Trade Practices Undercut African Agriculture
WITH growing impatience, the world waits for the European Community and the United States to resolve their differences on farm-trade reforms under the current Uruguay round of talks. Meanwhile, calls from some developing countries for fair trade in agriculture have largely gone unheeded.
Sadly, the marathon dispute over farm trade is overshadowing the plight of food exporters from developing countries such as Zimbabwe. Until this year's drought, the worst in southern Africa this century, Zimbabwe had been regarded as the region's food basket, exporting an average of half a million tons of maize a year.
Back in 1986, while sitting on a huge grain stockpile, the country struggled with its surplus, unable to off-load it on the world market because of low prices, thanks to food dumping by heavily subsidized European farmers. Zimbabwe's mounting stockpiles led to the twin problems of storage and marketing.
Defying the odds against it, the government embarked on a rigorous marketing campaign. Food was exported to neighboring countries, including Mozambique, Botswana, Tanzania, and sometimes South Africa. This was achieved despite fierce competition from international aid agencies that were bringing food aid all the way from the US and Europe. Penetrating other overseas markets was a daunting task for Zimbabwe, because of protectionist trade practices. Hopes that international relief agencies would purchase substantial amounts of food as donations for famine-stricken African countries proved futile. These agencies refused requests to buy Zimbabwean grain, which not only would have helped the country dispose of its stockpiles but also could have reduced donor transportation costs.
A world glut and the preference of aid agencies to purchase supplies from their home countries resulted in lower exports from this southern African country. Frustrated by what it considered an unfair trade system, Zimbabwe sought other options. In 1990 it slashed grain production by 50 percent and offered incentives to farmers to grow more profitable crops such as tobacco.
To the extent that net food exporters from the third world would be compelled to abide by decisions reached under the General Agreement on Tariffs and Trade (GATT) talks on farm trade, their efforts to achieve food security are likely to remain a distant goal, making them perpetually dependent on outside food. Export subsidies in the North create mountains of food that are then off-loaded on the international market at knock-down prices, destroying the viability of agriculture in poor countries. Even whe n prices pick up, tariffs and nontariff barriers protect northern farmers from foreign competition.
Dumping practices and protectionist trade policies have imposed enormous burdens on the ability of developing economies to sustain agricultural industries and increase earnings from this sector. Ironically, by driving down food prices on world markets subsidies have also depressed producer prices in industrialized countries and prompted calls for more subsidies. In contrast with subsidies by the North, third-world government support programs are meant to achieve food self-sufficiency. Zimbabwe, for examp le, increased the price of maize by 80 percent between 1979 and 1981, and production more than tripled in the following five years.
It is unfair for industrialized countries to call for trade liberalization from the South while imposing stiff tariffs and nontariff barriers on exports from developing countries. The argument often heard is that the industrialized countries pour a lot of money into assisting African farmers. Refuting these claims, The Economist magazine recently noted that "Aid to African farmers coupled with farm protection is supreme hypocrisy."
The general perception is that subsidies translate into cheap food for drought-stricken countries. In fact, subsidies in the North have negatively affected world commodity prices and given protection to inefficient farmers at the expense of infant agricultural industries in developing countries.
Given this situation, it is hardly surprising that developing countries in Africa and elsewhere view with apprehension the current Uruguay Round on trade being held under the auspices of GATT, the Geneva-based world trade organization.
The marathon talks have been deadlocked by the failure of the EC - particularly France, Europe's top grain producer - and the US to agree on a reduction of farm subsidies. The US is eager to end its trade dispute with the EC on subsidized export dumping practices. Washington is demanding substantial cuts in agricultural price support programs and export subsidies, which for most of the past decade have left world prices at levels not seen since the Great Depression.
A GATT accord that does not give special treatment to Africa would be a bitter pill for countries in that continent battling to feed an ever-increasing population, particularly traditional net food exporters. A suitable Uruguay package for developing countries such as Zimbabwe must address the twin issues of world-market food prices and assistance towards food security.
If rains come in the next planting season, farmers respond positively, and farm subsidies in industrialized nations continue, Zimbabwe will find itself in exactly the same situation as in 1986 - embarrassingly huge stockpiles, mounting storage costs, and declining world prices.
One way out of the predicament is for northern countries to drastically reduce farm subsidies to cereal producers while exempting developing countries from reciprocal action. Some kind of compensation would be necessary to subsidize food importers, who will be faced with high market prices for food.
Alternatively, developing countries could retain some protectionist measures to consolidate food production and shield them from low-priced imports. The problem with this arrangement is that it flies in the face of global free trade. But what developing countries need is not just free trade but fair trade.
Unless the international community, particularly those who have the power to influence the outcome of the GATT talks, takes steps to ensure food security in developing countries, Zimbabwe and the rest of Africa will continue to be dependent on food imports for a long time to come.