Seminar hosted during the World Social Forum, 2004, Mumbai, India
17th January, 5 pm- 8 pm

The first of the IDEAs seminars at the World Social Forum in Mumbai was hosted on 17 January 2004 from 5-8 pm. This session, held in partnership with the Bangkok-based Focus on the Global South, dealt with the crisis that the agrarian sector is facing as a consequence of imperialist globalization. Professor Erinc Yeldan from Turkey, and on the executive committee of the IDEAs chaired the session and briefly spoke about IDEAs to introduce the organization to the audience. Professor Jomo KS of Malaysia, and Chairperson of IDEAs was then invited by the Chair of the session to talk about IDEAs in greater detail. Jomo also read out the schedule of the sessions IDEAs would be hosting at the WSF over the next few days.

The speakers in this session included Professor Utsa Patnaik from Jawaharlal Nehru University, Chanida Chanyapate Bamford from Focus on the Global South, Punyavati from All India Democratic Women's Association (AIDWA), Professor Alicia Puyana from La Facultad Latinoamericana de Ciencias Sociales (FLACSO), Mexico, Chittaroopa Palit from the Narmada Bachao Andolan, and Professor Abhijit Sen from Jawaharlal Nehru University. The presentations were followed by a Question-Answer session.

Prof. Utsa Patnaik was the first speaker at the session. She started by thanking IDEAs for providing her with the opportunity to speak in the session. She said that there would be no need to outline in front of the gathered audience as to how globalization is all about recolonialisation of developing country. Today the focus of globalization is the agricultural sector. Sub-Saharan Africa and Latin America came under the neoliberal reforms more than 20 years ago. India took up the reforms programme much later but has seen similar results.

Farmers all over the globe are facing starvation and unemployment, and trade liberalization has resulted in global price volatility. Agricultural producers are now subject to output instability and are at the mercy of factors over which they have no control. For Indian primary producers one such factor is the unpredictability of the monsoons on which majority of the Indian producers have to depend. The huge subsidies that developed countries dole out to their producers are another factor that severely affects the competitiveness of producers in the developing world as these subsidies lower international prices of commodities to levels below the cost of production. A large number of farmers in India have committed suicide owing to indebtedness. In three districts of Andhra Pradesh alone 2580 farmers have committed suicide recently over a short period of time. However, this got reported only in the inside page of the local edition of The Hindu, that too under the heading 'Grandma's recipe can save lives', going on to say that the farmers needed to drink saline water to remain alive.

In India liberalization has led to massive income deflation. There has been removal or reduction of support of every kind, like price support and input support. Through the multiplier effect these cutbacks have resulted in a fall in development expenditure. Rural expenditure has fallen to less than six per cent of GDP during the last five years, a fall of around 30,000 crores of rupees annually. The impact would be severe when one factors in a multiplier of 4 or 5.

The whole strategy of imperialist globalization is intended to satisfy the requirements of developed countries. The phenomenon is the same as when certain countries had direct political control over the colonies. So the current globalization is nothing but recolonialization. The rich have always depended on the poor and not the other way round. The poor countries are richer in natural resources as well as in the possibilities of multicropping.

Another characteristic of imperialist globalization is the shift in agricultural production towards meeting export demand. An inverse relationship between promotion of agricultural exports and domestic food availability has been clearly established. Developed countries are making increasingly larger demands on fertile lands in developing countries. This has led to a decline in food output available for the domestic population. This has not only reduced nutrition, but has also led to an increase in starvation in the developing world. Per capita food availability in Sub-Saharan Africa fell by 20 kilograms during the 1980s to 137 kilograms, and the trend did not see any reversal during the 1990s either.

Producers in the developing world have also been forced into unfair trade. While they are being increasingly forced to give up quantitative restrictions, often in unscrupulous ways like conning, bluffing or sheer pressure tactics, and go for tariffication (implying lower subsidies for their domestic consumers), developed countries are increasing subsidies to their producers. The total subsidies offered to agricultural producers in the United States in 1998 was US $94 billion, which went up by another US $40 billion by 2002. In the US Farm Bill 2002 subsidy to the farmers are supposed to go up to a minimum of US $180 billion. Yet, even after tariffication, developing countries are often told that their tariffs are high, and are arm-twisted to lower them further.

In the last five years India has witnessed unprecedented agrarian distress. The per capita production of foodgrains has witnessed a decline, but more than that rural India has experienced a massive deflation. All India absorption of foodgrains per capita per annum has fallen by 22 kilograms between the three-year period of 1995-98 and that of 2000-03. However even many dissidents have started believing that poverty in India has gone down. They have been also fooled by the manipulated poverty figures which are worth less than the paper on which they are printed. Distress is so evident that there can be no doubt that there has been immiserisation of the masses as a result of agricultural liberalization. Theories need to be carried and linked up to mass movements if the fight is to succeed, necessary connections are to be made with people battling it out at the grassroot level.

Chanida Bamford from Focus on the Global South, Bangkok said that she is not an economist by training, but will speak from her experience of working with the farming population in Thailand, about the reality and the alternatives. Thailand has for long been a very successful food exporting country. Exports have boomed during the last 30 years. The farming community also gained from it and was not much affected by falling prices until other developing countries opened up their agricultural markets to competition. Opening up of their agricultural sector to trade during the last 10-15 years by other countries have affected world prices, with Thailand having to export more and more but even then seeing their farmers earning less and less. Not only have the incomes of the farmers been falling, the amount of debt per household has been going up as well. The government has set some guarantee prices. But farm gate prices have remained low and local traders, linked with exporters, have benefited by pocketing the difference between the government-guaranteed and farm gate prices.

A few companies control the entire grain trade in the world. There is a need to look at the link between local and international traders. It is basic economics which tells us that there is a limit to how much you can eat. So if supplies go up beyond consumption needs, not only do prices fall, countries desperately look for exporting the surplus to other countries. This results in a situation where every country is trying to dump its produce on other countries. Emerging markets like Vietnam (rice and coffee) and China have further added to supplies.

Countries in the Sub-Saharan Africa might need food, but have no money to buy the same. There is the need to allow access to microcredit, technology, etc. to boost capitalist production. However, the way in which these are controlled, to access these one needs to go to the doors of international banks and the multinational corporations. And they provide more woes to the peasants than remedies.

The farmers want to take production and distribution out of the market. The question that one asks is how this might be achieved. Everybody is either a producer or a consumer in the capitalist system. Some perform both the roles at the same time. But agrarian systems are based on a communitarian system. You exchange inside and outside the community. This community-based system has been thrown out in the last three or four decades of 'accelerated development'. If we cannot revive this system there is hardly any hope for a recovery for Thai peasants.

The next speaker was Punyavati from AIDWA. She outlined the experience of her organization in its work at the grassroot level, with rural poor women in South India. In Tamil Nadu Jayalalithaa holds 500 acres of land under different names. Two lakh acres of land has been bought by the rich in a few districts of Andhra Pradesh in the last ten years. It has not so much to do with adverse weather conditions or the like as much as with the aspect of distribution. Vizianagram is drought-prone, but rivers pass through the region. There is poverty, and people have to sell off their lands and become agricultural labourers. The Andhra Chief Minister Chandrababu Naidu is the main culprit. Industries have been given land at Rs 3,000 to 6,000 for every acre where the real cost is anywhere between Rs 2-3 lakhs. Fisheries have replaced rice cultivation in coastal Andhra. This has led to a reduction in demand for agricultural labour. This has led many families to send their women for prostitution. The increase in salinity of the water has led to shortage of drinking water, and has led to a decline in the availability of fodder as well. This has affected cattle rearing and has resulted in declines in milk output and manure production. People displaced from their land now offer themselves as casual labourers, with the men working in jobs like carrying goods in market places (they have to pay Rs 70,000 for a job) and the women working as maid servants and in construction work. Young men also have to leave to seek work in far-off cities like Mumbai leaving the women, new-borns and old people back in the village. Crime rates are also going up as a result of unemployment. Women, as has been mentioned are being forced to enter flesh trade, with the not-so-young-and-good-looking not being able to get any job. There have been more than 3,000 reported cases where daughters have been sold off to repay debts. There are not enough BPL cards and people are having to queue up at gruel centres. There was no provision for alternative employment during the drought. There was some food for programmes in place, but corruption in the system ensured that those who deserved and needed work hardly got any, and those who got some work got only 2-3 kilograms of rice after working the whole day. Ruling party leaders and contractors made the most out of it, and sold the rice meant for food for work programmes in the open market and made a kill. Self-help was being marketed as an alternative way of generating employment, but even here only some women got loans from the bank or the government, and more often than not such funds were spent on events like daughters' marriages.

Alicia Puyana from Mexico spoke about the asymmetry in agriculture between countries, big and small, particularly with regards to trade within NAFTA. Mexico, being a smaller country, got a hard deal. Earlier Mexican agriculture was more protected than agriculture in the US. Before NAFTA Mexican exports to the US had an average tariff of 2-3 per cent. Under GATT most commodities were tariff free. So where was the need for NAFTA in the first place?

NAFTA was more a political instrument than an economic tool. The US claimed that Mexico had a very unproductive and inefficient agrarian structure after the radical land reforms the country underwent during the 1917 revolution. NAFTA was supposed to modernize (read make production conditions capitalistic) Mexican agriculture. Non-productive peasants in Mexico cannot compete with the US farmers. So big farms have to push poor Mexican farmers out to make Mexican agriculture 'efficient'. With Mexico having comparative advantage in vegetables and fruits, the country was advised to produce and export solely these crops, mainly maize and strawberries. But as a result Mexico's attempt to diversify crop production has been thwarted.

Since NAFTA Mexican agriculture has become less labour-intensive. Fruits and vegetables, which are what Mexico is producing and exporting these days, are more capital-intensive than food production. Since the implementation of NAFTA two million producers in Mexico had to leave agriculture. Most of these cultivators were sowing cotton, wheat and soyabean. Those who signed the deal for Mexico did not have the interests of Mexican peasants in mind. US gives agricultural exports from Mexico a two per cent tariff preference, while Mexico gives US exports a 22 per cent preference. So less efficient Mexico gives more protection to US agricultural produce, and not the other way round. US exports to Mexico have risen sharply after NAFTA. US grains now constitute more than 90 per cent of Mexico's total grain imports.

Producer Subsidy Equivalent (PSE) per agricultural worker in Mexico is US $1, in the US it is US $16, and in Europe it is US $17. Grain export from the US to Mexico has a subsidy of 35 per cent of producer costs. Mexico gives only US $700 million a year for general services in agriculture, while the US gives US $26 billion. But still the NAFTA negotiators made Mexico compete with the US.

The trade deficit of Mexico has been rising alarmingly since the implementation of the NAFTA. The import content of items consumed in Mexico has also reached high levels. The value of domestic production is declining not due to a fall in the volume of production, but because of falling prices. Almost all agricultural prices in Mexico are now lower than what they were in the 1990s, and in many products the fall has been by about two-thirds of their earlier prices. The declines have been 71 per cent in cotton, 52 per cent in sesamum seeds and 97 per cent in soyabean.

Grains and beans production in Mexico are dominated by small producers, and they mostly sell to the food-processing industry. Falling prices for these crops meant rising profits for the industry. The entire blame of immiserisation of Mexican farmers is however not on US subsidies. Economic policy in Mexico has been very anti-rural, and anti-peasant. Public investment in Mexican agriculture has been abysmal. The Mexican government claims that there has been recovery on this front after 1995. But this rise has been only by US $40 per worker, and only an increase of 83 per cent in public investment in agriculture can undo the anti-agrarian bias in public investment in Mexico.

The Mexican government needs to protect its agricultural sector. No one can think of Japan without rice, so Japan protects its rice cultivators. A Mexico without corn production is equally unimaginable. And hence it deserves a similar kind of protection. Otherwise the costs to the Mexican society can be very large.

Chittaroopa Palit from the Narmada Bachao Andolan (NBA) spoke about the power sector reforms that are being brought in by the Asian Development Bank (ADB) and the World Bank (WB), and on the need to resist them as they affect peoples' and farmers' lives adversely. Farmers in India in particular are facing host of problems. We have the scissors' crisis, one where prices are falling and markets are non-existent, we have an ecological crisis, where climate change and recurring droughts are affecting peoples' lives, and we have falling accountability and withdrawal of the government, brought in by the structural adjustment and stabilization programmes under the aegis of the Fund-Bank policy prescriptions.

In November 2001 ADB gave the Madhya Pradesh government a loan of US $1680 million, of which US $270 million was a sectoral structural adjustment loan. This was to be paid in three tranches, the first was paid almost immediately as the Madhya Pradesh government had enacted the energy reforms act by July 2001. The next two tranches were payable subject to the restructuring of the Madhya Pradesh State Electricity Board, and the 'rationalisation' of power tariffs (recovering at least 75 per cent of production costs within 5 years). A regulatory commission was to replace the state government in deciding on power tariffs. The corporatisation, privatization and withdrawal of free power from even the most needy have led to tariff shocks in Madhya Pradesh. The Madhya Pradesh government has severed all single point free connections except in tribal homes. There has been a more than 300 per cent rise in tariffs. Farmers put in tariff petitions saying they would not be able to pay more than what they had been paying earlier. However the report did not mention about the farmers' objections to high tariffs. Instead, it reported that farmers said that they would be willing to pay more but delivery needs to improve. Earlier agricultural consumers had to pay a flat rate of 57 rupees per horse power (HP) per month upto consumption of three HP. The rate has now gone up to 190 rupees per HP per month. Even after subsidies, rates are still 300 per cent higher than what they used to be earlier. Also earlier electricity was available all through the day, now it is available for only six hours a day.

As a result of higher tariff bills, even farmers having 12.5 acres of land are not breaking even. The new electricity regime has made non-payment of bills a criminal offence for which a defaulter's land might be attached by the government. Farmers in Madhya Pradesh refused to pay the higher bills and were willing to go to jail. The government started disconnecting these farmers. Though even the women of the households tried to prevent this from happening, six lakh farming households were disconnected. This is one of the reasons Congress lost the recent assembly election in the state. The party promised to waive bills upto 5 HP. Also those who consumed more had to pay bills at the higher rate, and even those whose bills were to be waived would have to pay future bills at higher rates. However, Congress failed to deliver even on the promise to waive bills upto 5 HP.

The last speaker in the session was Prof. Abhijit Sen. He said that the crisis of globalization has been reflected the most in the agrarian sector in developing countries, where the poor live. The links between what is happening to poverty and imperialism are the most difficult in agriculture. We have to strive to make these links clear. Where crisis is the most severe, activism is at its high but the intellectual support is the weakest link in the chain.

The struggle against globalization has been mostly looked upon in fora of economists as a narrow struggle against opening up to trade and finance. Trade has been increasing for a long time. So finance must be the main source of worry. It is creating conditions for capital to take over control, weaken the nation state, and essentially weaken the concept of the developmental state. Some states remained more autarkic, less open- and that's why they continued to survive.

Various systems and structures have disappeared under liberalization. From the World War II to 1990 was clearly a period when developing countries did better than before. But even then, it was not a great success, and inequalities increased. But the situation worsened during the 1990s. Economists are still arguing whether world poverty and inequality have actually increased. Some say probably not, some say even if they have gone up, the rise has been marginal. Why and how they arrive at different results is often not explained. However, world inequality has definitely gone up if one leaves out India and China. If you include these two countries, the inequality may show to improve as these two countries have witnessed some growth.

But the question is whether the condition of the poor in these two countries has been improving as well. One can think of two Indias. One comprising of the 250 million urban residents, the other having the remaining population who live in villages. Every group wants to maintain its share of income. Before any election there are tax cuts and reduction in import tariffs which benefit the rich. But surprisingly sops given to the rich are always dubbed as good economics which will boost investment, while those to the poor are considered to be populist measures that need to be scrapped. The agrarian crisis is the problem of the peasantry, not of large capitalist farms. The latter may at times face some downturns, but can cope with the same and bounce back. The poor need the state to support them while in crisis, and that is why the state is important. One of the characteristic features during the last decade in India is that fewer people are leaving agriculture. It is not because opportunities in the agrarian sector are growing, but because employment opportunities in other sectors are becoming increasingly non-available.

Nation states have to catch up, and the attack on them, and attempts to weaken them have to be resisted. If we cannot, the case is lost.

Question-Answer Session
During the question-answer session various issues were discussed. One person in the audience who belonged to the African continent said that in Africa lack of markets is not the main issue for farmers. Lack of finance is the major impediment as banks do not lend to poor farmers, and as a result the latter find it difficult to manage capital required for daily operations. Cotton farmers in the continent have been affected. Besides, the expansion of so-called large scale commercial agriculture in Africa has led to growing concentration of land, with pockets witnessing such a phenomenon seeing increasing subversion of local authorities as well. Large tracts of land are being put out for tourism and to develop game reserves/sanctuaries, and peasants who were inhabiting these tracts are being driven out. To cater to international interests Africa is undergoing recolonization in connivance with international financial institutions. So for African peasants trade is not the main issue, it is an issue of livelihood of small farmers. Economists need to think of positive policy decisions that can help in reversing, or that least slowing, the process of peasant marginalization at the next WTO meeting.

Alicia Puyana said that during the 1950s and 1960s the Mexican government subsidized only large commercial farms. Only three per cent of the subsidies went to small farms. Yet, when these subsidies were reduced post-NAFTA, small farms were hit harder. While the share of agriculture in Mexico's GDP is four per cent, 70 per cent of the population is in agriculture. We need to stand up and say no to the pressure from the developed world to reduce subsidies for our poor cultivators.

Prof. Patnaik said that WTO rules were never drafted with the interests of developing countries in mind. The provisions in the WTO totally suit the interest of the US and the EU. It was arbitrarily decided that of the US $90 billion that the US gives as subsidy to its farmers, only US $26 billion would be included in Aggregate Measure of Support which needed to be reduced under WTO norms. The rest was to be considered as WTO-compatible. The elite in the South are being lured to give in to the demands of the west. There is utter callousness among the southern elite about the plight of the poor. The educated elites have been co-opted.

We need to protect our farmers. Tropical crop prices have been falling. While the service sector now accounts for about 50 per cent of our GDP, employment in that sector is hard to come by, and the sector is getting more iniquitous. The manufacturing sector in developing countries has almost stagnated. The agricultural sector in the south needs revival. Banks have to lend to this sector, giving up its mistaken belief that financing farmers will mostly result in bad loans. Most bad loans of the banks are loans given to large industrial houses. It is not the case that farmers cannot repay. Not lending to the farmers has been a political choice that has pushed farmers into the hands of usurers.

The session ended with a hope that the WSF will be able to lead a successful fight against the kind of imperialist globalization that the world is witnessing today.

February 7, 2004.