The Future of Agriculture is a global online policy discussion forum, by Oxfam International
It is intended to explore four key issues:
- farmers’ knowledge as the driver of innovation and investment;
- women’s land ownership;
- farming’s dependence on fossil fuels; and
- effective risk management systems.
Karen Janssen, advocacy specialist at Vredeseilanden wrote the following contribution:
More open trade based on a country’s comparative advantage that’s (half of) the recipe that Harold Poelman, managing director of Cargill Refined Oils Europe proposes as the way to reach food security on a global scale. Although we at Vredeseilanden share Harolds optimism about the ingenuity of farmers and their capability to feed the world, the solutions proposed are somewhat outdated by what’s happening in reality.
First of all, one can wonder how realistic the plea of Harold Poelman is. The WTO negotiations are since the Doha round at a stalemate… so a purely liberal approach to food security does (luckily) not seem very likely to take off in the near future. This is not without reason.
Reality (and yesterday’s history) have clearly demonstrated some of the flaws in neoclassical economic theory. Let’s have a closer look at what happened the last couple of years in Western-Africa for instance. Since the early 1990s, most West African countries have adopted food security policies based on regional and international trade patterns based on comparative advantage. Thus many West-African countries imported (cheap) grains from the international market and paid for the imports with devices gained in a cash crop export sector. In this way West-Africa became one of the biggest rice importers (importing one third of the export from Asia ) and produces itself only 60% of its needs for rice.
In 2008 a food crisis struck. Rice prices skyrocketed and export bans from some Asean countries threatened the availability of rice, which drove prices up even more. The unavailability of rice in the cities of Dakar and other capitals led to food riots, some threatening the stability of the régime. Thus West-African countries learned the hard way that trade based food security policy is very risky indeed. In reaction to the food price crisis of 2008, West-African governments understandably decided to rely no longer on the international market for basic food crops and they launched ambitious plans for self-sufficiency for several staples, with a focus on rice.
So what does this experience tell us? It seriously undermines the comparative advantage and open trade arguments pushing for more global trade. Sometimes self-sufficiency strategies can make a lot of (economic) sense, especially for strategic sectors such as food. Moreover Harold seems to forget that comparative advantage is not something static. Vietnam is currently exporting quite a lot of rice to Western Africa, but how long will it remain an exporter given the challenges with area’s of production and salination? With rising transport costs and world food prices, rice from West-Africa might also become competitive on the world market even without a high protection tariff. In conclusion: comparative advantage is a useful concept and countries should probably not deviate too much from it. However, when taking a long-term perspective, governments may want to defy their comparative advantage and install some degree of protection from the international market in order to give their local agriculture a chance to blossom. Border protection measures such as import taxes could give West-African governments the much needed funds to invest in their domestic agriculture. Since agriculture is the main provider of employment and source of income for the majority of people in the region, policies for self sufficiency can promote overall development and lift millions of people out of poverty.