[DEBATE] : Firms gained more than farmers under WTO norms, says Centad

[Riaz K. Tayob]

Firms gained more than farmers under WTO norms, says Centad

http://www.financialexpress.com/news/Firms-gained-more-than-farmers-under-WTO-norms-says-Centad/220430/0

ASHOK B SHARMA
Posted online: Monday , September 24, 2007 at 0052 hrs IST

The present asymmetric rules of the multilateral trading system coupled 
with the lack of appropriate policies of the national governments has 
benefited select global agribusiness firms, rather than the farmers, 
said a recent study done by the Delhi-based Centre for Trade and 
Development (Centad).

The study expressed concern over the Doha Development Round and said, " 
it now hangs on a thin tread as trade negotiators in Geneva make their 
absolutely last second attempts to get a fair deal. It is undeniable 
that the current impasse is primarily the result of unfair agricultural 
trade rules of the previous rounds of trade talks. The real 
beneficiaries of asymmetric rules have been business firms, rather than 
the farmers. Little wonder then that agribusiness has been one of the 
most important drivers of agricultural rules at the multilateral level."

According to the Centad study empirically global agricultural trade is 
highly asymmetric with large number of producers linked to very few 
traders who in turn sell to large number of buyers. Therefore there are 
few leaders to decide the price and choice of consumption.

Bayers, Syngenta, BASF, Dow and Monsanto control 65% of the pesticide 
sales in the world. Monsanto, DuPont, Syngenta and Groupe Limagarin in 
the sale turnover of 10 major seed companies account for 72% market 
share in the world, while Monsanto alone has 91% global market share in 
the sale of genetically modified seeds.

Global top 10 food retailers command a market share of 24% amounting to 
$ 3.5 trillion, out of which Wal Mart, Carrefour, Metro AG and Ahod 
account for 64%. Chiquita and Dole Foods command 50% of banana sales, 
while Unilever/Brooke Bond, Cadbury Schweppes and Allied-Lyons control 
80% of global tea sales.

The study said about two types of agribusiness consolidation—horizontal 
and vertical. When companies dealing with same product enter into an 
alliance, it is horizontal consolidation like Cargil, Cenex, ADM and 
General Mills controlling 60% of terminal grain handling in the world. 
Vertical consolidation is where few companies are in a commanding 
position in the `field-to-table' process.

The study says Carrefour's revenue from sales is greater than the the 
gross national income of Chile, while that of Wal Mart 3.2 times the 
gross national income of Pakistan and that of Cargil is equal to the 
gross national income of Romania.

Comparing the retail price of tea in India at Rs 160 a kg, the Centad 
study noted that it was more than 3 times greater than the average 
auction price for tea at Rs 50 per kg. Potato chip in India priced at Rs 
143 a kg was 28 times more than the price of potato paid to farmers. 
Similarly one pound of loose banana sold in UK Super Market at 40 pence 
was 27 times more than the price the plantation workers receive

The study also found compliance of stringent standards of developed 
countries would burden the farmers in the developing countries. 
Compliance to EUREP-GAP norms would amount to 70% of the average income 
of Ghana farmers, 87% of the average income of Indian farmers and about 
1.3 times the annual per capita income of Bangladesh.