After ten years under the North American Free Trade Agreement (NAFTA), a handful of factory farms and agribusiness corporations have reaped large profits and increased market shares. Meanwhile, millions of independent farmers in Canada, the United States, and Mexico have been driven off their land and denied their livelihood. How has this incredible disparity occurred?
In the United States, direct government subsidies disproportionately benefit agribusiness. Free trade agreements encourage export-driven production while doing nothing to prevent subsidized corporate farms from overproducing and dumping the surplus into foreign markets at prices as much as 46% below the cost of production. The export-oriented production model often forces independent farmers to sell their products at low cost to agribusiness for foreign distribution. This drives down the earnings of independent farmers, who struggle to survive when global prices are set at levels below production cost. Since the implementation of NAFTA, for example, farm incomes in the US have drastically fallen overall, and 7.2% of US farms now receive 72.1% of the market value of all products sold. This is representative of the concentration of market share and profit in the hands of a few massive agricultural operations.
The effects of free trade agreements are equally detrimental for independent farmers in developing countries. As Chris Kraul of the Los Angeles Times wrote, Few would argue that NAFTA has been anything but devastating for Mexican farm families, which account for 23% of Mexicos 100 million people. Many farmers simply cannot compete with low-cost US imports of grain, vegetable and livestock now pouring into Mexico at low or zero duty. Most farmers in developing countries produce for local and national markets. However, due to the reduction or elimination of tariffs mandated by free trade agreements, these independent farmers cannot compete with cheap imported goods, and small farmers are forced out of business and off the land. Some find low-paying jobs as farmworkers on corporate-owned farms that produce goods for export. Others migrate en masse to the cities and to the United States, where they are faced with few employment opportunities.
Trade agreements like NAFTA and the Agreement on Agriculture in the World Trade Organization (WTO) restrict the ability of governments to manage supply and protect local production. Therefore, as agribusiness gains a larger share in foreign markets, eliminating domestic producers and subsistence farmers, food security declines. According to the National Family Farm Coalition, food insecurity among the rural population of Mexico rose drastically after the implementation of NAFTA, from 36% in 1992 to 52.3% today. Food insecurity leads to malnutrition in fact, 80% of all malnourished children in the developing world live in countries where farmers have been forced to shift from food production for local consumption to the production of crops for export to the industrialized world.
The NAFTA model has failed for millions of independent farmers in Canada, the United States, and Mexico. Without addressing the concentration of market share and profit in the hands of a few large farming operations or the ability of US subsidized agribusiness to sell below the cost of production, family farmers throughout the world will continue to suffer from free trade while corporate agriculture profits.
Family Farmers and Trade National Family Farm Coalition
What Is an Agricultural Subsidy? Agricultural Policy Analysis Center
Subsidies and Demand Agricultural Policy Analysis Center
Subsidies and Production Agricultural Policy Analysis Center
Rethinking U.S. Agricultural Policy Agricultural Policy Analysis Center, September 2003