Posted March
3, 2005, IATP.org: Despite the now ten-year-old
World Trade Organization (WTO) agreement to end market
distorting practices in agriculture, commodity dumping
by U.S. food companies continues and in greater numbers
than when the agreement was made. According to an Institute
for Agriculture and Trade Policy (IATP) report, all
five major U.S. commodities were sold well below the
cost of production in 2003.
“It is clear that the WTO Agreement on Agriculture
is doing nothing to address agricultural dumping and
its severe consequences for farmers around the world,”
said IATP President Mark Ritchie. “The low global
prices caused by dumping hurt farmers around the world,
including U.S. farmers. It’s time for trade negotiators
to put this issue front and center.”
Using data from the U.S. Department of Agriculture
(USDA) and the Organization for Economic Cooperation
and Development (OECD), IATP analyzed price information
from 1990 through 2003 and found that U.S. commodities
continue to be sold well below the cost of production.
Analysis of 2003 data revealed:
- Wheat was exported at an average price of 28 percent
below cost of production;
- Soybeans were exported at an average price of 10
percent below cost of production;
- Corn was exported at an average price of 10 percent
below cost of production;
- Cotton was exported at an average price of 47 percent
below cost of production;
- Rice was exported at an average price of 26 percent
below cost of production.
Dumping is one of the most damaging of all current
distortions in world trade. Yet, since its inception
the WTO has refused to address or even acknowledge its
negative impacts on rural economies around the world.
Developing country agriculture, vital for food security,
rural livelihoods, poverty reduction and generating
foreign exchange, is crippled by the predatory competition
from major commodities sold at well below cost of production
prices in world markets.
The report found that dumping levels increased significantly
for every commodity after the passage of the 1996 Freedom
to Farm bill. The 1996 bill, followed by the 2002 U.S.
Farm Bill, produced a vast structural, price-depressing
oversupply of major agricultural commodities. This oversupply
has driven commodity prices down worldwide. Both the
1996 and 2002 Farm Bills were driven by efforts to make
them compliant with WTO rules. The result has been the
institutionalization of agricultural dumping by U.S.
farm policy, the report concluded. Each of the five
major export commodities saw a significant jump in export
dumping when comparing the seven years (1990-1996) prior
to the 1996 Farm bill to the subsequent seven years
(1997-2003):
- Wheat dumping levels increased from an average
of 27 percent per year pre-1996 to 37 percent per
year post 1996;
- Soybean dumping levels increased from an average
of 2 percent per year pre-1996 to 11.8 percent post-1996;
- Maize dumping levels increased for an average of
6.8 percent per year pre-1996 to 19.2 percent post-1996;
- Cotton dumping levels increased from an average
of 29.4 percent pre-1996 to an average of 48.4 percent
post 1996;
- Rice dumping levels increased from an average of
13.5 percent pre-1996 to an average of 19.2 percent
after 1996.
“Agriculture subsidies are not driving dumping,”
says Ritchie. “It is the absence of farm programs
that bring production in line with supply. Without these
programs, farmers will over-produce with or without
subsidies, and dumping will continue.”
The full report, along with a one-page fact sheet,
is available at: iatp.org. The Institute for Agriculture
and Trade Policy works globally to promote resilient
family farms, communities and ecosystems through research
and education, science and technology, and advocacy.
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