Firms gained more than farmers under WTO norms, says Centad

Written by ASHOK B SHARMA | New Delhi, Sep 23 | Updated: Sep 24 2007, 06:22am hrs
The present asymmetric rules of the multilateral trading system coupled with the lack of appropriate policies of the national governments has benefited select global agribusiness firms, rather than the farmers, said a recent study done by the Delhi-based Centre for Trade and Development (Centad).

The study expressed concern over the Doha Development Round and said, " it now hangs on a thin tread as trade negotiators in Geneva make their absolutely last second attempts to get a fair deal. It is undeniable that the current impasse is primarily the result of unfair agricultural trade rules of the previous rounds of trade talks. The real beneficiaries of asymmetric rules have been business firms, rather than the farmers. Little wonder then that agribusiness has been one of the most important drivers of agricultural rules at the multilateral level."

According to the Centad study empirically global agricultural trade is highly asymmetric with large number of producers linked to very few traders who in turn sell to large number of buyers. Therefore there are few leaders to decide the price and choice of consumption.

Bayers, Syngenta, BASF, Dow and Monsanto control 65% of the pesticide sales in the world. Monsanto, DuPont, Syngenta and Groupe Limagarin in the sale turnover of 10 major seed companies account for 72% market share in the world, while Monsanto alone has 91% global market share in the sale of genetically modified seeds.

Global top 10 food retailers command a market share of 24% amounting to $ 3.5 trillion, out of which Wal Mart, Carrefour, Metro AG and Ahod account for 64%. Chiquita and Dole Foods command 50% of banana sales, while Unilever/Brooke Bond, Cadbury Schweppes and Allied-Lyons control 80% of global tea sales.

The study said about two types of agribusiness consolidationhorizontal and vertical. When companies dealing with same product enter into an alliance, it is horizontal consolidation like Cargil, Cenex, ADM and General Mills controlling 60% of terminal grain handling in the world. Vertical consolidation is where few companies are in a commanding position in the `field-to-table' process.

The study says Carrefour's revenue from sales is greater than the the gross national income of Chile, while that of Wal Mart 3.2 times the gross national income of Pakistan and that of Cargil is equal to the gross national income of Romania.

Comparing the retail price of tea in India at Rs 160 a kg, the Centad study noted that it was more than 3 times greater than the average auction price for tea at Rs 50 per kg. Potato chip in India priced at Rs 143 a kg was 28 times more than the price of potato paid to farmers. Similarly one pound of loose banana sold in UK Super Market at 40 pence was 27 times more than the price the plantation workers receive

The study also found compliance of stringent standards of developed countries would burden the farmers in the developing countries. Compliance to EUREP-GAP norms would amount to 70% of the average income of Ghana farmers, 87% of the average income of Indian farmers and about 1.3 times the annual per capita income of Bangladesh.