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Globalisation and poverty

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A bid to throw more light on the links between globalisation of the agrifood systems and poverty

D. Narasimha Reddy

GLOBALIZATION OF FOOD AND AGRICULTURE, AND THE POOR: Joachim von Braun and Eugenio Diaz–Bonilla — Editors; IFRI, Washington. Oxford University Press, YMCA Library Building, Jai Singh Road, New Delhi-110001. Rs. 745.

Ever since the unfolding of the Agreement on Agriculture (AOA) as a part of the working of the World Trade Organisation (WTO), there has been a wide debate on the impact of trade liberalisation on agriculture and farmers in developing countries. This book, based on a workshop held at International Food Research Institute (IFRI), Washington, in 2002 is an attempt to throw more light on the debate by extending it to a comprehensive view of the links between globalisation of the entire agrifood systems and poverty. It looks at the world agrifood system as being increasingly globalised, driven by life-style changes propelling specialised production, growing share of processed packed food, and bottled water transported over long distances as well as changes in upstream food chain in seeds, feeds and technical equipment.

Impact

The nine chapters, interspersed with six ‘policy essays’, discuss these changes and their impact on production systems, health, nutrition and food security with particular reference to the poor in developing countries. Though issues relating to peace and domestic conflict, legal and institutional constraints, macroeconomic policy, market reforms, nutrition and food security figure in the book, the core analysis revolves around globalisation, agricultural trade and the poor, especially small farmers who constitute most of the poor in developing countries. Drawing a distinction between the view of globalisation as an impersonal force of shrinking space and time driven by technology on the one hand, and that of policy choices relating to economics and political change on the other, the analysis focuses on the latter.

Globally, smallholder (read small-marginal farmer) agriculture accounts for a large share of agricultural production and almost 85 per cent of all farms in developing countries are of less than two hectares. In India too, similar size accounts for 85 per cent of the farms, about two-fifths of foodgrain production and most of the share in livestock production.

In Bangladesh, most of the farms are of a mere 0.3 hectare in size. In Asia, as a whole, half of the poor are small farmers. In sub-Saharan Africa, small farms account for 90 per cent of agricultural production and for a majority of the poor. Therefore, what happens to rural poor depends on which way the smallholders go.

Two-pronged devices

Drawing on the extensive literature on the debate whether liberalisation would force smallholder to retreat to subsistence or help ride the globalisation wave, Narayanan and Gulati address the complexity of production, income and consumption effects of liberalisation and smallholders. Though theoretically smallholders’ gain or loss depends on their household status as net buyers or sellers, they recognise that the structural and institutional constraints result in substantial difference between market prices and farmers’ price. The result is asymmetric price transmission that makes smallholders pay more for what they buy as inputs, but without gaining higher prices for what they sell. The winners are those vertically integrated in the agricultural chain or those in the fold of collectives like cooperatives or farmer companies but such situations are very few. Hence most of the smallholders are losers, and most of them are with meagre assets, without much infrastructure and in poorly endowed natural resource regions.

The authors suggest two-pronged policy instruments, one to create factors that help farmers ride the globalisation wave, which includes access to infrastructure, information, input, building of human capacity through education and training, removal of credit constraints and building of institutional structures. And the other, to put in place safetynets, anti-monopolistic laws and research and development aimed at protecting small farmers from being swept away. At the end of this analysis, somewhat surprisingly, may be because of their faith in market fundamentalism, they conclude that “even if small farmers were to lose in the short run, in the long run they could benefit from farm and non-farm activities through greater employment opportunities.”

Perhaps, it is not only data and evidence, but also the courage of conviction that is needed to call a spade a spade and such frank speak also has space in the volume. Addressing the question of agricultural trade and the poor, Kevin Watkins observes that coexistence of rising prosperity, mass poverty, and growing inequality is one of the hallmarks of globalisation, and one of the objectives of the Doha round is to change this, with agricultural trade reform as a means towards that end. If agricultural trade provides access to developed countries’ markets and protection against subsidised exports from the European Union and the United States, then there is potential for small-farmer poverty reduction, rise in incomes and the multiplier effects of agricultural growth in developing countries. But the Doha round failed to address these problems. Referring to the role of high value food products (HVFP) from developing countries linked to supply chains of industrialised countries, he points out that the problem is such that markets are dominated by a small number of large-scale processors and traders or giant supermarket chains, often resulting in transfer of a large share of value-added away from producers in developing countries.

Preferred destination

There is celebration, in the same volume, of global supermarket chains, and of India as the third most preferred destination in the world to be flooded with FDI, if only the dam of the government restriction on foreign capital is breached in retail trade (Reardon and Timmer). Kevin cautions on short-term contracts, payment delays, high rates of product rejection, post-harvest quality storage etc. that plague the small farmer deals with the market chains. Making trade work for the poor will require new approaches to markets and rules, and national strategies including access to land, investment in rural roads and communication facilities, marketing institutions and so on. Globalisation has made research more competitive and proprietary. Developing countries need participatory and bottom-up research and national systems of innovation. Institutions involved in agricultural R&D in developing countries need to start relying on themselves and on one another to develop pro-poor technologies (Per Pinstrep Anderson and Mengistu).

The book is a collection of well-researched papers based on extensive data from developing countries across the three continents. Though there has been a cautious balance in the composition of the papers to bring out both sides of the impact of globalisation of agrifood systems on the poor, there is no escaping the conclusion that globalisation helped little in reducing poverty of those engaged in agriculture in developing countries (von Braun).


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