Agricultural subsidies help industrial nations sell their products in developing countries. But local farmers in these countries suffer due to the competition with the cheaper products from developed countries.
Asian farmers find little incentive to improve productivity
As many as 850 million people worldwide are victims of hunger and malnutrition, according to relief organisation German Agro Action. Even as farmers in Germany poured away litres of milk last month in protest against low prices, people are facing a shortage of food in other parts of the world.
Especially paradoxical is the global rice market. Rice feeds more than half of the world’s population. But the major rice cultivating countries like Thailand, India and Pakistan have begun to restrict rice exports, so that their local population can buy food at affordable prices. The result: inflation in the global market.
Unfair competitionMeanwhile, rice farmers in developing countries are up in arms over the falling purchase price of rice, because they have to compete with the cheaper, subsidised agricultural products from industrial nations. Rising production costs of fuel, manures and seeds give them poor chances of remuneration, especially with falling purchase prices.
In the year 2007, industry nations spent 350 billion US dollars for agricultural subsidies in order to sell agricultural products to consumers in developing countries. This is a brutal invasion of the market mechanism, feels Hans Joachim Preuß, general secretary of the German Agro Action.
``Export subsidies of the industry nations reduce the cost of products in the world market. Because of this, manufacturers in developing countries have no more incentive to produce food,’’ says Preuß. As a result, the agriculture does not advance as much as it would have without the subsidy measures.
Stop export subsidies
This is currently one of the main points of debate in the World Trade Organisation (WTO). The German government has called for a stop to subsidised agricultural exports to developing countries.
International organisations like the World Bank, the UN Food and Agriculture Organisation, and the World Trade Organisation have called upon the various governments to cooperate. UN General Secretary Ban-Ki-Moon has set up a special working group on this issue, which will keep him informed. Now there is need for a central political institution, which will be responsible for the food trade, says Germany’s Minister for Development Heidemarie Wieczorek-Zeul.
``We need to reach a consensus on how to take responsible global decisions -- a forum where such contradictions are discussed and also resolved. For example, a Security Council for social and economic questions,’’ says Wieczorek-Zeul.
More investment in agriculture needed
Similarly, concrete actions are needed on the political front. German Agro Action general secretary Preuß says that the European countries should invest more in the agriculture of developing countries and avoid all policies that prevent developing countries from having a share in the rising agricultural prices. ``As a gesture, we should say that we will not pay any agricultural subsidies from the year 2009. That would be a clear signal to the governments of the developing countries that they should focus more on their agriculture and invest in it,’’ asserts Preuß. This would also give the developing countries a chance to market their products worldwide.
Rice farmers can survive only if there is development aid for infrastructure facilities in farming. These include irrigation facilities or electricity supply. Only then will the global rice market stabilise.