The Need for Increased Agricultural Trade in Developing Countries


High food prices over the past two years and the current worldwide economic slowdown are causing some political leaders to reconsider their previous support for expanded agricultural trade for low income people in developing countries. Former U.S. President Bill Clinton, a supporter of more open trade as President, told a United Nations meeting in late October, “Food is not a commodity like others. We should go back to a policy of maximum food self-sufficiency.” If food production and consumption are not driven by market forces, they will be driven by political considerations that will not create opportunities for increased food production and consumption.

The William J. Clinton Foundation has programs in developing countries, and President Clinton has first hand experience at seeing under-nourished people with no jobs. It is easy to link hunger with low food production without considering the economic policies and other actions by governments that lead to a lack of food production and lack of employment to buy food from others. Self-sufficiency in food production is not a measure of economic success for poor countries or rich ones. Japan and Hong Kong would not be better off if they suddenly imported less food.

Agricultural producers take scarce resources of lower economic value and transform them into food and feed products of higher value that can be directly consumed, fed to livestock or sold in some type of marketing system. They do the same thing as makers of tires for cars or processor chips for cell phones and computers. To be successful, agricultural producers need a source of inputs like seeds, fertilizers and pesticides, financing for those products and markets for the finished products. If computer makers in China can connect to worldwide input supply lines and markets for finished computer products, why cannot small farmers do the same?

About 40 percent of the world’s population is stuck in subsistence or marginal market agriculture, and that is not something to be lauded by politicians or protected by trade agreement. Their problem is that they are too disconnected from inputs and markets that are necessary for economic development. Being left in that condition long term makes no sense. The last two years of high food prices have generated interest on the part of governments and international aid groups to open up input supplies to small farmers and break down market barriers to consumers. That is good. Now is the time to push forward, not to back track on previous market opening commitments.

President Clinton was also critical of policymakers at the World Bank, International Monetary Fund and other groups that provided aid on the condition that subsidies for fertilizer, seed and other inputs were dropped. He is on more solid ground with that criticism, not because subsidies are good policies, but because government policies often make the cost of inputs too expensive without subsidies and credit is not available at any price. Those agencies opposed to the subsidies were rightly concerned about the use of financial resource that could be better spent elsewhere, but ignored the weak infrastructure for inputs that provided too few inputs without the subsidies.

Walling off subsistence and marginal market farmers from the rest of the world economy is not an option. Limited resource farmers and landless peasants will continue to migrate to cities as they have since the industrial revolution began 200 years ago. Some illegally cross international borders to come to countries like the U.S. or move to cities within their countries without proper government permission as happens in China. Officials at the UN and the WTO can pretend that it does not happen, but people continue to use their feet to change their economic opportunities.

When people do earn enough money to eat better, they do not worry about theories of food self sufficiency. They expand the variety of foods they eat. Few countries have enough variations of climate to take food self sufficiency seriously if they want people to have complete diets. Northern countries like Canada and Finland would be severely restricted on the availability of fresh fruits and vegetables. Countries like the U.S. are short on bananas and coffee. Other countries lack fertile lands and rainfall. Variability of production necessitates imports by some countries in low production years.

Now is the time to push ahead with plans to make available more production inputs like fertilizer and hybrid and biotech seeds to subsistence and marginal market farmers so they can move from low incomes to higher incomes. Now is the time to recognize that some farmers will choose to leave agricultural areas and move to more populated area where employed opportunities may be greater. And now is the time to remove trade barriers that restrict producers and consumers from different countries from meeting in the marketplace.

President Clinton correctly pointed out the need to increase the capacity for people to feed themselves. That very seldom happens in closed economies like North Korea or Cuba. Increasing the capacity for people to feed themselves quickly leads to increased trade among people within a country and across borders in other countries. Food production and trade in food are not zero sum activities. Strengthening the economic position of low income farmers in developing countries and opening markets work together, not at cross purposes.

When agricultural trade is viewed as an economic opportunity rather than a problem, solutions are all around us. More input supplies and more markets for products lead to lower food costs and more trade as people specialize in production and trade with others who have also specialized in other products.

Ross Korves

Ross Korves

Ross Korves served Truth about Trade & Technology, before it became Global Farmer Network, from 2004 – 2015 as the Economic and Trade Policy Analyst.

Researching and analyzing economic issues important to agricultural producers, Ross provided an intimate understanding regarding the interface of economic policy analysis and the political process.

Mr. Korves served the American Farm Bureau Federation as an Economist from 1980-2004. He served as Chief Economist from April 2001 through September 2003 and held the title of Senior Economist from September 2003 through August 2004.

Born and raised on a southern Illinois hog farm and educated at Southern Illinois University, Ross holds a Masters Degree in Agribusiness Economics. His studies and research expanded internationally through his work in Germany as a 1984 McCloy Agricultural Fellow and study travel to Japan in 1982, Zambia and Kenya in 1985 and Germany in 1987.

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