Liberalisation undermines agriculture and sustainable development

Agriculture plays a critical role in the attainment of Sustainable Development Goals (SDGs). Thus, the Food and Agriculture Organisation (FAO) notes, "From ending poverty and hunger to responding to climate change and sustaining our natural resources, food and agriculture lies at the heart of the 2030 Agenda."

Yet, for such a complex role of agriculture, some quarters in the development community believe that market liberalisation, supported by governance reform, is the best way forward. For them, the answer to current food insecurity is to aggressively double up efforts to accelerate economic growth, presuming that a rising tide will lift all boats, no matter how fragile or leaky.

According to this school of thought, government interventions in agriculture would be a mistake as that would prevent market signals from functioning properly. The government's role should be restricted to strengthening the rule of law, in the form of a functioning court system to which investors can have quick and easy recourse, and ensuring open trade and investment policies. The government's only economic role is investment in absolutely necessary infrastructure.

It is claimed that within such a business-friendly environment the private sector can thrive to address the multifaceted challenges of agriculture and SDGs. There is no recognition of market failures, such as the possibility of over-grazing, over-fishing, over-farming, or land-clearing by big businesses leading to environmental degradation. There is also no recognition of social disruptions such as dispossessing of small holders and peasant farmers, or disregarding of cultural norms and traditional practices of livelihood. After all, SDGs are about balancing economics, society and the environment.

FLAWED RECIPES: This market-oriented approach was imposed in Africa and Latin America in the 1980s and 1990s as a condition for structural adjustment programme support from the International Monetary Fund (IMF) and the World Bank (WB). Unfortunately, that resulted in their 'lost decades', admitted by a leading former World Bank economist, Bill Easterly.

The World Bank's influential Berg Report claimed that Africa's supposed comparative advantage lay in agriculture. If only the state would stop "squeezing" agriculture through marketing boards and price distortions, the supply-side response to agricultural producers would drive export-led growth. Alas, three decades of market liberalisation policies transformed the continent from a net food exporter into a net food importer, despite its vast agricultural potential.

Examining the causes of this dismal outcome, a FAO report concluded, "arguments in support of further liberalisation have tended to be based on analytical studies which either fail to recognise, or are unable to incorporate insights from the agricultural development literature". It highlights that farmers in many developing countries face widespread market failures reducing significantly their ability to generate investible surpluses to facilitate diversification into higher value activities. Therefore, successful agriculture-led growth requires significant government interventions to address pervasive market failures at early stages of development.

HAITI TRAGEDY - PRESIDENT CLINTON'S CONFESSION: In the wake of Haiti's devastating 7.0-magnitude earthquake in 2010, former US President Bill Clinton issued an unusual and now infamous apology, admitting that his push in the mid-1990s for Haiti to dramatically cut tariffs on imported US rice was a mistake. The importation of highly subsidised US rice undercut rice production in Haiti, resulting in greater poverty and food insecurity; but benefiting American framers.

For nearly two centuries since its independence in 1804, Haiti was self-sufficient in rice until the early 1980s. When President Jean-Claude Duvalier turned to the IMF and the World Bank in the 1970s, US companies quickly pushed for agricultural trade liberalisation. The US companies' influence increased after the 1986 coup d'état brought General Henri Namphy to power.

When the elected 'populist' Aristide Government met with farmers' associations and unions to find ways to save Haitian rice production, the IMF opposed such "non-free market" policy interventions. Thus, by the 1990s, the tariff on imported rice was cut by half. Food aid from the late 1980s to the early 1990s further drove food prices down, wreaking havoc on Haitian rice production, as more costly, unsubsidised domestic rice could not compete against cheaper US rice imports.

Ironically, from being self-sufficient in rice, sugar, poultry and pork, impoverished Haiti became the world's fourth-largest importer of US rice and the largest Caribbean importer of US produced food. Thus, by 2010, it was importing 80 per cent of rice consumed in Haiti, and 51 per cent of its total food needs, compared to 19 per cent in the 1970s.

AGRICULTURE SUBSIDIES IN DEVELOPED COUNTRIES: While developing countries are advised to dismantle agriculture support policies, the developed world continues to subsidise its agriculture and food production. For example, European Union (EU) has its Common Agricultural Policy (CAP) for over half a century to support European farmers and European food production. In the words of Phil Hogan, the EU Agriculture & Rural Development Commissioner, "The CAP is at the root of a vibrant agri-food sector, which provides for 44 million jobs in the EU. We should use this potential more."

Farmers in the Organisation for economic Cooperation and Development (OECD) countries, on average, still receive prices that are about 10 per cent above the international market level. An OECD policy brief observed, "the benefits from agriculture for developing countries could be increased substantially if many OECD member countries reformed their agricultural policies. Currently, agriculture is the area on which OECD countries are creating most trade distortions, by subsidising production and exports and by imposing tariffs and nontariff barriers on trade".

DOUBLE STANDARDS MUST STOP: Thus, it is only fair to advise developing countries to adopt policies to support their agriculture.  But, as most developing countries have modest budgetary resources, they usually cannot afford the massive agricultural subsidies common to OECD economies.

Therefore, developing countries should be allowed to strengthen their support for agriculture through various non-fiscal regulatory protective measures. A 'one size fits all' approach to agricultural development, requiring the same rules to apply to all, with no regard for different circumstances and capabilities, would be not only grossly unfair, but also worsen food insecurity and poverty as well as threaten social stability and environmental sustainability.

AGRICULTURAL POLICIES FOR SDGS: Comprehensive and integrated policies are needed to support the agricultural sector to address not only hunger and malnutrition but also other challenges including poverty; water and energy use; climate change; and unsustainable production and consumption.

After all, tackling hunger is not only about boosting food production; it is also about enhancing capabilities (including real incomes) so that people can access food, especially when a disaster or natural calamity strikes affecting production. To sustainably eradicate hunger and attain resilient food security, governments need to ensure that there is a flourishing natural environment for diversified crops and that agricultural practices do not compromise with the regenerative capacity of the biosphere.

Cultural values for food and agriculture also need reviving in communities through proper recognition and policy measures. A deeper cultural value confers much needed social-ecological resilience, and can also contribute to biodiversity and adaptation to climate change. Therefore, insights from science and technology ought to be combined with knowledge from local communities.

Markets simply cannot be relied upon to recognise and navigate cross-scale social-ecological complexities. This requires enhancing state capabilities, much more than governance reforms or the rule of law.

Anis Chowdhury, Adjunct Professor, Western Sydney University and the University of New South Wales (Australia); a former professor of Economics at the University of Western Sydney; held senior United Nations positions in New York and Bangkok during 2008-2016.

 [email protected]