CAFTA and Agriculture
The most controversial aspect of the Central America Free Trade Agreement for the countries of Central America is agriculture. All five countries have been critical of U.S. domestic subsidies and publicly funded export promotion programs. If countries in Central America reduce their tariffs on agricultural products, while the U.S. maintains high subsidies, the effects could be disastrouse for small farmers. Yet, family farms in the United States will not benefit either.
One indication of the dangers in store for the region from CAFTA, is to look at the impact on the U.S. and Mexico almost 10 years after the passage of the North American Free Trade Agreement.
Today in Mexico farmers are fed up. A new organization called El Campo No Agunata Mas (The Countryside Can Take No More) has been organizing demonstrations and taking other steps to pressure the Mexican government to withdraw from NAFTA. Why? Since NAFTA went into effect in 1994 campesino production has suffered greatly in southern Mexico. While U.S. companies are dumping corn at prices 25% below the costs of production, rural families are forced to sell their land and flee to the cities where jobs are scarce.
But U.S. family farms are not doing well either. By 2000, 33,000 farms with annual incomes of under $100,000 had gone out of business since the passage of NAFTA. This rate was six times as high as the years prior to NAFTA. Farm annual incomes prior to NAFTA was also $59 billion, and by 2001, this figure had dropped by about 43%. The commodity prices between 1995 and 2000 also showed significant drops because of growing imports allowed under NAFTA that resulted in excess supply. Corn prices fell by 33% per bushel, 42% for wheat, 34% for soybeans, and 42% for rice. Farmers were not only hurt in the United States, but also the other partners in NAFTA. In Canada, net farm income fell by $600 million in the first seven years of NAFTA. In Mexico, it is projected that about 15 million Mexican small farmers, or one in six Mexicans, lost their farms. Many were forced to move to urban areas to try and make a living.
Where did all of the profit go that was promised under NAFTA? Agribusiness: ConAgra reported profits that grew from $143 to $413 million from 1993 to 2000, and Archer Daniels Midland (ADM) almost tripled in profit from $110 to $301 million. While farm commodities have fallen consumer food prices increased almost 20%, providing huge profits for corporate business. Everywhere we turn in agriculture policy today, the influences of corporate power can be seen. CAFTA is just an effort to expand this power even further.
Additional Resources on Free Trade and Agriculture
Joint letter on CAFTA and Nicaragua Agriculture from Latin America Working Group, Washington Office on Latin America, National Family Farm Coalition, Nicaragua Network and the Quixote Center/Quest for Peace, April 2003
Witness for Peace testimony on CAFTA, November 2002.
Down on the Farm Public Citizen's report on the effects of NAFTA on farmers in the U.S., June 2001