Chilean Farmers Protest Trade Pact

By Jimmy Langman

TEMUCO, Chile, June 11, 2003, The Miami Herald: The U.S.-Chile free-trade agreement signed by officials Friday in Miami will mean greater opportunity for some in this small South American nation. Successful export products for Chile, such as wines and fresh fruits, will consolidate their access to the lucrative U.S. market.

But for the more than 200,000 farmers in southern Chile who specialize in traditional agricultural products such as wheat, dairy products, beef and beets -- which they overwhelmingly sell only at home in Chile's internal market -- free trade with big brother to the north spells impending economic and social disaster.

Southern Chilean farmers are campaigning vigorously to defeat the agreement when it comes up for a ratification vote in Chile's Congress this fall.

Farmers like Nicolas García, 47, whose family has been growing wheat and oats on their farm just north of the southern Chilean city of Temuco for more than a century.

García says that the tranquil, verdant countryside has fostered a wonderful lifestyle and excellent farming but that free trade with the United States will mean the vast majority of the tens of thousands of wheat farmers in the region will be forced off their land and out of work.

''It's a case of the biggest and strongest eating the smallest. We just cannot compete with U.S. subsidies,'' García said.

Last year, President Bush signed into law a farm bill raising U.S. agricultural support by $180 billion, the equivalent of an 80 percent increase in subsidies for farmers each of the next 10 years. Those subsidies are aimed in part on keeping the cost of wheat and other commodities low, experts say.

In 2001, U.S. agribusiness sold wheat abroad at a price 44 percent less than what it cost to produce it, says the Minnesota-based Institute for Agriculture and Trade Policy, based on government statistics on production and transportation subsidies.

Below-cost U.S. grain exports are pushing down world prices, thereby undercutting competition in developing countries that cannot compete in a subsidy war.

''Family farms in the U.S. don't want to rely on government handouts. They would prefer that the market be restored,'' said Sophia Murphy, trade director for IATP.

To counter such distortions in the global market, Chile has employed a system called the ''price band'' since 1983 to stabilize the price of its wheat and sugar imports.

But in the trade agreement, U.S. negotiators insisted on eliminating the price band. Chile, in the final round of negotiations last December, relented in exchange for the elimination of tariffs on all products of both countries. The price band is to be phased out beginning in 2008.

Osvaldo Rosales, Chile's trade negotiator, said it surrendered because it believes the country will be ready.

''There is a sufficient lapse of time so that we would be capable of initiating projects to improve our productivity, technology, finance so that our farmers can be competitive with the United States,'' he said.

But officials at the Southern Agriculture Consortium, which represents the traditional farmers in Chile's southern regions -- about 70 percent of Chile's farming sector -- say they're already competitive. The group points to studies showing that Chile has the world's best rate of productivity per acre of sugar beets and is sixth worldwide for productivity per acre in wheat.

In addition, due to its particular climatic conditions, only wheat, sugar, dairy products and livestock grazing are economically feasible in Chile's south. These Chilean farmers do not have the option of moving on to alternative crops if their market disappears.

''Our government has cheated us. They promised not to remove the price band in this free-trade agreement,'' said Manuel Riesco, a farmer and the president of CAS.

NOTICE: In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving this information for research and educational purposes.

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