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Agriculture & Development

7. Why haven’t small farmers benefited more from global trade?

    The Executive Summary of the IAASTD Synthesis Report states:

    Local market in Pisar, Peru

    Local market in Pisar, Peru
    © Eva Schuster

    Trade and markets

    Targeting market and trade policies to enhance the ability of agricultural and AKST [Agricultural Knowledge Science and Technology] systems to drive development, strengthen food security, maximize environmental sustainability, and help make the small-scale farm sector profitable to spearhead poverty reduction is an immediate challenge around the world.

    Agricultural trade can offer opportunities for the poor, but current arrangements have major distributional impacts among, and within, countries that in many cases have not been favorable for small-scale farmers and rural livelihoods. These distributional impacts call for differentiation in policy frameworks and institutional arrangements if these countries are to benefit from agricultural trade. There is growing concern that opening national agricultural markets to international competition before basic institutions and infrastructure are in place can undermine the agricultural sector, with long term negative effects for poverty, food security and the environment. 5

    Trade policy reform to provide a fairer global trading system can make a positive contribution to sustainability and development goals. Special and differential treatment accorded through trade negotiations can enhance the ability of developing countries to pursue food security and development goals while minimizing trade related dislocations. Preserving national policy flexibility allows developing countries to balance the needs of poor consumers (urban and rural landless) and rural small- scale farmers. Increasing the value captured by small-scale farmers in global, regional and local markets chains is fundamental to meeting development and sustainability goals. Supportive trade policies can also make new AKST available to the small-scale farm sector and agroenterprises.

    Developing countries would benefit from the removal of barriers for products in which they have a comparative advantage; reduction of escalating tariffs for processed commodities in industrialized and developed countries; deeper preferential access to markets for least developed countries; increased public investment in rural infrastructure and the generation of public goods AKST; and improved access to credit, AKST resources and markets for poor producers. Compensating revenues lost as a result of tariff reductions is essential to advancing development agendas. 6

    Agriculture generates large environmental externalities, many of which derive from failure of markets to value environmental and social harm and provide incentives for sustainability. AKST has great potential to reverse this trend. Market and trade policies to facilitate the contribution of AKST to reducing the environmental footprint of agriculture include removing resource use distorting subsidies; taxing externalities; better definitions of property rights; and developing rewards and markets for agroenvironmental services, including the extension of carbon financing, to provide incentives for sustainable agriculture.

    The quality and transparency of governance in the agricultural sector, including increased participation of stakeholders in AKST decision making is fundamental. Strengthening developing country trade analysis and negotiation capacity, and providing better tools for assessing tradeoffs in proposed trade agreements are important to improving governance.

    Source & ©: IAASTD  Executive Summary of the Synthesis Report (April 2008), p. 19-20


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