TPP Stakeholders: Farmers (Workshop by Sanya Reid Smith)

This article is of interest to farmers and those concerned about how the TPPA will affect agriculture and food security in Malaysia. The Malaysian farmers will face challenges from US domestic subsidies (to their own farmers), and stronger intellectual property rights for their inputs.

This series is brought to you by TPPDebate.org based on a recent NGO briefing on the Trans-Pacific Partnership (TPP) in Malaysia by Ms Sanya Reid Smith, an expert on Trade and Investment Rules. She has been monitoring the Trans-Pacific Partnership Agreement (TPPA) since 2011, and is also the resource expert for Bantah TPPA Malaysia. The entire talk is uploaded on YouTube in a seven part series and can be accessed here; this article is drawn mainly from Part 1 and Part 3 of the talk.The index of the series is attached at the end of the article.

Video starts at 3:28

Domestic subsidies in US can harm Malaysian farmers

What happens to the Malaysian farmers if Malaysia removes all the tariffs on US farm products? You might know that the US subsidises a lot. They give their farmers a lot of subsidies. And those subsidies can mean – for example, that although the cost of rice production in the US is high, compared to Malaysia, when you give a big subsidy to the US farmer, the rice produced there can be cheaper than in Malaysia. But, Malaysia today is allowed to have a 40% tariff on American rice, so the prices remain high. But under the TPP, the 40% tariff goes down to zero tariff. Because of the subsidies the US rice can be cheaper than the Malaysian rice. So then the Malaysian rice farmers could be wiped out if there are no other protections for them allowed by the TPP.

In the TPP, what happens to the US farm subsidies? Well, the export subsidies are removed. But that is nothing new. America has not been using export subsidies for years, and they are removed by the World Trade Organization for the other 161 countries including all the TPP countries, last December. What the US does is give domestic subsidies. This is where the US government pays the farmer an income, for example 50,000 dollars a year, whether he grows rice or not. If he grows rice, he can export it very cheaply, because he already has his livelihood. So, he can export it below the cost of production. Although it is a “domestic subsidy” it keeps its exports cheap, and the rice comes to Malaysia very cheaply.

Now those domestic subsidies are not touched in the TPP. US can continue, can even increase. But Malaysia doesn’t have the money as much as the US to give to our rice farmers. If this is an arms race of subsidising, the US has deeper pockets. Of course, Malaysia and the US grow different things. US doesn’t grow bananas, mangos, kangkung. But there are some products that are the same. Rice, chicken – the main subsidy for chickens is the grain, that’s the main cost. For example, EU chicken dumped in Africa has wiped out the African chicken farmers. Also maybe pork, depending on Malaysia’s pork farmers.

Rice farmers are needed for food security in Malaysia

If the rice farmers are wiped out, what does that mean for rice self sufficiency in Malaysia? Malaysia has a rice self sufficiency policy – it was 80%, now it’s 60%, because if you remember in the last food crisis, the Philippines tried to import the rice but could not. Although a lot of rice is grown in the world by India and China, they eat most of it. So very little is traded. So if you can’t be self sufficient, sometimes it’s very hard to buy the rice you need. If you don’t have rice, it’s very difficult in an Asian country.

Video starts at 11:04

It will be illegal to swap seeds

Farmers are also affected by the intellectual property chapter. Kerana petani memang dia perlu benih. The seeds, right? So today, without the TPP, if I plant rice, and he plants corn and they grow, and we harvest the seeds, we can swap. Next year I plant corn, he plants rice, nobody goes to Monsanto to buy seeds. So Monsanto not happy mah, lost business. We could be all swapping seeds amongst ourselves and not going to the shop to buy.

So in the TPP, Malaysia must join a treaty that makes it illegal for the farmers to swap seeds. And the farmers must pay royalties on the seeds for 20 to 25 years for all the protected species. So that’s longer than a patent, kan? A patent is 20 years, this one is 25 years. So the cost of production for farmers goes up.

Farmers are squeezed from all directions

Due to the TPP’s intellectual property chapter, the cost of agricultural chemicals (the pesticides and herbicides) must stay at a high price for longer. These chemicals can be 14% of the input cost for farmers, and under the TPP they can be three times more expensive for longer. So farmers are squeezed from this side, they are squeezed from the tariffs removal and then subsidies (from the US) continue, so they are squeezed from different sides.


Index of the Series

This series contains 20 articles on the TPP, and can be read in any order:

Transcriptions are kept chiefly ad verbatim, with some minor edits for readability. The text has also been checked by Ms Smith for accuracy.

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