GLOBALIZATION, PROFITEERING, LACK OF GENUINE AGRARIAN REFORM BEHIND WORSENING FOOD CRISIS

Civil society groups call October 16 ‘World Foodless Day’

As the world celebrates World Food Day today, research group IBON join civil society groups worldwide in denouncing globalization polices and corporate profiteering, which have made food a commodity for trade and speculation that worsened global hunger.

Global food prices have risen by 75% since 2000, according to the World Bank, while prices of rice, corn, wheat, and soybean have hit all-time highs. Prices of meat, poultry, eggs and dairy products naturally follow the upward trends of grains prices. Amid the global financial crisis, increased speculation in food and fuel prices is seen as a possible consequence that will further push food prices up and worsen the poor’s access to food.

The world is facing its worst food crisis that has been aggravated by trade liberalization policies imposed by international finance institutions (IFIs) like the International Monetary Fund and trade bodies such as the World Trade Organization. These policies have allowed intensified profiteering by food transnational corporations (TNCs). In fact while more and more people go hungry everyday, TNCs such as Cargill and grain traders such as Archer Daniels Midland reported increased profits as of the first quarter of 2008.

TNCs in its desire for more profits have continued to lobby IFIs and Third World government to implement globalization policies in food and agriculture, including liberalization of trade and investment in agriculture, privatization of public organs in agricultural extension services such as irrigation, trading and the like, and deregulation of government roles in pricing, marketing and even land reforms. These globalization policies compound the deep crisis of agriculture and food production in underdeveloped countries due to decades-old landlessness of farmers, backwardness of their tools and production, monopoly of land, tools and inputs, TNC control in production and trade, and government neglect. Thus, ironically, hunger is at its worst in rural communities in the Third World where most food and agricultural production take place.

Globalization has not only resulted in the increasing bankruptcy and worsening poverty and hunger of farmers and consumers, but also in continuously eroding local production and self-sufficiency of Third World countries.

Civil society, peasant groups, and people’s organizations around the world consider World Food Day an opportune time to send a strong message that farmers and people of the Third World reject globalization, trade liberalization, and TNC profiteering of agriculture. It is also a time to recognize the successful efforts of broad alliances of farmers and people’s organizations for strengthened protests against globalization, struggle against genuine agrarian reform, and relentlessly demand for social accountability. (end)

World Foodless Day events are being held in more than fourteen countries across Asia and being supported by civil society groups around the globe. For more details on the events of World Foodless Day, visit http://www.panap.net/wfd



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7 OUT OF 10 FILIPINOS CAN’T BUY ENOUGH FOOD, HAVE TROUBLE PAYING ELECTRICITY BILLS, BASIC COSTS

More Filipinos have trouble buying enough food and paying for basic expenses, according to the latest IBON nationwide survey.

Of the 1,495 respondents, 75.3% said that their family had a problem buying enough food, a substantial increase from 63.2% last January, while 69.7% had trouble paying for electricity and water bills.

The survey also showed that 67.42% of respondents have difficulty paying for transportation costs, compared to 60.6% in January; 73.4% had a problem buying their medicines or paying for their medical treatment; and 68.2% had trouble paying for their children’s tuition.

The April 2008 IBON Survey was conducted from April 7 to 16 across various sectors and regions nationwide with a margin of error of plus or minus three percent (end).

Below is the tabulation of results of respondents’ problems meeting basic expenses.

In the past three (3) months, has your family had a problem meeting the following expenses?

January 2008

April 2008

Frequency

Percentage

Frequency

Percentage

Buying enough food

950

63.21

1,126

75.32

Paying for children’s schooling

997

66.33

1,020

68.23

Paying for transportation

911

60.61

1,008

67.42

Paying for water and/or electricity

1,006

66.93

1,042

69.70

Buying medicines/paying for medical treatment

1,024

68.13

1,097

73.38

AS GOV’T HOLDS FOOD SUMMIT : REVERSE RP’S DEPENDENCE ON FOOD IMPORTS, THINK-TANK URGES

The Philippines has become too dependent on food importation to make up for its shortfalls in domestic production and should reverse this trend, says independent think-tank IBON Foundation as the Department of Agriculture opens its Food Summit today.

“Importation should only be a short-term solution to supply shortages, “ said IBON executive editor Rosario Bella Guzman.

“In the long-term the government must make the country self-sufficient in the production of its staple foods such as rice, not just to guarantee that Filipinos have enough to eat without relying on foreign markets, but also to ensure sustainable development.”

According to data from the Bureau of Agricultural Statistics, the country imported 808,000 metric tons (MT) of rice in 2001, or 10% of total rice disposable of 8.1 million MT. By 2006, imports had grown to 1.7 million MT or 17% of total rice disposable of 10.3 million MT.

As the Department of Agriculture made a positive step of raising the buying price of palay to P17 per kilogram from P12, it should ensure that traders do not translate this to unreasonably higher prices of commercial rice.

Government should also allocate more funds for buying from local farmers, said Guzman. If the P5 billion announced by Pres. Arroyo were used, it would only buy some 300,000 MT– less than one percent of the expected production this year of 7.2 million MT of palay.

If the estimated P62 billion that would be used this year for imports were allocated for local procurement, the NFA could purchase from farmers 3.6 million MT of palay. Aside from benefiting local farmers, this would also help NFA address the issue of hoarding by unscrupulous rice traders.

“The Food Summit should focus on such urgent measures that will help improve our local producers,” said Guzman. “The country’s experience since the 1990s clearly shows that importation has only terribly worsened the country’s self-sufficiency in food.”

EMPLOYERS CAN GRANT MUCH-NEEDED WAGE HIKE

A wage hike is urgent amid soaring rice and food prices, rising transport costs, and power and rate hikes, and businesses are fully able to grant the wage hike demanded by workers, according to independent research group IBON.

According to IBON research head Sonny Africa, all that employers have to do is accept a cut in their profits or tap their accumulated earnings. In these critical times for the majority of Filipinos who remain poor, Africa pointed out that businesses can even cut back on their expenses that are basically unproductive and just about competing with each other to increase market share, and divert these to their workers instead. Such expenses, he said, include extraneous marketing and promotions expenses.

As it is, the average daily basi c p ay of the country’s wage and salary earners even falls far short of the minimum wage. A wage hike will put additional pressure on employers to pay higher wages, which is aside from how the government should also work to ensure that workers are paid the proper minimum wage.

As of the middle of 2007, labor force survey data on wage and salary workers found that laborers and unskilled workers were getting paid just P153 per day, service workers and shop and market sales workers were getting P227, trades and related workers just P262, and plant and machine operators and assemblers only P287. These occupations account for 58% of all jobs in the country.

The minimum wage also falls far short of the family living wage. For instance, the minimum wage in the National Capital Region is P362 per day but the family living wage for a family with five members is P672 per day– or a shortfall of P310 per day for a family with the average of five family members.

Africa added that the real value of families’ earnings has been falling steeply since the start of the Arroyo administration. While nominal family incomes increased 19% between 2000 and 2006, according to the latest Family Income and Expenditure Survey (FIES), the price of goods however increased 38 percent. Soaring prices more than off-set seeming increases in family incomes and, in effect, the average annual family income of P171,924 in 2006 was worth P20,400 less than in 2000.

Uncontrollable unemployment and dismally poor wages are among the most important reasons for the increase in poverty in recent years, said Africa . In itself these are solid reasons for a wage hike of at the very least P125 as demanded by organized labor.

Inflation has drastically eroded the value of this however and P125 in 2000 is worth just P64 today, he said

PROPOSAL TO CUT NFA POWERS HIT:RICE IMPORTS DON’T SPELL CHEAPER PRICES; GOV’T URGED TO STRENGTHEN LOCAL RICE SECTOR INSTEAD

As government continues to turn to importation as remedy for the current rice crisis, this time with the proposal to further cut the powers of NFA and increase private importation, research group IBON reminds the administration that rice imports, based on experience, do not result in lower-priced rice.

Decades of importation has proven that imported rice are not sold at cheaper prices because private importers have the monopoly over pricing and trading, while government has withdrawn support for marketing and distribution. The NFA’s reduced role in palay procurement and rice trading, including setting price ceilings left farmers and consumers at the mercy of traders. Data shows that the monopoly of the rice market is increasing, with only 2,968 rice dealers and wholesalers as of 2006 compared to 21,000 in 1986. Meanwhile, NFA procurement is only at 0.5% and distribution rate is only 6% of total production.

Prices are even likely to be driven up by the recent decision to remove the 300,000 metric ton quota on private sector rice imports because it paves the way for profiteering. The government says that the NFA will remain the “importer on record” so private sector importers will not have to pay the current 50% tariff and will instead just be charged a P2-3 “importation service fee” which, the agriculture secretary was quoted as saying, “(reduces) the tariff to about around maybe 10%”. The NFA will also supposedly determine import volumes.

Under this scheme, rice bought abroad at US$700 per ton could be sold at as much as P35.40 per kilo or higher – broken down into P29.40 import cost (at an exchange rate of P42 per US$1), P3 NFA import fee, P3 storage and distribution cost. This amount does not yet include traders’ mark-up. If rice is bought abroad at US$1,000 then its domesti c p rice could rise to as much as P48 per kilo or higher with traders’ mark up.

The worst hit are the poorest four-fifths of Filipinos trying to live off P110 or much less each day and for whom food takes up half to over two-thirds of their expenses. As it is they have already seen their real incomes fall by 5%-13% in the period 2000-2006. Majority of these number are the rice farmers who are pushed more into bankruptcy with the flooding of imported rice in the market amid sufficient local production of palay.

If we are to ever going to get out of this crisis, the government should in the short term, start expanding land area planted to rice, increase the NFA’s local rice procurement to 25% to 30% so it can effectively influence rice prices in the market, provide sufficient production and price subsidies to farmers, and rescind its commitments to further liberalize agriculture

EIGHT REASONS TO REJECT THE JPEPA

The JPEPA can be best described in three words: unequal, defeatist and destructive.

Recent government propaganda, however, has been trying to depict the JPEPA as an indispensable agreement– even as the country is currently reeling from a food crisis brought about by the same neoliberal framework that JPEPA was designed from.

With this, IBON is again releasing this summary below, which briefly explains why the country stands to lose from JPEPA and why the Philippine Senate should reject this patently unequal deal.

1. The JPEPA is a grossly unequal deal.

Under the JPEPA, Japan protects numerically more sectors of its economy from investment liberalization than does the Philippines and in addition is also very specific in protecting what it deems as vital sectors.

Advanced Japan lists at least 16 sectors to be so protected, many of which even require a minimum of 66% of full nationality. Japan rightly includes such strategic areas as mining, telecommunications, air and water transport, shipping, and banks and financial institutions for small businesses.

Underdeveloped Philippines , on the other hand, lists just five specific sectors: mining, rice and corn, geothermal energy, atomic energy and shipping. The other items are just formulated generically and are meaningless in terms of explicitly supporting and protecting specific sectors of the economy.

2. The JPEPA gives false or marginal gains for the Philippine economy.

There is much hype that Japan will open its doors to Filipino nurses and caregivers under JPEPA provisions on “movement of natural persons”. The pact allows for the entry and temporary stay of persons who engage in supplying services as nurses or certified caregivers for one to three years (which may be extended). There are, however, strict requirements that must be fulfilled as well as regulations to be followed under Japanese law.

Among the prerequisites are that nurses and caregivers should be proficient in both spoken and written Japanese and be qualified under Japanese law. Although these professional and language requirements are not unreasonable, they are limiting as far as deployment of Filipino health workers to Japan are concerned.

In all likelihood very few nurses and caregivers will be able to surmount the considerable language, technical and cultural barriers. Even assuming Japan lifts its quota limits, only a few thousand health workers may hurdle these barriers.

3. JPEPA lays the basis for increased toxic waste from Japan.

Under JPEPA, the country risks becoming a big dump site for Japanese waste materials, not just the recyclable ones but also toxic materials fit for disposal such as clinical and chemical wastes. Once the pact is ratified and implemented, these wastes can be imported tariff-free, from their original tariffs of 3% to 30% set under the Most Favored Nation treatment of the World Trade Organization.

In the face of widespread protests against JPEPA, the two governments have since come up with a side agreement that supposedly addresses these issues. However, this does not detract from how the Philippine government, under the pretext of developing local waste treatment and disposal capacity, did concede to the entry of these wastes by lowering existing tariffs to zero, notwithstanding the provision on “non-relaxation” of environmental protection.

4. “Free trade” does not result in development for backward countries.

On the contrary, historical and current experience show that: 1) industrialized countries like Japan developed on the basis of protection and discriminatory support; and 2) Third World countries like the Philippines that prematurely liberalized have suffered.

Japan certainly has more to gain from so-called free trade with the Philippines . The Japanese economy’s gross domesti c p roduct (GDP) of US$4.4 trillion in 2006 is 50 times larger than that of the Philippines . Japan is also the biggest foreign investor in the Philippines with a cumulative US$3.9 billion as of 2005, constituting over one-fifth of the country’s foreign investment stock. Japan accounted for 17% of the Philippines ‘ total trade in 2005 and is its second largest trading partner, while the Philippines accounted for just 1.4% of Japan ‘s total trade.

Underlying these figures are economies of vastly different industrial, agricultural and service sector strength. The myth of “comparative advantage” and the so-called “level playing field” between such economies is merely a smokescreen for giving the stronger economy free rein to profit from the other.

5. The JPEPA’s liberalization agenda severely limits the Philippines‘ freedom to set economic policy.

Government controls on how foreign investors operate in the country are necessary to ensure that the Philippines gets concrete and substantial benefits from such investments. This means, among others, ensuring control over investors’ operations through equity and ownership requirements or joint ventures. It also means ensuring benefits to the domestic economy through local content requirements and technology transfers.

These linkages between foreign investors and domestic entrepreneurs will not spontaneously arise and have to be consciously built, yet the JPEPA would disallow policies to build these. Investment provisions on “National Treatment” and “Most Favored Nation Treatment” will prevent the Philippines from favoring Filipino entrepreneurs over Japanese investors. There are also explicit “Performance Requirement Prohibitions” which disallow the Philippine government from requiring Japanese investors to achieve a certain level of domestic content, purchase goods and services in its area of operations, among others.

All these are designed to give Japanese investors greater protections, to ensure that they retain their advantages and to enable them to extract the maximum profit from their operations.

6. The JPEPA will worsen Philippine de-industrialization and cause job losses.

The government claims the local exporters would gain through export growth as tariffs are reduced and removed altogether. But the majority of Philippine exports to Japan are industrial manufactures that are actually subcontracted from Japanese transnational corporations (TNCs) and assembled using imported inputs while taking advantage of cheap Filipino labor.

If anything, the JPEPA actually raises the danger that some electronics and auto parts suppliers based in the country, whether TNCs or any genuinely Filipino enterprises, will be affected. Of course, there is no genuinely Filipino electronics or auto industry to speak of. But there are still such suppliers based in the country that import raw materials or components and assemble them either for re-export or as inputs to other electronics or auto assemblers in the country.

Such firms may have to close down if the removal of tariffs on these items makes them cheaper to import than procure from locally based manufacturers. Local steel makers will also be facing steeper production from Japanese producers. The resulting plant closures and layoffs could well mean some tens of thousands of jobs will be lost.

7. The JPEPA will increase landlessness and undermine agricultural livelihoods.

There is also much hype about supposed export gains from a more open Japanese market for Philippine bananas and pineapples. However, food exports are actually a small and even diminishing share of total Philippine exports to Japan, accounting for only 7.4% of total exports to it from 2001-2006. While food exports potentially have high local linkages to the local economy, grassroots farmers and farm workers are unlikely to benefit from JPEPA.

Agriculture in the Philippines , including that of bananas and pineapples, is in general very backward and underdeveloped because of the lack of true land reform and the absence of government support and extension services. Further, foreign agri-business TNCs, such as Dole and Del Monte and their big domestic corporate growers, account for virtually all banana and pineapple exports from the Philippines.

Local farmers are reduced to entering into oppressive contract growing and farm lease arrangements with these TNCs. These arrangements place all the risk of cultivation onto the farmers and force them to buy overpriced inputs. Such arrangements raise the high possibility that small farmers may lose their lands and become workers for hire or join the exodus to the cities.

8. The JPEPA is not about Philippine development.

The JPEPA’s provisions on trade and investment liberalization are designed to give Japan ‘s corporations the greatest benefit to make huge profits, at the expense of the greatest damage to the Philippine economy.

The pact also contains other measures that complement that central thrust. While packaged as being aimed towards developing domesti c p roductive capacity, their real objective is to make it even easier for Japanese firms to trade and invest in the Philippine on terms that are the most beneficial to them.

These include the supposed cooperation in trade and investment promotion, trade facilitation, technical assistance to meet Japanese requirements and regulations, capacity building in paperless trading, training to facilitate improvements in the competitiveness of workers, human resource development and language proficiency training.

GOV’T CAN ENSURE CHEAPER RICE BY DOING AWAY WITH LIBERALIZATION, RESISTING CREDITOR PRESSURE

Government can actually provide the much-needed relief of low-priced rice if it only gets out of its liberalization framework in coming out with remedies to the current rice crisis, said independent think-tank IBON Foundation.

Its responses to the rice crisis such as lifting the rice import quota and the proposal to increase the selling price of National Food Authority (NFA) rice are all conditionalities imposed on government by multilateral creditors like the World Bank and the Asian Development Bank (ADB) for further liberalization.

The Arroyo administration could, for instance, increase NFA procurement to help local rice producers, but it clearly prefers to preserve its “fiscal gains” by denying the agency enough subsidy, said IBON research head Sonny Africa.

Rice imports needed to make up for shortfalls in local production could mean as much as a P64.1-billion subsidy for NFA rice this year, an amount that is already over five times the national government deficit in 2007. Providing this much subsidy– even if it will benefit farmers and consumers– would not sit well with creditors. Hence, instead of strengthening the NFA, government has removed rice import quota to allow private traders to import larger amounts of rice, and now proposes for a hike in NFA prices.

These recent government proposals, Africa said, all comply with the ADB and World Bank conditionalities of NFA privatization and full liberalization of rice importation. It clearly shows that while it can ensure cheaper rice, government chooses to abandon its responsibility to the people and give in to creditor pressure