Home / General / Looks Like the TPP Will Do to Vietnamese Chicken Producers What NAFTA Did to Mexican Corn Farmers

Looks Like the TPP Will Do to Vietnamese Chicken Producers What NAFTA Did to Mexican Corn Farmers

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Vietnamese chicken farmers already see the writing on the wall from the Trans-Pacific Partnership. After NAFTA was passed, American food products, especially corn, flooded the Mexican market. That made it impossible for Mexican corn farmers to compete. Conveniently for American corporations, that led to millions of Mexicans leaving their land and requiring work that working in maquiladoras for low wages would provide. And if it didn’t, there was plenty of low-wage work in the United States if those former farmers could sneak across the border without being caught or killed.

Well, Vietnamese farmers are unlikely to migrate to the U.S., but they will be likely to lose their land and go to the cities to compete for the unsafe factory jobs making products for the American market that drives the TPP. That’s because American chicken companies are about to flood Vietnam with their poultry. In fact, it’s already happening. From the first link.

Vietnam’s poultry sector is expected to be one of the hardest hit by the Trans-Pacific Partnership (TPP) when the free trade deal falls into place.

Experts say Vietnamese chicken, long crippled by low technology and high production costs, will not be able to compete with chicken imports from the world’s top producers. However, others say that taste may be more important than price.

In Hanoi, chicken pho is not authentic unless it is made with local free-range chicken, or ga ta in Vietnamese. Almost double the price of factory chicken, ga ta’s competitive advantage is product differentiation.

“Vietnamese free-range chicken has a plumpness and shine to it,” said celebrity chef Nguyen Phuong Hai. “The meat isn’t too tough nor too soft, and the skin is crunchy, not fatty. But industrial chicken is different, the meat is too soft, the thigh is dry and falls apart.”

Won’t matter, as we know. That cheap, tasteless, awful American chicken will win out. And while the facile analysis is that this is great for everyone except those chicken farmers and the taste buds of consumers because now chicken will be cheaper, let’s also note that it will also make Vietnam more dependent upon international commodity processes and make the poor less able to eat if those prices rise. This is what we saw in Mexico in 2007 when international corn prices skyrocketed, making the staff of life in that nation very hard for the poor to eat. This was a major domestic issue in Mexico and brought the downsides of NAFTA home for a lot of people. There’s no reason that this can’t happen in Vietnam and likely will at some point. And if the poor of Vietnam are competing with Americans for chicken supplies and prices rise, well, we all know who won’t be eating meat for awhile.

Ultimately, what international trade should do is give people reasonable options to work in decent paid jobs in factories or stay and farm. It should promote nations working together while also allowing domestic industries to survive for cultural and political reasons. But of course it doesn’t work that way. What these trade agreements do is allow American corporations to devastate local industries, throw people off their land and out of work, force them into factories to work for cheap, and then send the vast majority of profits to their shareholders’ pockets. That’s what NAFTA did and that’s what the TPP is going to do.

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  • cpinva

    well, it took 50 years, but it would appear that America has finally defeated Vietnam. why do I not feel particularly good about this? I don’t even know those chicken farmers (or the corn farmers in Mexico), so I really shouldn’t care, but I do. not just for them, who are going to lose whatever vestige of self-sufficiency and dignity they had (with their government’s complicity), but the rest of us as well, who are slowly but surely being turned into Wal-Mart/stepford consumers.

  • xq

    The global poor spend a very high proportion of their income on food, and many are malnourished. Reducing food prices in developing nations seems like a good thing. Domestic markets can be volatile too; it’s not clear to me whether greater exposure to the international market would increase volatility in general.

    • DrDick

      You seem to have missed the part where the poor are driven out of their jobs and now do not have the money to buy even the cheap, tasteless chicken.

      • NewHavenGuy

        Seems to have missed how awesome NAFTA was for Mexican farmers too. But hey, it was great for the shareholders (Blessed Be Thy Name) so everyone wins, right?

        • xq

          The right question isn’t was NAFTA “awesome” for Mexican farmers. Producers are generally going to suffer from increased international competition. But consumers gain from cheaper prices. The question is 1) did Mexicans gain, in net, from cheaper food prices provided by US producers and 2) how good is this analogy for Vietnamese and poultry–because not all markets are the same. I think these are genuinely difficult questions, and as I said below (and you misinterpreted) I’m not looking to answer them on first principles. But, that said, I think you should need pretty strong evidence to argue against “flooding” the market with cheap food, in a society where a substantial proportion of people are malnourished–because the direct, straightforward effects of increasing food access are so positive.

          • DrDick

            did Mexicans gain, in net

            The answer is no, they did not. There may have been some minor benefit initially, but that was offset by the massive impoverishment of southern Mexico, where there are still villages where only children and old people live. It also did not last long, as the large US producers shifted to ethanol production and Mexico had a massive corn shortage which literally led to tortilla rationing. Do try to keep up with the facts.

            • xq

              You seem incredibly confident in your ability to estimate the net effect of one policy (occurring in the context of many other changes) on a complex economy.

              I think it’s pretty clear that Mexican corn producers were hurt by NAFTA. There’s a lot of data on that. It also seem pretty clear that it reduced prices for consumers 1995-2007. How much Mexico would have been shielded from rising global prices in 2007 in the world without NAFTA I don’t know.

              • DrDick

                There is actually a lot of literature on this, which I have read. Perhaps you should do the same.

                • Ahuitzotl

                  you and your facts, what do you think this is, a bar or something?

    • Tyro

      This presumes that the problems of the global poor could be solved with “cheaper stuff” rather than “better, more stable jobs and economic situations.”

      Trying to explain how destabilizing their economic position by arguing that, “well, on net it turned out to be better for them” doesn’t really work, because “on net” may be a slight, even unnoticeable, improvement for some people, total economic disruption for others, and huge gains for a core of shareholders.

  • Scott P.

    So if the US manufactures X, and the manufacturing of X moves overseas, that’s very bad as it means the loss of American jobs.

    But if another country manufactures X, and the manufacturing of X moves to the US, that’s also very bad, as it means the loss of jobs in other countries.

    So it would seem that whatever happens, it’s bad.

    Unless the point is that making clothing in the US and chickens in Vietnam is good, but making clothing in Vietnam and chickens in the US is bad, for some reason.

    • Scott P.

      Editing was disabled after my comment.

      Upon further reflection, it occurred to me you might be saying that chicken raising in Vietnam is not inherently preferable to the alternatives, but that the people and culture of Vietnam have adapted to raising chickens, and that any change would result in hardship and instability.

      Which seems to me to be about the most inherently conservative argument that could be made: yes, the peasants live lives of squalor, but they are used to it, and giving them ideas only will lead to foolishness.

      • LeeEsq

        It would also quickly lead to caste like social systems where jobs and professions would be past down through the generations if taken far enough.

      • cpinva

        “Editing was disabled after my comment.”

        you should have quit while you were only a little bit behind. instead, you managed to foul behind you, and smacked that brand new SUV parked right in front of the warning sign.

        nothing conservative about it. if we were talking about a level playing field, you might (kind of, sort of) have a point. as we have observed from the results of NAFTA, the impoverished locals, scratching out a living on a small plot of land, have a field littered with potholes. meanwhile, multi-national conglomerate, enjoying all the benefits of a gov’t owning monopoly, can easily wipe out the locals, thereby eliminating any competition. they do this by first underpricing their product, to a price point where the local consumer would be foolish to not buy it. they can afford to eat the losses, for as long as it takes, to rid the market of small local producers.

        normally, per econ 101, economies of scale would kick in, and even the “normal” price would probably be lower than what the locals could charge, while still making enough of a profit to live on. this isn’t so, when a producer has a monopoly on the market. having no competition for a product in demand, allows them to raise the price, forcing the locals to spend more of their scarce, allocable income on a basic necessity, food. everyone but the multi-national conglomerate, and the corrupt gov’t officials, loses.

        you see, the odds are all on the side of the multi-national American producer. we’ve seen this happen in small towns throughout the US, everytime Wal-Mart built a store: the local mom&pops got put out of business in the retail industry, and Wal-Mart became the town’s largest single employer, giving them the ability to make the local gov’t do anything it wanted, with the threat of closing shop, and taking all those tax dollars with them.

        I don’t happen to think this is fair, because there is no level playing field. if that sounds conservative to you, then I really don’t know what to say, aside from the fact that you clearly have no idea what you’re talking about.

        at least with the movement of cheap clothing manufacturing overeas, our gov’t wasn’t obviously complicit. I believe that makes a difference.

      • NewHavenGuy

        Historically, miserable peasants like this have to get marched off their land and into shitty factory work at gunpoint just about.

        Silly me, I forgot that Enclosure was all about freedom.

        Sillier me: human freedom means more to me than the freedom of capital.

        • Ronan

          These aren’t a pre capitalist peasant people we’re talking about. At least You seem to be making much more explicit what has been made more implicitly by a number of people here, (which is a conservative argument) that all economic development is in it’s nature illegitimate and people should remain in some romantic , subsistence economy for life. Why not ask what the Vietnamese people think of tpp.
          They overwhelmingly support it

          http://www.pewresearch.org/fact-tank/2015/06/23/americans-favor-tpp-but-less-than-other-countries-do/

  • Crusty

    Looks like they’ve already begun to adapt by building bikes out of their chickens instead of selling them as food.

  • J. Otto Pohl

    This already happened in Ghana. About 15 years ago Ghana grew about 90% of the rice and raised 90% of the chicken consumed here. Now in large part due to IMF and WB forcing the dismantlement of tariffs and other protective barriers about 90% of both staples are imported. The US while a significant supplier of rice after Thailand and Vietnam is not the chicken super power of the world. The largest supplier of chicken to Ghana is the Netherlands where poultry is very heavily subsidized.

    http://jpohl.blogspot.com/2014/03/africa-can-and-should-feed-itself.html

  • werewitch

    the facile analysis is that this is great for everyone except those chicken farmers and the taste buds of consumers because now chicken will be cheaper

    Beyond facile — this only works, analytically, if we have evidence that Vietnamese consumers have been suffering from a shortage of affordable chicken.

    • J. Otto Pohl

      No, what will happen is that the importation of cheaper chicken will mean a greater profit margin for merchants buying wholesale and selling retail. The actual consumer costs might even go up. But, the entities purchasing large amounts of chicken will go to the lower cost imports in many cases even if they raise retail costs. At least that is what happened in Ghana and I don’t see why it would be different in Vietnam unless consumers absolutely refuse to buy imported chicken and go out of their way to directly buy local ones.

      • cpinva

        if you eliminate the local producers, unless the people just stop eating chicken period, they will have no choice but to buy imported chicken or, more likely, chicken produced at the ginormous chicken plant the multi-national conglomerate will build in the country. now, this will create some jobs, that’s true, but not enough, and not at high enough wages, to offset the loss of jobs and land that the locally owned producers had.

        “They are suffering from a shortage of wealth, and spending less on food means more for other stuff.”

        again, I go back to Econ 101. monopolies generally (unless it’s owned by a philanthropist) charge more for their product, because without any competition, they can. so food won’t be cheaper, it will be more expensive, up to a point. this leaves the local consumer with less, not more, money to spend on “other stuff”.

        for a good read on how monopolies work, I would urge to get a copy of Adam Smith’s “The Wealth Of Nations”. first published in 1776, Dr. Smith pretty much nails the capitalist class, and their ways. What conservatives who quote him tend to always leave out, is that he was perfectly fine with gov’t regulation of the “invisible hand”, to keep it from destroying the economy, which it would, left to its own devices.

    • xq

      They are suffering from a shortage of wealth, and spending less on food means more for other stuff.

      • Assuming purchasing power remains the same.

        • xq

          Sure. I think that’s a reasonable first assumption. Ultimately, whether it’s true or not is an empirical question and shouldn’t be argued on first principles.

          • NewHavenGuy

            Cool, the first principles guy.

            How do you have private property rights without coercive violence underpinning them?

            And yes, all too familiar with the “Non Aggression Principle”, which seems to me = “things I don’t like are aggression, things I like and that serve my interests magically are not aggression, because Liberty”.

            • xq

              Cool, the first principles guy.

              You misread.

              How do you have private property rights without coercive violence underpinning them?

              You don’t. I’m not sure what this has to do with the economic effects of cheaper chicken prices on the Vietnamese.

              • cpinva

                “I’m not sure what this has to do with the economic effects of cheaper chicken prices on the Vietnamese.”

                they won’t be. see my post above, responding to your first assertion that the monopoly produced chicken will be less expensive to purchase. clearly, you have not the first clue how monopolies work.

                “First Principles” my ass.

                • xq

                  I never asserted that “monopoly produced chicken will be less expensive to purchase” It’s really hard to see how chicken could be a monopoly; there are a lot of producers on the global market. China and Brazil are big producers as well as the US (http://www.indexmundi.com/agriculture/?commodity=broiler-meat&). Do you have any actual evidence that there is a monopoly on chicken production? Who holds the monopoly?

          • J. Otto Pohl

            Given the increasing rise in the value of the dollar it is likely that purchasing power will decline. A number of states have seen their currencies collapse in recent years due to this and hence a massive decrease in purchasing power. These states include a couple like Russia and South Africa that had looked quite stable earlier. Other economies that were looking good that suffered from this problem are Ghana, Zambia, and Kyrgyzstan.

      • DrDick

        They are spending less on foodbecause they have less to spend on anything, since TPP destroyed their livelihoods.

        • xq

          I don’t know what you are talking about. TPP hasn’t even come into effect yet.

          • cpinva

            I think (and I could be wrong, the risk you take assuming you can read someone else’s mind) what DrDick is referring to is that the local chicken producers are already working under the assumption that TPP will pass, and that they will be fucked. not sure that’s a good assumption, but I’m not them, and I don’t know what they know, or at least what they think they know.

            regardless of how capitalist Vietnam has become, it is still ruled by the communist party, which has the final say so on signing the proposed treaty. I expect the Vietnamese have a better idea on this then anyone here does.

            hey, I could be wrong!

            • DrDick

              I was actually following xq’s usage of present tense to describe the future behavior of Vietnamese consumers. (S)he keeps forgetting that that such massive economic displacement results in huge increases in poverty (see the impacts of the Enclosure Laws, the Green Revolution in Java (in Geertz’s Agricultural Involution), or the actual impacts of NAFTA in Mexico).

  • DrDick

    what international trade should do is give people reasonable options to work in decent paid jobs in factories or stay and farm

    Bwahahahahahahah!
    How are multinational corporations going to inflate their already bloated profits doing that?

    • BiloSagdiyev

      Now, now. One man’s “bloated profits” are another corporation’s OMG OMG OMG NEVER ENOUGH MORE MORE MORE MORE MORE!!!

  • Gareth

    It should promote nations working together while also allowing domestic industries to survive for cultural and political reasons.

    You might want to give this an edit. For one thing, Vietnam is a communist dictatorship.

    • What does that have to do with anything concerning the sentence you pointed out?

      • Gareth

        It just seems odd that your ideal includes concessions to “political reasons”, when the politics can be several varieties of tyranny.

        • American capitalism throwing Vietnamese farmers out of business is also a form of tyranny.

          • Gareth

            OK, but is “political reasons” a good description of why we don’t want that?

          • NewHavenGuy

            GODDAMMIT LOOMIS WHY DID YOU SIGN SPILLER AND BROWNER oh wait, sorry different Loomis.

            If it’s free enterprise(TM) by definition it cannot be tyranny. Jeez, as a labor historian I’d have thought you’d have learned something from the late Victorian holocausts.

            What part of markets and freedom do you not understand?

        • cpinva

          “It just seems odd that your ideal includes concessions to “political reasons”, when the politics can be several varieties of tyranny.”

          all politics is economic in nature. the whole point of getting power in a society (whether it be representative democracy or a dictatorship), is to own the wealth, and the means of creating the wealth. so it’s all kind of intertwined.

          I think that’s kind of the point prof. Loomis was making.

          again, I could be wrong, and completely have missed his point.

      • NewHavenGuy

        +1

        For bonus points: Vietnam is a Communist dictatorship in the present day? China too I presume. So many levels of self-satisfied delusion to dig through here it’s probably not worth the effort.

        • Gareth

          It’s a dictatorship, ruled by the Communist Party of Vietnam. Which part are you having trouble with?

          • J. Otto Pohl

            Maybe the fact that economic reforms in Vietnam since 1983 have greatly shifted the economy away from a administrative command model almost completely controlled by the state to one where many of the means of production are now privately controlled. Yes the ruling party still calls itself communist but, the economic policies of that party are radically different today than they were in 1975.

            • Lt. Condition

              This. The country still calls itself communist but day to day life doesn’t feel as different from the west as you’d imagine–there’re privately run businesses (far more small, locally owned places than you’ll find in most small American towns, frankly).

              “Communist” doesn’t functionally mean what it did a few decades ago.

              • cpinva

                ““Communist” doesn’t functionally mean what it did a few decades ago.”

                agreed. but (and this is kind of a big “but”), when all is said and done, Vietnam is still a one party state, that party being the Communist Party. it has the final word on everything in the country, period. that it doesn’t constantly interfere with the life of each individual village/town/city, makes this no less true. the same goes for mainland China, still a one party state, etc.

                • DrDick

                  And that differs from the pre-communist South Vietnam or nominally capitalist Burma how?

                • Gareth

                  It wouldn’t be that difficult for the Communist party to change its name to “United Vietnam”, or what have you, either. So there must be some reason they keep calling themselves Communist.

  • Lt. Condition

    As someone who recently emigrated to Hanoi, there are a few things about vietnam that I’m curious to see how would be affected.

    First, ironically enough there’s basically no regulation in terms of citizens opening businesses or selling goods on the street. Now, I’m in a major city so I can’t speak to what the farmers are getting but most people who live here get their food from street markets, not supermarkets, and the food is already diet cheap by our standards. I don’t know what the export market is like but given I can already get a full meal worth of food for under a dollar, chicken included. Now, I don’t know what sort of subsidies if any make that possible or if it’s just the nature of a street market without the overhead of a big supermarket, bUT I don’t honestly see how the chicken could get cheaper.

    Almost everything here is small scale, and individual owner-operators arecheaperthanbibigger stores there just aren’t dominant wholesalers like in the US, at least not yet.

    This is just observation, though.

    • J. Otto Pohl

      The street vendors have to get their chicken from someplace. Here in Ghana the source went from being produced 90% in Ghana to being 90% imported in 15 years. The vast majority of Ghanaians like Vietnamese also shop at street markets. One thing that facilitated the move from local chickens to frozen Dutch ones was that the import licenses are part of a patronage system.So the politicians allocated themselves the profits from the importation of cheaper frozen chicken from the Netherlands. It is unlikely that actual consumer prices will fall if Vietnam imports most of its chicken. They did not in Ghana. In fact it is very likely like in Ghana they will go up. But, the profit margin for people politically connected enough (often members of the parliament itself here) to get import licenses will increase.

      • Lt. Condition

        That makes sense, and patronage / corruption are extremely common here and could certainly influence things in a terrible way for the farmers (although their signing the TPP at all would likely signal their willingness to undercut their own farmers, sadly).

        Still, there are chickens *everywhere* around here. A large portion of the chickens sold at market are still alive. Most of these markets (that I’ve seen) lack refrigeration / freezers as well, so I’m not even sure how they’d house all those imported chickens.

        That said, there’s more new construction going on in Hanoi than anyplace I’ve ever seen. I realize this is optimistic, but I’m really just hoping that local consumption patterns and a more dispersed distribution would make this whole process much slower / more difficult.

        What depresses me, though, is that many of the locals are actually excited about the TPP for reasons I don’t quite understand.

        And again, anything I have to offer on the subject is almost entirely observational–I’m here, but I won’t pretend to have any special insight into the nuts and bolts of how things work.

        • cpinva

          “Most of these markets (that I’ve seen) lack refrigeration / freezers as well, so I’m not even sure how they’d house all those imported chickens.”

          my guess is that this is also true of the consumers, most of whom don’t have refrigerators/freezers at home, hence the need to daily purchase the ingredients for that day’s meals. this was true in the US, especially in the cities, until electric refrigeration became the norm, rather than the exception. in time, assuming Vietnam’s economy continues to grow, this will probably be the case there as well.

          interestingly, mainland China is a local example of this evolution. most city dwellers have refrigerators/freezers in their apts., so there isn’t a need for daily food shopping.

          • Lt. Condition

            Definitely not true for homes in the cities (Hanoi, Ha Long, Vinh). I suspect you would’ve been right ten years ago, but this country has been modernizing very rapidly. Ten years ago Hanoi was still mostly bicycles, but now it’s Lexus SUV and motorbikes, internet is everywhere (and surprisingly decent), and most homes have modern appliances. And clothing’s cheap because, well, a great deal of it is produced here and they don’t give a shit about brand copyrights.

            What’s jarring, though, is that you’ll have a house will all of these things, but the front of it is set up like a corrugated tin shack where they sell grilled meat out of their house. The proximity of what we’d consider squalor right next to the brand new and modern is jarring coming from the west. Hell, most homes have AC now, too.

            Again, this is Hanoi, the quite prosperous Ha Long and Vinh, which was flatted in the war so was rebuilt from the ground up. I do wonder if the everyday shopping / markets will fall by the wayside over time, as most of these things are, from what I’m told, still very new here.

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