Friday, July 11, 2003

The Damaging Effects of Agricultural Subsidies

This op-ed in the New York Times, by the presidents of Burkina Faso and Mali, makes the case that First World agricultural subsidies, particularly for cotton in the case of both their countries, help to keep Africans mired in the very poverty which so many Western politicians and opinion-makers give so much lip-service to alleviating.

Cotton is our ticket into the world market. Its production is crucial to economic development in West and Central Africa, as well as to the livelihoods of millions of people there. Cotton accounts for up to 40 percent of export revenues and 10 percent of gross domestic product in our two countries, as well as in Benin and Chad. More than that, cotton is of paramount importance to the social infrastructure of Africa, as well as to the maintenance of its rural areas.

This vital economic sector in our countries is seriously threatened by agricultural subsidies granted by rich countries to their cotton producers. According to the International Cotton Advisory Committee, cotton subsidies amounted to about $5.8 billion in the production year of 2001 to 2002, nearly equal the amount of cotton trade for this same period. Such subsidies lead to worldwide overproduction and distort cotton prices, depriving poor African countries of their only comparative advantage in international trade.

Not only is cotton crucial to our economies, it is the sole agricultural product for our countries to trade. Although African cotton is of the highest quality, our production costs are about 50 percent lower than in developed countries even though we rely on manual labor. In wealthier countries, by contrast, lower-quality cotton is produced on large mechanized farms, generating little employment and having a questionable impact on the environment. Cotton there could be replaced by other, more valuable crops.

In the period from 2001 to 2002, America's 25,000 cotton farmers received more in subsidies — some $3 billion — than the entire economic output of Burkina Faso, where two million people depend on cotton. Further, United States subsidies are concentrated on just 10 percent of its cotton farmers. Thus, the payments to about 2,500 relatively well-off farmers has the unintended but nevertheless real effect of impoverishing some 10 million rural poor people in West and Central Africa.

It is good to see African leaders standing up for the cause of free trade for a change, rather than resorting to the tired old Marxist cant that was popular on the continent until very recently. They are entirely justified in pointing out the hypocricy of Western countries that deign to lecture Africans about their failings while refusing to do anything to help them help themselves. I would be happier if the case for free trade were not being made by characters as unsavory as Campaore*, but one works with what one has at hand, and given a choice only between a left-wing putschist and a free-trading one, I'll take the free-trader anyday.


*Captain Blaise Campaore came to power in 1987 by assasinating Captain Thomas Sankara, with whom he had seized power in a left-wing coup sponsored by Libya in 1983. Although Amadou Toumani Toure also came to power by the gun (in 1991), in his case it was to end 23 years of uninterrupted single party rule in Mali, and a year later he willingly stepped down after a successful multi-party election, which saw Alpha Oumar Konaré ascend to the presidency. Needless to say, this sort of behavior is virtually unheard of in Africa, and it makes Toure only the second military leader to have peacefully relinquished power, after Nigeria's Olusegun Obasanjo.