LETTERS TO THE EDITOR

Summer 2007

by Mariano Iossa

Sir,
Andreas Schneider argues that Europe’s Common Agricultural Policy (CAP) has been wrongly criticised for blocking development in the world’s poorest countries, and that NGOs and developing countries have been using empty rhetoric to hide the internal failures of local infrastructure and these countries’ poor farming methods.

While there is no doubt that agriculture in developing countries needs a stronger support from governments, the reality is that global aid for rural development and agriculture in the least developed countries (LDCs) has decreased by over $5bn in the last 20 years. This sharp decline has made the ability to develop local infrastructure and improve farming methods in these countries more than an uphill battle.

At the same time, the CAP’s trade distorting effects through dumping continues to undermine vulnerable small scale farmers stifling real efforts made in developing countries to strengthen their agro-based economies.

Agriculture can thrive if farmers have access to good land and seeds as well as sufficient water and use appropriate practice: all this needs support and enabling policies. But agricultural products also need sheltering from unfair competition, like a field needs sheltering from a flood. The CAP is like a flood of products that invades developing countries markets and unfairly destroys local production and marketing.

From the dumping of tomatoes in Ghana to chicken dumping in Cameroon and Gambia and milk powder in Jamaica, the negative impacts of the CAP are well known. The unfair “competitive advantage” of European agriculture led to €61bn of trade-distorting subsidies in 2004.

While Schneider ignores the trade distorting effects of the CAP domestic subsidies on the world’s poorest economies, his call for less state and more market control is disingenuous at best, and dangerously uninformed at worst.

Agricultural commodities provide a telling example; the discontinuing of international commodity agreements and the dismantling of national market boards have left farmers at the mercy of global market forces. The results have been catastrophic with high market concentration, overproduction, the instability of commodity prices and very poor returns for small producers.

To argue that, on the global level, developing countries are set to benefit most from a successful conclusion of the WTO’s Doha Development Round is factually out of sync. The European Union’s own sustainability impact assessment of the Doha Round has shown that in many LDCs “poverty may worsen as these countries stand to lose economically from trade liberalisation and face serious supply-side constraints”. A study for the US-based Carnegie Endowment for International Peace (CEIP) suggests Africa would lose $190m if a Doha Round deal is reached. A recent World Bank projection now suggests that under a most likely Doha scenario, gains would be just $96bn. Significantly, only $16bn (some 15%) of the gain would accrue to developing countries.

Agriculture is a critical sector for developing countries, not just for economic reasons. Developing countries governments have the right to protect their farmers and reject a trade round in which rich countries are once again unwilling to reform their unfair trade distorting agricultural subsidies.