World Trade deals, no easy answers for farmers or governments.

I recently had the privilege of meeting a group of farmers from the developing world who sell their produce through a fair trade company to European Markets. They were not downtrodden, but they were acutely interested in the way that their crops are sold here, and despite the fair trade tag, there is still a massive disparity between what they receive and what we pay. In some cases they are also restricted in how much of their produce they are allowed to send to our supermarket shells by tariffs and trade agreements.

The World Trade Organisation talks which have just collapsed in Geneva were about liberalising markets, removing those tariffs which stopped farmers in the developing world from freely selling their produce in Europe and the USA. Some of those countries also had tariffs of their own which stopped imports from the highly developed, highly technological developed world flooding in and squeezing out low yielding subsistence farmers, or newly established industries.

In the press much of the blame has been laid at the door of the Indian and Chinese delegations, wanting to keep the right to protect their own agricultural industries from competition from the West. However there is some sympathy, amongst anti-poverty campaigners, for the stand taken by countries from the developing world against the deal on the table.

The trouble is that these talks weren’t just about food and farming, they were also about industrial tariffs, and the west wanting fewer restrictions on access to markets, something which according to the charities would be hugely damaging for the fledgling industrial sector which is fuelling the growth of many of these countries. Action Aid laid the blame at the door of the EU and the US for trying to maintain subsidies to their farmers, and resisting the efforts of poorer countries to protect their own workers, saying that in the end it was better to have no agreement than a bad agreement.

Oxfam too was critical of the EU and US saying the lack of a deal was a wasted opportunity, however in a statement the organisation’s International Director Jeremy Hobbs said “At a time when prices are volatile, developing countries were right to fight for the flexibility to defend their smallest farmers and ensure food security.”

In the US cotton farmers will still get their subsidies, and in the EU billions of pounds will still be paid every year to arable farmers who are seeing some of the highest prices for their crops for several years.
The big problem though is that farming isn’t a single entity. Whist the barley barons are doing very well at the moment, many livestock farmers face a desperate struggle to find the cash to buy the feed for their animals. And those barley barons are in turn looking very carefully at the cost of planting next year’s crop. They will want to know in advance that the price they will get will match the increase in the cost of the fuel and the fertilizer needed to grow it.

The level of subsidies in Europe is decreasing, but farmers say that without these payments some of their crops simply aren’t worth growing. The question is whether taking away those payments would actually make a big difference to farmers in developing countries. In some cases, perhaps it would.

Perhaps an increase in the price of wheat on the world market might help farmers in developing countries get a better price for the alternative they could offer. Where the lack of an agreement really hurts is where there is competition, for instance in cotton where US growers receive a subsidy. Action Aid says the continuation of this will be a bitter blow to African cotton farmer who simply can’t compete.

But tariffs and trade restrictions are not always one-sided. As we’ve seen with the market for beef, it isn’t only the developing world that puts tariffs on imports; sometimes countries in South America put their own restrictions on their own exports. Argentina did this out of fear that beef shortages at home, caused by massive exports, could stoke inflation in the fragile Argentine economy.

Maybe at the heart of this would be a better world without any tariffs or subsidies. The trouble is that these measures are often linked, inextricably to somebody, somewhere needing the vote of an elector. Perhaps in the end the world food market is just so volatile that there was never going to be an agreement in this round of the WTO talks.

But maybe perhaps at a time of ever rising food prices and potential shortages some of the tariffs will have to go, just to ensure that the Western World stays fed. The question then will be whether the West sucks out of the developing world, the food that farmers need to feed their families and their fellow citizens.