G-20 Report Says Trade Reform Could Help Boost Farm Yields

9 May 2012

Governments should curb farm subsidies and discipline import and export restrictions in order to boost farm productivity, according to a confidential report by international agencies for the leaders of the G-20 group of major economies.

The draft has been prepared jointly by twelve organisations ahead of a meeting of deputy G-20 agriculture ministers in the Mexican resort of Los Cabos scheduled for next week. It makes ten recommendations for sustainably improving agricultural productivity growth, especially on small family farms.

The vice-ministers - or their senior officials - are due to discuss the recommendations and negotiate language that will be passed to ‘sherpas', who will prepare the 18-19 June summit of G-20 leaders.

Recommendations in the final draft, dated 27 April and seen by Bridges, are broadly similar to those in an earlier version that was prepared ahead of the last deputy G-20 agriculture ministers' meeting in April.

"Huge" yield gap

"We're trying to highlight the fact there's a huge yield gap in developing countries," said one official who helped draft the document. Increasing productivity will require "long-term commitment" from G-20 governments, the source said.

Other officials told Bridges that the document, although finalised, is awaiting endorsement from governments before being circulated. Mexico, which holds the G-20 presidency this year, requested the draft, which was coordinated by the UN Food and Agriculture Organization (FAO) and the Organisation for Economic Co-operation and Development (OECD).

The WTO and nine other agencies also contributed - many of which also collaborated on a similar project during the French G-20 presidency last year (see Bridges Weekly, 11 May 2011).

Alongside trade reform, the document urges governments to catalyse farm productivity by increasing responsible investment, strengthening development co-operation, supporting innovation, and improving water efficiency.

"Much more consensus"

One official told Bridges that there had been "much more consensus" this year over the draft document.

G-20 discussions last year on food price volatility had ignited "heated debate" over questions such as whether speculation or biofuel subsidies had triggered price spikes on commodity markets, and - if so - how best to remedy them.

However, one UN official argued that the absence of more controversial issues had led to a fairly bland draft from the international organisations involved, with few specific proposals that were new.

Silence on Doha

Indeed, the report's recommendations reiterate the negotiating mandate of the WTO Doha Round - to substantially reduce trade-distorting domestic support, substantially improve market access, and eliminate export subsidies - in words that are scarcely changed from last year's report from international organisations to the G-20.

The most notable difference is any reference to whether concluding the eleven-year trade talks might help boost farm productivity.

One official from an international organisation cautioned against reading too much into the subtle change of language, suggesting that the conclusions on agricultural trade and farm productivity remain valid "whether Doha exists or not."

Trade ministers agreed last December that the talks were in an ‘impasse', despite repeated efforts to break the deadlock (see Bridges Daily Update #1, 14 December 2011).

Export restriction discussions "to continue"?

The final draft now includes a summary of main points from the G-20's June 2011 Action Plan - including a controversial agreement to refrain from imposing export restrictions on World Food Programme purchases of humanitarian food aid. A bid to extend the accord to all WTO members fell flat when some G-20 governments opposed the move (see Bridges Weekly, 2 November 2011).

Trade sources privately told Bridges that they see little prospect of movement on this topic in the near future. The draft report nonetheless indicates that "discussions on this issue continue in the WTO."

Although last year's report had urged G-20 governments to define a ‘critical food shortage situation' that could justify food export restrictions, the recommendation was dropped this year.

Instead, one official said, "the novelty this year" in the trade section was the emphasis on reducing production losses in developing countries by improving farmers' ability to meet rules on food safety and plant and animal health. Also new was emphasis in the draft on the need to improve transparency on trade policies, support 'aid for trade', and strengthen trade facilitation initiatives.

"Market-smart" input subsidies

G-20 governments could help address what the agencies call Africa's "fertiliser crisis" by supporting developing countries as they monitor and evaluate "market-smart" input subsidy programmes that target smallholders through vouchers and grants, the report suggests.

About ten African countries now provide input subsidies of the type discussed in the draft, following a move to do so by Malawi.

The report urges G-20 governments to help developing countries improve ways of targeting subsidies at small family farms and graduating away from support afterwards.

"You subsidise an input: it's then very difficult to remove the subsidy," one official explained, suggesting that "starter packs" - providing farmers with fertilisers, seeds, and training for a set period - could be one way to do so.

The agencies also call for competition in the fertiliser industry to be strengthened, and for fertilisers to be made available at more competitive prices, especially in sub-Saharan Africa.

Sustainable agricultural intensification?

Expanding reliance on non-organic fertilisers sits oddly with the report's focus on sustainable agricultural intensification, some critics observed.

"The strong push to scale up fertiliser use is hardly a climate-smart solution," Romain Benicchio, policy advisor at Oxfam, told Bridges.

However, the draft also calls for governments to review policies that might generate perverse incentives for sustainability and encourage unsustainable use of natural resources.

Innovation and intellectual property rights

The report also discusses the role of agricultural innovation in boosting farm yields, and the controversial issue of whether and how protection for intellectual property rights - such as patents and plant breeders' rights - could contribute to spurring innovation.

The draft recommends that the G-20 help developing countries to "establish and enforce appropriate [intellectual property rights] systems consistent with international obligations." WTO rules on intellectual property rights has prompted extensive debate over the effects of patents involving genetic material on follow-up innovation, with some questioning whether such developments constitute inventions at all.

The draft nonetheless refers to the importance of the FAO's International Treaty on Plant Genetic Resources for Food and Agriculture - an accord that recognises farmers' rights, allows plant material from a list of selected crops to be pooled for common benefit, and prohibits governments from granting monopoly rights over these resources.

However, experts note that the report might overestimate the role of intellectual property when it comes to promoting agricultural productivity and investment. The draft also seems to "ignore that IP systems are strongly context-dependent," Carlos Correa, director of the Centre for Interdisciplinary Studies on Industrial Property and Economics Law at the University of Buenos Aires, commented.

"The report also overlooks the barriers generated by the proliferation of patents with low inventive step and the possible negative impact of broad IP protection on food security," he said.

Social ‘safety nets'

Governments should also support gender-sensitive social safety-nets to meet the immediate food and nutrition needs of smallholders and their households, the report says.

"We need to take people out of food security traps" one source familiar with the report told Bridges, who emphasised the need to target assistance to women and small children.

Cash transfers to food insecure households could be one tool to do so, the report said.

In the hands of G-20 leaders

"It's now out of our hands," sighed one official who had helped contribute to the report. Back in Geneva, trade negotiators were unclear on whether, or how, the proposal could affect them.

"I don't know if there'll be an impact on the WTO," said one, who wondered whether or not the leaders would "address a particular message to us."

ICTSD reporting.

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