Below is an excerpt from a book I just finished reading (thanks Melissa) that is very relevant to the work I am doing and part of the story of why we can keep giving aid to Africa but we find it difficult to see the results.
Excerpt from The Fate of Africa
“Nor are Western governments inclined to amend their trade and agricultural policies for the sake of Africa’s revival. Determined to protect their own producers, industrialized countries operate a system of subsidies and tariff barriers that have a crippling effect on African producers. The total value of their agricultural subsidies amounts to 1 billion dollars a day -$370 billion dollars a year- a sum higher than the gross domestic product of the whole of sub-Saharan Africa. The European Union subsidy for each of its cows is about $900 a year – more than the average African income; the Japanese subsidy is $2,700 per cow. Western surpluses produced at a fraction of their real cost are then dumped on African markets, undermining domestic producers. Simultaneously, African products face tariff barriers imposed by industrialized countries, effectively shutting them out of Western markets.
The case of cotton illustrates the hurdles that Africa has to surmount. Africa is the world’s third largest producer, turning out high-quality cotton at competitive prices. In West Africa cotton provides a living for a million farmers. Cotton production in francophone West Africa has soared from 100,000 tons a year at independence in 1960 to 900,000 tons. In Benin, Burkhina Faso, Chad, Mali and Togo, cotton represents between 5 and 10 per cent of GDP, more than a third of export income and more than 60 per cent of agricultural export income. Production costs in West Africa are about 38 cents a pound. By comparison, production costs in the United States are more than twice as high. But the US provides its 25,000 cotton farmers with an annual subsidy of $4 billion – more than the value of the entire crop. US farmers have therefore been able to export cotton at one-third of what it costs them to produce. Over a period of fifteen years, they have gained nearly one-third of the world market. A study by OXFAM in 2002 calculated that, as a result of the US subsidy, the world price was 25 per cent lower than it would otherwise have been. It is estimated that the cost to Burkina Faso was 1 per cent of its GDP or 12 per cent of its exports; to Mali, 1.7 per cent of GDP or 8 per cent of exports; and to Benin, 1.4 per cent of GDP or 9 per cent of exports. According to OXFAM, the trade losses associated with US farm subsidies that West Africa’s eight main cotton exporters suffered outweighed the benefits they received from US aid.
In addition to US subsidies, the European Union supports its cotton producers with a subsidy amounting to about $1 billion a year. A World Bank study estimated that it would be three times cheaper for Europe to import cotton than to grow it in Spain or Greece, where the subsidy paid to farmers is far more than the market price of cotton. China spends more than $1 billion a year on cotton subsidies. The overall impact on world prices has been huge. Though West Africa cotton production rose by 14 per cent between 1998 and 2002, receipts fell by 31 per cent. The World Bank estimated that eliminating cotton subsidies altogether would raise West Africa’s export income by $250 million a year. In similar fashion, African farmers have struggled to compete against a wide range of other subsidized agricultural products – European sugar, Asian rice, Italian tomatoes, Dutch onions; many have been forced out of business.”
Meridith, Martin. The Fate of Africa: A History of Fifty Years of Independence. Public Affairs, United States of America, 2005, p.684-685.
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