A/HRC/13/32 17. As FAO and the International Fund for Agricultural Development (IFAD) point out in recent studies, reality challenges the market economy theory and its rule of supply and demand.9 Higher output prices are not sufficient to trigger an expansion in food supplies. Smallholders, the majority of farmers in developing countries, have limited market participation. Recent decades of structural adjustment policies and declining investment in agriculture have resulted in a lack of access to resources – modern agricultural inputs and credit, poor marketing and transport infrastructure, rudimentary technology, ineffective rural services and institutions, which pose serious limitations to market participation of small farms. In addition, while higher food prices do not trickle down to the farm gate where smallholders have often to sell their products, higher input costs do. Those that reap the benefits of higher food prices are large commercial farmers in developed and foodexporting countries.10 3. The role of agricultural trade, subsidies and international companies in the context of the right to food 18. It is becoming increasing clear that the current international trade regime favours developed countries and creates disadvantages for developing States, particularly in the agriculture sector. A report of the International Assessment of Agricultural Knowledge, Science and Technology for Development, for example, “asserts that small-scale farmers and rural livelihoods are negatively affected by agricultural trade and that the poorest developing countries are net losers under most trade liberalization scenarios.11 19. It is also generally accepted that subsidies granted to farmers in the industrialized world play an important role in this context. Support to producers in the Organization for Economic Co-operation and Development (OECD) countries in 2008 was estimated at EUR 182 billion, equivalent to 21 per cent of aggregate gross receipts of OECD farm producers.12 Subsidized food and agriculture products arrive on the markets of developing states as cheap imports with which local products cannot compete. As a consequence of dumping practices, smallholders have less income and fewer resources to buy seeds and fertilizers, which in turn affects their agricultural production, and consequently their livelihood. Subsidies also produce long-term sectorial distortions in developing countries. Given the availability of cheap subsidized products obtainable through trade, there is a general disincentive to invest in agriculture. Undeniably, the past 30 years have witnessed serious under-investment in the agricultural sector of developing countries because of the growing perception of the unprofitability of agriculture.13 20. Linked to the serious human rights challenges posed by dumping practices is the market domination of a few large transnational corporations. Already in 2004, the Special Rapporteur on the right to food warned about the high concentration of control by few multinational firms in all sectors of the food chain: production, trade, processing, marketing, retail (E/CN.4/2004/10). 9 10 11 12 13 6 FAO ibid., IFAD, “Food prices: smallholder farmers can be part of the solution”, 9 July 2009. M.D. Anderson, A Question of Governance: To Protect Agribusiness Profits or the Right to Food?, 2009. IAASTD, Agriculture at a Crossroads, Synthesis Report, 2009, p. 65 OECD, “Agricultural policies in OECD countries. Monitoring and evaluation”, 2009, p. 5. IFAD, op.cit.