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Agricultural Negotiations, Food Security, and Poverty

Agricultural Negotiations, Food Security, and Poverty. Eugenio D íaz - Bonilla International Food Policy Research Institute Presentation at the meeting of the EU-LDC Network Rotterdam, May 30 and 31, 2001. Heterogeneity. Net Trade Position NFIM 105 (48, 35, 22) NFEX 43 (15, 17, 11)

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Agricultural Negotiations, Food Security, and Poverty

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  1. Agricultural Negotiations, Food Security, and Poverty Eugenio Díaz-Bonilla International Food Policy Research Institute Presentation at the meeting of the EU-LDC Network Rotterdam, May 30 and 31, 2001

  2. Heterogeneity • Net Trade Position • NFIM 105 (48, 35, 22) NFEX 43 (15, 17, 11) • NAIM 85 (30, 32, 33) NAEX 63 (33, 20, 10) • (Valdes and McCalla, 1999) • Direction of trade • Africa to EU • LAC, USA, and EU • Asia to Asia • Types of Products • Food Security: 12 clusters • (Diaz-Bonilla, Thomas, Robinson and Cattaneo, 2000) • Structure and Evolution of Production Page 2

  3. Is Agriculture Special? • Debate on multifunctionality • Other sectors; jointly produced; adequate policy interventions? • Developing countries: different positions. • Whose multifunctionality? • What multifunctionality? • For developing countries main issues: rural development, poverty reduction or elimination, food security, and environmental sustainability. Page 3

  4. Food Security, Nutrition Security and Trade • Art. 20 and Preamble of Agreement on Agriculture refer to non-trade concerns, including food security. • Two related questions: • Categories of countries under WTO rules: are they adequate for analyzing food security? • WTO disciplines and Special and Differential Treatment linked to those categories: are they adequate to address food security concerns? Page 4

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  6. Cluster Analysis • Variables • Calories per day per capita • Proteins per day per capita (grams) • Food production per capita (US$ 1989-91) • Total exports (merchandise and services) over food imports • Non agricultural population over total population • 167 countries; 155 WTO (132 members and 23 observers); 43 LDCs; 19 NFIDCs • Levels, standardized (z-scores) • Three methods: hierarchical, k-means, and fuzzy Page 6

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  9. Typology • LDCs better job at identifying food insecure. But some food insecure not included and some food neutral included • NFIDCs not as good as indicator of food insecurity (~40% trade neutral) • Need to define better categories? • Take -0.5 in standardized variable as cutting point • 2380 Calories and 62 grms. proteins for consumption insecure (FAO data) • 13% IMFOOD/TOTEXP for trade stressed Page 9

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  11. Trade and Food Security • Consumption per capita has increased on average, but there are exceptions (~ 1/4 countries less than 1960s) • Consumption is less variable than production • Total exports earnings expanded more than food import bill. • Price variability seems lower. Page 11

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  16. Is the AoA Framework Adequate? • Criticisms because of the imbalances between industrialized and developing countries. Valid criticism. • Criticisms because of the inadequacy of the AoA to address issues of importance for developing countries? • Cost money, difficult to implement? • Development box? Food safety box? • Do not ask for what you may already have or what you cannot pay Page 18

  17. Trade, Growth and Poverty • Trade and Exports associated with higher growth rates • Constraints? • Agricultural protectionism in industrialized countries. • Market access • Eliminate export subsidies and similar practices • Control domestic support • Agricultural and trade policies in developing countries. Page 19

  18. Protectionism in Industrial Countries • Existing preferential arrangements and differentiated impacts on developing countries. • Increase the percentage of the quota rent that goes to developing countries. • Transform value of trade preference to aid in cash. • Net importers • Financial facilities, food aid in cash, countercyclical, targeted Page 20

  19. Trade and Poverty • Poverty decreases with high, stable, inclusive and sustainable growth. • Trade helps or harms? • Level: open economies seem to grow faster, but how to define open? • Stability: open or closed economies more unstable? • Inclusiveness: Competitive advantage and more labor intensive? Can small farmers compete? Reinforcing powerful economic agents? • Export/cash crops versus staple crops? • Impact on women? Traditional crops, land tenure; new crops, wages. Time to care for children • Impact on environment? • Outward orientation and complementary policies • Does AoA constrain needed policies? It does not seem to be the case. Article 6.2. Page 21

  20. Agricultural policies in developing countries • High prices for producers vs low prices for consumers. Old conflict in agricultural policies. • Developed countries make consumers and taxpayers pay producers. Developing countries historically kept agricultural prices low for urban population and industrialization. And now? Lack of definition, affecting domestic policies and trade positions. Page 22

  21. Old Conflict (cont.) • Perspective of poor producer (multiplier effect of agriculture). But poor consumers (poor net food buyer >50% of incomes, urban malnutrition)? No way out of this policy dilemma. • Poverty alleviation and protection: tax on food, with the greater burden falling on poor consumers and larger percentage going to large producers • General equilibrium effects of protection: other sectors hurt; employment; exports Page 23

  22. Old Conflict (cont.) • There is still a need for instruments to protect from import surges. Avoidance of drastic shocks that imperil survival strategies of the poor. • Poor countries may ask industrialized countries to reduce protection to their levels. • Negotiate from bound tariffs Page 24

  23. Alternatives in the AoA • Green box: food safety stocks, domestic food aid. • Article 6.2. • Safeguards: special expanded or new ones? • No export bans/taxes. Page 25

  24. Additional Issues • Adequate indicators to identify countries. • Disasters and wars. Special consideration when consumption falls below some pre-specified levels • International food aid:counter-cyclical, cash form, and targeted. • Burden of regulations as % of GDP (SPS). Page 26

  25. Trade and Food Security: Some Conclusions • Food security is largely a domestic issue: • Availability (domestic supply and trade), • Access (broad-based development), and • Utilization (health, education, women empowerment, democracy). • Food security as perceived by poor countries is different from trade concerns as articulated by developed countries. Mixing completely different notions does not help poor countries. Page 27

  26. Trade and Food Security: Some Conclusions • Adequate policies. • Focus on small farmers and the poor. • Investment in human capital and infrastructure. • Technology and extension. • Land ownership by small producers and landless workers. • Community organization and political participation. • Adequate functioning of product and factor markets. • Macroeconomic stability. • Good governance. Page 28

  27. Conclusions: WTO Negotiations • Define better categories with objective indicators. • Address the issue of agricultural protectionism in developed countries. • Some changes in language in the AoA. Page 29

  28. Conclusions: WTO Negotiations • But the main issues are not legal texts and language. The problem is financing for rural development, food security and poverty alleviation: • To implement a better operating and integrated food system. • To establish more creative forms of safety nets utilizing world capital markets. Page 30

  29. Other Global Problems • Financial instability and debt problems. • Heavily indebted poor countries initiative (HIPC). • War and conflict. Page 31

  30. For additional information, visit our website <www.ifpri.org> Page 32

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  32. Exports to LDCs and LICs Page 34

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  36. Issues For Discussion • WTO: key instrument for developing countries to bring the rule of law to trade issues. • AoA does not constrain good policies that genuinely address poverty and food security issues (programs aimed at poor producers or consumers, stocks for food security, and domestic food aid for populations in need). Page 38

  37. Issues for Discussion • Under the AoA, countries must make serious efforts to structure well-defined programs for poverty, food safety, and environmental protection. • Poor producers helped by the disciplines on subsidized exports. Page 39

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