Pseudo-free markets

Amarjit Bhullar
EX-professor, University of Northern British Columbia

FARMERS of North India are on the warpath. They are not alone. In the last month or so, their counterparts in France, Germany, the Netherlands, Belgium, Spain, Romania, Austria and other countries have held demonstrations across Europe, calling for large-scale changes to the European Union’s common agricultural policy in order to save the farm sector.

THE TRIBUNE DEBATE Agrarian distress

According to European farmers, it is becoming harder to make a decent living as input costs, especially of energy/fuel and fertilisers, are surging and the crop prices are not remunerative. In addition, the stringent environmental regulations, coupled with tough bureaucratic controls, are further reducing the already squeezed profits and making their very survival difficult. Free trade agreements that the EU has signed in recent years have increased the inflow of agricultural products from other countries and amplified competition. Consequently, large numbers of farmers have already quit the farm sector. About 800 farmers leave agriculture every day, as stated by EU Agriculture Commissioner Janusz Wojciechowski a few months ago. The new generation is turning away from farming. As per Eurostat 2016 data, nearly 32 per cent of EU farm managers were above 65 years of age and another 25 per cent were between 55 and 65 years old.

The real solution lies in releasing agriculture from the strict confines of the WTO, its ideological promotional agents and the beneficiaries who have amassed billions.

The deception of so-called ‘free markets’ has squeezed them from both the input and output sides of the market. In reality, neither the agricultural input markets nor the output markets are standardised free markets. These markets are oligopolistic and, by and large, collusive oligopolies (cartels). The result is that farmers pay higher prices while buying the inputs but get lower prices while selling their produce.

The profitability has dropped to the point that a small tax hike, a minor policy change or the enforcement of an environmental regulation that marginally reduces the farmers’ revenue draws a hostile response from the farming community. This is happening even though the EU is spending billions of euros to support cultivators. Surprisingly, the West European growers, owning large chunks of land, are at the forefront of these protests, busting the myth that only smaller, economically unviable family farms face economic distress.

Tillers have a long history of agitation. What’s different now is the breadth and potential impact on the prevailing world economic order, which has consistently viewed the agriculture sector as less important, as it accounts for less than 2 per cent of the gross domestic product and employs less than 3 per cent of the workforce in developed countries. But how long will this sector, beset with festering issues like high debt, price volatility, farmers’ suicides and damage to crops from erratic weather induced by climate change, sustain itself? The problems are compounded by the move towards monopolisation of input and output supply chains facilitated through liberalisation, globalisation and privatisation policies of the World Trade Organisation (WTO) and its sister organisations.

Therefore, across the world, agriculture is emerging as a key battleground, and farmers are resorting to protests. But how to tackle this unrest? In India, the authorities are using water cannons, tear gas shells and other heavy-handed methods to tackle protesting farmers. Has this happened, or is happening, in other countries too?

A major protest was staged by farmers in Seattle (US) in 1999. The stir saw a series of marches and the use of a variety of tactics, such as street theatre, sit-ins and protesters chaining themselves together and locking themselves to metal pipes at strategic locations. Protesters had disrupted the WTO Ministerial Conference. The police had responded by using pepper spray, tear gas and rubber bullets to disperse the crowd, while some protesters retaliated by throwing sticks and water bottles. A large number of farmers from Europe had participated in that agitation. The Seattle WTO protest acted as a catalyst for sporadic farmers’ movements across the world that have now culminated in a wider global movement.

For almost two decades after the Seattle disturbances, developed countries successfully used institutional mechanisms for trust-building and keeping farmers off the roads. There are dozens of examples of governments engaging directly with farmers to pacify them, respecting their democratic right to protest. Recently, French President Emmanuel Macron came forward to talk with the tillers. Police and other security agencies have exercised restraint while dealing with the farmers, despite being provoked at times.

But all these seem to be short-term crisis management exercises, and farmers are running out of patience. Countries’ agriculture and food systems were largely free from global institutional controls before the formation of the WTO, and the policy-makers enjoyed the flexibility to tune their policies as per the needs of respective countries. The Agreement on Agriculture, aimed at regulating agricultural trade and investment, came into effect on January 1, 1995. It was designed in such a way that it could potentially intrude into every aspect of agriculture. The WTO has exposed India’s minimum support price regime and public food security and procurement programmes to repeated attacks from multinational corporations of export-oriented countries, particularly the US, labelling them as ‘trade-distorting’ policies. European farmers want to halt the harmful free trade agreements that the EU has signed with other countries. The wheat boards of Canada and Australia were privatised and handed over to private sector entities despite farmers’ opposition. In some South American countries, food sovereignty movements are going on to increase local community control over the production, processing and distribution of food and liberating communities from market oppression. Foodpoly is a term coined to describe a monopoly over food markets. Dozens of examples can be cited.

The real solution lies in releasing agriculture from the strict confines of the WTO, its ideological promotional agents (primarily neoliberal economists occupying decision-making seats in governments across the world) and the beneficiaries who have amassed billions. Otherwise, farmers’ movements will rewrite the rules.

#Europe #France #Germany #Spain