EU finally sweetens life of world's poor

Agricultural protectionism is bad for consumers, and for both developed and emerging economies.

By JOHN LALOR
December 7, 2005 07:43
EU finally sweetens life of world's poor

sugar beet 88. (photo credit: )

The European agriculture commissioner, Mariann Fischer Boel, has been attempting, at long last, to reduce the guaranteed price paid for sugar by 39 percent. She had originally wanted to start the phasing-out process over a two-year period, starting in 2006. Due to protests it is likely to take at least four years longer. These reforms would benefit the third world to the tune of about $47 billion per annum. Meanwhile, the European Union is dumping five million tons of sugar on the world market - with a subsidy of 525 pounds per ton. Around 320,000 farmers grow sugar beets, enjoying 1.7b. pounds of subsidy per annum, which supports a price nearly three times that of the world market. The Guardian points out that the EU is not alone in this disgrace. As the Future of Freedom Foundation's James Bovard commented, in 2002 President Bush "signed one of the most wasteful farm bills that Congress has ever enacted." It stands to cost the US consumer $200 billion until 2008. The Guardian continues: "Subsidies account for over 30% of all OECD agricultural spending. In Japan this rises to 58%." Despite claims of "protecting the small-time farmers," more than half of EU support goes to 1% of producers - the Big Boys. As ever, the crony capitalists and their allies in government are the only winners. BUT MAKE no mistake: The demands of those in the developed world, who claim to be fighting for the interests of the third world, are not what they first seem. It is not that they believe the world's poorest should be enabled to develop to their maximum potential. It is that they should be provided with a protected environment in which to maintain their present practices. This is accomplished, not by free trade, but by a perpetuation of infancy - a.k.a. "fair trade." This infantilism costs the citizens in the developed world too. We are forced to buy produce grown domestically, which would be cheaper in an open market. This is under the guise of "protecting national interests" - much like "Buy Blue and White" in Israel. The clich d excuse for the failure to move beyond agrarianism - a lack of natural resources - is also nonsense. Iran, Venezuela, Nigeria and Saudi Arabia have more oil than they care to produce, and their peoples suffer from extreme poverty and some of the worst rulers in the world. Tanzania is awash with hydropower, tin, phosphates, iron ore, coal, diamonds, gemstones, gold, natural gas and nickel. Despite this, it is recognized as the fifth poorest country in the world. Now compare these nations to the likes of the affluent Cayman Islands, Hong Kong and Singapore. These countries boast natural resources like weather, tourism, "outstanding deepwater harbor," feldspar… oh, and fish. ON TOP of a failure to advance into more lucrative industries, specialization in a low number of export products further endangers an economy. The troubled future of small-time sugar growers in Mauritius is a perfect example. This tiny Indian Ocean nation depends on a single crop: sugar. To be so dependent is madness. The more diverse a nation's economy, the less affected it can be by such tyrannies as the EU and its Common Agricultural Policy. But those impoverished people working the land are only doing what they are allowed to do. First, without secure property rights, investment and accumulation of capital cannot exist. Next, add tariffs on their produce (for example, sugar from Mozambique faces tariffs of 325% on entering the EU). Then add one corrupt and plundering third world government after another. As if that wasn't enough, they then have to listen to the junk economics of Bono, Bob Geldof and Chris Martin from Coldplay. So, like a giant welfare state, we encourage these poorer nations to keep producing goods they should have evolved away from decades ago. We prefer to put "fairly traded" sugar in our fairly traded coffee while dreaming of pre-industrialized idylls in Kenya and Bangladesh. We deplore our "over-intensive farming" - while enjoying the efficiency, cheapness and low manpower demands that result from it. THE EU exacerbates an already awful situation. It enables a form of arrested development to go on in certain ex-colonies by giving preferential access to a select few (those 18 nations within the "African, Caribbean and Pacific Sugar Group"). Producers in Guyana, for example, will suffer from these same reductions in subsidies as their EU counterparts. But while Irish sugar producers will simply change profession, Guyanans have no such cushion. Like a teenager coming from a long line of welfare dependents, the Guyanan farmer are left helpless. Creating such dependence was bad enough; to leave them so suddenly unprotected shows the damage caused by isolating emerging nations from market forces which would help them develop in a more sustainable, balanced fashion. Not only is the slashing of subsidies to EU sugar producers a moral act - from the point of view of the livelihoods of third world farmers - it is also beneficial to the developed world. In our globalized economy, forcing the EU taxpayers to fund their own bloated and wasteful agricultural industries is economically self-defeating. Only continually growing economies can provide jobs, within other sectors, to the newly unemployed. Developed world or third world, attempts to keep an economy in stasis only leads to regression. The writer is a freelance journalist based in Ireland.


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