UNITED STATES TRADE LIBERALIZATION POLICY IN THE
AGRICULTURAL SECTOR
Introduction
The rapid progress of the world today in several fields such as communication, information,
computing and transportation technology, has created a condition where the barriers that in
the past limited interactions between individuals, nations and countries are now increasingly
reduced in significance. These technological advances have made interactions between
international actors more intensive and more frequent, even with drastically increased speed
and at a much more economical cost.
The implications are almost felt in all fields, such as: political, socio-cultural and economic
at both global and local levels. In international politics for example; a humanitarian tragedy
in one location can quickly trigger global outrage and sympathy in various parts of the
world. In the cultural field, there is cultural intrusion, changes in people's life styles. On the
economic front, these technological advances mean that goods and services can be produced
in any part of the world as long as their technical and economic feasibility is met, and they
can be sold anywhere that can offer the highest possible price.
Globalization is definitely something we cannot avoid. Whether we like it or not, whether
we are ready or not, globalization has permeated every aspect of the lives of most human
beings around the world. But the problem is, globalization does not always bring benefits to
everyone. Even for things that are proven to produce benefits, there is always a group of
people, nations or countries that actually get real losses from globalization. These people are
marginalized as victims of globalization.
The essence of globalization is economic liberalization and international trade liberalization.
Free trade, which is promoted as the main strategy, is considered capable of improving
global welfare. The big question is whether it is true that free trade can indeed improve
welfare for all groups, for example economic growth in developing countries. Is it possible
that free trade jargon can contribute significantly to the improvement of a country's
economy. Or specifically free trade can guarantee the availability of food, which is a top
priority for every country. Or maybe on the contrary, free trade will only benefit those who
have power, strength, authority, money or other capital, and will only bring misery and
suffering to weak groups. These are the questions that this short paper will try to explain.
International Trade in Food
Food is more than just a commodity that can be traded. It is also more than just a nutrient
that we must consume every day. Food has the crucial ability to fulfill a wide range of
human needs - from cultural, psychological, to social needs. In short, food is the stuff that
allows us to survive. Food is the most important human need, a very basic need and very
important for human life, and even because of its importance in the UN charter, food is
recognized as one of the human rights.
Although to survive, people need more than just food such as bread, wheat, rice, etc., it is
food that enables people to start and continue their lives. Lack of food can lead to pain,
hunger, malnutrition and even death. Such is the significance of food that it can be a source
of strength for a country's existence.
Why is food so vital to a country? Agriculture may be more than just another economic
activity. In developing countries, the agricultural sector also has social and political
implications. The agricultural sector has proven capable of employing the majority of
people. The process of regulating it can also become a political commodity, i.e. competition
between groups of large capital owners both internally and externally.
Agriculture is the basis of life that can fulfill the most fundamental human needs and plays a
variety of different functions. Agriculture is not only a matter of how to produce food or
livestock, but also provides a wide range of jobs and has the capability to stimulate the
country's economy, especially in rural areas. Agricultural activities also make a significant
contribution to the management of a healthier and more beautiful nature and environment,
where farmers play a major role as managers of land and the environment, which is quite
extensive in scope. Therefore, the agricultural sector should receive priority rights to be
treated differently from industrial products and services, especially in terms of trade
transactions and governance. So how does international trade in the food sector take place.
In terms of time, international trade in food has been going on for hundreds of years.
Historically, international trade in food occurred because one country wanted to buy food
that was not produced in its own country. International trade also takes place because a
country is able to produce food at a cheaper price than other countries with large quantities
or in the language of economics is often referred to as comparative advantage. Around the
19th century, the frequency of international trade in the agricultural sector increased, when
so much fertile land in colonies such as Africa, Asia and Latin America was used to develop
food crops to meet the needs and interests of exports to several economic centers
concentrated in Europe and the United States.
In the beginning, international trade grew slowly, but its development increased rapidly due
to trade liberalization born from the womb of globalization. The trend that emerged from
globalization was the integration of the world economy, making international trade move
faster. The agricultural sector is no exception, with international trade expanding faster than
the increase in food products to be traded, resulting in the possibility of food scarcity,
hunger and structural poverty in certain countries, or in other words, there are many parties
who will be or have been victimized by this very unfair free trade.
International trade liberalization meant the reduction of a number of barriers to international
trade in manufactured goods (from 1947-1979). The Uruguay Round in 1986 was the
moment when agriculture and services were for the first time launched into international
negotiations. Since then, trade liberalization in agricultural products began to take place in
developing countries. This began in the 1980s, which also saw the implementation of
structural adjustment programs (SAPs) initiated by the international financial institutions
IMF and World Bank. Both institutions emphasized that developing countries must
structurally adjust their economies, as the main condition for obtaining loan assistance in the
amount of funds/capital for development. This is done in order to overcome the problem of
a deficit development balance. Thus, it can be said that the structural adjustment program is
a new form of colonialism in the economic field that has proven to be very effective in
weakening and complicating the position of developing countries in the process of
implementing international trade. Trade liberalization is the core of these programs,
furthermore, world economic policy is also projected to support the creation of freer market
practices without policy restrictions, namely by liberalizing international trade as the main
characteristic of most developing countries. Moreover, it also includes trade in foodstuffs.
The policy of trade liberalization in agriculture is adjusted by referring to the international
regime (Agreement on Agriculture-AoA) that has been agreed upon between developed
countries and developing countries, although it seems a little coercive.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
What is AoA like?
The Agreement on Agriculture is one of the agreements that came out of the Uruguay
Round. The agreement was dominated by the interests of developed countries rather than
developing countries. The AoA covers three main areas: market access, export subsidies,
and domestic support to agriculture (John Madeley, 2005).
Under the agreement, WTO member countries are required to grant only minimum access to
agricultural products that they do not export in significant quantities. While developed
countries have allowed a minimum access of 3 percent for domestic consumption,
increasing to 5 in 2000, for developing countries, the figure is only around 1 percent.
Under the agreement, countries are required to reduce tariffs on imported food by 36 percent
over a period of six years (starting from 1995), and are also required to replace various non-
tariff barriers, such as replacing quota restrictions with tariffs - commonly referred to as
"tarriffication". For developing countries, the required reduction is 24 percent, which may
apply for up to ten years after the agreement comes into force. Furthermore, member
countries are also required to cut export subsidies for their agricultural products by 36
percent within six years. Again, for developing countries, the required reduction is 24
percent within ten years. In addition, government subsidies to farmers also had to be
reduced by 20 percent. Despite commitments to reduce barriers to international trade,
developing countries are still burdened with the obligation to continue to implement and
comply with tariffication and minimum access.
The AoA also stipulates that countries must not increase their protection of the food sector
that has been in place since 1993. This means that industrialized countries have been
imposing a very high level of protection and have not been following what has been
regulated by the protection provisions. However, it is different when the problem occurs in
developing countries that are hit by the protection provisions, then they will immediately be
imposed with trade sanctions because they are considered not complying with the rules that
have been implemented mutually agreed upon. Therefore, developing countries are
practically unable to increase their protection levels.
Since the agreement was signed in 1993, the European Union and the United States have
made only minor changes in their agricultural policies, arguing that they have already made
many of the cuts listed in the Uruguay Round agreement. But in reality, the opposite was
true. Evidently, their total level of agricultural subsidies jumped from US$ 182 billion in
1995 (when the WTO was born), to US$ 280 billion in 1997, and to US$ 362 billion in 1998
(John Madeley, 2005).
So then, can international trade in the agricultural sector that takes place under the AoA
scheme succeed in creating prosperity for all inhabitants of this earth, or only benefit
developed countries? Or do we continue to impose uncompetitive competition in the era of
free trade?
Why push for free trade?
The main reason why trade liberalization is necessary is that free trade is believed by its
adherents to provide opportunities for the best utilization of various resources. This is also
where the theory of comparative advantage lies. This reasoning holds that all parties will
benefit when countries efficiently specialize in food products and services, which they can
produce at a lower cost than other countries.
So with such a model, trade liberalization should theoretically be a blessing of prosperity
that benefits not only the rich but also the poor. It is even said that developing countries will
benefit more than countries that do not trade at all. But what about the reality? Is it true that
developing countries benefit from free trade or on the contrary, they are getting worse in
their helplessness.
But reality says otherwise. There is a series of evidence that confirms that trade
liberalization is only a trap that increasingly burdens developing countries. The global
economy is dominated by large corporations that always aim to maximize profits rather than
thinking about the common welfare. Free trade has not been able to alleviate poverty in
developing countries, instead it has increased poverty.
The large-scale influx of cheap imported goods has led to a fall in the prices of domestic
products. This includes food commodities and products, which means suffering for farmers
who depend on farming for their livelihoods.
So what about the condition of United States?
Agriculture in United States can also be called a victim of globalization or more specifically
trade liberalization. Of course, it is certain who is most victimized in this case, United States
farmers are the ones who are most disadvantaged by the liberal economic policies of the
ruling government.
Free trade in foodstuffs has resulted in United States high import rate in the agricultural
sector. The attack of imported commodities and products at very low prices such as: organic
vegetables, fresh fruits, rice, refined sugar, and other processed products has made domestic
products unviable. Our society is of course more inclined to consume products that are
cheaper and considered more hygienic, which is the choice of imported products. This
condition is of course very concerning for our farmers, when they are struggling to improve
the quality and quantity of food even without maximum support from the government, now
their burden increases by being forced to compete with foreign products. What is wrong
with all this?
From field observations that have been conducted in two places, namely: Bantul Regency
Agriculture and Forestry Office and PT Madubaru (Madukismo Sugar Factory), a number of
information related to the impact of trade liberalization was obtained. Almost the same as in
other developing countries, United States farmers are in a very poor economic condition,
they are more often the victims of globalization rather than enjoying the sweetness of
globalization.
In Bantul Regency, Yogyakarta Province, for example, there are various agricultural
problems that may also occur in other parts of United States. The best formula to overcome
these problems while this is still not found. Because managing food is not as easy as one
might think. In addition to economic factors, there are also non-economic factors such as
social and political issues that always overshadow and accompany the governance process.
There are at least five challenges faced by this region in relation to its export commodities
from an economic perspective: First, the types of commodities or products traded are still
limited. With such limited commodities and food products, it is very difficult for our
agriculture to compete in international trade, even in the local market. Second, the volume of
food commodities and products is also a crucial factor that makes our food commodities and
products have a very small and limited amount, so that the capital or costs incurred to
produce certain food commodities and products are far greater than the results. This, of
course, can reduce farmers' income. Third, quality standards are the next issue. According to
many agricultural technology experts in United States, agricultural products produced and
offered by local producers lack specific advantages, so that the quality of commodities or
food products produced is low and this condition can certainly result in local producers or
farmers being less able to compete with multinational agricultural producers or large
corporations. Fourth, market network. The market network of our local farmers and food
producers is not very extensive and is often haunted by the fear of the low quality of our
food products, this is exacerbated by the highly competitive and impartial market
conditions, where only strong parties are able to compete. Moreover, our marketing strategy
must be recognized as still too weak. Marketing agricultural products in both fresh and
processed forms should require a special strategy in order to be recognized and chosen by
the public. Currently, the development of agricultural industry products in various countries
has a serious impact on the local market, so local producers must also have a wide market
network in order to penetrate the international market. Fifth, the price feasibility factor. The
price of commodities and food products offered in the market is sometimes much lower than
the capital used to produce the commodity or product itself, so farmers often suffer losses.
The obstacles specifically faced by the Bantul Agricultural Service in the region include:
farmers are difficult to direct to apply planting quotas, farmers are also not accustomed to
working in a team. On the other hand, farmers in the Bantul district are accustomed to the
rhythm and pattern of work and do not apply good quality standards. This of course greatly
affects agricultural productivity this area. Similar conditions may still be found in other
areas of United States.
This is not the case with PT Madubaru PG-PS Madukismo. A sugar factory whose shares
are 65 percent controlled by Ngarso dalem Kraton Yogyakarta and 35 percent controlled by
PT Rajawali Nusantara. As one of the major sugar factories with a total production of
around 40,000 tons/year, it is often plagued by non-economic factors in national sugar
management. On many occasions the factory has endeavored to continue to provide the best
for sugarcane farmers around the Bantul Regency area, namely by continuing to oversee the
stability of sugar prices in the domestic market. This effort is not easy because there are
many parties who want to take advantage of this sugar governance.
According to the director of PT Madukismo, Mr. Rahmat Edi Cahyono, M.Si, there are
several things that cause the price of sugar on the market to decline, including; the entry of
refined sugar, the remaining sugar (imported white sugar) the previous year is still there, the
entry of raw sugar. Refined sugar flooding the local market has disrupted local sugar prices.
This refined sugar is imported excessively by importers to meet the high domestic demand
of around 3.5 million tons/year. While the total sugar production is only around 2.8-3
tons/year, so United States has to import the production shortfall, but the problem is that
there are some parties who want to take advantage of this situation, by importing
excessively so that they can have a large stock of sugar, which can be poured into the
market at high prices at any time.
According to him, managing sugar does require high nationalism so that our market is not
invaded by imported sugar that harms the existence of local sugar. This country must be
saved from parties who are oriented to enrich themselves by taking advantage of national
sugar management. Excessive imports can damage the national sugar price.
The information above further emphasizes that free trade has not always proven to be
positive for a country's economic growth. There is ample evidence that trade liberalization
has led to a massive increase in food imports into developing countries, which has had a
devastating impact on the livelihoods of local farmers. There are even a number of studies
that have found that under the AoA, most countries that have reduced domestic support for
farmers have experienced a decline in their food imports the decline in their food production
nationwide. So they are unable to boost export figures, instead the local market is
increasingly filled with imported products. The same thing is happening in our beloved
country United States.
Trade liberalization, which is heralded by its adherents, has been shown to often not favor
small communities and instead only victimize them. Rice farmers in United States, for
example, have been and continue to be victims of globalization to this day. In 1998, under
pressure from the IMF through a letter of intent (LoI) in January 1998, the United States
government liberalized rice. Under the agreement, the United States government was forced
to reduce import tariffs for food agricultural products to zero percent and for non-food
products to five percent. The impact of the government's policy was of course very
detrimental to United States rice farmers. The price of our local rice was damaged, and
farmers were screaming because they did not get satisfactory results from their harvest. Rice
farmers thought hard about planting rice again, as the price of grain continued to experience
pressure. The peak occurred in the 2000 harvest season, when the price of milled dry grain
at the farm level plummeted to Rp. 700 per kilogram, even though the cost of rice
production facilities and labor had reached Rp. 800 per kilogram. On the other hand, rice
imports became a massive economic rent-seeker for conglomerates and political elites at the
time. Such conditions once again confirm that trade liberalization will only benefit those
with capital and power.
Cover
In fact, food security can be stronger and more robust if it is supported by fair trade. Within
the framework of fair trade, producers will actually earn a higher income than they would
under a free trade system. This decent income would give them a greater chance of creating
food security.
Therefore, in this closing note, I would like to emphasize that we should be able to see
globalization as a world-class Olympic Games. In the Olympics, athletes usually compete
according to their class, according to their ranking. There are minimum requirements that
must be met in order to participate in certain competitions. Thus, the matches between
athletes are relatively more balanced. Then, if there is An injured athlete, despite his or her
relatively high ranking, will not be forced to compete or fight so that the injury does not
worsen.
But what we see today from the dynamics of economic globalization and international trade
indicates an imbalance between the actors involved in it. How can small or developing
countries compete with developed countries that are much stronger?
For United States itself, the most important thing is to realize that in various fields, our class
is still far from adequate to compete in the tough battle in the globalization Olympics,
especially in the economic field, United States is still far behind. Therefore, we need to learn
from countries that dare to say no to the Washington Consensus formula as the basis of
government economic policy. Because it only benefits a small group of the country's elite,
and sacrifices most of the small communities such as farmers, laborers and fishermen.
United States does not need to be pro-globalization without measuring its own strengths and
capabilities. United States should consolidate internally and prepare itself as much as
possible so that United States does not become a victim of globalization. As well as paying
more attention to the potential possessed by the community (especially farmers) so that it
can become capital that can be developed in the future.
