Rich states stall farming changes in poor ones

Agence France Presse

Washington, January 12:

Protectionism by rich nations is sabotaging efforts by poor nations to liberalise their farm trade, the World Bank’s chief economist said today. The major trading powers — particularly the United States and European Union — faced a new attack on the customs duties they levy and subsidies given to farmers in a World Bank report.

The report called on the EU to make drastic reforms to its Common Agricultural Policy when it comes due in 2006 and to the US Farm Bill when it comes due in 2007. Unless more action is taken to open up markets, rich nations will increase their farm trade surpluses and worsen rural poverty in developing countries, according to the report. “Because of these tariffs and subsidies in the rich countries, the rich countries are sabotaging the efforts and progress made in developing countries,” said the bank’s chief economist Francois Bourguignon.

Agriculture is a crucial sector, providing the livelihood for up to 70 per cent of the rural populations of developing nations.

The report said that since the start of the 1980s, developing countries have dramatically increased productivity, and in the last decade reduced the average customs duties on farm products from 30 per cent to 18 per cent. It added that currency devaluations and other tax changes had also acted against developing nations. But the World Bank said governments in North America and Europe, the main agricultural producers, still give huge subsidies. In the world’s $20 billion a year cotton industry, European producers received $3.7 billion in official subsidies and their US counterparts one billion dollars, in 2001-2002, said the report.

The report said that if US cotton subsidies were abandoned, growers in central and west Africa would get an extra $250 million in revenue each year. “The message is not new but this report is getting into the details in a way that was not done before,” said Bourgignon of the report.

Despite free-trade measures agreed in the Uruguay Round of global commerce talks, between 2000 and 2002, Organisation for Economic Cooperation and Development (OECD) countries gave $230 billion in subsidies to their farmers: 63 per cent in price subsidies and the rest in direct production aid. This represents 46 per cent of the value of farm production in the OECD, said the report. “If the protectionist walls do not come down then this increased productivity will result in more production and lower prices and this will damage all the effort by poor countries to expand their exports and to expand their income in the rural sector,” said the chief economist.

Bourgignon said the restrictions could even encourage protectionism. The report also criticised the cost of preferential access systems put in place by the EU and US. Under the systems, it costs five dollars to import one dollar’s worth of produce. The report examines the market for a series of key agricultural products, such as: sugar, cotton, wheat, rice, milk products, fruits and vegetables. These are all areas where rich countries still give billions of dollars in subsidies to protect their farmers.