/WTO-CANCUN/AFRICA: Farm Subsidies High On the Agenda

By IPS Correspondents Reprint | | Print |

Anthony Stoppard

JOHANNESBURG, Aug 19 2003 (IPS) - Farmers in sub-Saharan Africa could earn about two billion U.S. dollars more every year if industrialised countries dropped their trade-distorting agricultural policies and opened their markets to goods from the developing world, says the International Food Policy Research Institute.

Eighty percent of people living in sub-Saharan Africa live on less than two dollars a day.

Farmers from all developing countries could boost their income by as much as 26 billion U.S. dollars a year if industrialised countries effectively opened their markets to free trade in agricultural goods. Almost three billion people live in rural areas in developing countries, says the Washington-based International Food Policy Research Institute (IFPRI) in a statement.

“These trade figures are ideal if all trade-distorting policies are dropped,” IFPRI economist David Orden told IPS. “We’re far away from that but it’s useful to know what is possible.”

Trade distorting policies are essentially agricultural subsidies which allow farmers in industrialised countries to sell their goods at abnormally low prices, and tariff barriers that make goods imported from the developing world prohibitively expensive in the markets of the wealthy countries.

The countries that are members of the Organisation for Economic Co-operation and Development (OECD) are estimated to have spent 311 billion U.S. dollars in subsidies to their farmers in 2001.

The IFPRI figures were released ahead of the 25th Conference of the International Association of Agricultural Economists which is being held in the South African port city of Durban, from Aug. 17 to Aug. 22.

The theme of the conference is “Reshaping Agriculture’s Contributions to Society”. Key items on the agenda are: strategies for reducing poverty; efficiency in food and farming systems; environmental stewardship and food safety and security. Because it is a professional conference, it is not expected to have a direct effect on the policies of the countries of the roughly 800 delegates attending the meeting.

The conference is being held at a time when industrialised countries and the developing world are scrambling to reach some kind of agreement on rules for trade in agricultural goods, among others.

The present round of world trade talks – called the Doha round – are meant to kick-start the economic development of the developing world. However, the talks have stalled because of differences between the developing world and the industrialised countries over trade in agricultural goods.

The developing world is demanding that industrialised countries remove subsidies to their farmers and make access to their markets easier. Under pressure from their domestic agricultural interest groups, who are politically powerful, industrialised countries have not been able to remove the subsidies and tariffs, which form barriers to entry to their markets, fast enough to satisfy the developing world.

In an interview in the weekly, Sunday Times, South Africa’s chief director for trade negotiations at the Department of Trade and Industry Xavier Carim, said: “Agriculture is probably the single most significant issue on the agenda. It is clear that the European Union (EU), Japan and others are not prepared to open up their markets to the extent that is necessary.”

Carim added: “Agriculture in Africa has been constrained by the lack of market access competing against highly subsidised . . . exports into third markets.”

However, Orden points out that some developing countries are also reluctant to give-up tariffs and subsidies which protect their farmers from competition from international goods.

In addition, those developing countries which import most of their agricultural goods are quite happy for the costs of farmers in industrialised countries to be subsidised by their local taxpayers, as this reduces the price of their produce on international markets.

World trade ministers are scheduled to meet in Cancun, Mexico on Sep. 10-14, to see if they can find a way out of the impasse.

Although there seems to be no immediate way around the deadlock, Orden says never before has world trade in agricultural goods been this high on the international and local political agenda of both developing and industrialised countries. And, for now, the developing world needs to keep up the pressure on industrialised countries in the hope that a breakthrough will come.

Carim believes the most likely outcome from Cancun round of the world trade talks will be a shift in the deadlines and the negotiators will have to keep plugging away until they can reach a deal.

Ahead of the conference, the New Partnership for Africa’s Development (NEPAD) – a programme to kick-start the social and economic development of the continent – and IFPRI signed an agreement this week to collaborate on a new initiative to reduce poverty and hunger by improving policies concerning agriculture and food security.

“IFPRI will serve as a focal point to develop comprehensive programmes to undertake policy research, capacity strengthening, and communications in African countries,” says a senior research fellow at IFPRI, Suresh Babu.