Paper developed by the Asian Farmers’ Association for Sustainable Rural Development (AFA) and presented by Mr. Muhammad Nuruddin, Executive Committee Member of AFA, and Secretary General of Aliansi Petani Indonesia (API) during the Panel Session of the 6th ASEAN People’s Assembly (APA) entitled “Towards Fair Trade In An Integrating ASEAN: Perspectives of Workers, Farmers and Informal Sector” held in EDSA Shangri-La Hotel, Mandaluyong City, Philippines in October 25, 2007.
Good morning, ladies and gentlemen, fellow people from Southeast Asian countries. My organization, the Asian Farmers’ Association, or AFA, is pleased to share with you our perspectives as small, subsistent farmers and producers , in the era of an ASEAN , trying to have economic integration in the region through free trade or liberalization.
We have divided this paper into four main parts . The first part deals with current liberalization policies of ASEAN . The second talks about how and why we have been affected by these policies. The third part offers some thoughts on how agricultural trade can be just and fair for small men and women farmers. The last part makes suggestions on what governments, farmers’ groups and rural based NGOs can do to promote a fairer, more just, agricultural trade. In making this paper, we have referred to several papers distributed and presentations given during various consultations and workshops we have conducted and attended on these issues.
In presenting this paper, please bear with me as I try my best to communicate in a foreign language -English.
ASEAN trade liberalization in agriculture
In 1992, during the 4th ASEAN Ministerial Meeting in Singapore, ASEAN member countries signed a Framework Agreement on Enhancing Economic Cooperation.This agreement paved the way for the creation of an ASEAN Free Trade Area or AFTA. The AFTA is geared towards fasttracking free trade among ASEAN members . Its main mechanism for realizing this goal is the Common Effective Preferential Tariffs or CEPT scheme. Its goal is to complete abolition of tariffs for the ASEAN 6 by 2010 and 2015 for ASEAN-4 , with flexibility on some sensitive products until 2018.
In the 1992 agreement, agriculture or unprocessed commodities were excluded in list of products to be subjected to CEPT. However, during the 1994 ASEAN Ministerial meeting, agricultural products were included, albeit in the Sensitive List. This means, that agricultural products are given a longer period of integration into the free trade area.
Beginning mid 1990s, ASEAN started negotiating as a bloc in several bilateral free trade agreements or FTAs. In a manner so fast and so many that we are called the “noodle bowl of trade talks”. The FTAs with Australia, New Zealand, China, EU, India and Japan are under negotiation. The FTA with China is being implemented with an Early Harvest Program for Indonesia, Philippines and Thailand. The ASEAN-Korea FTA has been signed. The EU-ASEAN negotiations have been formally launched. Currently signed FTAs approximate the ambitions of AFTA and other ASEAN economic initiatives, as most bilateral FTAs involve trade not only in goods but also in services and investments.
Analysis and effects on small men and women farmers
One success indicator of integration is the level of intra-trading that has developed among ASEAN countries. In the European Union, two thirds (2/3) of trade is intra-EU trade, in North America, the North American Free Trade Agreement or NAFTA accounts for more than half of the global trade of USA, Canada and Mexico.
In contrast, intra-ASEAN trade is merely 22.5% in 2004. Agriculture only accounts for 10% of intra-ASEAN Trade , despite its importance to most member countries. Outsiders Japan, USA, EU, China and Korea remain to be ASEAN’s largest trading partners, together accounting for more than 51% of ASEAN trade in 2003.
Why would this be so? Intra-ASEAN trading has not increased because member countries are producing the same or similar set of products. There is little complementation in agricultural products. We have same products and the same markets. We are essentially competitors in our respective markets. The rice of Thailand and Vietnam competes with Philippine rice; the onion, garlics and fruits of Thailand competes with the vegetables and fruits of Indonesia. The palm oil of Malaysia competes with Indonesia palm oil and coconut oil of Philippines. Because of this, we fear displacement of agricultural producers and workers whose products cannot compete with the products of co-ASEAN members.
In ASEAN, agricultural exports account for only 7.6% of total exports. This indicate that the agricultural sector’s integration in the international market is limited. Also, this may mean that much of agricultural production among ASEAN members is directed to meeting domestic needs.
The primary actors in the agricultural integration processes are big agri- based companies and trade investors, both in ASEAN and non-ASEAN countries. Integration occurs at three levels.First, is agri business from within. For example, San Miguel Corporation of the Philippines has several brewery plants and agribusiness undertakings in Thailand, Vietnam and Malaysia. Second, ASEAN as backyard garden and source of raw materials of other countries. For example, China needs all coco fiber and other coco materials so it wants to help develop the Philippine coconut industry. _Third, ASEAN as a big market. The US agribusiness companies look at ASEAN as a big market destination for surplus soya and corn and a potential market for farm inputs, seeds and agricultural machinery.
In a research done by the Southeast Asia Council on Food Security and Fair Trade or SEACON, on the impact of AFTA on the rice sector, the study concluded that in many parts of Southeast Asia, millions of small farmers have not and will have a hard time taking advantage of the opportunities brought about by an expanding ASEAN market. It appears that the benefits of expanded trade have been captured by processors, exporters/importers, middlemen/traders while the small producers have remained poor.
In his paper, Dr. Rene Ofreneo said that the biggest agricultural integration taking place in the region is happening not through formal trading and investment arrangements- but through bio technology. In his words, “quietly and without much fanfare, the big agri-based biotech companies such as Cargill, Monsanto and Dupont are transforming the ASEAN countryside into a big bio-tech lake, , with some help from the Asian Development Bank and the “converted” agricultural ministers of ASEAN governments”.
In promoting the Gene Revolution, these transnational corporations work at three levels. First, by mobilizing support of ASEAN’s leading creditors. Second, through backchannelling and talks with ASEAN leaders . Third, through training, demonstration farms and technical assistance on biotechnology. They have narrowed the definition of food security to merely access of food . These TNCs have been very active in ASEAN policy corridors , through the ASEAN – US Business Council.
We have felt the big powerful hands of these TNCs as our governments have started promoting demonstration farms of genertically modified crops such as corn, papaya, rice. With everything free, and without much knowledge on the hazards , risks and implications of GM crops, many of our farmers participate in these demonstration farms. There is very litte support for the development and promotion of organic farming technologies, even if many of these technologies, such as the organic systematic rice intensification, approximates yield of hybrid and GMO crops, and are much safer and less risky to produce and eat!
Where are we, small men and women farmers, in the ASEAN agriculture integration process? We cannot even enter the corridors of power and decision making. We are not simply there. Farmers’ groups are not consulted, both at national and regional levels, In cases where consultations are held, for example in the Philippines and Thailand, we are not satisfied as we feel our concerns are not responded to.
We believe that another major weaknesses of the ASEAN is its inability to act as a regional bloc in international trade negotiations. We regret to observe that Indonesia and Philippines are strong leaders of the G33 coalition pushing for Special Products and Special Safeguard Mechanisms , but Malaysia and Thailand are opposing the G33 position. ASEAN do not have common positions in WTO negotiations, unlike the EU, or ACP countries. This is very disheartening because the agricultural trade rules of the WTO has brought massive dumping of cheap agricultural imports, displacing millions of small farmers and producers. Rural women bear the brunt , as they do 50% or more of agricultural work in almost all crops. With less income in their pockets, there is less money for food, health, education of the family.
How agri trade can be just and fair
Agriculture continues to be a significant and sensitive sector in the economy of most ASEAN countries. Excluding Singapore and Brunei, the contribution of the sector to total domesit output ranged from 7.9%, in the case of Malaysia, to as much as 50%, in the case of Lao PDR.
Agriculture’s contribution to total employment ranged from 16% to 78%. Around 48% to 80% of the population still depend on agriculture. This indicates that it is still a vital source of livelihood and income for the population, especially in the rural areas.
Agricultural productivity is low, and this low productivity is closely linked with poverty. In most ASEAN economies, poverty is highest and most widespread in the rural areas, where agriculture is the main source of livelihood.
Thus, agriculture trade policies should contribute to poverty alleviation efforts, considering that agriculture is the main employer of most of the poor people in ASEAN countries. They should not lead to displacement and should not heighten existing vulnerability within the sector. Also, the policies should consider that agriculture plays a crucial role in meeting the food security needs of a country.
Challenges to key stakeholders
Poverty in ASEAN countries is mainly caused not by poor or weak trading, but by unequal distribution of resources , small subsistence farmers’ lack of access to economic opportunities and our poor participation in decision-making processes.
The current integration of agriculture in ASEAN countries has not benefitted small men and women farmers. Unabated and unchecked, the integration will further displace us, lose our livelihoods, and lose the rural heritage and the culture of agriculture comunities in Southeast Asia.
In a participatory manner, with government, NGOs, business and farmers’ groups, we can develop a strategic policy for agriculture that integrates trade and development. This strategic policy can first be done at the national level, then levelled off and harmonized at the regional level. In the process, we have an agricultural policy that is harmonized at both national and regional levels.
This policy will have the following principles and features:
a. Small men and women farmers need – first things first . land to till. In Indonesia, much of the agricultural lands are in the hands of the state or big plantation owners. In the Philippines, much of the prime agricultural lands are still in the hands of landowners who wield influence in executive, legislative and judicial branches of government. This agriculture policy will make access and control of land resources a pre-requisite to trade and development. .
b. providing adequate support services to small farmers like acess to credit/capital, technology, crop insurance, as well as price support
c. pouring massive infrastructure investments so as to reduce transportation costs for small farmers.
d. directing research and development efforts to raise the quality of local commodities.
e. ensuring self sufficiency in basic or staple crops of the country ; where producers are assisted to produce enough food that comply with safety and environmental standards, and where governments try to balance production and demand, meeting domestic needs for staple crops first rather than international needs for cash crops.
f. . providing calibrated liberalization and calibrated protection to protect the jobs and livelihoods of the small producers, attuned to the specific conditions and needs of each member country.
g. developing tighter domestic forward and backward linkages as well as focusing on the linkages between the agricultural and food processing industries. Across the region, local farmers often find themselves pitted against end-users like big hog raisers and poultry operators, who prefer cheaper imports to local products. The interests of both can converge through the use of trade and price management that ensures that the price spread between imports and local commodities is not too big.
h. formulating standards for sustainable and fair production and marketing, such that farmers and traders are encouraged to produce and sell only those products that are produced in a safe and sustainable manner and that gives fair returns to small producers.
i. putting in place procedures and mechanisms for maximum quality democratic people’s participation of both men and women small producers and comsumers in policy and decision making processes. To ensure quality participation, ASEAN governments should :
-disclose the terms of the trade negotiations early enough for meaningful discussions
-hold public hearings nd consultations especially with small scale farmers, fishers and civil society groups
-translate the proposed terms of trade agreements into non technical language and in local languages
-give ample representation of small men and women producers in these consultative and decision making bodies
For farmers’ groups like us in AFA, we need to build, strengthen and consolidate ourselves both at the national and regional levels so that we can be powerful, effective, influential voices at all political levels-local, national regional . We may not be able to match the money of the big agribusiness corporations, but we can have the numbers. We can match , maybe even surpass the passion and dedication, but for us, dedication towards making trade fair and just. Hand in hand with other like minded civil society groups we can exchange information and views and help promote people-to-people cooperation . Through these , we deepen our understanding and analysis of our issues , we build our capacities to make things happen, for the benefit of our families, communities, our nation, our region.
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