SUNS 4335 Tuesday 1 December 1998
AFRICA: AGRICULTURAL REFORMS BRING PAIN, NOT GAINS
Harare, Nov 27 (IPS/Lewis Machipisa) -- Sub-Saharan Africa has little to smile about as countries prepare for the 1999 negotiations on the Uruguay Round Agreement on Agriculture.
According to studies from the U.N Food and Agricultural Organisation (FAO)'s Commodities and Trade Division, there will be welfare losses for Sub-Saharan Africa and some other larger food importing regions due to agricultural reform under the Uruguay Round.
One study estimates the total welfare loss for the sub-region from reforms in agriculture, textiles/clothing and manufactures at $420 million in the year 2005 or about 0.24 percent of the region's GDP. Of the total loss, roughly 70 percent is as a result of agricultural reforms.
"Further decomposition of the sources of loss within agriculture shows that most of the losses for the sub-region are due to reductions of subsidised exports, which have the effect of raising world market prices and food import bills for importing regions," said the FAO in a paper at an international workshop on Agricultural Policy of African Countries and Multilateral Challenges and Options, held Nov. 23-26 in Zimbabwe.
The workshop was attended by some 50 participants, most of them policy- decision-makers, senior policy advisors, scientists and administrators from 18 Sub-Saharan African countries.
It was organised by the German Foundation for International Development (DSE), the Washington D.C.-based International Food Policy Research Institute (IFPRI) and the Technical Centre for Agricultural and Rural Cooperation (CTA) based in The Netherlands. The workshop sought to assist Sub-Saharan African countries to respond in a better way to the challenges resulting from changes in the international policy environment affecting the agricultural sector.
"The integration of agriculture into the international trade negotiations will increase the pressure on African countries to adjust their own policies outside of the agricultural sector," said Ousmane
Badiane and Natasha Mukherjee of the World Bank and International Food Policy Research Institute respectively.
"One reason why African economies are vulnerable to changes in international agriculture markets is the dominant role agriculture plays in the domestic economies and in foreign trade in these
countries," they added in a paper issued at the meeting. Primary agriculture and processing industries are by far the largest sectors, both in terms of employment and foreign exchange earnings.
"The vulnerability of African countries arises from the high degree of openness of their economies. For the large majority of African countries, the share of exports in Gross Domestic Product fluctuates around 30 percent and a large share of these exports is generally composed of raw and processed agricultural commodities," added Badiane and Mukherjee.
According to Carlos Mucavel of Mozambiques's Ministry of Agriculture and Fisheries, the "WTO Round should address the problems of countries like Mozambique that are at a disadvantaged position when they come into trade competition with the developed economies."
Addressing these problems will "not only be to the benefit of the developing countries, but also to the industrial economies," said Mucavel.
Mucavel believes countries like Mozambique will obtain only very limited benefits from tariff reductions, the elimination of non-tariff measures and the reduction of subsidised exports, and that new mechanisms should be formulated to assist these countries.
"On the other hand, negative effects from further steps of liberalisation, for example further reductions until the complete elimination of exports duties on raw cashew nuts (one of Mozambique's main cash crop), will reduce the quantity available for local processing, " Mucavel explained.
This scenario will lead to a lower value added and less people employed by the cashew nut processing industry in the country, said Mucavel.
As one way of improving the participation of the least-developed and the developing countries, said Tobias Takavarasha, permanent secretary in Zimbabwe's Ministry of Agriculture, regional economic blocs should be mobilised into one group.
"Such co-operation would increase their bargaining power, enable them to pool resources, reduce costs and would provide for quick flows of sharing information," said Takavarasha.
The Agreement on Agriculture requires replacement of all non-tariff barriers by tariffs and a 36% tariff reduction by 1999 or increase market access; curtailing price support and replacing it by direct
income transfers to beneficiaries; removal of all import and export subsidies, among others.
Developing countries account for about 74 percent of the WTO membership. However, their world trade is about 19 percent of total world exports.
"There is need to develop a coherent trade policy strategy for the countries of the region which adequately reflects regional concerns, taking into account both domestic development considerations and export interests," added Takavarasha.
"Such an initiative would ensure a more rational integration of the countries of the region into a world trading system and facilitate their fuller participation in the negotiations of further agricultural
policy reform within the WTO framework envisaged to commence in 1999," added the Zimbabwean official.