Kevin J. Kelley
20 May 2002
IN A move contrary to its stated policy of using trade to promote Africa's development, the United States last week decided to increase subsidies to American farmers. Grain and cotton growers will benefit, as will producers of honey, milk, peanuts and lentils.
Critics say that the joint action by the US Congress and President George W Bush will prove harmful to Africa.
Farmers will in effect be paid to keep producing certain crops even when excess supplies are driving down prices, explains Mr Tom Beierle, an analyst with Resources for the Future, a Washington-based think tank. "That will further depress prices for a range of commodities that are also produced in developing countries," Mr Beierle says.
African producers can thus expect to receive less money in the coming years for cotton, peanuts and a variety of grains sold on the world market.
Washington's decision to boost farm subsidies runs counter to the highly touted Africa Growth and Opportunity Act (Agoa) that has been in effect for the past two years. Agoa opens US markets more widely to a range of African products, especially textiles, on the theory that freer trade will create jobs and reduce poverty in many sub-Saharan countries.
It took several years before Agoa backers were able to overcome the resistance of US textile lobbyists, who feared the loss of jobs and profits for the domestic industry.
While textile interests do possess political muscle in the United States, they are not as influential as the agriculture lobbies that have overcome all objections concerning the damaging impact of high farm subsidies on low-income countries.
The 70 per cent increase farm subsidies also makes it unlikely that European governments and Japan will reduce payments to their own farmers.
According to the World Bank, protectionist farm policies in the rich countries cost poor countries far more in lost trade opportunities than the value of the aid they receive from the developed world.
And the International Monetary Fund has warned that economic reforms by African countries will yield few benefits unless accompanied by a lowering of the trade barriers erected by the United States, Europe and Japan.
The US action will actually impede current efforts to liberalise global trade terms, critics add. They note that many developing countries agreed last November to push for a new world trade agreement that is supposed to involve big reductions in subsidies paid to domestic producers. But now the US has moved in exactly the opposite direction.
As a result, African countries will be less likely to dismantle their own trade walls, including those that obstruct commerce among sub-Saharan nations.
Mr Moses Ikiara, an analyst at the Kenya Institute of Public Policy Research and Analysis, called the American move "a slap in the face for African countries. This is completely in contrast to what everybody has been expecting," Mr Ikiara told Reuters. "It will be very difficult now to convince African countries about liberalisation."
Trade barriers between African countries are "often so high that it's difficult to develop effective regional markets," adds Ms Ann Tutwiler, president of the International Policy Council on Agriculture, Food and Trade, a Washington research group.
She suggests that increased US subsidies will allow protectionist-minded officials in Africa to say, "Why should we lower our tariff barriers to the world and to one another when you're so heavily subsidising your own farmers?"
At the same time, however, African countries that import sizable quantities of food will probably realise significant short-term savings due to the price-dampening effect of the greater US subsidies, Ms Tutwiler points out. "But in the longer term, it's going to hurt farmers in those same countries. They'll have to compete in local markets against subsidised food imports."
With Democrats holding a one-seat edge in the Senate, the Republican president's approval of the subsidy legislation is believed to have been motivated in large degree by political factors.
The legislation approved by the US Congress and signed into law by President Bush will raise the yearly cost of subsidies to American farmers to around $19 billion.
Some of the richest farmers in the United States will enjoy the greatest gains from the new legislation. It is estimated that 80 per cent of the subsidies will go to corporate, factory-style farms, with family operations receiving comparatively small amounts of assistance.
Many of the potential beneficiaries are based in midwestern and southern states viewed as key battlegrounds in this year's US Senate elections. The United States has thus moved to aid prosperous farmers at the indirect expense of poor peasants in Africa and in other parts of the developing world, says Ms Nancy Birdsall, head of the Center for Global Development, another Washington think tank. The US spends about $10 billion a year on foreign aid, Ms Birdsall notes, compared with the $19 billion a year that will now go mainly to large US farms. "This is what we're spending on a few big farmers, versus the 3 billion-plus people who live on under $2 a day," Ms Birdsall told The San Francisco Chronicle.
Copyright 2002, Nation Media Group Ltd. All rights reserved.
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