Chop Agricultural Subsidies, Say World Bank and NGOs

By Farah Khan

The best contribution the developed world can make to sustainable development is to reduce their one-billion-dollar a day payout in agricultural subsidies, say the World Bank and non-governmental organisations.

"Reducing agricultural subsidies is the single most important area where rich countries can do something," says Ian Goldin, World Bank director for Development Policy.

The World Bank has allied itself with some of the most powerful multinational NGOs to help mount a challenge to the continued payouts of subsidies, an issue that has emerged as one of the thorniest at the World Summit on Sustainable Development. The Bank will host various functions during the summit to lobby against this kind of financial support.

To head off the lobby, the United States and the European Union, the main culprits in subsidy payouts, have launched a joint proposal offering greater access to their markets in return for guarantees on good governance.

But civil society has criticised the offer, charging that it is silent on subsidies. Commentators, however, say that by opening the door to negotiations on trade and finance issues, the E.U. and the U.S. have in fact consented to discussions on subsidies.

A powerful coalition of seven non-governmental organisations including Greenpeace, Oxfam and Friends of the Earth, said the subsidies were one reason behind the food crisis affecting six countries in southern Africa.

"All rich countries must look to the spectre of the 13-million people facing disaster just a few hundred kilometres from Johannesburg. They can agree to eliminate the absurd subsidies and export dumping that denies long-term development opportunities for previously self-sufficient peoples in southern Africa," said the coalition of NGOs which calls itself Ecoequity.

The subsidies paid in the rich world did not only affect production, but also stopped diversification, which kept developing countries from becoming developed, the coalition said. In addition, they cause instability in world prices, which is bad for both producers and consumers.

The bank's World Development Report, released last week, said that, "higher agricultural productivity is crucial to raising incomes in developing countries".

Regions like Africa depend on agriculture for about a quarter of total output. A healthy agricultural sector is essential to achieving the 3.5 percent annual growth needed to allow these nations to meet their development goals of halving poverty, expanding education, combating HIV/AIDS and increasing potable water supplies.

World Bank research on agricultural trade liberalisation suggests that unrestricted access by developing countries to developed country's agricultural markets would yield 9 billion U.S. dollars a year.

However, income growth alone is not enough to ensure sustainable development. The bank's report says one of the reasons the 1992 Rio Earth Summit has not yielded results is because institutional structures to deal with social and environmental problems in both private and public agencies in the North and South are weak.

"The institutions to manage and protect environmental and social assets are not emerging rapidly enough to address the consequences of the growing scale and interconnectedness of human activity," says the report.

This problem prompted the Bank's somewhat bleak assessment of Rio. Its report card reads as follows: "Air: polluted; fresh water: increasingly scarce; soil: being degraded; forests: being destroyed; biodiversity: disappearing; fisheries: declining."

Because of low levels of industrialisation, Africa was the lowest contributor to greenhouse gas emissions, but it felt the impact of climate change severely, said a World Bank lead economist Linda Likar. This was evident in the growing regularity of droughts, the cause of the deep food shortages afflicting southern Africa.

Some 40 percent of sub-Saharan farmland is classified as "fragile land" because they are located in arid zones, on slopes, in areas of poor soil or in forest ecosystems. "The inhabitants of these fragile lands account for a large share of people in extreme poverty," said Likar.