It's fairly safe to say that the Bush administration and many in Congress cast a skeptical eye toward multinational organizations. The United Nations and the North Atlantic Treaty Organization both have received their fair share of criticism in recent years, while certain high-profile international initiatives, like the Kyoto treaty and the International Criminal Court, have drawn outright hostility.
Still, there's at least one international body that the powers-that-be in Washington have a tougher time opposing: the World Trade Organization. Among other things, the WTO renders judgments on disputes among global trading partners, and its rulings help keep goods and services flowing freely across international borders. Working with the WTO is often beneficial for the United States, since doing so helps maintain U.S. export levels.
The WTO's rulings on trade disputes, though, don't always fall in America's favor. A recent case in point is its determination that U.S. subsidies for domestic cotton growers are out of line with international trade rules. The complaint, brought by Brazil, represents a victory for developing countries seeking to end farm subsidies by richer nations. The United States will probably move to change its cotton-subsidy policy as a result of the ruling, which is likely to be just the first crack at developed countries' subsidy programs.
As I've mentioned before, when subsidies come down, farm production will probably increase in developing countries. In fact, the most advanced of the developing nations, like Brazil, are already boosting output. For companies that sell to the agricultural market, like Monsanto (NYSE:MON), Bayer's (NYSE:BAY) Bayer CropScience, Delta & Pine Land (NYSE:DLP), and Deere (NYSE:DE), that means future customers are more likely to come from developing rather than developed countries. All of these companies already sell overseas, but it's likely they're going to have to get even better at it.
Winning in developing markets, however, carries its own set of challenges, as cement firmCemex (NYSE:CMX) has discovered. Potential buyers could have trouble getting credit, for example. Or groups may pool resources when making purchases, a situation that could complicate companies' efforts to market to the right people.
As a result, the future in the agricultural-product space could well belong to the companies that best respond to the needs of developing countries. It's a point that investors may want to keep in mind.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
