From Pwalugu to Cancun: Toward fair agricultural trade policies

As an Akan proverb goes, “it is he who owns the food who eats, and not the one who is hungry.” In the case of global trade, the developed nations are the owners of the market. That reality has been demonstrated at the World Trade conference in Cancun.

The troubling issue going into Cancun was whether the developed nations were right to flood the global market with their heavily subsidized agricultural products. When the conference ended on September 14, 2003, there was no answer to the issue or obvious benefit for the hungry economies of the developing world.

Hopefully, the occasion might turn out to be a defining moment and an ennobling one for Africa’s self-reliance. So rather than regret the outcome, Africa must give kudos to her diplomats.

Cancun failed because of the attempt to link the “abolition of subsidies to the opening up by third world markets to more western investment and exports;” said an article, titled “Talks Dead in the Water,” in The Guardian of September 15, 2003.

In effect, the developed nations seemed to be saying to the Third World “free trade works, but it has to work only on our terms.” To this the African diplomats said no and that agricultural subsidy must be abandoned unconditionally because it was wrong.

In stating their position, the diplomats showed strength in unity; a quality that has so far been rare in negotiations on behalf of Africa. Still, there is reason to be wary. Africa’s penchant for divisiveness is always lurking and potent enough to make one apprehensive about her chances for winning future trade negotiations.

Africa’ stance in Cancun is likely to cause some angry reaction. Like it or not, the developed nations will put heavy pressure on Africa to bring her back to her old vulnerable trade position. Can Africa stand the pressure?

A Washington Times article of September 16, 2003 observed that “Developing countries may take satisfaction in having stood up to larger economic powers, namely the United States and the 15-nation European Union. But Sunday's celebration among many poorer nations may turn to dismay as they try to negotiate agreements with the world's largest market individually or in small blocs.”

The US has already expressed her next policy tack on trade issues. Following the rout at Cancun, her approach to trade with the Third World will be to negotiate on individual or small regional basis; same gist as expressed by Washington Times. Is this the signal to divide Africa on trade issues? So what is Africa going to do to maintain unity?

Africa’s needs are as immense as her need to penetrate developed markets with her products. The developed world has wealth; and Africa not enough. But, the developed markets are almost impenetrable, protected with tariffs and subsidies. To continue the present state of affairs is to render Africa helpless. So the call for Africa's own common market must begin now.

The reasons for African common market are legion. There is the EU for instance behind whose market the subsidies that hurt Africa operate.

Fortunately, after Cancun, issues which otherwise would have been overlooked have worked their way into the open. Suddenly, the plight of African farmers has become front page news. A story on a tomato factory at Pwalugu, in northern Ghana, written for Christian Aid in November 2002, resurfaced in Independent News, UK on September 14, 2003. Pwalugu is a serious dilemma, but the story is being told with gaps in it.

By 1989, the Pwalugu factory and many others in Ghana had closed at the recommendation of the World Bank and the IMF. The divestiture policy that made this possible was to make Ghana’s economy more efficient. Instead, it created stagnation in segments of the economy and opened up Ghana’s market to subsidized products from EU countries. Ghana, a tropical country, became a heavy importer of tomato concentrate from Italy instead of producing her own.

The Pwalugu factory was part of the Nkrumah administration’s plan for the overall development of Ghana. The plant by design was strategically placed in a fertile tomato growth area to encourage erstwhile subsistence farmers to produce more fruits to feed the factory.

The advantage of Pwalugu was to provide jobs as well as form a nascent agro-processing industry. It was state owned. Looking back today, it can be said that the rationale behind it, whether right or wrong, was the same as those that drive developed countries to support their farmers with subsidies.

By 1970, the ideological underpinnings that made factories like Pwalugu operate had been removed. The coup of 1966 had made it politically less desirable.

And since the idea of the coup was to shear glory off Nkrumah, the powers that followed proceeded to support these factories with little enthusiasm until the World Bank and IMF came. The factories then became readily available for sale. Witness now that the cry to put the whole blame on the World Bank and the IMF, is just a shift in emphasis on who exactly to censure.

Since Cancun made manifest the folly of closing places like Pwalugu, it must help now to pay close attention to some of the motives behind world trade policies and investments. Were the so-called programs of divestiture ever intended to benefit Africa? Does it make sense, for instance, for Ghana to dismantle her tomato factories in order to make her food production more dependent on cheap subsidized tomato concentrate from EU countries?

The Christian Aid publication of November 2002 observing Pwalugu after 1989 said: “A buyer has not been found, and Ghana is now overwhelmed by imports of subsidized Italian tomato products. In contrast to Ghana, where tomato farmers receive no support, the EU provides annual subsidies for tomato processing in southern Europe averaging 372 million Euros. Indeed, Ghana has become Africa’s largest importer of tomato concentrate from the EU, with import over 10000 tonnes per year.”

The Pwalugu factory, by the way, was producing 100 tons of tomato concentrate a day before it closed, as told to Christian Aid by George Jato, the factory’s former manager.

By this figure, the factory had the potential of producing annually three times the load imported from Italy. Failure to produce at all is a loss of business and employment opportunities for many in Ghana and a gain for workers and investors in Italy. What is not calculable is the disruptive effect on the growth of Ghana, now more dependent on a common thing like tomato concentrate supplied by foreigners.

Nkrumah saw the link between agriculture and state supported agro-processing factories and its benefits just as clearly as the developed nations did and continue to do. Now they push their subsidized, surplus products on Africa in the name of global trade.

Pwalugu tomato factory’s predicament is an example of the damage wrought by subsidies in Africa and the injury being done to her. Agriculture, potentially a greater employer in the developing world, is very important for countries seeking to advance to the modern stage. But, if agriculture can't work for Africa, then what else would?

Legitimate reasons can be stated as to why state supported businesses like Pwalugu fail in Africa. And these have already been stated. But none justifies the destruction of an infra-structure for food production and security for a country. If the preceding is true, then it is time to fix Pwalugu. If not, then thank heaven for the subsidized tomato concentrate from Italy!

At this point, it pays to remember the Akan proverb cited earlier. That proverb is not necessarily a paean to the rich. It serves to urge the have-nots to grow their own. Seen in this light, “Domestication” after all makes a lot of sense. So bring on the African common market!

Africa needs agriculture for food. She also needs it as a base to eradicate poverty and can do so through subsidizing the agricultural sector of her economy. For Africa to follow policies that allow foreign subsidized products to displace her agricultural enterprises is sheer madness. Africa must phase out these policies. The process should be gradual and continental wide; but determined, as she builds up her own capacity for sustenance. State supported, if need be.