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Comprehensive Analysis of NAFTA?s 7-year Record Documents Bitter Harvest of Broke Farmers and Higher Consumer Food Prices

June 26, 2001

Comprehensive Analysis of NAFTA?s 7-year Record Documents Bitter Harvest of Broke Farmers and Higher Consumer Food Prices

Farm Leaders Point to New Report?s Findings to Highlight Causes of Growing Rural Opposition to Fast Track and Efforts to Expand NAFTA


WASHINGTON, D.C. ? Farm incomes plummeted and bankruptcies escalated in the U.S., Canada and Mexico ? while U.S. food prices increased 20 percent ? during the first seven years of the North American Free Trade Agreement (NAFTA,) according to a new study issued Tuesday by Public Citizen?s Global Trade Watch.

The study found that contrary to promises and predictions at the time of NAFTA?s 1993 passage, North America?s farmers and consumers have not benefited from the pact ? but many large agribusinesses have seen record profits during the period.

A conservative Democratic Congressman from a farm district in Minnesota and U.S. farm organization leaders joined Public Citizen today for the release of the new report: Down on the Farm: NAFTA?s Seven-Years War on Farmers and Ranchers in the U.S., Canada and Mexico.” The 70-page study is the most comprehensive review of NAFTA?s agricultural outcomes. It comes as President Bush launches an effort to persuade Congress to provide to him a broad delegation of Congress? constitutional trade authority through a procedure called Fast Track. Bush seeks Fast Track authority to expand NAFTA to an additional 31 nations through a proposed agreement called the Free Trade Area of the Americas (FTAA). The study provides a substantive context for the escalating political opposition to Fast Track and NAFTA expansion in the agricultural sector.

On Friday, House Agriculture Committee Chair Larry Combest (R-Texas) withdrew his co-sponsorship of the GOP?s Fast Track bill after the Bush administration listed as potential trade irritants some of the U.S. farm bailout payments used to counter falling commodity prices and the declining U.S. agriculture trade balance.

“In the past year, we noticed that wheat, soy, beef and other producers who had been a base of support for trade deals really starting to complain about how badly things were going since NAFTA,” said Lori Wallach, director of Public Citizen?s Global Trade Watch. “We understand why farmer are so upset, because nearly every U.S. commodity has faced a flood of new NAFTA imports swamping modest export gains, and prices have tanked.”

During debate over NAFTA, farmers were promised that new export opportunities to Canada and Mexico would stabilize and reinvigorate the economics of farm life. The reality has been quite different. Independent farmers have seen commodity prices plummet and critical domestic safety nets dismantled in the name of implementing NAFTA and other export-oriented farm policies. For the past seven years, wheat farmers in the Midwestern and Plains states; ranchers in Montana, Texas and other states; flower and fruit growers in California; lumber mill and timber workers in Louisiana, Arkansas and Washington; vegetable growers in Florida and California; chicken farmers nationwide; and others have suffered declining farm income while a flood of NAFTA imports outpaced U.S. exports to Canada and Mexico.

Yet it was not farmers in Mexico or Canada who benefited from the woes of U.S. farmers. Up to 15 million campesinos (peasant farmers) throughout Mexico have lost a significant source of income and are threatened with losing their small corn farms.

Among the report?s findings:

During NAFTA, the rate of elimination of small U.S. farms with sales under $100,000 was six times greater than in the preceding five-year period.

U.S. farm income is projected to decline 9 percent between 2000 and 2001 ? from $45.4 billion to $41.3 billion ? compared to annual farm income of $59 billion before NAFTA.

While the U.S. agricultural trade surplus with Canada and Mexico grew by $203 million between 1991 and 1994, it fell by $1.5 billion since NAFTA.

Instead of reaping special trade advantages with Mexico and Canada, under seven years of NAFTA, the U.S. agriculture trade balance with the NAFTA countries declined more rapidly ? 71 percent ? than the U.S.-world agriculture trade surplus, which suffered a 29.6 percent decline.

Promises of new NAFTA export markets for U.S. farm products have proved to be as elusive as NAFTA proponents? promises of new U.S. manufacturing jobs created by exports to Mexico. Between the 1994-95 growing season and the 1999-2000 season:

U.S. corn export volume fell by 11 percent and prices fell by 20 percent.

the volume of wheat exports declined by 8 percent and prices dropped 28 percent.

the volume of cotton exports fell by 28 percent and prices plunged 38 percent.

during the same period, even though the volume of soybean exports increased 16 percent, the total U.S. soybean crop value still declined by 2 percent because the per-bushel price fell by 15 percent.

In Canada, falling commodity prices meant that net farm incomes declined 19 percent between 1989 and 1999, even though Canadian farm exports doubled.

In Mexico, crashing commodity prices caused by a flood of imports and the elimination of domestic farm programs have resulted in a massive transfer of land from small farmers to large multinational corporations.

Meanwhile, as farmers and consumers suffered, some giant agribusiness and food companies made out like bandits, according to the report. During NAFTA?s seven years, Archer Daniels Midland?s profits nearly tripled ? from $110 million to $301 million and ConAgra?s profits grew from $143 million to $413 million.

“Given the track record of the NAFTA model for farmers and consumers in the three NAFTA countries, it is not surprising that farmers nationwide are increasingly opposed to the notion of expanding NAFTA through the proposed Free Trade Area of the Americas,” said Public Citizen President Joan Claybrook. “As bad as NAFTA?s seven years has been in the United States, the results for poverty-stricken Mexican farmers and consumers is horrific and puts to rest that myth that these trade deals benefit people in developing countries.”