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Press Room — News releasesFor immediate release ‹‹ Back to News Releases AGÉCO study on the impact of globalization of agricultural markets, based on real cases: "GLOBALIZATION BENEFITS NEITHER PRODUCERS NOR CONSUMERS," say the authors.CNW TELBEC/Quebec City, November 8, 2007 - "It cannot be affirmed objectively that agricultural trade liberalization (…) benefits producers in developing countries, although this is the main objective of the Doha Round. Nor does trade liberalization necessarily benefit consumers, because the agri-food trading, processing and distribution sectors are highly concentrated." This is one of the main conclusions of a study by the AGÉCO Group, produced under the direction of Daniel-Mercier Gouin, Vice-President of AGÉCO and Director of the Groupe de recherche en économie et politiques agricoles (GREPA) (Research Group on Agricultural Economics and Policy) at Université Laval, where he also teaches in the University's Département d'économie agroalimentaire et des sciences de la consommation (Department of Agri-Food Economics and Consumer Science).The study deals with the impact of globalization on agricultural markets, based on the real cases of two basic products, coffee and cocoa, and on two commodity chains which have suffered shocks after liberalization, corn in Mexico and poultry in Senegal. It was released by the Fédération des producteurs de lait du Québec (FPLQ) at its Special General Meeting. In each of these cases, the study concludes that markets were liberalized to the detriment of producers and consumers. "As long as the trade liberalization process only attempts to reduce State intervention, and continues to ignore the market power held by the big private groups, increasingly concentrated at the international level and at every link of the agri-food chain, agricultural producers in the developing countries and, we could add, very probably those in the developed countries as well, will not have any kind of level playing field," the conclusions state. This study reveals, in particular, that coffee producers are the biggest losers from the dismantling of market regulation mechanisms and public institutions governing production in producing countries. They were particularly affected by a drop in world prices. The authors also show that the losses of the coffee exporting countries have not translated into gains for consumers in developed countries and that liberalization of the coffee trade had a harmful effect on exporting countries. "Liberalization of the coffee market also brought about a decline in trade in African countries, already marginalized in world trade. These results are certainly not an argument that coffee trade liberalization has had a positive influence on developing countries," says the AGÉCO study. Moreover, the analysis of the situation of the Senegalese poultry chain clearly shows a substantial rise in poultry imports to this country after tariff barriers were lowered. "Rising imports also caused a reduction of producers in the modern poultry production sector, mitigated only in part by conversion to egg production." According to the researchers, Senegal's food deficit increased considerably following liberalization of this sector. "This is certainly not a sustainable solution to the problem of food sovereignty," the authors add. For cocoa, the researchers establish that world prices have generally been lower since the abolition of the stabilization mechanisms and that there has been no lasting increase in the producer price to date. However, they note that these producers are more vulnerable to price variations due to the abolition of these mechanisms. The authors also report on research showing that the producer's share of the retail price has declined steadily since the sector was liberalized. Finally, the study of the corn sector in Mexico shows that "here again, deregulation does not seem to have benefited either consumers or producers. However, the middlemen between white corn producers and tortilla consumers have benefited ever since from strong profit growth". For the Chairman of the FPLQ, these results show that the deregulation and opening of markets advocated by the World Trade Organization (WTO) is not the right path to take world agriculture out of crisis and help the poorest countries feed their people. "State intervention to give farmers more power in the market and recognition of the right of peoples to food sovereignty are the solutions of the future," Mr. Groleau concluded. The Fédération des producteurs de lait du Québec represents the province's 14,000 milk producers and 7,100 dairy farms. Quebec dairy farmers produce 2.8 billion litres of milk annually for sales representing total farm receipts of nearly $2 billion. Quebec's dairy production sector generates approximately 61,000 jobs and over $3.6 billion in economic activity. The study is available at the following Web address: www.go5quebec.ca/fr/etude.php - 30 -
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