Trends and analysis: WB plays new tune on old notes

There is enough data to convince the incumbents and future governments about the potential and importance of agriculture. However, as with all its policy prescriptions the World Bank’s suggestions must not be followed, if wholesome and equitable development is desired. The state should by no means remain satisfied by merely creating a healthy investment climate or attracting more private investment in the sector. The state must itself remain an active player in the market for many more years so as to be able to intervene in and govern the market to drive in a suitable direction, writes Tanim Ahmed*

ONE of the main moot points of the current negotiations in the World Trade Organisation happens to be agriculture and quite rightly so. Agriculture happens to be a sensitive sector across the world, both commercially and politically. The World Bank’s annual development report this year is titled ‘Agriculture for Development.’ It was launched this week during annual meetings jointly with the International Monetary Fund.

It is surprising that this agency would choose to admit that trade liberalisation hurts the interest of food importers and say subsidies in rich countries hurt farmers in poor countries, particularly highlighting the case of cotton subsidies of the United States and mentioning the plight of farmers in countries like Burkina Faso and Benin. But the agency refuses to come away from its professed path towards economic prosperity – market freedom and economic liberalisation.

Although it does acknowledge that farmers in Bangladesh would lose out, the agency sticks to its stance favouring free trade claiming that in the long run it would be beneficial. There have been publications of the same agency that have pointed out beyond any doubt that the net effect of successful completion of the Doha Round would be negative for Bangladesh, and that the worst affected would be marginal farmers and the urban poor. Such contradictions between the agency’s findings and claims are not new or accidental. The World Bank’s internal reports as well as research carried out by others point out that the agency often makes claims, which are not substantiated by its own data. The false is necessary to vindicate a foregone conclusion and advance its neoliberal agenda.

With the renewed interest in the ‘welfare’ of Africa, especially sub-Saharan Africa, particularly after investments from advanced developing countries like China and India have begun to compete with those from the North, it is not surprising that the entire report heavily draws on examples and case studies highlighting the plight of that region of the world. In sync with the political establishment of the North, the World Bank has dutifully devoted much attention to the impoverished masses of Africa.

The importance of agriculture is evidently and convincingly demonstrated. It states that poverty still remains a largely rural problem as 80 per cent of all poor people live in rural areas. Agriculture still affects over half the population of the entire world but, crucially still, agricultural growth, the report points out, is a few times more potent in reducing poverty than the growth of other sectors. Unfortunately, agriculture remains among the most ignored and neglected sectors by successive governments in Bangladesh as well as in many other countries, the bank observes and commendably calls for more attention there.

That agriculture is more potent in poverty reduction than other sectors is evident from the fact that in Bangladesh it employs over half of the labour force and contributes just over a fifth of the GDP. Although the share of agriculture is decreasing, its potential to generate employment, being a labour intensive sector, remains high. Thus renewed attention in agriculture and welfare of the farming community would surely translate into welfare gains for most of the labour force and thereby benefit most of the populace. This applies for other countries as well where agriculture still remains labour intensive and mechanised agriculture is a rather remote reality.

The agency’s suggestions do not ignore the corporate interests in agriculture, and understandably so. Among the several policy briefs is one that suggests harnessing the full potential of genetically modified organisms and transgenic crops, developed by an industry which is worth billions of dollars and has the potential to grow exponentially with worldwide implementation of intellectual property rights. There is considerable opposition to such crops in Bangladesh as well as in Europe and other parts of the world. The report laments the slow adoption of these crops across the world and highlights the case of Bt cotton that was widely adopted in India and China. While pointing out the financial gains, the report conveniently overlooks the fact that wide adoption of Bt cotton, which had been touted as pest resistant, failed after a few years as pests developed biological resistance to it and the crops failed. The offices of Monsanto, the manufacturer, were vandalised in some states of India. Bt cotton has also been said to be one of the factors responsible for self-immolation and suicide of thousands of farmers in India.

The annual report goes as far as admitting that irrigation can increase the incidence of malaria and pesticide poisoning is estimated to cause 355,000 deaths annually. But there is no mention that these deaths have been apparently due to the introduction of the high-yielding varieties of crops – the precursor to hybrid crops and terminator technology – that typically require more inputs than the traditional land races. The high-yielding varieties that were promoted worldwide since the Green Revolution of the 1960s require heavier irrigation and are more dependent on chemical inputs such as fertiliser and pesticides in far heavier doses than traditional crops. Promotion of these varieties along with hybrids and other genetically modified varieties of crops have increased grain yield in exchange for a sharp decline in the overall farm yield.

Since each of the input components, fuel and pumps by way of irrigation, chemical fertilisers, pesticides and herbicides represents substantial commercial interest for corporations based in the North, the World Bank understandably remains silent and instead provides these products with unqualified support despite the worldwide opposition and discontent over genetic modification. This is also in line with the agenda of the lending agencies that essentially strive to ripen markets across the world in favour of corporate interests that also drive the political establishment of the North.

There are no suggestions to adopt wide usage of organic fertiliser and integrated pest management systems that would greatly reduce environmental pollution and soil degradation, although the report does note the prevalence of such phenomena. Although such strategies might reduce the cost of inputs, reduce pollution, improve health and prove economically more rational the lending agency does not toe that line since it would be contrary to the corporate interests that it serves.

As for the state’s involvement in agriculture, the report calls for investment in core public goods such as infrastructure and ensuring good investment climate but clearly discourages the state’s involvement in any sector that has a commercial potential. When outlining suggested approaches to harness the potential of agriculture there is no indication that the state should have mechanisms to intervene in the market and govern the market to suit its needs. In the case of Bangladesh, there is still need for the state to be an active player in the market.

The chronic crisis of urea which often appears to be manufactured and riddled with irregularities wherever private operators are involved naturally suggests that the state should have more control and directly supervise distribution of this vital input since farmers have become unduly dependent on chemical urea despite the wide availability of natural sources of nitrogen. The state-controlled irrigation projects function and assist farmers far better than where irrigation is done on private initiative. The state has typically had little capacity to supply seeds as per demand, especially for paddy. Still, farmers have thus far managed to make do. But without strong regulation and monitoring, imported and hybrid seeds threaten to flood the market and would eventually run out the meagre stocks of traditional varieties that the farmers have still kept alive. It would result in even further soil degradation and higher payment to foreign companies in the form of royalties once the government is compelled to implement intellectual property rights according to its obligations in international agreements in a few years’ time.

The development report suggests migration as another path out of poverty and appears to be advocating that more people move out of agriculture as a source of livelihood. It even goes to say reduced numbers of farmers have greater political leverage than when the numbers are high since they command more resources at their disposal. In fact, one of the suggestions made in the report to reduce poverty is to provide education through which the rural poor will acquire skills needed to acquire a better employment after migration. This, according to the report, should be highly prioritised in order to reap the most benefits from agriculture. The implication that the report favours complete annihilation of marginal farmers and subsistence farming and sustenance of corporate farming is rather disturbing but conforms to the World Bank’s aversion for the poor and direct contribution to worsening disparity.

There is no doubt of agriculture’s potential to reduce poverty. The report states, ‘Cross-country estimates show that GDP growth originating in agriculture is at least twice as effective in reducing poverty as GDP growth originating outside agriculture. For China, aggregate growth originating in agriculture is estimated to have been 3.5 times more effective in reducing poverty than growth outside agriculture – and for Latin America 2.7 times more.’

There is enough data to convince the incumbents and future governments about the potential and importance of agriculture. However, as with all its policy prescriptions the World Bank’s suggestions must not be followed, if wholesome and equitable development is desired. The state should by no means remain satisfied by merely creating a healthy investment climate or attracting more private investment in the sector. The state must itself remain an active player in the market for many more years so as to be able to intervene in and govern the market to drive in a suitable direction.

*Contact Tanim Ahmed: tanimahmed@gmail.com

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