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Published 25 Apr, 2005 12:00am

Dumping on world agricultural markets

SINCE the WTO’s inception, widespread agricultural dumping by global agribusiness companies based in the United States and the European Union has wreaked havoc on global agricultural markets, according to a recent study by the Institute of Agriculture and Trade Policy.

An examination of U.S. government data indicates that since the WTO began, the US-based companies have engaged in steady, high levels of agricultural dumping in their global sales of the five most exported commodities.

While global food companies have greatly benefited from the low prices for the raw materials of their products, farmers around the world, including the US farmers, are going out of business.

The IATP study has documented export dumping from the US-based multinational corporations onto world agricultural markets for the last 14 years.

This analysis provides dumping calculations from 1990 to 2003 for five commodities grown in the US and sold on the world market: wheat, corn (maize), soybean, rice and cotton.

* Wheat was exported at an average price of 28 per cent below the cost of production.

* Soybeans were exported at an average price of 10 per cent below the cost of production.

* Corn was exported at an average price of 10 per cent below the cost of production.

* Cotton was exported at an average price of 47 per cent below the cost of production.

* Rice was exported at an average price of 26 per cent below the cost of production.

Ominously, the US commodity prices for several crops, particularly corn, have plunged in 2004, suggesting dumping levels will increase again when final numbers are available for 2004.

Dumping is one of the most damaging of all current distortions in world trade. Developing country agriculture, vital for food security, rural livelihoods, poverty reduction and generating foreign exchange, is crippled by the competition from major commodities sold at well below cost of production prices in world markets.

The structural price depression associated with agricultural dumping has adverse major effects on developing country farmers.

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