> Pascal Lamy’s speeches
Ladies and Gentlemen,
Thank you for inviting me here tonight, and allowing me to think ahead
with you about the future of food and agricultural trade policy. It is
key that we all take some “time-out” from our regular day-to-day work
and responsibilities to think of the long run.
Let me start by saying that food and agricultural trade policy does not
operate in a vacuum. In other words, no matter how sophisticated our
trade policies may be, if domestic policies do not themselves
incentivize agriculture, and internalize negative social and
environmental externalities, then we will always have a problem.
I will give you one simple example; the issue of farm size. In many
parts of the world, in particular in the world's poorest corners, land
is getting divided through inheritance amongst a growing population, and
farm sizes are dwindling.
In India, the average landholding fell from 2.6 hectares in 1960 to 1.4
in 2000, and is still declining. In Bangladesh, the situation is worse.
The number of farms has literally doubled in this period, with farm
sizes going from 1.4 to 0.6 hectares; with a rise also in landlessness.
While small farms have their advantages, yields tend to be higher on
It is also well-documented that some of the world's poorest countries
have taxed agriculture the most, and that reinvestment of tax revenue
into agriculture has been low. The policy mix at the national level,
therefore, must be the starting point for any discussion of food and
Land management, natural resource management, water availability,
property rights, enforcement, storage, transportation and distribution
infrastructure, credit systems, and science and technology, are all key
elements of the agriculture and food security puzzle.
Trade policy — no doubt — has its place in this landscape. But it cannot
and does not, by itself, answer each and every challenge in agriculture.
Not least because, at the end of the day, trade is no more than a simple
transmission belt between supply and demand. It has to work smoothly,
with little friction, but it is simply one element of a much more
I would argue that agricultural trade policy has “stumbled” along quite
nicely in the past two decades. But that is as far as I would go in
characterizing the situation. Yes, we have only “stumbled” along. We
have not taken strong, collective and decisive action. The reason being
that until today, the world does not have a shared vision of what global
integration should look like and what it can deliver in agriculture.
Let me explain. I believe that we could all agree on what the basic
objectives are that we seek from our agricultural systems. We all want
sufficient food, feed, fibre and some even want fuel. We want nutritious
food and feed. We want safe food and feed. We want a decent and rising
living standard for our farmers. We want food to be available and
affordable for the consumer. We want agricultural production systems
that are in tune with local culture and customs, and that respect the
environment throughout a product's entire life-cycle.
Where we still disagree is on what global integration could bring to
this process. To my mind, global integration allows us to think of
efficiency beyond national boundaries. It allows us to score efficiency
gains on a global scale by shifting agricultural production to where it
can best take place. As I often say, if a country such as Egypt were to
aim for self-sufficiency in agriculture, it would soon need more than
one River Nile. Which basically means that global integration must also
allow food, feed, and fibre to travel from countries where they are
efficiently produced to countries where there is demand.
We need to remember that national boundaries were defined by none other
than a long historical game of musical chairs. All the world's people
were asked to stand up, and given some time in which to scramble for
land. But then a global whistle blew. While some found themselves
sitting on fertile lands, blessed with sunshine and freshwater, others
found themselves condemned to arid and inhospitable terrains. Trade
therefore imposed itself (absolute advantage). But there were other
reasons for trade too; such as differences in the relative efficiency of
production (otherwise known as comparative advantage); and geographical
proximity, which Nobel-Laureate Paul Krugman has told us all about.
Yet, despite this trade reality, in the World Trade Organization,
countries continue to disagree on whether agriculture is like shirts,
shoes or tyres, and should fall under the same trade regime. Hence, the
specificity of agriculture in the WTO rule-book. It made its entry into
that rule-book about 50 years after industrial goods, and managed to
step-in on a different footing. For example, export subsidies, which are
completely prohibited for industrial goods, are yet to be phased-out
through the Doha Round in the area of agriculture! Moreover, whereas
harmful subsidies for industrial goods are actionable in the WTO, many
harmful agricultural subsidies found shelter in Amber and Blue Boxes,
and a Peace Clause. Whereas the world's trade-weighted average
industrial goods tariff is about 8 per cent, in agriculture it is 25 per
cent. Not to mention tariff peaks, which in agriculture still rise up to
1000 per cent!
This fundamental divide took on a different dimension in last year's
Food Crisis. In response to the crisis, some started looking further
inwards, and we saw a whole host of export restrictions flourish. While
others started looking outwards more than they had ever done before,
seeing their food security endangered since they were dependent on
imports. Unique to this situation was that countries sitting on opposite
sides of the export barriers all complained of the same thing — hunger.
And hence the phenomenon of the purchase of agricultural land abroad —
dubbed “land grabs” by some, that we now witness.
As the crisis was unfolding, we also saw the United Nations Rapporteur
on the Right to Food deliver the stark conclusion that we need (I
quote): “To limit excessive reliance on international trade in the
pursuit of food security.” A conclusion which I will be addressing in my
first public debate with him tomorrow in Geneva. Various farmers groups
have also called for “food sovereignty”, by which they mean greater
self-sufficiency like Mr De Schutter.
Ladies and gentlemen, international trade was not the source of last
year's food crisis. If anything, international trade has reduced the
price of food over the years through greater competition, and enhanced
consumer purchasing power.
International trade in agriculture is less than 10 per cent of world
trade. Whereas 50 per cent of the world's production of industrial goods
enters international trade, it is important that you know that only 25
per cent of the world's food production is traded globally. In addition,
of that 25 per cent, the vast majority is processed food, and not rice,
wheat, and soya as some would like to claim. To suggest that less trade,
and greater self-sufficiency, are the solutions to food security, would
be to argue that trade was itself to blame for the crisis. A proposition
that would be difficult to sustain in light of the figures I just gave
Just recently, Yemen's Minister of Trade was in office complaining of
the “starve-thy-neighbour” policies that followed from the food crisis;
as Yemen was being starved of its staple rice food. Do we answer Yemen
by recommending self-sufficiency; by recommending the same experiment
that Saudi Arabia went through in growing its own wheat, and which it
has called-off just this year because of its heavy toll on water? Or do
we answer Yemen by strengthening global interdependence, and enhancing
the reliability of international trade.
Despite the absence of a shared vision on agricultural trade policy, I
would nevertheless argue that the world is moving in the right
direction. Although this does not mean of course that our job is done.
Between 2000 and 2007, the agricultural exports of developing countries
to the developed grew by 11 per cent per year; faster than the 9 per
cent growth in trade flows in the opposite direction. This means that we
are finally beginning to redress historical imbalances, and to level the
international trade playing field.
The developing world's international competitiveness in agriculture is
becoming an undeniable reality. To those who argue that the developing
world suffers from much lower agricultural productivity, I would ask
them to look at FAO charts on yields. The developing world tops the
charts in kg/hectare of sugar cane, sugar beet, rice, wheat, maize and
other commodities too.
Despite the food crisis, long-term trends also show that we are
gradually making food more affordable. Although I do not mean to
belittle in any way the hunger that millions around the world continue
to experience. Whereas in 1990, Peruvians spent 60 per cent of their
income on food, today they only spend 32 per cent. This picture is
matched in other continents as well. For instance, whereas Bangladeshis
also spent 60 per cent of their income on food then, today they spend
only 50 per cent. These are important long-term trends.
While we must agree on a common vision for agricultural trade policy,
the progress that the world has made is important. Global integration
that has fuelled economic growth and led to efficiency gains must
continue to be pursued. However, we must ask ourselves, why then is
there such widespread resentment to trade opening? To me the answer is
clear. It is because we have yet to build robust safety-nets for the
world's poor. Each and every government must turn its attention to this
issue, urgently, in my view. In the absence of such safety nets, there
will always be resentment at a time of crisis to a country's food supply
We will also have to act together, and responsibly, in addressing what
has become one of the world's most serious environmental challenges:
climate change. The droughts and other turbulences that climate change
may lead to leave me convinced that international trade will be an even
greater must in the future. While agriculture accounts for some 14 per
cent of total anthropogenic GHG emissions, in some countries it
represents about half of all emissions, such as in New Zealand,
Australia or Argentina.
I have been following closely the efforts that some countries are making
to bring agricultural emissions under control. I would argue that these
efforts too would be easier to pursue under a shared vision of global
integration. Having said, they would still have my every encouragement —
we clearly need a starting point!
I thank you for your attention.
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