Is Free Trade free for all?
John Clark writes…
First published: January 2003 – Gazette & Herald
So Safeway is going to be taken over by another supermarket. Will it be Sainsbury, Morrisons, or Wal-Mart (Asda)? Does it matter?
Recently I gave a talk at the Smithfield Show. My subject was that the government should fix the ‘farm gate’ price for food. This would mean that farmers received a fair price for their products. We have a minimum wage and thus a safety net is put in place for an hours work. Many employers opposed it and others thought this approach would damage the economy; a belief that has proved wrong. ‘Slave labour’ is morally wrong. The same applies to the production of basic commodities, particularly food. A minimum price is morally right. Members of the audience expressed the view that fixing a price was against Free Trade. It was a communist approach and thus totally unacceptable. A fellow speaker who had not previously heard my proposals exploded in indignation “We do not have Free Trade. We have the market of the Mad House.” He went on to say that a Free Market depended on having lots of sellers and lots of buyers. There are hundreds of millions of farmers. The buyers however are limited in numbers e.g. over half the worlds traded grain is bought by one company. This is not Free Trade it is control by a few transnationals.
My logic and thought processes analysed the problem from a small farm in Ryedale. Other people with a Third World perspective have since approached me. The unfairness of it is accentuated by two factors.
Western farmers in the EU and the USA receive subsidies for the food they produce. This is not Free Trade, it skews the market. Supermarkets get their farm produce at less than the cost of production. It also means that the ‘farm gate‘ price of food is low and this helps to reduce the world price.
The second factor is that of export subsidies – a system where the EU and the USA subsidize food exports. This at a minimum has a large impact on world prices. In most cases it sets the World price at considerably less than the cost of production. There are numerous examples.
- The USA and the EU account for around half of all wheat exports. Their export prices are respectively 46% and 34% below costs of production.
- The EU is the world’s largest exporter of skimmed milk powder. It exports at prices representing around one-half of the costs of production.
- The EU is the world’s largest exporter of white sugar. Export prices are only one-quarter of production costs.
The result of this is again twofold. Those of us in the UK are told that we need to produce more efficiently and hence compete with world prices. The above logic shows this to be totally false. The more intensively we farm, the more ‘efficient’ we become, the more destruction occurs and the more the world prices are driven down.
The British people will at some point have to decide if the present system is to continue, or are we to call a halt to the abuse. British farmers are suffering but in the Third World this system is causing deprivation, lack of health care, lack of education and in many cases if not starvation certainly malnutrition. Hundreds of millions of farmers worldwide are being driven into the above abyss.
The solution is for the government to set the ‘farm gate’ price for food. Thus:
- UK farmers would receive a fair price.
- The taxpayer would save billions – £3billion from subsidies plus many more £billions in export subsidies (£15 to £20 per household per week).
- Yes the price or food would increase but by less than 10%. The above savings could more than pay for an increase in income for those on low incomes.
- The well-off West would reduce the abuse of the Third World.
There is not the space to expand on the details. However in a democracy, it is for people to control the ‘big powers’. These powers are the food processors, the supermarkets, the EU, the USA and the government.
The answer to the question of who takes over Safeway is: it doesn’t matter. They all have too much power and need democracy to bring them under control.