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"Suddenly, the paradigm of food security has shifted back to the traditional 
concept of greater self-sufficiency instead of relying on cheaper imports. In 
the immediate period, emergency food supplies have to be shipped to affected 
countries, but the long-term solution must include increased local food 
production."

"The current food crisis has been precipitated by a number of factors 
including climate extremes, such as the drought that has drastically cut 
wheat harvests in Australia, the rising cost of inputs, especially oil and 
oil-based products (fuel, chemical fertilizers and pesticides) and above all, 
the switch of land use from the production of food to bio-fuels."


ISIS Press Release 15/07/08
Rising Prices Reinforce Need for Food Security Policies
http://www.i-sis.org.uk/risingPricesFoodSecurity.php

The new key to food security is self-sufficiency, not trade, and policies are 
needed to expand local food production and invigorate the agricultural sector 
particularly in developing countries

Food Futures Now , *Organic *Sustainable *Fossil Fuel Free, How organic 
agriculture and localised food, and energy systems can potentially compensate 
for all greenhouse gas emissions due to human activities and free us from 
fossil fuels
Desperate measures to cope with soaring food prices revive debate over food 
security

In response to rising world food prices, some food-importing developing 
countries have lowered their tariffs to mitigate the high prices of imports. 
At the World Trade Organisation (WTO), agricultural exporters are questioning 
the need for the instruments of special products (SP) and special safeguard 
mechanism (SSM) designed to protect food security, livelihood, and rural 
development against trade. But the G33 group of developing countries and its 
members say that their case for SP and SSM has grown even stronger, as the 
food crisis is due to inadequate production in many developing countries, 
forcing them to increase their dependence on imports that has now become so 
costly.

Although importing countries can cut tariffs to reduce prices now, in the 
longer term their farmers will need local markets and incentives for them to 
revive agriculture production.

The current crisis has also revived the debate over food security. In recent 
years, international financial institutions have promoted the view that 
cheaper imports make local food production no longer a matter of necessity, 
and many developing countries reduced food production on the advice of those 
agencies.

The rise in food prices in the past two years has increased the cost of 
imports and inflated food prices in local markets. This was exacerbated by 
shortages experienced in countries placing import orders, for rice, for 
example, only to find supplies cut by export restrictions. The ensuing street 
protests in many countries have added a considerable sense of urgency to the 
worsening situation.

Suddenly, the paradigm of food security has shifted back to the traditional 
concept of greater self-sufficiency instead of relying on cheaper imports. In 
the immediate period, emergency food supplies have to be shipped to affected 
countries, but the long-term solution must include increased local food 
production.

This raises the question of barriers to local food production and how to 
overcome those barriers.
Barriers to local food production for self-sufficiency

The current food crisis has been precipitated by a number of factors 
including climate extremes, such as the drought that has drastically cut 
wheat harvests in Australia, the rising cost of inputs, especially oil and 
oil-based products (fuel, chemical fertilizers and pesticides) and above all, 
the switch of land use from the production of food to bio-fuels.

However, a more important contributing factor is the decline in agriculture 
in many developing countries that has been happening over the past decades, 
in most cases, due to the structural adjustment policies of the IMF and World 
Bank. The countries were asked or advised to dismantle marketing boards and 
guaranteed prices for farmers' products; to phase out or eliminate subsidies 
and support for fertilizer, machines, agricultural infrastructure; and to 
reduce tariffs of food products to very low levels.

Many countries that were net exporters or self-sufficient in numerous food 
crops experienced a decline in local production and a rise in imports that 
had become cheaper because of the reduced tariff. In addition, some imports 
are from developed countries that heavily subsidize their food products. 
Consequently, the local farmers were subjected to unfair competition, and in 
many cases, failed to survive.
How Ghana’s agriculture was destroyed by the World Bank and the IMF

Ghana is a case in point. From the 1960s through to the 1980s its policies to 
promote self-sufficiency in food had involved the government actively 
encouraging the agricultural sector through marketing, credit and subsidies 
for inputs. This had facilitated an expansion of food production for example, 
in rice, tomato, and poultry.

But from the mid-1980s onwards and especially in the 1990s under World Bank 
and International Monetary Fund (IMF) conditionalities - programmes for 
economic and political reform attached to the provision of funds - the 
policies for self-sufficiency were reversed. The subsidy for fertilizer was 
eliminated, and its price rose very significantly. The marketing role of the 
state was phased out. The system of minimum guaranteed prices for rice and 
wheat was abolished, as were many state agricultural trading enterprises and 
the seed agency responsible for producing and distributing seeds to farmers, 
and subsidized credit also ended.

Simultaneously, applied tariffs for most agricultural imports were reduced 
significantly to the present 20 percent. That, on top of the dismantling of 
state support, left local farmers unable to compete with imports artificially 
cheapened by high subsidies, especially in rice, tomato and poultry.

Rice output in the 1970s could meet all local needs, but by 2002, imports 
made up 64 percent of domestic supply. Rice output in the Northern region 
fell from an annual average of 56 000 tonnes (in 1978-80 to only 27 000 
tonnes for the whole country in 1983. In 2003, the US exported 111 000 tonnes 
of rice to Ghana. In the same year, the US government gave $1.3 billion in 
subsidies for rice. A government study found that 57 percent of US rice farms 
would not have covered their cost if they did not receive subsidies. In 
2000-2003, the average costs of production and milling of US white rice was 
$415 per tonne, but it was exported for just $274 per tonne, a price 34 
percent below its costs.

Tomato was a thriving sector, especially in the Upper East region. As part of 
a privatization programme, tomato-canning factories were sold off and closed, 
while tariffs were reduced. This enabled the heavily subsidized EU tomato 
industry to penetrate Ghana, and displace the livelihoods of tomato farmers 
and industry employees.

Tomato paste imported in Ghana rose from 3 200 tonnes in 1994 to 24 077 
tonnes in 2002. Local tomato production has stagnated since 1995, while 
tomato-based products from Europe made inroads into African markets. In 2004, 
EU aid for processed tomato products was 298 million euros, and there are 
many more millions of euros in indirect aid (export refunds, operational 
funds for producer organisations, etc).

Ghana’s poultry sector started to grow in the late 1950s, reaching its prime 
in the late 1980s and declined steeply in the 1990s. The decline was due to 
the withdrawal of government support and the reduction of tariffs. Poultry 
imports rose by 144 percent between 1993 and 2003, and a significant share of 
this were heavily subsidized poultry from Europe. In 2002, 15 European 
countries exported 9 010 million tonnes of poultry meat for Euro 928 million, 
at an average of Euro 809 per tonne. It is estimated that the total subsidy 
on exported poultry (including export refunds, subsidies for cereals fed to 
the poultry, etc) was Euro 254 per tonne.

Between 1996 and 2002, EU frozen chicken exports to West Africa rose 
eight-fold, due mainly to import liberalization, practically wiping out the 
half million chicken farmers in Ghana. In 1992, domestic farmers supplied 95 
percent of Ghana’s market, but this share fell to 11 percent in 2001.

In 2003, Ghana’s parliament raised the poultry tariff from 20 to 40 percent. 
This was still much below the bound rate (allowed by the World Trade 
Organisation) of 99 percent. However, the IMF objected to this move and the 
new approved tariff was not implemented. The IMF representative in Ghana told 
Christian Aid that it pointed out to the government the raising of tariff was 
not a good idea, and the government reflected on it and agreed. Many farmers 
groups and NGOs in Ghana have protested to the government.
WTO completes the debacle

Some developments in the trade negotiating arena are also a source of 
concern. The Doha negotiations at the World Trade Organisation (WTO) are 
mandated to substantially reduce domestic support in developed countries. But 
to date, that has not materialised.

Another source of concern is the new US Farm Bill. According to several 
analyses, including those oif the US administration, the Bill will continue 
the present system of subsidies, and will even expand support in some ways 
for several commodities. For example, the Bill guarantees that 85 percent of 
the domestic market for sugar will be met by local production.

The Bill also allows a farm family with an income of up to $1.5 million to 
obtain subsidies, compared to the limit of $200 000 per farmer proposed by 
the Bush administration. The Bill thus ‘locks in’ the US system and its 
levels of subsidies for the next 5 years, and also constrains what the US 
negotiators can offer in the WTO Doha negotiations.

A major loophole in the WTO agriculture agreement is that countries are 
obliged to reduce their bound levels of domestic support that are deemed 
‘trade distorting’ but there are no constraints on the amount of subsidies 
deemed non-distorting or minimally distorting, which are placed in the 
so-called Green Box.

Recent studies have shown, however, that many of the Green Box subsidies are 
also trade-distorting. The Doha negotiations are unlikely to place new 
effective disciplines on the Green Box. Therefore, the major subsidizing 
countries can change the type of domestic subsidies they give, while reducing 
the "trade-distorting subsidies" and continue to provide similar levels of 
farm subsidies.

Meanwhile, the developing countries are being asked to reduce their 
agricultural tariffs further. The Chair's proposal at the Doha talks is for a 
maximum 36 percent tariff cut for developing countries, and 24 percent for 
small vulnerable economies. This is sizable, and compares with the 24 percent 
cut in the previous Uruguay Round.

Most developing countries are advocating that the instruments of SP and SSM 
be set up as part of the WTO talks to promote food security and farmers’ 
livelihoods and rural development. SP would exempt important food products 
from tariff cuts or at least allow for more lenient cuts. SSM would enable a 
developing country to impose an additional duty on top of the bound rates in 
situations of reduced import price or increased import volume, in order to 
protect the local farmers. However, there is considerable opposition from 
some exporting countries to having these instruments that can work in an 
effective way.
Free trade agreements reduce tariffs even further

In the bilateral or regional free trade agreements involving developed and 
developing countries, the developing countries are asked to reduce or 
eliminate their tariffs by even more. For example, in the Economic 
Partnership Agreements between ACP countries and the EU, the ACP (group of 
African, Caribbean and Pacific less developed countries) are asked to 
eliminate their tariffs on 80 percent of their tariff lines over different 
time periods, among which are agricultural products.
Key policies and measures for food security

The economic and trade policies followed by many developing countries, often 
at the advice of international financial institutions, or as part of 
multilateral and bilateral trade agreements, have contributed to the stunting 
of the agriculture sector in developing countries. In order to increase food 
production in developing countries for food security, a number of policies 
and measures need to be implemented.

   1. Developing countries must be allowed to provide adequate support to 
their agriculture sector and to have a realistic tariff policy to advance 
their agriculture, especially as developed countries’ subsidies are 
continuing at a high level. The developed countries should quickly reduce 
their actual levels of subsidy.
   2. The agriculture policy paradigm in developing countries must be allowed 
to change. Countries should have the policy space to expand public 
expenditure on agriculture. Governments in developing countries must be 
allowed to provide and expand support to the agriculture sector.
   3. Developing countries should place high priority on expanding local food 
production. Accompanying measures and policies should thus be put in place. 
The countries should be allowed to calibrate their agricultural tariffs in 
such a way as to ensure that the local products can be competitive and the 
farmers’ livelihoods and incomes are sustained, and national food security 
assured.
   4. The proposals of developing countries (led by the G33) on special 
products and special safeguard mechanism at the WTO should be supported. 
Effective instruments that can meet the aims should be established.
   5. The policies of the World Bank, IMF and regional development banks 
should be reviewed and revised as soon as possible, so that they do not 
continue to be barriers to food security and agricultural development in 
developing countries.
   6. The actual levels (and not just the bound levels) of agricultural 
domestic subsidies in developed countries should be effectively and 
substantially reduced. There should also be new and effective disciplines on 
the Green Box subsidies to ensure that this category does not remain an 
‘escape clause’ that allows distorting subsidies detrimental to developing 
countries.
   7. There should be a review of many of the FTAs between developed and 
developing countries, including the Economic Partnership Agreements between 
the EU and ACP countries. In light of the food crisis and the changing 
paradigm on food security, developing countries that have signed or are in 
the process of negotiating FTAs should ensure that the FTAs provide enough 
policy space to allow sufficiently high tariffs on agricultural imports to 
safeguard the principles of food security, farmers' livelihoods and rural 
development. Developed countries should also not make demands that adversely 
affect food production in developing countries.

Martin Khor is Director of the Third World Network, and this article is a 
revised and  edited version of part of a paper on food crisis and climate 
change presented at a round-table at the FAO Summit on Food Security in Rome 
on 4 June 2008. For further details see Khor M. The impact of trade 
liberalization on agriculture in developing countries: the experience of 
Ghana. TWN, Penang, 2008.