By Martin Khor
US President Barak Obama visited Ghana last week, after the G8 Summit pledged funds to boost Africa’s food security. But Africans will continue to be food dependent unless the West changes its own policies towards African agriculture. On his first trip to Africa as President of the United States, Obama, in his speech in Ghana’s Parliament, stressed the role of good governance and the need for democratic practices and correct policies if the continent is to develop out of poverty. Just before that, the G8 Summit in Italy agreed on a US$20 billion programme to promote food security in Africa, to help the countries produce their own food instead of relying on food aid or imports. At a press conference, President Obama compared Kenya to South Korea, saying that both countries once had the same per capita income but Kenya remains poor while South Korea had become an economic powerhouse.
The implication of all this is that East Asian countries like South Korea did well because they had good governance and democracy while African countries have lagged behind because of undemocratic practices and bad policies.
The assumption of the G8 Summit, and of President Obama, are correct only to a limited degree — South Korea’s development, for example, took off while the country was under dictatorship.
It misses the main reasons why Africa has become food dependent and as a result, the large funds pledged may miss the opportunity of helping Africa become food secure.
Of course governance and good policies are crucial elements.
But any comparison between the developments in Africa and East Asia must take into account that most African countries were unfortunate enough to come under the influence of World Bank and IMF conditionalities, whereas most East Asian countries did not and were free to adopt their own policies.
The decline in agriculture in many African countries was due to the structural adjustment policies of the IMF and World Bank.
These countries were asked or advised to dismantle marketing boards and guaranteed prices for farmers’ products; phase out or eliminate subsidies and support such as fertiliser, machines, agricultural infrastructure, and reduce tariffs of food products to very low levels.
Many countries that were net exporters or self-sufficient in many food crops experienced a decline in local production and a rise in imports which had become cheaper because of the tariff reduction.
Some of the imports are from developed countries which heavily subsidise their food products.
The local farmers’ produce were subjected to unfair competition, and in many cases could not survive.
The effects on farm incomes, on human welfare, on national food production and food security were severe.
The case of Ghana itself, which President Obama chose for his first African visit, illustrates this.
The policies of food self-sufficiency and government encouragement of the agriculture sector (through marketing, credit and subsidies for inputs) had assisted in an expansion of food production.
But the policies were reversed from the mid-1980s and especially in the 1990s, when Ghana relied on loans from the World Bank and IMF and these two bodies conditioned their loans on new agriculture policies.
The fertiliser subsidy was eliminated, and its price rose very significantly. The marketing role of the state was phased out.
The minimum guaranteed prices for rice and wheat was abolished, as were many state agricultural trading enterprises and the seed agency responsible for producing and distributing seeds to farmers, and subsidised credit was also ended.
Applied tariffs for most agricultural imports were reduced significantly to the present 20 per cent even though the WTO bound rate is around 99 per cent.
This, together with the dismantling of state support, led to local farmers being unable to compete with imports that are artificially cheapened by high subsidies, especially in rice, tomato and poultry.
Rice output in Ghana in the 1970s could meet all the local needs, but by 2002 imports made up 64 per cent of domestic supply. In 2003, the US exported 111,000 tonnes of rice to Ghana.
In the same year, the US government gave US$1.3 billion (RM4.6 billion) subsidies for rice.
A government study found that 57 per cent of US rice farms would not have covered their cost if they did not receive subsidies.
In 2000-2003 the average cost of production and milling of US white rice was US$415 (RM1,486) per tonne, but it was exported for just US$274 (RM981) per tonne, a price 34 per cent below its costs.
Another major problem facing Ghana and other African countries is the free trade agreements (known as the Economic Partnership Agreements) they are scheduled to sign with the European Union this year.
Under the EPA, African countries are asked to lower their tariffs to zero on 80 per cent of their products. Agricultural products are among those affected.
Thus, if the G8 countries really want to assist Africa to boost its domestic food production, their US$20 bn in funds has to be accompanied by a change in policies. Unless this is done, the programme will not succeed.
And Africa will most likely continue to be blamed for its lack of good governance.//Business Daily
Without underminding the deleterious effects of the Brettons Woods-orchestrated Structural Adjustment Programmes on African economies, I would argue with President Barack Obama that Africans need to straighten their human rights records,respect democratic tenents, encourage South-South economic dialogue, and set up viable trade unions in order to extricate themselves from the prevailing economic doldrums. We cannot continually blame our woes on the G-8, bad as they may be.
DR PETER WUTEH VAKUNTA
UNIVERSITY OF WISCONSIN-MADISON, USA
Posted by: DR PETE RWUTEH VAKUNTA | July 17, 2009 at 02:56 PM