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Draft Paper – Not to be cited without author’s permission

soil conservation, the ability to re-direct domestic supports away from corporate farms and toward family farmers, improving incomes for family farmers, and even reducing subsidies, since many are the result of low prices. This is an area in need of further study.

Ray et al. ran simulations for an alternative U.S. policy scenario based on a combination of (1) acreage diversion through short-term acreage set-asides and longer-term acreage reserves, both of which take land out of production; (2) a farmer-owned food security

reserve; and (3) price supports.39

They found that such a program would lead to a net

reduction of $10-12 billion per year in US farm subsidies, though it would only boost the crop prices farmers receive by a moderate). The overall finding from this study is that subsidies are not having much impact on prices (although cotton is something of an exception). But the critical conclusion from their analysis is by taking a step away from “free” markets we can greatly reduce the cost to tax payers of subsidies and provide a sold basis for greater family farmer competitiveness.

The second required step is to correct structural oversupply at the global level with international supply management agreements. Farmer organizations (see Box 5) and others call for close study of the old commodity agreements under the United Nations Conference on Trade and Development (UNCTAD), which were the pre-Uruguay Round mainstay of international trade regulation. While the International Coffee Agreement, for example, was riddled with problems, coffee farmers were incomparably better off before its collapse than they are now. Nevertheless, the collapse of many of these agreements was due not so much to their internal weaknesses, but to the withdrawal of the political

support of developed countries. them must be taken up urgently. 40 41

The study of these agreements and how to improve

6.1.3 Market concentration: A return to anti-trust enforcement?

Reducing the market concentration of agribusiness conglomerates may well need to be the first step. Note that the Ray et al. study found that a lot of taxpayer money could be saved with supply management, but that farmer prices would nevertheless remain low. That is because they left the concentrated structure of agriculture markets intact in their alternative scenario.

Not only is the ability of large conglomerates to fix prices a key driving force behind low farm prices and high consumer prices, but their size gives them the political leverage to ‘bend’ government trade negotiators to their will. Without weakening their grip on markets and political power, few of the changes proposed here would be possible. 42

Unfortunately the WTO negotiations on “competition policy” are focused on breaking the power of state enterprises to intervene in prices, rather than on the power of TNCs to collude to fix prices. These are the very state enterprises that once provided a floor price to peasant producers in the Third World, and that have been cut back or outright privatized by structural adjustment and trade agreements. Farmers need such bodies— albeit less corrupt ones than their defunct predecessors—so the WTO approach is completely wrong-headed. What is needed is a global competition policy directed at the


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