Cash cropped

Transnational corporations are playing havoc with the lives of farmers

Published: Monday 28 February 2005

-- Transnational corporations (TNCs) control the price of commodities in a way that farmers get less for their produce. For instance, TNCs reduced the price of bananas for consumers from 1.08 (US $2, at current rates) per kg in 2002 to 0.74 (US $1.37) per kg in 2004 in the UK. The brunt of the price cut was borne by the growers in Costa Rica, who did not get even the legal minimum price. Nor did the plantation workers get the legal minimum wages

Consider this -- in the early 1990s, the coffee earnings of exporting countries were US $10-12 billion while retail sales were around US $30 billion. In 2002, retail sales had more than doubled to exceed US $70 billion. But the earnings of coffee-producing countries were cut by half to US $5.5 billion. The reason -- the coffee market is controlled by just four TNCs

Aggressive takeovers by Nestl and Parmalat in Brazil forced over 50,000 dairy farmers out of business. In 1990, Parmalat entered South Africa's dairy market and offered products to retailers at a reduced rate. This forced the dairy farmers to slash their prices by up to 28 per cent. Once established, Parmalat increased its selling price for retailers

In Southern India, auction prices for tea fell by around 33 per

cent -- from Rs 69 per kg in 1998 to Rs 46 in 2004. This is below the cost of production -- estimated at Rs 75 per kg in 2004. But the shareholders of Hindustan Lever Limited, which has a 34 per cent share of the Indian packaged tea market, are getting four times the dividends they received in 1996

TNCs have set high quality standards. Farmers trying to meet these standards spend more on inputs such as seeds, pesticides, herbicides and fertilisers. In Andhra Pradesh, farmers paid up to Rs 1,600 for a 450-gramme packet of Monsanto's genetically modified Bt cotton seeds. In comparison, a packet of traditional cotton seeds costs Rs 450-500. Despite the higher costs, some Bt cotton yields were lower than that of local varieties. On an average, the farmers using Bt seeds earned Rs 1,526 (US $35) less per acre than those using other varieties

TNCs monopolise the market by removing marginal farmers from the picture. In Brazil, the total area of farms larger than 10,000 hectares (ha) rose from 17.8 million ha in 1980 to 20.6 million ha in 1996 and almost 14,000 farms smaller than 10 ha disappeared. This affects rural employment

The savings that TNCs make are generally kept as profit and passed on to consumers (as a price cut) only if the company wishes to gain or consolidate market share

The consumer is still paying more -- the retail price for CTC tea in India has gone up from Rs 85 per kg to Rs 105 per kg between 1999 and 2002

In developing countries, farmers focus on cash crops. As TNCs control the price of these products, the farmer gets less money to buy food with

The farmers are kept away from lucrative parts of the business such as value addition. For instance, the contribution of developing countries to value addition in the cocoa trade declined sharply from 60 per cent in 1970-1972 to around 28 per cent in 1998-2000

It has been estimated that if the prices for the top ten tropical commodities had risen in line with inflation over the last twenty years, the countries producing these goods would have received an extra US $242 billion in 2002

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