jobs were lost in agriculture.

Over the years, wages of farm workers have fallen. While the nominal wage in 1995 was P92 ($2.13) and in 2011 was P207 ($4.80), the real wages in 1995 was P126 ($2.92) and in 2011 was only P122 ($2.82).

According to the government’s latest poverty data in 2009, national poverty rate was at 27 percent. Farmers and fisherfolk were poorer, at the rate of 37 percent and 44 percent respectively. Africa said that Ibon estimates, using the same data from the National Statistics Office, the national poverty rate at 70 percent and rural poverty rate between 75 percent and 90 percent.

For how can local farmers compete with imported agricultural products?

The food import dependency of the Philippines, an agricultural country, increased in a span of 18 years, from pre-WTO in 1994 to 2010. Data culled by Ibon from the Bureau of Agricultural Statistics showed that in 1994, only four-percent of the rice supply were imported, but in 2010, imported rice accounted for 19 percent of the rice supply. The list below shows the increasing importation of food.

boo-table-increase-importation-food

In the same period, Africa said, food insecurity increased 11 times. In 1994, agricultural trade deficit was $287 million and in 2010, it rose to $3.3 billion.

Food trade deficit, according to Africa, multiplied by 21 times. From $181 million in 1994, it ballooned to $3.6 billion in 2010.

On the contrary, the profits of agricultural business giants soared. From P674 million ($15.61 million) net income in 2001, they raked in P2.5 billion ($57.89 million) in 2010.

“While our farmers and farm workers suffer from poverty, agricultural transnational corporations increased their profits three times,” Africa said.

Imperialist countries, Africa said, benefit from the country’s agricultural trade. Eighty percent of coconut oil exports go to the United States and the Netherlands; 53 percent of banana exports to Japan; 80 percent of sugar to US and Japan and 72 percent of pineapple to US, Japan and Singapore.

“After two decades of the WTO and some three decades of free market policies of globalization, the Philippine economy remains backward and underdeveloped ,” Africa said. “Despite its vast potential it is still not able to meet the basic needs, much less improve the welfare, of the largest number of Filipinos.”

Africa said further that the WTO is foremost among the international agreements, treaties, policies and programs that legitimize and protect a foreign trade and investment regime biased for foreign monopoly capital and against the Filipino people. He said that the landlords and big business in the country, in partnership with foreign corporations, were the only ones who benefited from globalization policies.

To achieve genuine economic development, Africa said that genuine agrarian reform must be implemented. A well-developed agrarian base shall be the foundation for nationalist industrialization, he said.

“What we need is pro-people economics free from foreign dictates,” Africa said. ()

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