“Free Trade”: Is it working for farmers? Comparing 2007 to 1988
National Farmers Union (Canada)
“Free Trade”: Is it working for farmers?
Comparing 2007 to 1988
October 19, 2007
(This is an expanded and updated version of a report originally published in 2002.)
In January 1989, Canada implemented the historic Canada-US Free Trade Agreement
(CUSTA). In January 1994, Canada implemented the North American Free Trade
Agreement (NAFTA). And in January 1995, we implemented the World Trade
Organization (WTO) Agreement on Agriculture (AoA).
We’ve had 19 years of “Free Trade.” How is it working for farm families and rural
communities? To help us find out, the following compares economic indicators from
1988 (the year before we set off down the Free Trade path) with those of 2007.
Figures are not adjusted for inflation.
[See attached PDF for figures]
Why isn’t Free Trade working for farmers?
Farmers have doubled and re-doubled exports, adopted new technologies, switched to high-value
crops, and poured billions of dollars of investments into our farms. At the initiative of our
governments, we’ve become signatories to trade agreements. Farmers did everything Free Trade and
globalization advocates recommended. And the result is the worst farm income crisis since the 1930s.
Question: Why hasn’t Free Trade yielded the predicted benefits for farmers and rural communities?
Answer: These agreements don’t just shift trade flows, they shift power.
For farmers, so-called “Free Trade” agreements do two things simultaneously:
– By removing tariffs, quotas, and duties, these agreements erase the economic borders between nations and force the world’s one billion farmers into a single, hyper-competitive market.
– At the same time, these agreements facilitate waves of agribusiness mergers that nearly
eliminate competition for these corporations.
Economists agree: when competition increases-as it has for farmers-prices and profits decrease.
And when competition decreases-as for agribusiness corporations-prices and profits increase.
Thus, trade agreements and globalization predictably decrease farmers’ prices and profits and increase prices and profits for the dominant agribusiness corporations.
“Free Trade” agreements may increase trade but, much more importantly, they dramatically alter the relative size and market power of the players in the agri-food production chain. For farmers and their net incomes, increased exports may be one of the least significant effects of trade agreements and globalization. Much more significant-perhaps completely overwhelming any potential benefits from increased exports-may be the effect these agreements have on the balance of market power between farmers and agribusiness corporations, because this balance of market power determines the
distribution of profits within the
agri-food production chain.
Profits are not made, they’re
taken.
This graph [see attached PDF ] shows that farmers
have not benefited from Free Trade
or rising exports. Despite such
evidence, the federal government
continues to push for a new World
Trade Organization (WTO)
agreement that will, it says, help
end the farm crisis. The
government also wants to expand
NAFTA to the tip of South
America with the “Free Trade Area
of the Americas” (FTAA). Help
reverse this destructive course. Help the NFU get the message to
Ottawa: “Free Trade helps
Cargill and Monsanto, not
farmers.”
