Trade Liberalization under WTO Agreements for Farmering in the U.S.

For a long time agriculture had been considered as different from all other industries. Farming was seen rather as a way of life than a normal business, moreover agriculture was a subject to intensive government intervention and assistance in many countries, and in the United States in particular. Recently agriculture is losing some of its uniqueness. The inclusion of agriculture in the World Trade Organization (WTO) negotiations in Uruguay Round of 1994 demonstrated that agriculture, worldwide, was no longer considered unique in trade matters (Green 819).

The idea to subject agricultural policies more comprehensively to international disciplines was to make agriculture conform more closely to rules that have long applied to industrial goods. The WTO Agreement on Agriculture led to increasing world agricultural trade liberalization (Fischer 202), which means that countries are less able to use conventional trade barriers – tariffs and quotas – to restrict trade. The sharp decline of tariff trade barriers under WTO agreements has been one of the successes of the world trade system.

Nevertheless, the reduction in tariffs has exposed the many non-tariff barriers that remain, and in several cases, “governments have kept protectionism in place by simply shifting from tariff to non-tariff measures” (Taylor, Walsh & Lee 102). As David Vogel observes, “free trade advocates want to limit the use of regulations as barriers to trade, while environmentalists and consumer advocates want to prevent trade agreements from serving as barriers to regulation” (23).

Here the contradiction of interests inherent to world trade liberalization is apparent. The purpose of this study is to scrutinize, in the light of this contradiction, how WTO agreements affected farming in the U. S. Toward this end we will analyze the current trends in the U. S. agricultural business, examine its experience within WTO, consider the outcomes of the main provisions of the WTO Agreement on Agriculture upon the U. S. farmers, and make the conclusion. Current Trends in Agricultural Business

Developments in technology – in information technology and in refrigeration, transportation, and preservation of perishable agricultural products – have opened up new possibilities for moving agricultural products from every corner of the earth. Changes in trade induces by the WTO agreements have made it easier to import and export foods, making legally possible what technology is making physically possible. Globalization has changed the entire food chain, including suppliers of fertilizers, pesticides, hybrid seed, and tractors, as well as grain traders, millers, transportation companies, processors, and supermarkets (Harrington et al. 61).

Farmers, of course, have also faced significant changes. While many farmers have been continuing to receive generous payments from the government through various agricultural programs, the money have not stayed on the farm. Instead, it went into increasing prices for inputs, rent payments for land, and payment of the debt when production costs were higher than the final sale price (Clark, Stokes & Mugabe 788). As the supply chains have got longer and more concentrated, the profits made in agricultural and food production have been redistributed.

The U. S. Department of Agriculture noted that since 1980 the amount of every consumer dollar spent on food declined almost by 40 percent (Harrington et al. 57). The process of reducing farmers to a marginal role in the food system, most advanced in the U. S. , was repeated around the world. Each part of the food chain has undergone considerable consolidation over the last 20 years. For example, four meat-packing companies slaughter 79 percent of all U. S. beef (Taylor, Walsh & Lee 105).

Six grain companies dominate the grain trade in the U. S. , and not many more are active around the world (Furtan & Baylis 290). At the same time, vertical integration is on the increase. Suppliers of seed, pesticides, and other agricultural inputs, such as Monsanto, are entering into arrangements with grain buyers, such as Cargill. A company like ConAgra now has interests in every part of the food chain, from seed to supermarket shelf (Lyson, Geisler & Schlough 188). Farmers themselves are under pressure to expand and consolidate – or go out of business.

Some 40 percent of agricultural land in the U. S. is farmed by tenants, not the land owner, as families keep the land, which has retained its value, but lease it out to someone else to farm because there is too little profit in farming (Harrington et al. 62). Besides, poultry and hog production, where contracts dictate production methods and quotas to the farmer are increasingly the norm, farmers are in effect becoming hired labor for agribusiness (Clark, Stokes & Mugabe 792).