Global food companies are the primary beneficiaries of selective trade liberalization in agriculture
The past two decades of "globalization" have fundamentally altered the shape of agricultural markets, dramatically increasing the market power of transnational agro-food companies at the expense of farmers around the world. While a variety of macroeconomic variables have influenced this trend, it is important to focus on two policy phases of globalization, and to explore the influence of food corporations on the shaping of those policies.
After the developing country debt crisis exploded in the early 1980s, policy makers at the multilateral financial institutions (the World Bank and International Monetary Fund) introduced stringent lending conditionalities for borrowing countries seeking to maintain liquidity and address their balance of payments problems. Under these structural adjustment policies, governments were required to slash spending on social programs, privatize their state-run enterprises, and eliminate public investment in sectors of the economy that were deemed "uncompetitive" in the global economy.
For most developing countries, structural adjustment brought an end to subsidy support to farmers, and an all-out effort to switch from production for local consumption to a focus on growing exotic food for export markets. The logic was simple: exports, which generate foreign currency for debt service, were considered more important than meeting domestic food requirements.
The second phase of globalization -- trade liberalization -- was supposed to feed those who no longer grew their own food. During the 1990s, a wave of "free trade" agreements came into effect, culminating in the launch of the World Trade Organization in 1995 as the architect and arbiter of global trade rules. People in developing countries would supposedly use export earnings to buy food more cheaply on international markets.
The WTO's contentious "Agreement on Agriculture" became an ongoing effort to balance the competing interests of food exporters and importers around the world, but the net result of trade liberalization in agriculture became apparent very soon after "globalization" policies were applied to developing countries. Farmers were driven off the land by the collapse of domestic support systems, subsidized production from the US and Europe was "dumped" on developing country markets, and the trend toward consolidation and concentration accelerated among the transnational food companies that trade across these markets.
Globalization has thus been very good for agribusiness. It should therefore come as no surprise that firms and industry associations have aggressively used their privileged access to policy makers to push for ongoing trade liberalization, as well as for selective subsidy policies that keep production levels high and global commodity prices low.
