Reconciling Liberalization of Agricultural Markets and Food Security to Boost Agricultural Development in West Africa
The Foundation for World Agriculture and Rural Life (FARM) recently funded a study carried out by a consortium of design and research firms on the future possibilities for agriculture in West Africa.1 In addition to first and foremost reminding readers of the key economic function agriculture fulfils within the Economic Community of West African States (ECOWAS), the report seeks to determine to what extent the region can boost its potential for production, thereby ensuring its food security.
As underlined by the article's authors, however, a significant challenge to reaching this goal appears: how can these fundamental reforms be shaped, knowing that uncertainties exist surrounding the effects that regional and international changes (demographics, market liberalization, agricultural price volatility, climate change, etc.) will have on agriculture in West Africa?
Momagri's approach and instruments shed invaluable light on this question.
According to the authors of the report, West Africa holds "immense and still under-exploited potential," despite the fact that this potential exists within quite diverse national contexts. And yet, West Africa still has been unable to decrease its food dependence vis-a-vis the rest of the world and has struggled at penetrating international markets, except perhaps via certain products for export such as cotton, coffee, cocoa and bananas. The reasons behind this are numerous and include weak agricultural productivity, a lack of infrastructures and capital, market partitioning and volatility and high exposure to the uncertainties of weather, among others. West African producers must therefore evolve within an environment characterized by significant economic insecurity.
That insecurity is heightened by uncertainty over the effects that regional and international changes will have on the agricultural sector, given such factors as significant population growth, changing demographics with a majority now living in urban areas, an increase in the size of markets and the opening of borders within the region.
Certain factors at the international level could also change the face of agriculture in West Africa: an agreement reached on the WTO agriculture dossier, a decrease in export subsidies and direct payments to farmers, increased agricultural demand given the economic growth in Asia, rising energy costs, vast environmental requirements and even the effects of climate change.
Given the scope of these areas of uncertainty, the report's authors drew up various scenarios for the long term, outlining a very wide "field of possibilities" for the future of West Africa's agricultural sector, ranging from the very optimistic to the quite pessimistic, depending on how the international and regional contexts evolve.
It was nonetheless difficult for the authors to quantify the probability associated to each scenario, since significant uncertainty remains over whether or not the "current pressures on agricultural and food commodities (among other items) are cyclical in nature or whether they point, rather, to a structural change."
Finding the answer to that query is nonetheless fundamental for two reasons. First, that answer will determine what strategies must be followed by the international institutions involved in the agricultural sector and in West Africa in particular, where agriculture accounts for 35 percent of the region's GDP and employs over 60 percent of the economically active population. Next, because not finding an answer, or finding the wrong answer, would lead to a misunderstanding of the realities of the situation, the consequences of which could in turn weigh heavily on the future. If one considers the current pressures on the agricultural markets to be cyclical in nature, this means that the gap between supply and demand is merely temporary and that the international agricultural markets will therefore self-regulate, in which case the WTO-supported strategy consisting of a complete liberalization of agricultural markets would be positive, since it would naturally smooth out the prices of agricultural commodities.
This hypothesis is not plausible, however, for the volatility of agricultural has been proven to be a structural phenomenon. This means that the agricultural markets are not able to regulate jolts on their own and that, therefore, a complete liberalization of international agricultural trade would not smooth out global prices, but rather would cause quite the contrary to occur.
As we demonstrated with the first results of the momagri economic model, it appears, in fact, that price volatility is the intrinsically unique characteristic of agricultural markets, which a current cycle of hyper-volatility has compounded given the effects of several factors such as financial speculation over agricultural commodities, an increase in demand in Asia, decreased worldwide inventory and unforeseen weather events. This volatility will be further exacerbated by a non-regulated liberalization of international trade.
Of the scenarios examined - and if the Doha Round comes to a close - there is therefore a high probability that the pessimistic scenarios will prevail and that food security in West Africa will not improve.
Global governance has in fact been plagued by a form of schizophrenia regarding agriculture issues, for the WTO-led strategy of liberalizing the international agricultural markets wholly contradicts the food security objectives of the FAO. The protectionist withdrawals that countries such as Argentina have applied on beef, wheat or, more recently, soybeans, to ensure their domestic food security are testament to this fact. This contradiction explains in part the current impasse of the WTO agricultural negotiations and the series of audits carried out internally by the major international institutions and the World Bank and the FAO in particular. The two objectives are nonetheless both legitimate and fundamental for the international community. A strategy allowing for an optimal balance of these two objectives must therefore urgently be established.
This is indeed what has driven momagri's work since December 2005: providing the agricultural sector with new international governance and creating new tools and indicators to benefit this strategic sector. Momagri is working toward the creation of a world agriculture organization, the governing principles of which would rest on this notion of the "strategic mix" of economic efficiency and food security. To reach this mix, equilibrium prices per product and per large, homogenous region would be set according to the level of each zone's development. The organization would draw on two main tools: an assessment and rating agency for the agricultural sector, which momagri is currently building and that among other functions would make it possible to define the optimal balance between economic efficiency and food security for each homogenous region; and the momagri model, which will use information provided by that agency to evaluate the intermediate- and long-term effects that can be expected at the international level following the implementation of a given strategy.
Momagri will soon distribute a dossier presenting its view of international agricultural policy and detailing the principles, organizational methods and decision-making frameworks in furtherance of a regulation of agricultural markets. There is no doubt that once this process of international cooperation has begun, the prospects for economic development in West Africa will draw on more effective instruments than those that exist today.
momagri Editorial Department
|1 "Les potentialités agricoles de l’Afrique de l’Ouest (CEDEAO)," February 2008. Study funded by FARM and carried out by the Issala firm, the IRAM institute and the regional analysis firm LARES - Cotonou (Benin). |