11 May 2008
analysis
Washington, DC — "We are living in a confusing time in the history of commodity markets. Commodity prices are currently high. Yet producers in Africa and other parts of the developing world do not seem to be benefiting from these high prices. ... The rich industrialised North has set the rules of the game, but instead of holding its producers accountable to those rules, it is distorting markets in their favour. Meanwhile, African producers whose governments have accepted to play by the rules are losing out.- - Dede Amanor-Wilks, ActionAid International
The issue of commodities and development, notes Amanor-Wilks, is far more complicated than just the price levels. And it is further complicated by the new phenomenon of competition for use of agricultural products for fuel. The bottom-line for commoditydependent countries, including many in Africa, is the lack of control and predictability, as prices fluctuate and commodity markets are increasingly monopolized by large-scale companies.
Without some kind of check on markets and large producers, she notes, the chances for breaking reliance on commodities and entering higher-value sectors of production are very low.
This AfricaFocus Bulletin contains excerpts from a statement at a side-session of the Accra meeting of the United Nations Conference on Trade and Development (UNCTAD). The full report on which this is based is a joint publication by Action Aid and the South Centre, available at http://www.southcentre.org/publications/CommodityReport/AA_SC_Commodity_Report.pdf
Another AfricaFocus Bulletin sent out today contains a statement by Yash Tandon, director of the South Centre, also presented at the meeting in Accra.
For previous AfricaFocus Bulletins on related issues, see http://www.africafocus.org/tradexp.php and
http://www.africafocus.org/agexp.php
Sudan Justice and Equality Movement / Darfur Background
Sudanese Government Bombs Villages in Darfur
UN Integrated Regional Information Networks, May 6, 2008
http://www.irinnews.org/Report.aspx?Reportid=78072
Justice and Equality Movement website
http://www.sudanjem.com/en/index.php
Wikipedia Article on May 10, 2008 Attack
http://en.wikipedia.org/wiki/2008_invasion_of_Khartoum_and_Omdurman
Short, well-informed book by Julie Flint and Alex de Waal, Darfur: A New History of a Long War
Zed Books, 2nd edition, 2008
At amazon.com http://tinyurl.com/45evg2
At amazon.co.uk http://tinyurl.com/4rwwub
Zimbabwe Updates
Morgan Tsvangirai Press Statement, May 10, 2008
http://www.sokwanele.com/thisiszimbabwe/archives/949
Hunger Drives Post-Election Violence
UN Integrated Regional Information Networks, May 9, 2008
http://allafrica.com/stories/200805091048.html
Zimbabwe Lawyers for Human Rights
Baseline Conditions for Runoff Election, May 4, 2008
http://www.kubatana.net/html/archive/hr/080504zlhr.asp
Charlie Cobb, Jr. Interview with Chenjerai Hove, May 7, 2008
http://allafrica.com/stories/200805070997.html
African Emergency Summit on Zimbabwe
Civil Society Groups meet in Dar es Salaam, April 21, 2008 http://www.osisa.org/node/11097
South Bulletin: Reflections and Foresights
South Centre is an Intergovernmental Organization and Think Tank of Developing Countries
1 May 2008, Issue 14
African Commodities: How Corporatization Squeezed Out Producers?
Excerpts from the statement made at the joint South Centre-Action Aid side event at UNCTAD XII in Accra. 19 April 2008
By Dede Amanor-Wilks
[Dede Amanor-Wilks is the Director of ActionAid International for West & Central Africa She can be contacted at:
dede.amanor-wilks@actionaid.org
The joint Action Aid-South Centre report can be downloaded from: http://www.southcentre.org/publications/CommodityReport/AA_SC_Commodity_Report.pdf ]
We are living in a confusing time in the history of commodity markets. Commodity prices are currently high. Yet producers in Africa and other parts of the developing world do not seem to be benefiting from these high prices. Instead, they are crying out for protection.
It has been reported that in Asia, food prices rose by 70% during 2007. If the rise in food prices that we are now experiencing in Africa is being driven by the quest of the industrialised North for new sources of fuel, namely biofuels, then the implications for food production are potentially terrifying.
To illustrate this point - currently, Ghana's total production of oil palm is nowhere near sufficient to meet the demand of the industrialised North for palm oil for the manufacture of bio fuels. This means that if the prices being offered are raised to attract palm products away from the Ghanaian market and towards bio fuel producers in the North, there would be no palm oil left for Ghanaian consumers. In a country like Ghana, where most people prepare food with palm oil and other palm products almost every day, that would be unthinkable. Yet if we do not act, this is what is likely to happen.
The Three Features of Commodity Markets
The recently released joint Action Aid - South Centre report "Commodity Dependence and Development: Suggestions to tackle the commodities problem", at an UNCTAD XII pre-event in Accra explains how dependence on a few primary products seals and perpetuates poverty. It draws attention to three features of commodity markets that will keep those that are dependent on commodities poor forever. First is the unpredictability of international prices. Second is the belief that over the long term, prices of primary commodities go down (in relation to prices of finished goods or goods to which value has been added); and third, there is a tendency towards concentration of production in just a few hands, internationally.
On the first point, the report says:
'Commodity price fluctuation is anathema to economic development for commodity-exporting developing countries: it translates into export earning fluctuations. These in turn lead to fluctuations in domestic income, savings and in government revenues. As a result there is an adverse effect on domestic investment in productive as sets. Therefore....the report says.... 'Commodity price volatilities lead to macroeconomic instability, which is detrimental to economic development.'
This is the macroeconomic instability that we are seeing all over Africa. One of the biggest sins of the neo-liberal paradigm - the gravest errors of judgement in the so-called Washington Consensus - was to advise African countries to do away with their state marketing boards. Many Asian countries managed to avoid the crisis currently facing African agriculturalists because they did not fall into the debt and structural adjustment trap, and because the state refused to withdraw from taking the lead in development.
But in Africa, the IMF and World Bank told African producers to get rid of state marketing boards and that agriculture would flourish. The state is kleptocratic and parasitic; the state is a vampire. So let us throw the state out of development and without these parasitic marketing boards, we would all be better off. Yet what we are seeing is that in countries where the marketing boards have been privatised, producers are in trouble.
Historically, the marketing boards were established during the colonial period, ironically, to protect African producers from the price crash during the great depression of the 1930s. They were further strengthened to protect African producers from the effects of World War II. In the settler colonies, the marketing boards were usually set up by settler farmers themselves.
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