Global Policy Forum

By Julio Godoy

European subsidies for agriculture are contributing to rapidly rising food prices and the destruction of small-scale farming in the South, experts say.

"Farmers in countries of the South cannot compete with subsidised agricultural products from Europe," said Thilo Bode, director of the German non-government organisation Foodwatch. "The subsidies the EU pays to farmers in France, Germany, Britain, Spain and elsewhere cheapen European food production in such a way that small farmers in say, Senegal, can no longer exist." Bode said the EU, the U.S. and other industrialised countries pay their farmers a billion dollars a day in subsidies. "These very same countries have forced developing countries through international organisations to eliminate their customs duties and their trade barriers, constraining them to import subsidised food."

The economic consequences of such policies are increasing unemployment and poverty among farmers in Africa, Asia and Latin America, Bode said. This leads on to food scarcity because farmers lose the means to grow more, he told IPS. The EU channels more than 50 billion dollars a year to its farmers in subsidies under the Common Agricultural Policy (CAP). These subsidies represent about 45 percent of the European Commission's budget. The CAP guarantees a minimum price to European farmers, imposes import tariffs and quotas on certain foods, and provides direct subsidy payment for cultivated land. Following an agreement in 2005, the CAP is due to be phased out by 2013.

Other industrialised countries, especially the U.S., also pay substantial subsidies to their farmers, and protect their local markets with import tariffs and quotas. These subsidies have been at the core of debates in international forums such as the World Trade Organisation, the Organisation for Economic Cooperation and Development, and the United Nations. But now with prices of basic foods like rice, wheat and corn rising sharply, industrialised countries' subsidies for agriculture are increasingly under the spotlight.

Wheat prices have risen on average 130 percent since March 2007, according to the United Nations Educational, Scientific, Cultural Organisation (UNESCO), while soy prices have jumped 87 percent. Food prices have risen 83 percent over the past three years, the World Bank reported this month. This increase in food prices has fuelled protests in several countries, including Haiti, Egypt, Cameroon, Cote d'Ivoire, Mauritania, Ethiopia, Uzbekistan, Yemen, the Philippines, Thailand, Indonesia and Italy.

Voices are rising within Europe against such subsidies. Renate Kuenast, leader of the German Green party, said during a debate in the Bundestag, the lower chamber of the German parliament, that EU subsidies are substantially responsible for the global food scarcity. Kuenast called for a new agricultural revolution. "The European Commission must stop as soon as possible all subsidies, including export credits to agriculture," she said. Kuenast said before German parliamentarians that "if the EU would not cut artificially the prices of its own agricultural products, there would be no hunger and food scarcity in the world, because the small farmers in developing countries would still be producing their own food." Bode and Kuenast backed several reports that have called for radical reform of agriculture in Europe and North America in order to tackle food scarcity.

In a UNESCO report released Apr. 15, a body of 400 experts called for a revolution in agriculture to avoid social explosions around the world from rising food prices. The report, officially known as the International Assessment of Agricultural Science and Technology for Development (IAASTD), explores ways of finding an equilibrium between the economic efficiency of agriculture, its social and welfare benefits, and the environmental consequences of economic activities.

A typical example of the difficulties in finding such balance is the search for carbon-free fuel for automobiles. Biofuels, once a hope for reducing greenhouse gas emissions through transport, and thus helping to cut global warming, are now under heavy criticism because their environmental footprint is seen as negative by many studies. But production of biofuels has boomed, driven by rising world fuel prices and the growing demand for energy. And this boom has contributed to creating conditions for the present food scarcity in many regions by crowding out production of grains such as maize and wheat.

The IAASTD recognises this, saying that the diversion of crops to fuel "can raise food prices and reduce our ability to alleviate hunger throughout the world." The IAASTD authors affirm in the report that "we are now in a good position to reflect on (all these) consequences and to outline various policy options to meet the challenges ahead, perhaps best characterised as the need for food and livelihood security under increasingly constrained environmental conditions from within and outside the realm of agriculture and globalised economic systems."

Salvatore Arico, a UNESCO biodiversity expert and co-author of the report, put it more bluntly. "Modern agriculture will have to change radically if the international community wants to cope with growing populations and climate change, while avoiding social fragmentation and irreversible deterioration of the environment," he told IPS. The IAASTD assessment, while admitting that modern agriculture has brought significant increases in food production, also says these benefits have been spread unevenly, at "an increasingly intolerable price, paid by small-scale farmers, workers, rural communities and the environment."