The Houston Chronicle | By JOHN OTIS | December 07, 2003,
ASSAI, Brazil - With their cracked leather uppers and wafer-thin soles, the donated work boots heaped in the corner of this Brazilian farm cooperative look like Salvation Army rejects.
Yet six jobless cotton pickers rummage through the pile with gusto. One eager peasant tries on pair after pair until he finds the right size, then proudly struts off as if wearing factory-fresh Timberlands.
Shoe giveaways "never used to be necessary," says Edson Texeira, who founded the co-op to help find jobs for unemployed field hands after the local cotton industry crashed. "When there was cotton, everyone had a job. But today, these people are going hungry."
The rolling plains here in southern Parana state were once quilted with small farms that produced most of Brazil's cotton.
But in the 1990s, the United States enacted new farm policies that brought huge swaths of idle American farmland back into production and nearly tripled subsidy payments as part of an effort to boost agricultural exports.
The result, many analysts say, was bumper crops of artificially cheap cotton, corn, wheat and rice that helped drive down world prices.
Unable to compete, legions of small-scale Brazilian cotton growers were forced to give up their farms or switch to other, less labor-intensive crops, leaving an army of field hands unemployed.
To many observers, the crisis in Brazil's cotton industry is glaring evidence that the rules of globalization are rigged. U.S. officials, they charge, have launched a crusade to pry open foreign borders for American exports while protecting domestic farmers from outside competition.
"Northern governments preach the merits of open trade but then destroy trade opportunities for poor countries," complained Kevin Watkins, head of research for the British development group Oxfam, at a recent trade meeting in Geneva.
The refusal of the United States and the European Union to cut farm subsidies and import tariffs was one of the main reasons World Trade Organization talks designed to expand international commerce collapsed in Mexico last September. Now, a WTO panel is considering a complaint filed by Brazil that accuses the United States of provoking the deepest crisis in world cotton markets since the Great Depression.
U.S. officials contend, however, that eliminating subsidies would ruin thousands of American farmers unless Japan and the EU roll back similar payments.
"We're focused on making real global farm trade reforms," says Richard Mills, a spokesman for the U.S. trade representative's office. "But we're not going to unilaterally disarm."
Last year when international prices for cotton bottomed out at 38 cents a pound, subsidies helped guarantee American cotton growers, many of whom farm in Texas, about 70 cents a pound.
In a chicken-and-egg debate, some analysts contend that, rather than causing the price decline, most U.S. farm payments kicked in as an emergency response to a dire market situation.
"Low prices led to the subsidies, not the other way around," says Roger Haldenby, vice president of operations for the Plains Cotton Growers in the Lubbock area, where about 25 percent of the U.S. cotton crop is produced.
Regardless, plummeting prices have devastated poor farmers from West Africa to Uzbekistan, where governments are too poor to provide U.S.-style subsidies.
"There's no escaping globalization. We know that, because we already use John Deere tractors and Monsanto seeds," says Almir Montecelli, one of the few farmers still growing cotton in Parana. "But if cotton prices were better, family farms could survive."
A thinning industry
At a factory in the Brazilian city of Maringa, vacuum chutes suck clusters of tawny-white cotton into a room humming with automatic spools and bobbins. The size of a football field, the plant operates night and day, employs 650 people and produces 14,500 metric tons of yarn and thread every year.
Back when cotton was king here in Parana state, there used to be nine spinning mills in the area, says Jose Ranieri, a plant technician. Now, there are just two.
What's more, most of the cotton comes from other parts of Brazil or from abroad. Local farmers grow only enough cotton to supply the Maringa factory for four months.
"You used to see cotton growing right up next to the highway," Ranieri says. "Now, it's like looking for a needle in a haystack."
Because of cheap land and low wages, Brazilians for years produced cotton for about half of what it costs American farmers. By 1987, the nation was exporting more than 170,000 metric tons of cotton.
But the boom petered out in the 1990s when, according to critics, the United States began dumping cotton on the world market at rates far below the cost of production.
Soon, Brazil's cotton crop fell by half, and the country began importing large amounts to keep its thread and clothing factories running. Even though the nation is once again sending cotton abroad, the Brazilian government estimates that low world prices are depriving the country of $ 800 million a year in export income.
Because of recent crop failures in China, world cotton prices have now rebounded to 68 cents a pound. Many experts predict, however, that a surplus will depress prices to 50 to 60 cents over the next decade. When adjusted for inflation, cotton prices stood at about $ 1.24 a pound back in 1989.
"It's one thing to protect your own market, but the U.S. is destroying the ability of other countries to produce cotton," charges Pedro de Camargo, a former Brazilian trade official.
Today, family cotton plantations are disappearing in Brazil as indebted growers sell out to wealthy landlords who have easy access to market information and loans and can make money on other crops when cotton prices fall.
Slogging across one of his fields in a steady rain, Antonio Romano pauses to explain what the changing dynamics of farming means to Brazilians.
Romano, 41, used to grow 2,500 acres of cotton in Parana. At harvest time, he brought in busloads of peasants to hand-pick every tuft. But as prices slumped, Romano switched to soybeans, and machines now do most of the work.
"With cotton, I had 1,000 workers," says Romano as he scrapes mud off his boots. "With soybeans, I have 20."
State-of-the-art harvesting machines also perform the lion's share of labor on Brazil's new generation of cotton farms. Most of the crop now is grown on mega-plantations in west-central Mato Grosso and Goias states.
As a result, thousands of unemployed cotton pickers have crowded into the crime-ridden slums ringing Sao Paulo, Rio de Janeiro and other big cities.
"The Brazilian economy is not prepared to absorb all of these workers," says Parana soybean farmer Wilson Pan. "They have no education. All they know is farming."
Triggering a free fall
Since the end of the Cold War, the United States has pressured many developing nations to reduce trade barriers, moves that have left fragile farm sectors more vulnerable to market vagaries.
At home, U.S. farm policy has shifted away from cropland set-asides, grain-storage programs and other government incentives in place since the 1930s to help stabilize prices by preventing a glut in supply.
Under the new strategy, Washington sought to increase production and lower prices, says Mark Ritchie, president of the Institute for Agriculture and Trade Policy in Minneapolis. The idea, he says, was to reduce government intervention in farming and make U.S. agricultural products more attractive to foreign buyers.
Some observers now view this policy shift as a ruinous wrong turn.
U.S. prices for cotton, corn, wheat, and rice have fallen by an average of 40 percent since 1995.
"U.S. government policy has been to permit, even to encourage, a free fall in domestic farm prices," says a report issued in September by the University of Tennessee's Agricultural Policy Analysis Center. "From Haiti to Burkina Faso, the Philippines to Peru, these unprecedented low prices have destroyed livelihoods and reaped a harvest of desperation, hunger and migration."
Few poor nations provide farmers with cushions from price shocks. Between 1999 and 2001, however, 47 percent of total U.S. farm income came in the form of government payments, according to the University of Tennessee report.
Much of the largesse went to American cotton growers, who received about $ 230 per acre. All told, they reaped nearly $ 4 billion in subsidies last year for a crop worth only about $ 3 billion, according to Oxfam.
In the Lubbock area, government programs sent about $ 80 million to cotton farmers, says Texas Tech University professor Sam Mohanty.
Bob Poteet, executive vice president of the Dallas-based Texas Cotton Association, says removing the government payments "would be pretty devastating to Texas farmers and the small towns that they support."
But when told about the U.S. subsidy system, Brazilian Jose Suarez stops repairing a barbed-wire fence on the small plot he rents.
"I've never received any subsidies, and I don't know anyone who has," says the 72-year-old, who sold his 125-acre cotton farm when prices dropped. "Farming here depends on the climate and God."
A thorn for trade deals
Coming from the world's leading cheerleader for free markets, Washington's reluctance to erase farm subsidies and import tariffs has caused Brazil and other nations to balk at signing new trade deals.
One recent survey of government officials and other prominent Latin Americans showed that just 18 percent favored more economic integration with the United States.
At meetings in Miami last month, ambitious plans to forge a trade zone stretching from Alaska to Tierra del Fuego - the so-called Free Trade Area of the Americas - were scaled back, in part, because of Brazil's objections to U.S. farm policies.
U.S. officials, in turn, complain about Brazilian import tariffs on American computers and other manufactured goods.
"The United States has a fairly open agricultural economy" compared to those in Japan and Europe, says Mills, the spokesman for the U.S. Trade Representative. In 2002, U.S. government support for farmers totalled 17.6 percent of the value of agricultural production, compared with 36.5 percent in the EU and 59 percent in Japan.
What's more, analysts disagree on the impact of repealing U.S. farm subsidies.
Oxfam claims that abolishing the payments would boost international cotton prices by 11 cents a pound, bringing immediate relief to poor cotton farmers throughout the world.
But Ritchie, of the Institute for Agriculture and Trade Policy, insists that eliminating the payments would do little to level the playing field for peasant farmers, because they lack the technology and acreage to compete with large-scale growers in the United States.
In fact, the World Bank recently estimated that if rich countries removed all of their subsidies and import tariffs on both agricultural and industrial goods, the move would add a mere 0.6 percent to the gross domestic product of poor and middle-income nations over the next dozen years.
The key to recovery, says the University of Tennessee report, is for Washington to adopt policies designed to raise international prices for cotton and grain to levels that allow farmers across the globe to make a profit.
The report calls for taking millions of acres of U.S. farmland out of production, for Washington to purchase and store excess farm commodities, and for other measures designed to limit the supply of staple crops. The result, according to the report, would be a 25 percent to 30 percent price hike.
"The way out," says the report, "lies in careful and balanced measures that were discarded in our headlong rush to an imagined 'free market' in agriculture."
But in Brazil, the out-of-work cotton pickers sifting through the pile of used boots seem to believe that the new realities of global agribusiness already have rendered them obsolete.
"It used to be that you could make a living in the countryside and raise a family," says Antonio Francisco da Silva, a sunburned 53-year-old who has worked just six days in the past six months as a field hand. "Now, everything is done by a machine. I'm no longer good for anything."
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BRAZIL
GDP: $ 1.34 trillion (2002 estimate); Largest economy in Latin America
Biggest export partners: United States, 24.2%; Argentina, 11.6%; Germany, 5.4%
Biggest import partners: United States: 27.4%; Argentina, 13.5%; Germany, 8.9%
Chief export commodities: Transport equipment, iron ore, soybeans, footwear, coffee and autosThe Houston Chronicle:
