Lessons on globalization from Colombia’s uprising

Last week more than 200,000 Colombians converged on Bogota for a nationwide strike to protest free trade, privatization and poverty. According to Common Dreams, the strike began as a protest by campesinos and spread to encompass teachers, miners and other sectors of society.

I have to admit I was surprised to see that farmers had been hit so hard, since prices for grains have been pretty high over the last few years. Back in the early 2000s, when the U.S.-Colombia Free Trade Agreement (FTA)—and the U.S.-Central America FTA, U.S.-Peru FTA, and others—was negotiated, the concern was that U.S.-grown commodities would be dumped by agribusiness at artificially low prices onto foreign markets. This was certainly Mexico’s experience under NAFTA. U.S. corn exports to Mexico quadrupled after NAFTA went into effect, and many small-scale farmers were unable to compete. More than two million Mexicans were driven from their lands.

But that was before the 2008 food price spike, when soaring grain prices sparked food riots around the world and, to some degree, a rethinking of agricultural development policies. Concerns over dumping were replaced by attention to extreme food price volatility and the prospect that prices would continue to increase for the foreseeable future.

So, if prices of key global commodities are higher (although not as high as they were in 2008), why are Colombian farmers still being hurt by the trade deals? I contacted Colombian economist Héctor Mondragón, and he explained that the problem is more complicated than just the price of corn. The economy has shifted away from production of coffee and other goods to mining, which, along with the financial sector, has grown dramatically in recent years. The influx of foreign investment and financial speculation that came in after the U.S.-Colombia FTA was ratified in 2011 (along with similar FTAs with the EU, Canada, Switzerland, South Korea other countries) overwhelmed the economy.

Economists call that problem the “Dutch Disease,” as it mirrors the Netherland’s experience in the 1960s when huge economic inflows resulting from discoveries of natural gas disrupted the local economy, shifting economic activity away from manufacturing, in that case. The inflows of foreign investment caused the currency to appreciate, making exports relatively more expensive, and imports cheaper. In the wake of the trade deals, the Colombian currency has appreciated, so once again imports of grains and other agricultural commodities enter the country at prices that are hard for local farmers to beat.

Mondragón explained that there’s also a bit of the “Cyprus Disease,” as those inflows were coupled with deregulation of the financial sector and massive new speculation. But to really understand what’s going on with agriculture, we have to look at what’s happened under what he calls the “Colombia Disease” of speculation on land. That disease, he explains, is characterized by increasingly high concentration of land ownership, and land grabs, together with the decline of large tracts of farmland, with 16.6 million hectares of arable land now standing idle. Land prices have soared, and government land reform programs have favored big businesses—domestic and foreign—over supposedly less efficient small-scale farmers. In many cases, the investors are just holding onto the land in hopes that it’s value will continue to increase, and making it even harder for smaller-scale farmers to access the land they need for production.

"Years ago Colombian farmers lost the markets for wheat, barley and 70 percent of the corn market to imports," he adds. "Now they are dealing with increases in fertilizer prices, measures to prohibit unregistered seeds, scandals around land grabs by big businesses, along with big increases in imports of potatoes and milk, setting off the current strike and those that are sure to follow later this year.”

Financial deregulation, restrictive new patent protections, along with the trade liberalization that has led to surges in food imports, are all central elements of the FTAs Colombia negotiated with the U.S. and other countries. These characteristics are virtually identical to negotiations that are underway now among other countries involved in the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP, or TAFTA, which very much rhymes with NAFTA). Before surging ahead blindly with further free trade agreements that primarily benefit big financial and corporations, we should carefully review the impacts previous agreements have had on the public good, including farmers and food sovereignty, consumers and health, and control over natural resources and the commons. It’s time to break the cycle of deregulation and expansion of trade and financial flows at all costs through trade deals, and begin rebuilding local food and economic systems around the world.