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NEWS RELEASE
June 1, 2002

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Contact: M. Ann Tutwiler
President
(01) 202-328-5001
tutwiler@agritrade.org

Memo to the World Food Summit: To Reduce Poverty and Hunger, Developing Countries Need Better Domestic Policies And More Open Markets

For the past few years, at every international gathering, anti-globalization demonstrators have marched on behalf of the poor in developing countries. Next week’s World Food Summit in Rome will be no different. Many of these demonstrators will call for more aid and less trade as the way to reduce poverty and hunger in developing countries. Yet, when you talk to agricultural policymakers, farmers and businessmen from developing countries about reducing poverty and hunger, they call for the exact opposite.

In 1997, the International Policy Council on Agriculture, Food and Trade launched a four-year global initiative focusing on the links between agricultural trade and agricultural production in Asia, Africa and South America. Despite the passage of four years, and despite the wide differences across continents, the views of developing country leaders’ around the world were remarkably similar. To reduce poverty and hunger, agricultural leaders from Asia, Africa and South America said they themselves need to do more to increase domestic agricultural production, but they also said that developed countries need to do more to open their agricultural markets to developing countries.

On Increasing Domestic Food Production

Leaders expressed widespread optimism about the potential for agricultural production in Asia, Africa and South America. And, while demonstrators blame inadequate foreign aid funding, most developing country farm leaders blame homegrown impediments to increased food production. They singled out macroeconomic and fiscal policies that were biased against farmers. They pointed to investment policies that were biased against rural areas. They pointed to insecure land-tenure and limited access to credit for farmers. Many of these policies were put into place to keep food prices low for urban consumers. But, as one Minister of Agriculture said: "There is no such thing as a cheap food policy. Eventually a cheap food policy becomes a no food policy".

Developing country farm leaders agreed on what developing countries need to do to increase domestic production:

  • No matter how solid a country’s agricultural policy, it is impossible to overcome macroeconomic, investment and fiscal policies that are biased against farmers and rural areas. Developing countries themselves must create stable and unbiased macroeconomic environments.
  • Farmers cannot farm without secure access to land. Developing countries need to create secure land tenure laws. They must create a vibrant land sale and rental market. And, government policies must not discriminate against small holders.
  • Inadequate public infrastructure was the single most important constraint preventing developing countries from benefiting from global trade. Developing country governments must put a priority on ports and on roads, and telecommunications in rural areas.
  • Increasing agricultural productivity will be even more dependent on public research in the coming decades than in the past. Governments need to raise research spending on increasing productivity for staple crops grown by small-scale farmers.

On Opening Agricultural Markets

Developing country leaders in every region complained about high domestic subsidies and high tariffs in wealthy countries. Nevertheless, they believe developing countries will have significant comparative advantages in agricultural trade, if they can get access to developed country markets. Despite broad cynicism about the results of the Uruguay Round Agreement on Agriculture, developing country agricultural leaders saw the WTO as their only defense against high domestic subsidies and against unfair trade practices by wealthier countries. They agreed that developing countries need to take a more active role in the Doha Round negotiations.

Again, there was broad consensus among developed country agricultural leaders on what developed countries need to do to open agricultural markets:

  • High domestic subsidies in developed countries were viewed as the major impediment to developing country agriculture. Reducing high domestic subsidies in wealthy countries should be the principle focus on the Doha Round negotiations.
  • Limited market access for the very products in which developing countries hold comparative advantage was the next most important impediment. Tariff peaks and tariff escalation on processed foods were seen as particularly insidious.
  • Developing country agricultural leaders also called for reduced barriers between developing country neighbors. High barriers to South-South trade undermine the growth of regional markets, which are so important for developing economies.
  • Developing country participants unanimously and unambiguously called for the elimination of export subsidies. Even food importing countries recognized these were destabilizing in the long run.
  • Developing countries also called for "supply assurances" from developed countries, with a promise not to embargo food or impose export taxes.
  • "Non-trade concerns" of developed countries should not be addressed in the WTO negotiations. These were universally seen as restrictions imposed to curb competition, thwart comparative advantage or raise production costs in developing countries.

The declaration from the World Food Summit to be hammered out in Rome next week will no doubt call for more foreign aid and more technical assistance. But developing country agricultural policymakers and farmers are calling for better domestic policies and more open markets. To paraphrase a former IPC member from Africa:

Developing countries are now becoming full participants in the multilateral trade system. Developing countries cannot continue to be poor. There is no justification or excuse for it. The greatest challenge is we have not made sufficient progress in reforming our own domestic environments, and our regional environments, which are supposed to be the foundation on which we can participate in international markets. We need discipline and commitment in implementing domestic agricultural policies and in promoting regional trade to be able to grasp the opportunities the new world trade system will provide. But, importantly, we need to argue for a more level playing field in trade with developed countries. Regrettably, while striving to be near, we are not yet there.

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