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LATIN AMERICA: Can Rising Food Prices Help Small Family Farms?

Daniela Estrada*

SANTIAGO, Apr 24 2008 (IPS) - Rising global food prices could represent an opportunity for the development of small-scale family farming if national governments provide effective support as part of long-term policies, say experts from various agencies.

Prices for agricultural products have been rising since 2002, for a number of reasons. The initial increase was the result of growing demand from countries with large numbers of poor people who were beginning to eat better, such as China and India, coupled with revised projections of corn consumption for the production of ethanol in the United States.

In 2005 and 2006, droughts, flooding and unseasonal frosts impacted prices, while today, “we are dealing with speculative movements triggered by the fall of the dollar, and it is difficult to predict when it will end,” José Graziano da Silva, regional director of the United Nations Food and Agriculture Organisation (FAO), told IPS.

Martine Dirven, head of the Agricultural Development Unit of the Economic Commission for Latin America and the Caribbean (ECLAC), said that relatively high prices are expected for the next 15 to 20 years.

Although there is no single definition of campesino (peasant) family farming, Dirven explained to IPS, it is associated with three characteristics: family labour, the lack of permanent employees, and the passing down of the farm from one generation of the family to the next. The term “campesino” in Latin America refers to “a way of life, which includes special values with respect to the land,” she added.

ECLAC estimates that family farms account for 80 percent of all farming operations in the region.

While rural poverty and extreme poverty rates have shrunk since 1990, the majority of self-employed farmers have suffered a decline in their incomes, which has been drastic in some countries, with the exception of farmers in Chile, Paraguay and Colombia, Dirven stated in a 2007 report.

Can the current rise in food prices be turned into an opportunity for campesino family farming in the region? Dirven and da Silva believe that one of the main obstacles is the fact that profits are not shared equitably among the different components of the chain of production.

“It is the non-agricultural intermediary sector that has benefited the most, especially the wholesalers,” stressed da Silva. In those cases where there actually has been a positive impact on the income of small farmers, noted Dirven, “there has also been an impact on expenditures, which means that their situation has not improved overall.”

One of the trends that has had negative consequences for small-scale agriculture is the “ever greater concentration of agents in the processing and marketing of farm products (particularly agribusiness and supermarkets),” Dirven noted in her study. Within this scenario, corporate producers have reaped the greatest benefits.

Da Silva said that in order to take advantage of the current situation, countries should implement “policies to stimulate food production, especially among the smallest producers.”

He believes there are three key tools needed for this purpose: soft credits; government purchases of foodstuffs to guarantee a market for producers and generate “minimum stocks”; and the direct purchase of agricultural products from family farms to be distributed to the poorest sectors of the population.

Dirven also proposed the possibility of subsidies for agribusiness in return for purchasing the output of family farms.

In Brazil there is a Food Acquisition Programme through which the government purchases food produced by family farms. The programme ensures food supplies for poor families, school meals and public hospitals, while creating a solid market for the small farming sector. This has had an especially significant impact in northeastern Brazil, the country’s poorest region.

According to the most recent agricultural census, carried out in 1995-1996, there were 4.2 million family farming units in Brazil, with two million families living in poverty.

“The rise in prices benefits family agriculture without a significant inflationary effect in Brazil, because the supply is solid,” said João Luiz Guadagnin, director of Financing and Protection of Rural Production at the Ministry of Agricultural Development.

Small dairy farmers have particularly benefited, he told IPS.

The Brazilian government’s policies to support the sector include the National Programme to Strengthen Family Agriculture (PRONAF), which granted 1.9 million soft loans worth a total of five billion dollars in 2007.

Other incentives include insurance against climate-related damages and a Price Guarantee Programme for Family Agriculture, which compensates farmers when prices fall below the cost of production.

In Chile there are roughly 300,000 small farms, which represent over 80 percent of the country’s agricultural operations and supply 45 percent of the vegetables consumed domestically, 43 percent of the corn, wheat and rice, and 40 percent of the beef and dairy products, according to the Ministry of Agriculture.

“It would be irresponsible to say that progress hasn’t been made, but it hasn’t lived up to expectations,” said Rigoberto Turra, president of the United Peasant and Ethnic People’s Movement of Chile (MUCECH), which brings together some 180,000 self-employed and salaried farmworkers. “There are too many problems facing farmers, compared to the support that’s being provided,” he commented to IPS.

The government’s main pending debts to the sector include “more training for farmers, technical advice for campesino organisations and assistance for marketing their products internationally,” said Turra.

The executive director of the non-governmental Campesino Assistance Coordinating Office (OCAC), Iván Radovic, agreed with Turra that government subsidies and aid are “insufficient” and that there is no “aggressive policy” to spur the development of family farming.

For his part, acting Minister of Agriculture Reinaldo Ruiz told IPS that he does not share these opinions, and that he believes the country has provided “ongoing” support to small farmers.

The rise in prices is “good news for our producers,” especially for the small farmers who supply the domestic market, but “we are concerned by the increases that have also affected the prices of inputs (like fertilisers), which have reduced their profit margins,” said Ruiz.

For this reason, the ministry has called on the National Economic Prosecutor’s Office to investigate possible collusion among suppliers. It also provides consumers and producers with information on fruit and vegetable prices in supermarkets and outdoor markets that is updated weekly on its website.

Ruiz also reported that the ministry is working on a request from MUCECH for legal assistance for peasant farmers to help them get better prices in sales negotiations with intermediaries and supermarkets.

In Ecuador, 91 percent of the country’s 843,000 farms are family owned and operated, according to figures from 2000. They primarily sell their crops to large distributors, who are the main beneficiaries of the current high prices. The products that have seen the greatest price hikes are wheat flour and rice.

To support family farming, the Ecuadorian government provides soft loans through its development bank and facilities for refinancing debts. It also organises markets where farmers can sell their products directly to the public, thereby eliminating middlemen.

According to official figures from Argentina, over 66 percent of the country’s farms are family outfits. There are a total of roughly 150,000 family farms that occupy 23 million hectares of land and account for 20 percent of total gross production and 53 percent of rural employment. However, more than half are facing problems in maintaining family ownership.

When asked by IPS whether the rise in food prices has benefited this sector, Diego Montón of the National Campesino and Indigenous People’s Movement responded, “No, quite the opposite.”

“We have seen no benefits for 30 years. All of the government’s policies are aimed at promoting agribusiness, and family farming has only regressed even further. Many farmers have been directly evicted from their lands,” reported Montón, who is himself a farmer from Lavalle in the western province of Mendoza.

“The only factor that is taken into account by the government is profitability. There is no consideration of community life. There are almost no government policies for us. Only five percent of the budget of the Ministry of Agriculture is allocated to assistance programmes for our sector, but not as part of a transforming policy, and merely as small subsidies that don’t lead to any kind of structural changes,” he maintained.

In Dirven’s view, any support for family farming should be implemented in the framework of an agricultural and rural development policy designed for the next 50 years. Governments should especially strive to promote generational renewal in rural areas, she added.

*Additional reporting by Marcela Valente (Buenos Aires), Mario Osava (Rio de Janeiro) and Kintto Lucas (Quito).

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