TCS Daily


The Dead Hand

By Andrew Apel - November 11, 2002 12:00 AM

Europe's food and agriculture policy dominates the policies of developing nations and it is turning into an economic and humanitarian disaster. The current humanitarian crisis in Africa only serves to highlight how damaging European regulations truly are.

Europe has an enormous appetite for imports, so its dominance of food production policy in developing nations would seem to be an obvious application of the dictum that "the customer is always right." An analysis conducted by the International Food Policy Research Institute, found that developing nations do, indeed, adjust their trade patterns in response to preference changes in important trading partner countries.

In the context of genetically modified (GM) crops - which Europe permits only in rare instances - this is proving to be especially true. According to Prof. Robert Paarlberg of the Department of Political Science at Wellesley College, some poor countries are now trying to stay "GM-free" in order to retain the option of exporting food to Europe, which is schizophrenic about crops and foods improved through biotechnology.

At first blush, this seems to make very little sense. After all, in developing nations, the vast majority of food produced is consumed internally. According to the World Bank, 75 percent of the world's poor live in rural areas and work primarily in agriculture. This means that benefits from the first wave of GM crops, which are designed to reduce labor and improve agricultural output, should offer so many benefits for domestic food security that maintaining export markets would only be a remote consideration.

Indeed, international trade statistics support this conclusion. The World Trade Organization (WTO) has found that agricultural exports by developing countries made up only about three percent of total international trade volume for the years 1990 through 1999. And the International Monetary Fund (IMF) estimates that 40 percent of this minuscule portion of international trade is not with Europe, but among developing nations.

Export Policy Trumps Production Policy

Despite this, Europe has had a disproportionate - and negative - impact on food policy in some developing nations. How?

Europe's economic power among exporters in developing nations is unmistakable. The EU is the world's largest importer of agricultural products and says that in 2000, it imported agricultural products totaling 58.6 billion euros, 61 percent of it from developing nations. Agricultural exporters in developing nations can scarcely ignore a customer with such economic power.

But with agricultural exports from developing nations at only three percent of total trade and nearly half of that with other developing nations, it would still make sense for developing nations to prioritize domestic food security over food exports.

For example, strains of rice improved through biotechnology are under development that will be able to resist drought and disease, or provide vitamin A to prevent childhood blindness. Nonetheless, the Union of European Community Rice Millers' Associations in October 1999 demanded that Thai rice exporters refuse all GM rice and warned that consignments of Thai rice could be refused if any kernels are found to have been improved through biotechnology. In other words, if Thailand adopts the technology to feed its population, its exporters face the prospect of losing a major market; and if the EU follows through with plans to require labeling and traceability, Thai exporters would also find themselves involved in testing and tracking programs and liability for product recalls, all of which involve costs they would rather not bear.

Of course, these concerns are irrelevant to the rural poor in developing nations who largely consume locally what is produced locally. Their subsistence farmers do not plant crops with Europe in mind, but look primarily to their own survival. Every improvement in production is almost entirely to their benefit.

The central problem is that European economic power translates into political oppression in developing nations. Exporters in developing nations are involved in making money, not food; and as part of the political elite who hunger for hard currency such as the euro, they impose policies on farmers to satisfy export markets, not the needs of the poor. As Robert Thompson, CEO of the Winrock International Institute for Agricultural Development noted, "The rich in no country go hungry except in times of war, natural disaster, or politically imposed famine." Accordingly, they can conveniently rest their agricultural and export policies on the backs of the poor.

While this is to some extent true everywhere, it is truest for developing nations. In a poverty briefing by the Overseas Development Institute, it was noted that the poor in developing nations have little market power. Combined with often undemocratic political structures, this results in a lack of political power. Moreover, the political traditions in developing nations are often top-down, excluding participation of the poor even in programs intended to assist them. Without political power, the poor cannot resist policies that cater to European tastes at their expense.

As if this were not bad enough, exporters and their political allies in developing nations have another financial incentive to accept food insecurity in exchange for exports: trade liberalization. The IMF has found "considerable evidence" that more export-oriented countries consistently tend to grow faster than ones that are inward-looking, and that the benefits of trade liberalization can exceed the costs by more than a factor of ten. If the financial rewards of increasing food exports to Europe are anywhere near that substantial, the incentives to impose Europe's food production policies on the poor are equally great.

The food crisis in Africa illustrates this problem in a painful way. In six countries stricken by drought and political strife, 14.4 million face starvation, yet their leaders blocked the import of GM food aid from the US on fears that Europe would impose on them the same restrictions that cost US food producers an estimated $300 million annually. Some of these African leaders have maintained these policies even after EU officials have publicly assured them such fears are groundless. Five of these countries eventually relented, while requiring maize imported from the US to be milled prior to distribution. Zambia, the sixth, has an outright ban on US food aid. Those starving poor who were driven by hunger to loot government warehouses where the maize has been impounded have been rounded up and placed under arrest. Zambian grain traders are said to support this policy, because food shortages are driving up commodity prices and increasing their profits.

There are two potential solutions for this problem. Since agricultural exports to Europe account for only a tiny percentage of their economic activity, many developing nations could easily reject Europe as a trading partner in the agricultural sector and focus instead on food security. Other economic activities already account for most exports, which could be expanded with a proportionally greater economic benefit. WTO figures show that exports by developing nations of such things as timber, metals and manufactured goods are typically eleven times greater than agricultural exports. However, shifting an emphasis from agricultural exports to food security would require substantial political changes which are unlikely to happen in the near future. For developing nations with a strong dependence on agricultural exports, this should be counted as a political
impossibility.

It should be hoped that leaders in developed nations could recognize that Europe's food regulations are distorting trade so severely that they actually contribute to famine in Africa, and demand that the EU live up to its obligations under the WTO. Because international systems for trade governance are already in place, this is a far more realistic solution.

Andrew Apel is the editor of AgBiotech Reporter. C.S. Prakash is a professor at Tuskegee University and president of the Agbioworld Foundation.
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