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G8-AFRICA: Farm Subsidies a Taboo Subject?

Julio Godoy

BERLIN, May 30 2007 (IPS) - In the preparations for this year’s summit of the Group of Eight most industrialised countries, to take place Jun. 6-8 in the Baltic seaside resort of Heiligendamm, Germany, aid for Africa has topped the agenda. But the farm subsidy factor is likely to be avoided in the debate.

German Chancellor Angela Merkel has repeated again and again that the G8 countries (Britain, Canada, France, Germany, Italy, Japan, Russia, and the United States) will this time finally meet their pledge to double development aid for Africa by the year 2010.

Merkel and other high-ranking German officials have also insisted that G8 investment in Africa must increase, in order to reap the rewards that economic opportunities in that continent offer to bold private investors.

Activists, from retired rock musicians like Bob Geldof to the leaders of prominent development groups, have played a similar tune.

But perhaps the most important issue for African development, one that few have mentioned, is the need to reduce the subsidies that most G8 countries shell out to their farmers and the trade barriers that protect their own markets, which numerous studies show contributed heavily in the past two decades to undermining development in Africa and other poor regions of the world.

This is not something unknown to politicians and analysts in the G8 capitals. Already in 2005, the United Nations Human Development Report (UNHDR), which had the premonitory title “International cooperation at a crossroads: Aid, trade and security in an unequal world”, said it quite clearly: “The basic problem to be addressed in the World Trade Organisation negotiations on agriculture can be summarised in three words: rich country subsidies.”


The document went on: “In the last round of world trade negotiations (launched in Doha, Qatar in 2001) rich countries promised to cut agricultural subsidies.” But, as the UNHDR remarked, since then, subsidies for agriculture in the G8 countries have steadily grown.

The world’s richest countries spent just over one billion dollars for the year 2005 on aid for agriculture in poor countries, and just under one billion dollars each day of that year for various subsidies of agricultural overproduction at home. “A less appropriate ordering of priorities is difficult to imagine,” concluded the U.N. report.

And the situation has not changed much since then.

Add to this “less appropriate ordering of priorities” the trade barriers in the European Union, the United States, Canada and Japan, which stand in the way of poor African, Asian, and Latin American farmers from exporting their agricultural goods to rich countries, and some perverse elements of the so-called development and emergency aid towards these very same regions, and you have a good picture of what is wrong with the G8 policies on global trade and development.

Consider the U.S. allocations to the World Food Programme.

Some 1.2 billion dollars per year in aid to the U.N. agency makes the U.S. government its largest donor. But the aid comes with strings attached: it must be provided in products made in the United States, meaning, in reality, that the allocations are a hidden subsidy for U.S. farmers and producers, and an insuperable barrier for poor farmers in Africa and elsewhere in the developing South, even during emergencies.

Alice Wynne Wilson of the non-governmental organisation ActionAid says “Good practice in emergency aid is to provide cash support to the World Food Programme, so that it can buy grain from the most cost-effective sources.”

“Bringing large volumes of food into a region that has areas of surplus can lead to a situation where there are food shortages in one part of a country, and locally produced food rotting in other parts,” Wilson added.

European countries also export their large agricultural, state-supported surpluses to Africa, at dumping prices, inundating the African markets with products sold under local prices, and condemning African farmers to watch their own grains and vegetables spoil under the sun.

For instance, EU countries exported 1,150 tonnes of powdered milk to the West African nation of Burkina Faso in 2005.

“For local milk producers in Burkina Faso, the powdered milk imports from Europe constituted a sentence to ruin, and for the country a fast track to political violence,” says Wilhelm Thees, a development worker with the German Catholic agency MISEREOR. “If Burkinabé farmers could sell their milk, they would live from their own work, and the country would enjoy peace and political stability,” Thees told IPS.

Similar complaints can be heard all over Africa.

In Senegal, a resilient showcase of democracy in a continent otherwise pervaded by corrupt dictatorships and brutal wars, producers of tomatoes and other food products have been suffering for more than a decade under the unfair trade relations with Europe and other wealthy regions of the world.

Their markets are overflowing with cheap, subsidised tomatoes from Italy, onions from the Netherlands, rice from Japan, cotton from the United States, and chicken parts from across Europe.

Senegalese farmers are paying the price for the structural adjustment programmes that international financial institutions such as the World Bank and the International Monetary Fund imposed upon the country in the early 1990s, as sine qua non for credits.

According to figures by the Food and Agricultural Organisation, such structural adjustment programmes are essential to understanding the negative about-turn that agricultural trade flows from the poorest countries of the world have experienced over the last two decades.

Until the mid-1980s, the poorest countries of the world – most of them in sub-Saharan Africa – enjoyed a surplus in their agricultural trade balance with the rest of the world. But starting in 1984, these trade flows changed direction, transforming the surplus into a steadily growing deficit, which reached more than six billion dollars in 2005.

As the UNHDR 2005 put it, “Sub-Saharan Africa has become increasingly marginalised (in the global trade). Today, the region, with 689 million people, accounts for a smaller share of world exports than Belgium, with 10 million people.”

In other words, if sub-Saharan Africa enjoyed today the same share of world exports as it did in 1980, the foreign exchange gain would represent about eight times the aid it received in 2003.

A similar conclusion was reached this week by DATA (Debt, AIDS, Trade, Africa), the organisation created by Irish rock musician Bono to monitor G8 policies towards Africa. In its new report, released this week, DATA says “The G8’s efforts to increase aid for trade do not yet meet the scale of need.”

The paper recalls that at its summit in Gleneagles, Scotland in 2005, the G8 “promised to make trade work for Africa… and agreed a number of specific measures, including substantial reduction of trade-distorting agricultural subsidies, expanded market access for African products, increases in aid for trade and the flexibility or policy space for African countries to appropriately coordinate trade strategies that work for economic development.”

Few of these objectives have been fulfilled, the document concludes.

Although the EU has vowed to revise its subsidies to farmers by 2013, and the U.S. Congress extended the apparel provisions of the African Growth and Opportunity Act in December 2006, “due to a lack of significant trade-related funding or reform specifically targeted to benefit Africa, either through (the WTO Doha negotiations) or through bilateral commitments, DATA believes that all of the G8 countries are off track on trade.”

And they will probably remain so after the Jun. 6-8 summit, for, despite all their talk about increasing aid to Africa, the most essential aspect – the changes they need to make at home – is not likely to be mentioned by G8 leaders in Heiligendamm.

 
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