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The Corporate Benefits of an Agrarian Crisis
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The push for more trade to solve the food price crisis is actually aimed at bringing more profits for a handful of multinational corporations rather than providing food to hungry millions, says Devinder Sharma.


22nd July 08 - Devinder Sharma ~ STWR

The global food crisis is turning out to be a savior for the agribusiness industry, and it couldn’t have been better timed.  More free trade and a fast track adoption of genetically modified crops are being proposed as the best possible solution, further threatening the needs of small farmers and hungry millions across the developing world.

US President George Bush, when asked what he discussed with Prime Minister Manmohan Singh at the recently concluded G-8 Summit, said: “We discussed about the need for a successful completion of the Doha Development Round of the World Trade Organisation (WTO).” His statement assumes importance given the several unresolved issues in agriculture and non-agricultural market access (NAMA) agreements that are likely to come up before the forthcoming WTO mini-Ministerial, scheduled for July 21-25 in Geneva.

George Bush’s emphasis on resolving the contentious trade issues comes at a time when the WTO is in a tearing hurry to reach an agreement before the year-end. Says WTO chief Pascal Lamy: “Free trade is the only answer for the global food crisis,” and he has time and again called for an early completion of the Doha Development Round. World Bank chief Robert Zoellick has also been impressing upon developing countries to provide more market access for agricultural commodities from the rich and industrialized countries.

While the World Bank and WTO are pushing hard for further opening up of developing country markets ostensibly to benefit agribusiness companies, the United Nations is not convinced. In its latest “World Economic and Social Survey 2008”, the UN says that on the contrary it is the system of protection for agriculture in advanced countries that has grown over the past 40 years has been detrimental to agricultural development in many developing countries, and is one of many factors that have contributed to food insecurity in some of these countries.

This report comes in the wake of an unprecedented food crisis being witnessed across the globe. Some 37 countries have been faced with food riots in the past year, and the UN classifies 55 countries as vulnerable to serious food shortages.

Ironically, while the WTO is negotiating for more market access from the developing countries, the UN says that these countries have already paid a price in advance at Marrakesh (where the WTO formation was agreed upon in 1994), adding that there is actually no need for the developing countries to provide more market access concessions. It is therefore quite obvious that the WTO director general Pascal Lamy and the WB chief Robert Zoellick are only batting for the commercial interests of multinational corporations.

Already, the profits of agribusiness MNCs have shown stupendous gains in the first quarter of this year. At a time when the world was faced with rising food prices, increasing by 300 per cent in the past five years, the profits of agribusiness corporations have exceeded all expectations. In other words, while hunger multiplied (the World Bank estimates an additional 100 million people sliding into hunger), business for these corporations zoomed.

It is quite evident that the WTO’s push for more trade is actually aimed at bringing more profits for a handful of MNCs rather than providing food to hungry millions. Thanks to more trade in agriculture, the food deficit of developing countries has grown to a record US $ 11 billion a year. Some 40 years ago, developing countries were actually exporting foods and had a surplus of US $ 7 billion in food trade. This turnaround in food fortunes is the direct outcome of more trade liberalization.

The gains from an unequal trade regime have also been siphoned off by a handful of private corporations. Profits for Monsanto, the world's largest seed company, were up 108 per cent, while Cargill and Archer Daniel Midlands (ADM), the world's largest food traders, registered profit increases of 86 and 42 per cent respectively. Profits for Mosaic, one of the world's largest fertiliser companies, rose 1,134 per cent. No wonder that the fertilizer subsidy bill in India has already crossed Indian Rs 100,000-crore mark.

Apart from its fixation with trade, the G-8 also focused on the role genetically modified (GM) crops can play in alleviating hunger from the developing countries. A recent estimate by the Consultative Group on International Agricultural Research (CGIAR), the governing body of the 16 international agricultural research centres, had suggested that biotechnology can contribute to major advances in crop productivity. GM could further increase global yield potential, it claimed, by some 25 per cent in the coming years.

Interestingly, the CGIAR study is not even being acknowledged by the GM companies. Martin Taylor, chairman of Syngenta, one of the world’s biggest supporters of GM research, refutes the CGIAR claims. In an interview with The Guardian, he said: “GM won’t solve the food crisis, at least not in the short term.” His words contradict the statements of the G-8 leaders who see a tremendous possibility for GM crops in addressing the world food crisis.

In India too, the political leadership is in tune with these faulty projections and expectations. Parroting the flawed economic and scientific analysis being promoted by the mainline economists and policy makers of western countries, the Indian government refuses to look beyond the G-8’s corporate viewpoint. The Planning Commission and the Ministry for Science & Technology expresses more faith in what Thomas M Schoewe (vice chairman of Wal-Mart International and chief executive officer of Wal-Mart International Stores) has to say about opening up markets for more trade, and what Friedrich Berschauer (chairman of Bayer CropSciences AG) has to say about the potential of GM crops/foods.

Unfortunately, what is not being realized by world leaders and policymakers is that the present agrarian crisis is more an outcome of an unjust trade regime and unwanted technologies that have little relevance to the needs of small and marginal farmers.


Devinder Sharma is an award-winning food and agriculture policy analyst. His writings focus on the links between biotechnology, intellectual property rights, food trade and poverty. He is a regular contributor to Share The World’s Resources.