Agricultural support policies are the rule, not the exception
A recent study by the Research Center at Texas Tech University shows that throughout the world agricultural sector, support policies are more the norm than the exception. As a result, it is better to harmonize them at the international level, than remove them, as the WTO is trying to do.
Up to a few months ago, deregulation was the broad trend. And the agricultural sector is no exception. At the World Trade Organization (WTO), as in the European Union, a certain consensus is taking shape among a margin of political decision-makers to bring the market as close to agriculture as possible: at the WTO, by pushing unregulated liberalization of international agricultural markets through the Doha negotiations, and in Brussels, by unraveling most of the existing support instruments within the Common Agricultural Policy (CAP). Unequal and distorted agricultural subsidies in relation to developing countries, is high up among the most frequent criticisms leveled against the regulation policies. It is not unusual to see in the media that the low revenues of farmers in developing countries are directly linked to the support polices implemented by the rich countries, in favor of their agricultural sector.
However, a recent study by the Cotton Economics Research Institute (CERI) at Texas Tech University1shows once more, that for the 21 developed and developing countries studied, agricultural subsidies are the norm rather than the exception. It also shows that the developing countries are more inclined to protect their agriculture, whose peculiarity is widely known.
Entitled « Crop subsidies in foreign countries : different paths to common goals », the study highlights, in fact, that even if agricultural support tools differ at times, all countries, recognizing the special nature of this vital sector, tend to increase agricultural support policies 2.
For example, China intends to maintain its food self-sufficiency ratio above 95% until 2020. To reach this objective, the government has mobilized direct payments, customs duty, price support programs (for rice and wheat), as well as subsidies. The budget earmarked for this policy has also more than doubled between 2007 and 2008, jumping from 7.6 billion to 15 billion US dollars.
India earmarks a significant part of its budgets for subsidizing inputs (seeds, electricity, fertilizer, irrigation, etc.) while maintaining import and export control tools. There has been a two-fold increase in fertilizer subsidies alone between 1992 and 2001.
In Nigeria, the agricultural sector remains very protected, with customs duty of around 40% leveled on imported products. Following the example of sorghum and corn, other commodities, are banned from import, in order to preserve the country’s self-sufficiency. In Benin, Burkina Faso and Mali, some production prices are even fixed by decree at the start of the year…
More generally, the study concludes that almost all countries, follow the example of the European Union and the United States, and intervene in their agricultural markets in the form of public policies. The most common reasons given are: structural instability of the agricultural markets (price volatility), national security, and the need to ensure reliable food supplies at low prices for urban populations.
The list of agricultural support tools and measures used by the governments of developed and developing countries is long: customs duty protection, production or input subsidies, price support, etc. Even if the effectiveness and fairness of each instrument can be unquestionably debated, nonetheless, their dominance in national public policies is proof that countries cannot do without them to make their agricultural sector durable, and thus, to preserve the food security of their population.
Based on this fact, the WTO needs to imperatively factor this reality into its liberalization policy, rather than try to make it the exception to the rule: dismantling national agricultural regulation policies to encourage the free game of the market on the food issue is not only unrealistic, but also dangerous. On the contrary, to ensure the food security of the entire world population, it would be wise to define a global agricultural and food policy by large homogenous zones, that respects the characteristics of the market as well as the productivity gaps between the world’s regions. This formula has the advantage of providing a solution to the fact that support policies are unequal, vis-à-vis the countries that do not have the means to implement them. This is what momagri recommends for the implementation of an international agricultural and food policy 3.
Paul-Florent Montfort, Analyst, momagri
1 “Crop subsidies in foreign countries: different paths to common goals”, April 2009 http://www.aaec.ttu.edu/ceri/NewPolicy/Publications/StaffReports/CropSubsidiesInForeignCountries_2009.pdf
2 The study examines 21 countries and 7 basic agricultural products: corn, cotton, rice, sorghum, soybeans, sugar and cereals. The countries concerned are: West Africa, South Africa, Argentina, Brazil, Canada, China, South Korea, Egypt, India, Indonesia, Japan, Mexico, Nigeria, Uzbekistan, Pakistan, Russia, Thailand, Turkey, the European Union and Vietnam
3 See, momagri “10 proposals by Momagri for new vision for agriculture “ July 2008 http://www.momagri.org/UK/Points-of-view/Ten-propositions-by-Momagri-for-a-new-Vision-for-Agriculture_337.html |