Trade
And The Rural Sector
The
Washington Office on Latin America, December,
2003
for
more information, contact Vicki Gass or Gabi
Kruks-Wisner,
(202) 797-2171
Who farms in Central America?
› The Central American agricultural sector
is comprised of small, medium and large-scale
producers, and by a large number of landless
laborers and farm workers. Agriculture continues
to be central to the well-being of significant
portions of the population. In Guatemala and
Nicaragua, agriculture employs 601 and 442 percent
of the economically active population, respectively.
In Costa Rica, the only middle-income country
in Central America, 21 percent of the population
is employed in agriculture.3
› The two poorest groups in Central America
consist of indigenous people and women, many
of whom reside in rural areas. One third of
the rural poor in Latin America are indigenous,
and eight to ten million rural households are
headed by women.4
Poverty
is concentrated in rural areas.
› Despite economic growth in Latin America,
rural poverty has increased during two decades
of trade liberalization. Sixty-four percent
of the region’s rural population lives
in poverty, compared to 59.9 percent in 1980.5
Sixty percent of Central America’s poor
live in rural areas.6
›
Official support for the rural sector has declined
significantly over the last two decades. International
development assistance to rural areas has dwindled,
and structural adjustment programs in the 1980s
and 90s have also resulted in reduced investment
in rural infrastructure, technology, financial
services, and human capital in Central America.
The productivity of Central American farms has
suffered as a result.
What
will CAFTA mean for Central American farmers?
› Rural Central America is dependent on
a few, key export crops and is highly vulnerable
to the volatility of international markets.
For example, a world crisis in coffee production
has led to farm bankruptcy and has displaced
hundreds of thousands of workers in Central
America (the World Bank estimates that 600,000
coffee related jobs have been lost in Central
America). Trade liberalization, without safeguards
for small farmers and the agricultural sector,
will make Central America more vulnerable to
downturns in the global economy.
›
Under CAFTA, Central Americcan farmers will
compete against highly subsidized production
in the U.S. and elsewhere in the developed world.
Changes in U.S. farm policy, beginning in the
1990s, have eliminated programs to regulate
agricultural production and pricing. The result
has been a precipitous drop in commodity prices
and a decline in farm income worldwide. Proponents
of this deregulation argued that the lower prices
would be good for U.S. exports. However, only
a very few agro-export corporations have been
able to increase their exports, while the majority
of U.S. farmers struggle to survive. The impact
for developing world farmers has been devastating,
as large corporations “dump” commodities
at well below the costs of production. Under
CAFTA, Central America will be required to reduce
tariffs, subsidies and other supports that protect
key agricultural sectors. Central American farmers
will not be able to compete on this uneven playing
field.
›
In Mexico, the real price paid to farmers for
corn fell by 45.2 percent between 1993 and 1999.7
This drop is attributed in large part to the
opening of the Mexican market under NAFTA to
U.S. and Canadian corn, which is subsidized
and sold at low cost, displacing Mexican producers.
Small and medium producers in Central America
fear the same fate under CAFTA.
Understanding CAFTA
Agriculture, Trade and Food Security
› Small farmers are concerned by the potential
impact on the production of basic foods such
as corn, rice and beans, should Central America
be forced to compete with U.S. imports under
CAFTA. These products, as they are the staples
of the local diet, are essential for food security
and generate significant rural employment.
› Alarming rates of malnutrition have
been recorded in rural areas of Central America.
A September 2002 World Food Programme report
estimates that 8.6 million people in Central
America live in a “drought corridor”
where they are at risk of hunger. Further liberalization
of staple agricultural products will contribute
to worsening rates of malnutrition, as small
and medium producers are unable to compete and
rates of farm failure and rural unemployment
rise.
1 World Bank, “Country at a Glance,”
http://www.worldbank.org.
2 Centro Internacional de Agricultura Tropical,
“Rural Sustainability Indicators: Outlook
for Central America,” August 2002.
3 World Bank, op cit.
4 International Fund for Agricultural Development,
“Regional Strategy Paper: Latin America
and the Caribbean,” March 2002.
5 Ibid.
6 Centro Internacional de Agricultura Tropical,
op cit.
7 Public Citizen, “Down on the Farm: NAFTA’s
Seven Year War on Farmers and Ranchers in the
U.S., Canada, and Mexico,”
June 2001.
©
|
