Scheme to Safeguard Small-Holder Production: Last Month, Hong Kong Trade Negotiators Were Considering a Proposal That Would Allow Developing Countries to Protect Their Agricultural Commodities from Global Commitments to Lower Import Duties. This Is Seen as a Vital Instrument to Safeguard the Food Security of Some of the World's Poorest Nations. Mildred Mpundu of Panos Reports from Zambia

By Mpundu, Mildred | African Business, January 2006 | Go to article overview

Scheme to Safeguard Small-Holder Production: Last Month, Hong Kong Trade Negotiators Were Considering a Proposal That Would Allow Developing Countries to Protect Their Agricultural Commodities from Global Commitments to Lower Import Duties. This Is Seen as a Vital Instrument to Safeguard the Food Security of Some of the World's Poorest Nations. Mildred Mpundu of Panos Reports from Zambia


Mpundu, Mildred, African Business


Zambian farmer Margree Chilwesa is faced with a hard choice--he either has to sell his last season's crop on the cheap or eat it.

"Last year the National Milling Company was buying my grade-A soya at K1,900 ($2.5)/kg and K1,600/kg for the standard grade. This year grade-A fetches only K1,450/kg" says Chilwesa, who is based in Kanakantapa on the outskirts of the capital Lusaka.

This year he has produced 21 bags--or 1.5t--of soya and 50 bags of maize on his 20 hectare farm. But he says the market is flooded with produce from hunger-struck Zimbabwe, where contract farmers grow crops on large commercial farms of over 300 hectares each. In contrast, Zambia's small-scale farmers have an average farm size of two hectares.

"Who would listen to you even if your produce on the small piece of land was of high grade? The politics of economics defeats you," Chilwesa complains. His problem is that the market price for his crops has plummeted--fuelled by cheap imports--but he lacks adequate warehousing facilities to store the produce until the prices rise.

Double whammy

It's a double whammy that has hit not just Chilwesa, but millions of other small farmers like him in Zambia and elsewhere in Africa. As poor countries have lowered their tariffs on imports--often on the advice of international financial institutions--their markets have been flooded by cheap produce from abroad. Zambia recently lowered its import duty on mealie maize--the staple by-product of maize--by five per cent.

Imported products can be cheaper because they are produced more efficiently on large commercial farms. But sometimes they are simply 'dumped'--or sold below the cost of production--by producers in wealthy countries where the agricultural sector benefits from massive government subsidies. Either way, the worst hit is the small farmer.

[ILLUSTRATION OMITTED]

An important aspect of the problem is food security. Because maize is the staple in Zambia there is always the looming threat of a food crisis. It is a familiar scenario: cheap or dumped imports trigger a fall in prices, leading small farmers to consume their maize rather than sell it cheaply to mills.

Mill-owners, in turn, tend to hoard their stocks hoping for a price rise. In a country with pockets of drought and ridden with poor transportation, sourcing maize from remote areas is a further problem.

As a result, the protection of vital food crops was high on the agenda of trade ministers from many developing countries gathered at Hong Kong for the ministerial meeting of the World Trade Organisation (WTO) last month.

They wanted to protect their markets--and their poorest populations--from the worst effects of agricultural dumping by persuading the WTO to allow countries to select their own individual lists of 'Special Products', while introducing what they call Special Safeguard Mechanisms (SSM).

According to the proposal, special agricultural products, seen as part of a longer-term strategy in the face of dumping, would comprise those commodities that are vital for national food security, for safeguarding the livelihood of rural populations, and for national development.

These commodities would be exempt from commitments to lower duties on imports.

The SSM proposal would allow developing countries to protect themselves and their farmers by imposing higher than normally-allowed duties on any product when there are sudden import surges or price fluctuations--twin scourges that have ruined small farmers.

At Hong Kong, the G20 group of large developing nations lent its weight to these longstanding demands of the G33, which includes the poorer countries of the world. The G20, led by India, South Africa, Brazil and Argentina, said that a "gateway for special products and special safeguard measures" in agriculture was crucial for moving the talks ahead.

"This is a key issue for the G20. …

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Scheme to Safeguard Small-Holder Production: Last Month, Hong Kong Trade Negotiators Were Considering a Proposal That Would Allow Developing Countries to Protect Their Agricultural Commodities from Global Commitments to Lower Import Duties. This Is Seen as a Vital Instrument to Safeguard the Food Security of Some of the World's Poorest Nations. Mildred Mpundu of Panos Reports from Zambia
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