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CSEND Conference

         WTO Rules and Food Crisis in
         the Least-developed Countries


Towards a new development strategy
         by Jean Feyder, Ambassador,
    Permanent Representative of Luxembourg

               Geneva, 17 July 2008
• Early 1960s: Developing countries,
  including LDCs, have 7 billion $US food-
  trade surplus
• Early 1980s: This surplus has disappeared
• 2008: LDCs are likely to pay 100% more
  than in 2000 for food imports
• Africa imports 25 billion $US worth of food
• What are the reasons for this change?
• How to change this?

                                            2
The case of rice production in Haïti
• Early 80s: Haïti is self-sufficient in rice
  production
• 1980s: Introduction of two structural
  adjustment programmes by World Bank
  and International Monetary Fund
• In this context: rice tariff reduced from
  50% to 3%


                                                3
Haïti
• Result: subsidised rice imports increased
  from 15,000 tonnes to 350,000 tonnes
  between 1980 and 2004
• Local production: decreased from 124,000
  tonnes to 73,000 tonnes between 1981
  and 2002
• Government spends some 80% of export
  earnings for food imports
• High rural exodus continues
                                              4
Haïti
• 2008: Increase of rice price by 40%
• 1 February 2008: Journal « Le Temps »:
  « Des Haïtiens en sont reduits à manger
  de la boue « (Haitians are reduced to
  eating mud)




                                            5
The case of rice production in
              Ghana
• 1970s: Some 800,000 rice producers ensure all
  rice consumed by Ghanaians.
• 1980s: Trade liberalisation policies introduced
  by WB and IMF
• Result: tariff for rice reduced to 20%
• All State’s policies in support of agriculture
  deleted (price support, fertilizer subsidies,
  marketing boards…)
• Consequences: Today Ghana imports some
  70% of all rice consumed, some of it heavily
  subsidised (34%)

                                                    6
Ghana
• 2003: Ghana Government submits a new law to
  Parliament to raise rice tariffs from 20% to 25%.
  Parliament adopts that Bill
• Under IMF’s advice, Government stops implementation
  of this law, although consolidated rate for rice is at 99%
• NGO FIAN study: right to food of Ghana rice producers
  violated
• Similar trade developments for imports of chicken and
  tomato concentrate
• 2008: Ghana’s Government has to pay some 400 million
  dollars for food imports


                                                           7
One major reason for the food
               crisis
• A development model introduced by Bretton
  Woods institutions, aiming at:
- liberalising the economies
- lowering tariff rates, deleting policies in
  support of agriculture
- priority to be given to cash crops
- free market unable to replace
• In addition, ODA for agriculture fell from 13% to
  3,4% -from 2.63 to 1.90 billion $US - between
  1980s and 2004
                                                      8
New development strategy
            A: Developing countries
• Set new priority for agriculture - staple food
  production - in development strategies
• Consult civil society and farmers’ associations
• Ensure minimum national investment for
  agriculture (AU Maputo Summit recommends
  10%)
• Implement common agricultural policies on
  regional level (UEMOA, ECOWAS)
• Facilitate access to inputs, credit, knowledge
  and information
                                                    9
• Promote land reform, infrastructure
  development
• Develop stocks, irrigation, research
• Due to environmental and climate change
  constraints, focus on sustainable, small-
  scale family farming (see IAASTD Expert
  Meeting conclusions)
• Develop capacities
                                              10
B: Developed countries

• Increase of ODA for agriculture, including
  research: minimum 10%




                                               11
C: Trade policies

• Need to face price volatility
• Present price increase follows 40%
  decrease for staple food between 1996
  and 2004 and 60% price decrease for
  cash crop products in the last 20 years
• Need for adequate market regulation
  ensuring profitable prices (prix
  rémunérateurs) so that the producer is at
  least covering production cost
                                              12
• Such a market regulation also needs to cope
  with huge productivity gap between
  industrialised and emerging countries, on one
  hand, developing countries including LDCs on
  the other
• This gap has been 1:10 a century ago, it is today
  1:1000
• This means that, while a peasant in the south
  produces 1 tonne of cereals, a farmer in the
  north or in emerging countries, produces 1000
  tonnes

                                                 13
• Existing and new trade rules have to be adapted
  accordingly
• Effective elimination of all trade-distorting practices
• Developing countries and LDCs in particular, to be given
  policy space or sovereignty in order to fully use tariff
  flexibility between applied and consolidated rates
• Revise trade policies of the structural adjustment
  programmes
• Free trade agreements to be based on special and
  differential treatment
• Most industrialised countries and Asian countries
  (Japan, South Korea, Taiwan, China,…) developed their
  agriculture on the basis of market protection


                                                         14
Competition rules
• Given the oligopolistic market structure in
  food trade, need to strengthen competition
  rules
            Policy coherence
• Improve cooperation between all
  concerned UN organisations (FAO, IFAD,
  WFP, UNCTAD, …) and between UN and
  Bretton Woods organisations
                                            15
Concluding remarks
• Not all LDCs are in the same boat (Cape
  Verde is not Malawi)
• Need to differentiate, there is no « one
  size fits all » model
• Before the world food crisis, already 850
  million people suffered from hunger and
  malnutrition
• 3/4 of these people are living in rural
  areas.

                                              16
• New development strategy to serve
  several purposes
- fight poverty
- promote respect for the right to food
- enhance food self-sufficiency




                                          17
Note: This publication has been made available by CSEND with the agrement of the author.




                        The Centre for Socio-Eco-Nomic Development (CSEND) aims at
promoting equitable, sustainable and integrated development through dialogue and
institutional learning.

http://www.csend.org/programmes-a-services
http://www.csend.org/about-csend
http://www.csend.org/project-samples
http://www.csend.org/csend-group
http://www.csend.org/knowledge-area
http://www.csend.org/csend-portraits
http://www.csend.org/community-of-artists




Diplomacy Dialogue is a branch of the Centre for Socio-Eco-Nomic Development
(CSEND), a non-profit R&D organization based in Geneva, Switzerland since 1993.

http://www.diplomacydialogue.org/mission
http://www.diplomacydialogue.org/about-us
http://www.diplomacydialogue.org/projects
http://www.diplomacydialogue.org/publications
http://www.diplomacydialogue.org/conferences
http://www.diplomacydialogue.org/dialogue-forum
http://www.diplomacydialogue.org/partners
http://www.diplomacydialogue.org/links
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20080731 session 2 towards a new development strategy - jean feyder

  • 1. CSEND Conference WTO Rules and Food Crisis in the Least-developed Countries Towards a new development strategy by Jean Feyder, Ambassador, Permanent Representative of Luxembourg Geneva, 17 July 2008
  • 2. • Early 1960s: Developing countries, including LDCs, have 7 billion $US food- trade surplus • Early 1980s: This surplus has disappeared • 2008: LDCs are likely to pay 100% more than in 2000 for food imports • Africa imports 25 billion $US worth of food • What are the reasons for this change? • How to change this? 2
  • 3. The case of rice production in Haïti • Early 80s: Haïti is self-sufficient in rice production • 1980s: Introduction of two structural adjustment programmes by World Bank and International Monetary Fund • In this context: rice tariff reduced from 50% to 3% 3
  • 4. Haïti • Result: subsidised rice imports increased from 15,000 tonnes to 350,000 tonnes between 1980 and 2004 • Local production: decreased from 124,000 tonnes to 73,000 tonnes between 1981 and 2002 • Government spends some 80% of export earnings for food imports • High rural exodus continues 4
  • 5. Haïti • 2008: Increase of rice price by 40% • 1 February 2008: Journal « Le Temps »: « Des Haïtiens en sont reduits à manger de la boue « (Haitians are reduced to eating mud) 5
  • 6. The case of rice production in Ghana • 1970s: Some 800,000 rice producers ensure all rice consumed by Ghanaians. • 1980s: Trade liberalisation policies introduced by WB and IMF • Result: tariff for rice reduced to 20% • All State’s policies in support of agriculture deleted (price support, fertilizer subsidies, marketing boards…) • Consequences: Today Ghana imports some 70% of all rice consumed, some of it heavily subsidised (34%) 6
  • 7. Ghana • 2003: Ghana Government submits a new law to Parliament to raise rice tariffs from 20% to 25%. Parliament adopts that Bill • Under IMF’s advice, Government stops implementation of this law, although consolidated rate for rice is at 99% • NGO FIAN study: right to food of Ghana rice producers violated • Similar trade developments for imports of chicken and tomato concentrate • 2008: Ghana’s Government has to pay some 400 million dollars for food imports 7
  • 8. One major reason for the food crisis • A development model introduced by Bretton Woods institutions, aiming at: - liberalising the economies - lowering tariff rates, deleting policies in support of agriculture - priority to be given to cash crops - free market unable to replace • In addition, ODA for agriculture fell from 13% to 3,4% -from 2.63 to 1.90 billion $US - between 1980s and 2004 8
  • 9. New development strategy A: Developing countries • Set new priority for agriculture - staple food production - in development strategies • Consult civil society and farmers’ associations • Ensure minimum national investment for agriculture (AU Maputo Summit recommends 10%) • Implement common agricultural policies on regional level (UEMOA, ECOWAS) • Facilitate access to inputs, credit, knowledge and information 9
  • 10. • Promote land reform, infrastructure development • Develop stocks, irrigation, research • Due to environmental and climate change constraints, focus on sustainable, small- scale family farming (see IAASTD Expert Meeting conclusions) • Develop capacities 10
  • 11. B: Developed countries • Increase of ODA for agriculture, including research: minimum 10% 11
  • 12. C: Trade policies • Need to face price volatility • Present price increase follows 40% decrease for staple food between 1996 and 2004 and 60% price decrease for cash crop products in the last 20 years • Need for adequate market regulation ensuring profitable prices (prix rémunérateurs) so that the producer is at least covering production cost 12
  • 13. • Such a market regulation also needs to cope with huge productivity gap between industrialised and emerging countries, on one hand, developing countries including LDCs on the other • This gap has been 1:10 a century ago, it is today 1:1000 • This means that, while a peasant in the south produces 1 tonne of cereals, a farmer in the north or in emerging countries, produces 1000 tonnes 13
  • 14. • Existing and new trade rules have to be adapted accordingly • Effective elimination of all trade-distorting practices • Developing countries and LDCs in particular, to be given policy space or sovereignty in order to fully use tariff flexibility between applied and consolidated rates • Revise trade policies of the structural adjustment programmes • Free trade agreements to be based on special and differential treatment • Most industrialised countries and Asian countries (Japan, South Korea, Taiwan, China,…) developed their agriculture on the basis of market protection 14
  • 15. Competition rules • Given the oligopolistic market structure in food trade, need to strengthen competition rules Policy coherence • Improve cooperation between all concerned UN organisations (FAO, IFAD, WFP, UNCTAD, …) and between UN and Bretton Woods organisations 15
  • 16. Concluding remarks • Not all LDCs are in the same boat (Cape Verde is not Malawi) • Need to differentiate, there is no « one size fits all » model • Before the world food crisis, already 850 million people suffered from hunger and malnutrition • 3/4 of these people are living in rural areas. 16
  • 17. • New development strategy to serve several purposes - fight poverty - promote respect for the right to food - enhance food self-sufficiency 17
  • 18. Note: This publication has been made available by CSEND with the agrement of the author. The Centre for Socio-Eco-Nomic Development (CSEND) aims at promoting equitable, sustainable and integrated development through dialogue and institutional learning. http://www.csend.org/programmes-a-services http://www.csend.org/about-csend http://www.csend.org/project-samples http://www.csend.org/csend-group http://www.csend.org/knowledge-area http://www.csend.org/csend-portraits http://www.csend.org/community-of-artists Diplomacy Dialogue is a branch of the Centre for Socio-Eco-Nomic Development (CSEND), a non-profit R&D organization based in Geneva, Switzerland since 1993. http://www.diplomacydialogue.org/mission http://www.diplomacydialogue.org/about-us http://www.diplomacydialogue.org/projects http://www.diplomacydialogue.org/publications http://www.diplomacydialogue.org/conferences http://www.diplomacydialogue.org/dialogue-forum http://www.diplomacydialogue.org/partners http://www.diplomacydialogue.org/links http://www.diplomacydialogue.org/contact http://www.diplomacydialogue.org/sitemap