Posted March 3, 2005, IATP.org:
Despite the now ten-year-old World Trade Organization (WTO) agreement
to end market distorting practices in agriculture, commodity dumping
by U.S. food companies continues and in greater numbers than when
the agreement was made. According to an Institute for Agriculture
and Trade Policy (IATP) report, all five major U.S. commodities
were sold well below the cost of production in 2003.
“It is clear that the WTO Agreement on Agriculture is doing
nothing to address agricultural dumping and its severe consequences
for farmers around the world,” said IATP President Mark Ritchie.
“The low global prices caused by dumping hurt farmers around
the world, including U.S. farmers. It’s time for trade negotiators
to put this issue front and center.”
Using data from the U.S. Department of Agriculture (USDA) and the
Organization for Economic Cooperation and Development (OECD), IATP
analyzed price information from 1990 through 2003 and found that
U.S. commodities continue to be sold well below the cost of production.
Analysis of 2003 data revealed:
- Wheat was exported at an average price of 28 percent below cost
- Soybeans were exported at an average price of 10 percent below
cost of production;
- Corn was exported at an average price of 10 percent below cost
- Cotton was exported at an average price of 47 percent below
cost of production;
- Rice was exported at an average price of 26 percent below cost
Dumping is one of the most damaging of all current distortions
in world trade. Yet, since its inception the WTO has refused to
address or even acknowledge its negative impacts on rural economies
around the world. Developing country agriculture, vital for food
security, rural livelihoods, poverty reduction and generating foreign
exchange, is crippled by the predatory competition from major commodities
sold at well below cost of production prices in world markets.
The report found that dumping levels increased significantly for
every commodity after the passage of the 1996 Freedom to Farm bill.
The 1996 bill, followed by the 2002 U.S. Farm Bill, produced a vast
structural, price-depressing oversupply of major agricultural commodities.
This oversupply has driven commodity prices down worldwide. Both
the 1996 and 2002 Farm Bills were driven by efforts to make them
compliant with WTO rules. The result has been the institutionalization
of agricultural dumping by U.S. farm policy, the report concluded.
Each of the five major export commodities saw a significant jump
in export dumping when comparing the seven years (1990-1996) prior
to the 1996 Farm bill to the subsequent seven years (1997-2003):
- Wheat dumping levels increased from an average of 27 percent
per year pre-1996 to 37 percent per year post 1996;
- Soybean dumping levels increased from an average of 2 percent
per year pre-1996 to 11.8 percent post-1996;
- Maize dumping levels increased for an average of 6.8 percent
per year pre-1996 to 19.2 percent post-1996;
- Cotton dumping levels increased from an average of 29.4 percent
pre-1996 to an average of 48.4 percent post 1996;
- Rice dumping levels increased from an average of 13.5 percent
pre-1996 to an average of 19.2 percent after 1996.
“Agriculture subsidies are not driving dumping,” says
Ritchie. “It is the absence of farm programs that bring production
in line with supply. Without these programs, farmers will over-produce
with or without subsidies, and dumping will continue.”
The full report, along with a one-page fact sheet, is available
at: iatp.org. The Institute for Agriculture and Trade Policy works
globally to promote resilient family farms, communities and ecosystems
through research and education, science and technology, and advocacy.