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Monitoring Corporate Agribusiness From a Public Interest Perspective
A.V. Krebs Editor\Publisher
Issue #121 July 13, 2001
PUBLIC CITIZEN'S GLOBAL TRADE WATCH REPORT:
THE DISASTA OF NAFTA
Farm incomes plummeted and bankruptcies escalated in the U.S., Canada and
Mexico while U.S. food prices increased 20% during the first seven years of
the North American Free Trade Agreement (NAFTA,) according to a new study
issued recently by Public Citizen's Global Trade Watch.
The study found that contrary to promises and predictions at the time of
NAFTA's 1993 passage, North America's farmers and consumers have not
benefited from the pact ø but many large agribusinesses have seen record
profits during the period.
A conservative Democratic Congressman from a farm district in Minnesota and
U.S. farm organization leaders joined Public Citizen today for the release
of the new report: "Down on the Farm: NAFTA's Seven-Years War on Farmers and
Ranchers in the U.S., Canada and Mexico."
The 70-page study is the most comprehensive review of NAFTA's agricultural
outcomes. It comes as President Bush launches an effort to persuade Congress
to provide to him a broad delegation of Congress' constitutional trade
authority through a procedure called Fast Track.
Bush seeks Fast Track authority to expand NAFTA to an additional 31 nations
through a proposed agreement called the Free Trade Area of the Americas
(FTAA). The study provides a substantive context for the escalating
political opposition to Fast Track and NAFTA expansion in the agricultural
Recently, House Agriculture Committee Chair Larry Combest (R-Texas) withdrew
his co-sponsorship of the GOP's Fast Track bill after the Bush
administration listed as potential trade irritants some of the U.S. farm
bailout payments used to counter falling commodity prices and the declining
U.S. agriculture trade balance.
"In the past year, we noticed that wheat, soy, beef and other producers
had been a base of support for trade deals really starting to complain about
how badly things were going since NAFTA," said Lori Wallach, director of
Public Citizen's Global Trade Watch.
"We understand why farmer are so upset, because nearly every U.S. commodity
has faced a flood of new NAFTA imports swamping modest export gains, and
prices have tanked."
During debate over NAFTA, farmers were promised that new export
opportunities to Canada and Mexico would stabilize and reinvigorate the
economics of farm life. The reality has been quite different. Independent
farmers have seen commodity prices plummet and critical domestic safety nets
dismantled in the name of implementing NAFTA and other export-oriented farm
For the past seven years, wheat farmers in the Midwestern and Plains states;
ranchers in Montana, Texas and other states; flower and fruit growers in
California; lumber mill and timber workers in Louisiana, Arkansas and
Washington; vegetable growers in Florida and California; chicken farmers
nationwide; and others have suffered declining farm income while a flood of
NAFTA imports outpaced U.S. exports to Canada and Mexico.
Yet it was not farmers in Mexico or Canada who benefited from the woes of
U.S. farmers. Up to 15 million campesinos throughout Mexico have lost a
significant source of income and are threatened with losing their small corn
Among the report's findings:
* During NAFTA, the rate of elimination of small U.S. farms with sales under
$100,000 was six times greater than in the preceding five-year period.
* U.S. farm income is projected to decline 9 percent between 2000 and 2001
from $45.4 billion to $41.3 billion ø compared to annual farm income of $59
billion before NAFTA.
* While the U.S. agricultural trade surplus with Canada and Mexico grew by
$203 million between 1991 and 1994, it fell by $1.5 billion since NAFTA.
* Instead of reaping special trade advantages with Mexico and Canada, under
seven years of NAFTA, the U.S. agriculture trade balance with the NAFTA
countries declined more rapidly, 71% than the U.S.-world agriculture trade
surplus, which suffered a 29.6% decline.
Promises of new NAFTA export markets for U.S. farm products have proved to
be as elusive as NAFTA proponents' promises of new U.S. manufacturing jobs
created by exports to Mexico. Between the 1994-95 growing season and the
* U.S. corn export volume fell by 11% and prices fell by 20%
* the volume of wheat exports declined by eight percent and prices dropped
* the volume of cotton exports fell by 28% and prices plunged 38%.
* during the same period, even though the volume of soybean exports
increased 16%, the total U.S. soybean crop value still declined by two
percent because the per-bushel price fell by 15%.
In Canada, falling commodity prices meant that net farm incomes declined 19%
between 1989 and 1999, even though Canadian farm exports doubled.
In Mexico, crashing commodity prices caused by a flood of imports and the
elimination of domestic farm programs have resulted in a massive transfer of
land from small farmers to large multinational corporations.
Meanwhile, as farmers and consumers suffered, some giant agribusiness and
food companies made out like bandits, according to the report. During
NAFTA's seven years, Archer Daniels Midland's profits nearly tripled ø from
$110 million to $301 million and ConAgra's profits grew from $143 million
to $413 million.
"Given the track record of the NAFTA model for farmers and consumers in
three NAFTA countries, it is not surprising that farmers nationwide are
increasingly opposed to the notion of expanding NAFTA through the proposed
Free Trade Area of the Americas," said Public Citizen President Joan
"As bad as NAFTA's seven years has been in the United States, the results
for poverty-stricken Mexican farmers and consumers is horrific and puts to
rest that myth that these trade deals benefit people in developing
Public Citizen is a consumer advocacy group with 150,000 members nationwide.
The report can be read on the Web at http://www.tradewatch.org.