When Protectionism Is Necessary
Africa Plays the Rice Card
By G. Pascal Zachary
ForeignPolicy.com
For years, Western experts promised Africans that free-market ideology would save them from poverty and famine. Now, one African country is showing that sometimes, a little protectionism can work wonders.
Farming has suddenly become fashionable again. Once a largely ignored corner of the development business, agriculture is now a hot field among experts more versed in structural adjustments than crop rotations. Record prices for cereal crops such as wheat, corn, and rice have many of them viewing farmers as a key component of economic growth in poor countries and as a supply-side solution to the political instability those high prices have caused everywhere from West Africa to Bangladesh. Researchers should be careful, however, to learn the right lessons from the countries that are already harvesting success.
Consider the case of Uganda. The country’s rice output has risen 2½ times since 2004, according to the Ministry of Trade. Rice production is expected to reach an astonishing 180,000 metric tons this year, up from 135,000 in 2006 and 102,000 in 2005. Consumption of imported rice, meanwhile, fell by half from 2004 to 2005 alone, and by half again from 2005 to 2007.
Uganda’s importers, seeing the shift, have invested in new mills in the country, expanding employment and creating competition for farmer output, thereby improving prices. New mills, meanwhile, lowered the cost of bringing domestic rice to market. While people in developing countries across the globe are clamoring about the sharp rise in food prices, Ugandans are still paying about the same for rice as they always have. And Uganda is poised to start exporting rice within East Africa—and beyond.
The secret of Uganda’s homegrown success? Ignoring decades of bad Western advice.
In the 1990s, African governments sharply reduced or eliminated duties on imported rice, urged on by the World Bank, the International Monetary Fund (IMF), and some influential free-market economists. The assumption was that richer countries would reciprocate by curtailing subsidies to their own farmers. That never happened. In response, a few African countries have raised duties on rice, violating a key tenet of neoliberal trade philosophy. Protectionism is supposed to be bad—so bad that international advisors have spent decades convincing African governments to open their markets as wide as possible to imports...
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Farming has suddenly become fashionable again. Once a largely ignored corner of the development business, agriculture is now a hot field among experts more versed in structural adjustments than crop rotations. Record prices for cereal crops such as wheat, corn, and rice have many of them viewing farmers as a key component of economic growth in poor countries and as a supply-side solution to the political instability those high prices have caused everywhere from West Africa to Bangladesh. Researchers should be careful, however, to learn the right lessons from the countries that are already harvesting success.
Consider the case of Uganda. The country’s rice output has risen 2½ times since 2004, according to the Ministry of Trade. Rice production is expected to reach an astonishing 180,000 metric tons this year, up from 135,000 in 2006 and 102,000 in 2005. Consumption of imported rice, meanwhile, fell by half from 2004 to 2005 alone, and by half again from 2005 to 2007.
Uganda’s importers, seeing the shift, have invested in new mills in the country, expanding employment and creating competition for farmer output, thereby improving prices. New mills, meanwhile, lowered the cost of bringing domestic rice to market. While people in developing countries across the globe are clamoring about the sharp rise in food prices, Ugandans are still paying about the same for rice as they always have. And Uganda is poised to start exporting rice within East Africa—and beyond.
The secret of Uganda’s homegrown success? Ignoring decades of bad Western advice.
In the 1990s, African governments sharply reduced or eliminated duties on imported rice, urged on by the World Bank, the International Monetary Fund (IMF), and some influential free-market economists. The assumption was that richer countries would reciprocate by curtailing subsidies to their own farmers. That never happened. In response, a few African countries have raised duties on rice, violating a key tenet of neoliberal trade philosophy. Protectionism is supposed to be bad—so bad that international advisors have spent decades convincing African governments to open their markets as wide as possible to imports...
Click here to read full text.
