Friday, February 02, 2007 Oledan: Terminal condition By Radzini Oledan
ASIDE FROM the rice sector, the plight of the corn industry in the global trade agreement was equally grim.
Mindanao, being the main production area of the country suffered from several decades of neglect and was suddenly opened up to global competition that it was ill-prepared to meet.
Unlike rice, however, corn imports were not subject to quota restrictions. A minimum access volume (MAV) starting from 3% of domestic consumption in 1995 to 5% in 2004 would be taxed at a low tariff of 35%. Beyond that, the AOA still allowed corn to come in with no volume limitation, though the tariff rate would be increased to 100%.
How much protection these arrangements gave was open to question. An Oxfam Great Britain study in 1996 claimed that imports from the US, the world's largest corn exporter, could be available at a price 20% below the current domestic price. It went on to note that by "the year 2004, the price gap may have widened to 39%, as tariffs are scaled down under the (1986-94) Uruguay Round agreement".
From practically zero imports in 1993 and 1994, corn coming into the Philippines shot up to 558,000 in 1996, 462,120 metric tons in 1998 and 446,430 in 2000.
Among the factors depressing the price of corn was cheap corn from the United States coming in under the PL 480 programme of the United States, which sought external markets for US corn by giving foreign governments long-term low interest export credits to import US agricultural commodities, including soybean, rice, and corn.
Further analysis would show that PL 480 was one of several dumping devices that were legitimate under the AOA.
An average of $US20 million of US agricultural commodities has arrived under the program since 1997, causing protests from local growers claiming that PL 480 yellow corn imports were particularly harmful, in terms of depressing local prices, especially since they arrived during the corn harvest.
The trend appears to have accelerated after the country's adherence to the Agreement on Agriculture. Focus on the Global South analyst Aileen Kwa claimed that, corn farmers in " Mindanao... have been wiped out. It is not an uncommon sight to see farmers there leaving their corn to rot in the fields as the domestic corn prices have dropped to levels [at which] they have not been able to compete".
This observation was supported by macro data. While production remained stagnant, land devoted to corn across the country contracted sharply from 3,149,300 hectares in 1993 to 2,510,300 hectares in 2000 (28).
During the GATT-WTO ratification debate, government admitted that traditional corn and rice farmers would be among the losers, with some 45,000 corn farmers among those displaced annually.
Industry players were pinning hope that the growth of employment in selected export and high value added crops that was supposed to be a fallout of the WTO would translate into a net gain of 500,000 a year.
But these estimates were highly questionable. According to the Secretary of Agriculture at the time of the WTO ratification debate, the 45,000 corn farmers slated for displacement would be absorbed by the silage growing industry that would service the cattle-growing industry stimulated by the WTO regime.
Yet cattle raising turned out to be a very disappointing industry in the next few years, stunted by a very liberal beef and "carabeef" import put in place to comply with the AOA itself.
It was a depressing reality for corn farmers as only those who have bigger farm lots are able to shift easily while small farmers were forced to lease their lands to finance the capital needed to shift to high value crops.
An explanation for this trend was offered by economist Kevin Watkins: "The argument that displaced food staple producers will simply shift to the production of commercial crops has a somewhat surreal quality. The high capital costs of entry into commercial food markets and the importance of infrastructure, which is non-existent in the more marginal areas from which people will be displaced, means most of the benefits from commercial agriculture will accrue to more prosperous producers". Email comments to roledan@gmail.com
