by Martin Khor
Monday 13 July
and food insecurity
Obama visited Ghana
last week, after the G8 Summit pledged
funds to boost Africaís food security.† But Africans will continue to be
food dependent unless the West changes its own policies towards African
Last week, Barrack
Obama visited Ghana
on his first trip to Africa as President of the United States. In his speech in Ghanaís Parliament,
he stressed the role of good governance and the need for democratic
practices and correct policies if the continent is to develop out of
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.
In a press conference,
Obama compared Kenya to South Korea,
saying both countries once had the same per capita income but Kenya
remains poor while Korea
had become an economic powerhouse.
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.
of the G8 Summit, and of Obama, are correct only to a limited degree
(for example, Koreaís
development took off while the country was under dictatorship) and miss
the main reasons why Africa have become
food dependent.† 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
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
The decline in agriculture
in many African countries was due to the structural adjustment policies
of the IMF and World Bank.†† The countries were asked or advised to
dismantle marketing boards and guaranteed prices for farmersí products;†
phase out or eliminate subsidies and support such as fertilizer, 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 subsidize their food products.†
The local farmersí
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 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.
The policies were
reversed starting from the mid-1980s.and especially in the 1990s, when
relied on loans from the World Bank and IMF and these two bodies conditioned
their loans on new agriculture policies.†
The fertilizer 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 subsidized credit was also ended.
for most agricultural imports were reduced significantly to the present
20%, even though the WTO bound rate is around 99%.† 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% 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
subsidies for rice.†
A government study
found that 57% of US rice farms would not have covered
their cost if they did not receive subsidies. In 2000-2003 the average
cots of production and milling of US white rice was US$415 per tonne,
but it was exported for just $274 per tonne, a price 34% below its costs.†
No wonder farmers in Ghana could not compete with imported
Tomato was a thriving
sector in Ghana. As part of a privatization
programme, tomato-canning factories were sold off and closed, while
tariffs were reduced.† This enabled the heavily subsidized EU tomato
industry to penetrate Ghana, and this displaced livelihoods
of tomato farmers and industry employees.
Tomato paste imported
in Ghana rose from 3,200 tonnes in 1994
to 24,077 tonnes in 2002.†† Local tomato production has stagnated since
1995.†† Tomato-based products from Europe
have made inroads into African markets.† In 2004, EU aid for processed
tomato products was $298 million euros, and there are many more millions
of euros in indirect aid such as export refunds.
poultry sector started its growth in the late 1950s, reached its prime
in the late 1980s and declined steeply in the 1990s.† The decline was
due to withdrawal of government support and the reduction of tariffs.†
Poultry imports rose by 144% between 1993 and 2003, and a significant
share of this were heavily subsidized poultry from Europe.†
In 2002, 15 European
countries exported 9,010 million tonnes of poultry meat for Euro 928
million, at an average of Euro 809 per tonne, while the subsidy for
the exported poultry was an estimated Euro 254 per tonne.†
Between 1996 and
2002, EU frozen chicken exports to West Africa rose eight fold, due mainly to import liberalization.†
In Ghana, half a million chicken farmers
have suffered from this situation.† In 1992, domestic farmers supplied
95% of Ghanaís market, but this share fell
to 11% in 2001, as imported poultry sells cheaper.
In 2003, Ghanaís
parliament raised the poultry tariff from 20% to 40%. This was still
much below the bound rate of 99%.† However, the IMF objected to this
move and thus the new approved tariff was not implemented.†
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% of their products.
Agricultural products are among those affected.† This will lock them
into a trade policy that will perpetuate what the IMF and World Bank
started, with artificially cheapened imports continuing to overwhelm
the domestic food market.
Thus, if the G8
countries really want to assist Africa to boost its domestic food production, their US$20
billion 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.
TO MAIN | ONLINE
BOOKSTORE | HOW TO ORDER