McDonald's Corp. lobbies ASEAN on farm reform

McDonald's Corp. lobbies ASEAN on farm reform

SINGAPORE (Reuter): A senior official of U.S. hamburger giant McDonald's Corp. said yesterday that protectionist farm policies had driven up the cost of food in Southeast Asia.

Raymond Cesca, managing director of McDonald's World Trade, which runs the company's international operations, told Reuters Southeast Asian governments and the U.S. farming community should come up with a plan to lift restrictive agriculture rules in the region while protecting its farmers.

"The food costs are extremely high in ASEAN (Association of Southeast Asian Nations) compared to other developing countries. Primarily, the reason is because of the very restrictive policies relative to agriculture," he said in an interview.

The price of one hamburger in ASEAN, when hidden costs like high tariffs on feedstuffs for the livestock industry are included, reached an average of US$2.16 against the $1.95 paid by consumers in the United States, he said.

McDonald's has more than 400 restaurants in ASEAN, which groups Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Cesca said protectionist farming policies were understandable "because of the large number of people that are employed in this sector, and that ranges from 50-65 percent of the people employed."

"That's why no one wants to address it," he said. "Politically, it's not in vogue to address those issues."

Cesca said he would seek to convince the region's food industry officials of the need to remove barriers when he speaks at the first ASEAN business summit in Jakarta this week.

The ASEAN free trade area agreement, which aims to trim tariff duties to 5.0 percent or less in many industries by 2000, does not apply to agriculture.

Discussions on the sensitive farming issue, which has often marred meetings of ASEAN leaders and economic officials, has been deferred to beyond the year 2010 when the ASEAN Free Trade Area (AFTA) will be implemented in full.

Some countries, such as Indonesia, may be reluctant to open their agricultural sectors because trading in farming goods is controlled by a state monopoly, analysts say.

Others, like the Philippines, espouse a national policy of self-sufficiency in items like rice, the staple food of the country's 70 million people, and slap prohibitive tariffs on the import of foodstuffs.

Cesca blamed the high tariffs on items like imported animal feed for the poultry and livestock industry and inefficiencies in the food processing and distribution sectors for driving up costs in the region.

He said food processors and the U.S. farming community should help develop a plan to help ASEAN farmers boost yields and upgrade their food processing and distribution networks.

"Ultimately, what I see is a strategic plan that balances two things. One is to balance the liberalization of the agricultural sector and on the other side to minimize employment dislocation," Cesca said.

He said lobbying ASEAN countries to throw open their farming sectors would make no sense without providing for farmers by teaching them how to raise yields and income.

"If you open the borders right away, it would basically affect that (farming) sector by putting some people out of work," Cesca said.