Authors: Nico de Leeuw and Bruno Villalobos
In a global food system characterized by food waste, exploitation of resources, and seed market monopolies, the concept of food sovereignty has gained traction, as it rejects the monopolization and globalization of the food chain and, instead, promotes decentralized and autonomous small-scaled food systems.
This blogpost aims to investigate the food-related policies of the World Trade Organization (WTO), through the lens of food sovereignty. We focus on the WTO because of its influence on the contemporary food system, which is characterized by a high level of trade and liberalization. Within WTO policy, we focus specifically on the phenomenon of price-dumping and how it hinders food sovereignty. Price-dumping takes place when goods coming from foreign countries are sold for lower prices than local production costs, which is made possible through subsidies that artificially lower prices. This makes local food markets less stable, interfering with food sovereignty. The phenomenon of price-dumping is illustrated in this blogpost by zooming in on a specific case: the dairy industry in India.
The Current Global Food System (Or ‘The Problem’)
When looking at the present global food system, we can identify that it is marked by long-standing and severe inequalities. Historically, colonial relations of power have structured the economies in the South to sacrifice local consumption and, instead, prioritize cash crops for exports to Northern markets. For the past decades, unequal relations of production have changed and persisted through market-driven agriculture – for example, global demand determines what is grown at the expense of local food needs and biodiversity in the South. In consequence, there is dependence on foreign markets which further undermines the access to basic goods.
Following global trends, the food system has become export-oriented and organized around trade liberalization over the last decades. This has had other side effects: for instance, the trend towards “de-peasantization” of production (or the shift towards industrialization), the switch towards monoculture, the promotion of fertilizers and pesticides, and the monopolization of crops and seeds by big agricultural multinationals.
The ‘Green’ Revolution
These trends have been in the making for decades, especially since the “Green Revolution” of the 1940s. Economic expansion after World War II, rapid industrialization, and an exponentially growing world population fueled the need for the agricultural sector to become a sector of development. During this age of development, small-scale farmers were perceived as an obstacle to global capitalism. The start of the Green Revolution was therefore also the start of the marginalization of rural communities, and of local and indigenous agricultural practices.
The Green Revolution included a global switch towards monoculture, as well as an increase in the usage of pesticides and fertilizers. Domesticated crops were bred specifically to respond to fertilizers and have a higher yield. As a result, these high-yield varieties that are still used to this day cannot grow successfully without the help of fertilizers, essentially creating a dependency on fertilization. Because these high-yield crops were developed, most other species of crops were not used anymore. Only the high-yield variants remained, creating fields of monoculture. Monocultures are more vulnerable to infestations, and thus pesticide use has grown as well.
With specific breeding of plant species, the business of seed and crop patenting began. With the monopolization of these patents, the global agriculture system is now essentially run by only 20 companies who control everything from the seeds, to the fertilizers, to the pesticides, to the machines. The patents restrict farmers in what they can grow and sell, also limiting their options to adapt to changing climate conditions.
This complete switch within the agricultural food chain is just an example of how the global food system has changed within the last decades. The system is based on principles of industrial production nowadays, in which fewer people actually have true control in the production or consumption of their food. Instead, the system is dominated by a very select few multinational corporations such as Nestlé (dairy), Tyson Foods (meat), Yara (fertilizers), and Cargill (grain). This destroys farmer autonomy, the environment, biodiversity, and food security all across the world.
In short, we shifted from a peasant-driven agriculture with diversified species, to a globalized capitalism-driven agricultural system that invades rural communities and suppresses indigenous knowledge.
The Role of the WTO
Despite the pernicious consequences of these transformations in the food system, the current mode of production and distribution of food is still endorsed by key international bodies. Among them is the World Trade Organization (WTO), which regulates global exchange through rules and agreements between countries. By reducing tariffs and fostering liberalization of food and agricultural goods, it has enormously influenced the global food system. However, its role has increasingly been problematized from different sectors, precisely because the previous measures have led to more dependency of toxic fertilizers, shifted the control of food production to corporate hands and, more overtly, permitted the practice of price dumping—where heavily subsidized agricultural products from more affluent countries are exported at artificially low prices, undercutting local producers and fair competition. The basis of these critiques lies in the lack of “food sovereignty”, an increasingly salient ideal that emphasizes the right of communities to define and control their own food systems.
Introduction to Food Sovereignty
Before examining the effects of WTO policies with regards to price-dumping on the food system, it is important to define the concept of ‘food sovereignty’. Food sovereignty pushes us to rethink the foundations of the industrial food system. It advocates for a shift from top-down models designed for profit, to bottom-up models centred on people. It aspires to reshape the global food system into one where local producers have the agency and support to make decisions that reflect our global needs, values, and aspirations.
The concept of food sovereignty was first introduced at the World Food Summit in 1996 by La Via Campesina – an international movement of peasants, indigenous people, farmers, rural women, and workers. La Via Campesina defines food sovereignty as “the right of peoples to healthy and culturally appropriate food produced through ecologically sound and sustainable methods, and their right to define their own food and agriculture systems.” Food sovereignty includes multiple elements, from highlighting the need for local control and empowerment, to promoting agricultural practices, to underlining the connection between food and social justice and equity, globalization, cultural preservation, environmental sustainability, education, and women empowerment. In short, food sovereignty means reshaping food systems in order to prioritize the wellbeing of communities, culture, and the planet.
Food Sovereignty: Theoretical Framework
There are two other concepts related to food sovereignty that have gained traction in the discussion around reforming the global food system: the right to food and food security. United Rising views food sovereignty as the essential condition which ensures that both food security and the right to food are upheld for all, in a sustainable and just manner.
The right to food has been solidified in the Universal Declaration of Human Rights and in the International Covenant on Economic, Social and Cultural Rights as a basic human right. It recognizes dignity and equality in accessing food. The right to food is therefore recognized as a legal right. The rights-based approach of this concept puts the legal responsibility on states to ensure access to food.
Food security is more of a technical concept than a legal right, that uses a holistic approach, recognizing agency, sustainability, availability, access, utilization, and stability of resources as factors contributing to food security or a lack thereof. The United Nations Food and Agriculture Organization states that food security is achieved when “all people at all times, have physical, social, and economic access to sufficient, safe and nutritious food which meets their dietary needs and food preferences for an active and healthy life.”
Lastly, food sovereignty can be viewed as the condition for achieving both food security and the right to food in a sustainable and just way. This makes it a political concept that encompasses both food security and the right to food but goes beyond the two. Food sovereignty means realizing access to healthy and culturally appropriate food that is produced sustainable. It means having the right to define your own food and your own food system. Food sovereignty is about realizing autonomy and democracy over food systems, empowering producers, consumers, and distributors. It reshapes the debate around food from the individual level to the collective level, advocating for collective rights, peasant solidarity, and local ownership over resources.
The WTO vs. Food Sovereignty
Despite the egalitarian aspirations contained in the notion of food sovereignty, its realization has found important obstacles, primarily in organizations that govern global exchange. The WTO has been particularly problematic, since it has put in place a series of policies that covertly allow powerful countries to engage in ‘price dumping’ practices – flooding markets abroad and undermining industries in developing countries. WTO-induced price dumping showcases the lack of control that Southern countries have over the production and distribution of agricultural goods. Currently, the WTO does not create the enabling conditions for gaining food sovereignty but rather keeps transferring control to large agricultural exporters and multinational corporations from Northern states.
Paradoxically, one of the measures that enables price dumping in the WTO is the anti-dumping test of the General Agreement on Tariffs and Trade (GATT). This test requires countries affected by foreign subsidies to prove three elements: first, that imported agricultural goods are being sold at a significantly low price; second, that this price produces harm in the local industry; third, that there is causal connection between price and harm.
However, gathering the evidence is a rather challenging task, given that developing nations often lack resources as well as technical and legal expertise to meet the burden of proof. Thus, large exporters continue to flood southern markets with artificially inexpensive products, negatively affecting local agricultural producers.
Moreover, developed countries also make use of the Agreement on Agriculture (AoA), especially its ‘Color Box’ classification system, to further enforce their subsidies. Under this scheme, subsidies are classified in the following manner: green, if they do not distort trade (such as research related and environmental subsidies); blue, if they give financial support while limiting production; amber, if they are trade-distorting. Developed nations manipulate this system by shifting their subsidies into the green and blue box, thereby avoiding restrictions. In this way, they can justify their market interventions as ‘environmentally beneficial’ or ‘efficiency-enhancing’ measures, thereby evading WTO-imposed limits on trade-distorting support while still preserving competitive advantages for their domestic industries. In this way, they give unfair advantages to their producers. Meanwhile, southern states are unable to give significant subsidies to their own businesses.
To overcome this asymmetry, the principle of Special and Differential Treatment (S&D) within the AoA was designed to give flexibility to developing countries to even set protective tariffs. However, major economies have taken advantage of its loopholes, particularly the vague definition of ‘developing countries’, thus securing trade benefits. Wealthy nations continuously pressure poor countries to reduce their tariffs in exchange for minor concessions.
Price dumping is, in this way, the counter side of WTO-style liberalization: instead of leading to mutually advantageous exchange, the liberalization of goods is, in fact, grounded in practices of unfair competition and pressure from powerful states. The right to determine one’s own agricultural system – a key pillar of food sovereignty – is denied to the extent that southern countries cannot push back against the dominant market position of northern states and their dumping practices. Rather than having control over their own food production, developing nations are at an increasingly vulnerable position: through price dumping, they experience income deflation and thus, lower capacity to purchase basic food supplies. In consequence, given the lack of food sovereignty, the right to food and food security are also severely under threat.
Case Study: The Dairy Industry in India
To illustrate the real life consequences of WTO-allowed price dumping on local farmers, we will look more closely at the effects of price dumping on the dairy industry in India.
The dairy industry is huge in India: milk is the single largest agricultural commodity there. Additionally, India is the largest milk producer in the world. The dairy industry is organized in a remarkable way in the country, through an extensive network of strong dairy cooperatives and small local vendors. This method of organization has ensured self-sufficiency for the past decades. It has also ensured that a large portion of the money paid by consumers for the milk goes to the milk producers, with an average of 70 percent of the money going directly to them. The dairy cooperatives can operate in India in such a way because the Indian government has blocked imports of cheap dairy products for the most part through tariffs and other trade barriers. These measures are in place to protect the domestic dairy production and to ensure the continuance of self-sufficiency. This also links to food sovereignty: local farmers have more autonomy because of the trade barriers, India is self-sufficient (which links to food security), and the dairy industry in India operates in a decentralized way, where local farmers have power and ownership. Despite the high trade barriers to protect the industry, big dairy multinationals have found ways to still price-dump in the dairy sector.
Price Dumping in Action
The core of the price-dumping problem of the dairy industry is that international prices for dairy are currently far below the costs of production. This is due to international prices being based on heavily subsidized surplus production in Europe and the United States, in combination with the low-cost export models of New Zealand and Australia. Together, this creates an import price with which domestic farmers can never compete. Trade barriers and import tariffs try to protect the dairy industry in India from price dumping from the west, but the multinationals have found loopholes in the tariff system to exploit.
They have for example been importing dairy components, like lactose and whey, to India for lower prices than the farmers in India can sell their products for. The dairy multinationals and western governments also continue to push trade agreements between India and other countries in order to lower or delete import tariffs. In other words, despite the high tariffs on dairy imports in India, big multinationals have still found a way to price-dump and disrupt the dairy industry. The imports of dairy components are already significantly impacting India’s dairy cooperatives. Lowering the import tariff would only make price dumping worse.
In general, price dumping is not regulated properly due to a lack of good WTO measures that limit it. As discussed in the paragraphs above, frameworks part of WTO price-dumping policy such as the GATT and the AoA, do not limit price dumping as it is difficult to enforce them effectively. This limitation allows for consistent price dumping, which interferes with local farmers and threatens food sovereignty.
Effects on Food Sovereignty
When price dumping takes place, domestic farmers have to lower their product prices in order to stay relevant. This makes their profit margins extremely tight, which threatens sustainability of the local farms, which in turn threatens food security. Additionally, lesser profits also means a strain on finances available for food, threatening the right to food. Both food security and the right to food are key elements of food sovereignty. Price dumping also creates dependence of the Indian population on imports, which undermines local agriculture practices, interfering with food sovereignty. When the population depends on imports, local farmers lose the ability to control their own agricultural frameworks, thereby limiting their autonomy and thus their food sovereignty.
To attain food sovereignty in India, it is crucial that price dumping ceases. From the facts presented above it can be concluded that current WTO frameworks fail to address the issue of price dumping, thereby also failing to uphold the principles of food sovereignty.
Recommendations
As revealed by the case of India, to fight these threats and increase food sovereignty, a general strategy is required: one that puts local production as the first priority, protects small-scale farmers, and encourages sustainable practices. Below we delineate some key paths aligned with these directives (also outlined in greater detail in United Rising’s comprehensive report).
One effective measure in this regard is the levying of anti-dumping duties on agro-imports to prevent foreign goods from disrupting local markets. Indonesia, for example, recently imposed such duties on nylon film imports to save its industries from price predation. In this vein, the imposition of import quotas can also serve to avoid swamping markets with dumped goods, so as to prevent domestic producers from being pushed out by artificially subsidized prices. The second underlying approach is shifting towards regional trade agreements. This can serve as a buffer, allowing countries to set up stable markets that are less vulnerable to global price volatility and price manipulation from dominant states. The shift towards greater regionalization of trade is already in place, and opens the possibility for less concentration of food chains in the hands of a few market agents, as well as the possibility to diversify the agricultural production of developing countries with greater consideration for human needs.
Finally, and to the extent that the WTO has raised multiple obstacles to food sovereignty, it is necessary for developing states to work collaboratively and push for a fundamental revision of WTO agreements to decouple the food system from global market dynamics. In this sense, civil society organizations are demanding that all food and agricultural concerns should be taken out of WTO jurisdiction: by dismantling the Agreement on Agriculture (AoA) and removing or amending the relevant clauses on other WTO agreements so as to ensure the full exclusion of food and agriculture from the WTO regime.
These policies could mark an important shift from a food system dominated by market interests to one centered around food sovereignty and human needs. The WTO and its price dumping policies could be leveraged by the collective efforts of developing nations to contest established trade rules and to establish networks of food production that prioritize the full satisfaction of the right to food and food security. These efforts require a greater coalition of actors, ranging from international organizations, civil society and social movements. Yet, as shown by the examples of India, strong advocacy for food sovereignty is not only desirable but necessary.
*This article was written upon the work of Hermita Ramchandani, a graduate from the International and European Law program at The Hague University of Applied Sciences, who wrote an Applied Research Project with United Rising as its client organization.