Free trade could harm agriculture in developing nations

Free trade could harm agriculture in developing nations

By Prapti Widinugraheni

BALI (JP): A senior agricultural economist warned yesterday
that global free trade in the agricultural sector may bring about
new inequalities between developed and developing countries and
between farm regions with different resources.

Kim Dong-Hi, the president of the Asian Society of
Agricultural Economists (ASAE), said that for this reason, Asian
agricultural economists have the responsibility not only to
refine economic theories but to design strategies for
agricultural development in Asia that are "balanced and practical
in economic reality".

Speaking at the opening of the ASAE's second conference, Kim
said here that liberalized trade is generally more favorable to
economic growth in the open market economies of developed
nations.

The production of grains, the staple foodstuff of the world
population, tends to be controlled by exporting countries.
At the same time, he said, food-importing countries are deprived
of their cereal-production capabilities.

"On the one hand, increased grain production in some exporting
regions... may result in environmental degradation and a cost
push. On the other hand, scarce farming resources -- such as
cultivated land -- in food-importing countries are forced to
refrain from producing due to lower (import) prices," he said.

Kim said that the effect could ultimately upset the global
food market, particularly if there is unfavorable weather and if
major exporters retain their grain stocks.

"In recent years, two giant cereal exporters -- the United
States and the European Union -- have reduced their grain reserve
stocks since the end of the trade war over grains, thanks to the
Uruguay Round," he said.

The Uruguay Round was the eighth multilateral round of trade
negotiations since the birth of the General Agreement on Tariffs
and Trade (GATT) in 1947.

Kim said giant food exporters such as the United States,
Canada and Australia "were most delighted" with the outcome of
the Uruguay Round negotiations, which established a globalized
food market by eliminating the trade barriers imposed by the
governments of importer countries.

"The GATT's goal is to promote free trade. But, as a matter of
fact, individual governments... have been guided by
mercantilistic motives in the practice of trade policies," he
said.

"Our primary concern after the conclusion of the Uruguay Round
in 1994 is as to what extent the paradoxical behaviors of these
governments will improve," he said.

Coordinating Minister of Economic and Financial Affairs Saleh
Afiff, who attended the conference's opening ceremony,
acknowledged that during the 1969-1974 period, the Indonesian
government played a major role in the country's agricultural
sector.

The government, he said, invested greatly in infrastructure
while policies were designed to protect Indonesian farmers from
foreign supplies of "sensitive" foodstuffs such as flour, sugar,
soybean and maize.

"For virtually all significant food commodities, traders
usually have had to keep a close eye on what the government was
doing in order to succeed in business," Saleh said.

But over the last 15 years, the government started
deregulating the economy, removing barriers and controls "which
were once considered necessary and important but which we now
recognize as impeding growth".

Indonesia's agricultural development, he said, will become
more market oriented as international trade in food and
agricultural commodities increases.

Meanwhile, the chairman of the conference's organizing
committee, Beddu Amang, noted in his opening remarks that in
several Asian countries, trade liberalization may complicate the
management of programs to stabilize food prices.

"Poor consumers may end up less secure than they are now,
unless there are innovative policy approaches," said Beddu, who
is also the head of the State Logistics Agency.

The issue of free trade in the agricultural sector is among
the topics being discussed in the four-day conference being
attended by 200 participants, of which 120 come from foreign
countries.

The conference, called "Asian agriculture facing the 21st
century", will also include discussions on the sustainability and
commercialization of agriculture.