[stop-imf] Uganda Plays the Rice Card Against the IMF

[robert weissman]

http://www.foreignpolicy.com/story/cms.php?story_id=3D4306

Africa Plays the Rice Card

By G. Pascal Zachary

Posted May 2008

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=92s rice output has risen 2=BD
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=92s 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=97and beyond.

The secret of Uganda=92s 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=97so bad
that international advisors have spent decades convincing African
governments to open their markets as wide as possible to imports.

One of the leaders of Uganda=92s rice revolution is Gilbert Bukenya, the
country=92s vice president and its leading advocate for the
commercialization of agriculture. I first met Bukenya at his home on the
shores of Lake Victoria, where he laid out the basic philosophy. =93By
farming smarter, Ugandans not only can grow more, they can earn more
money,=94 he told me. An advocate of food self-sufficiency, Bukenya wants
Ugandans to eat more homegrown rice, boosting local farmers and rice
millers while at the same time freeing hard cash for other uses. Bukenya
has long promoted a new African rice that grows in =93uplands=94 (as oppose=
d
to wetland =93paddies=94) and requires less water.

Embracing a new variety is only part of the working-smarter formula.
Once rice output began to expand, Bukenya and other Ugandan politicians
played another card: They stumped for a duty of 75 percent to be imposed
on foreign rice. The legislature passed the duty, which stimulated
domestic rice production further.

Uganda=92s success in expanding its rice production is especially
interesting because the people of sub-Saharan Africa spend nearly $2
billion a year on rice grown outside Africa. The amount Africans spend
on rice alone equals the national budgets of the governments of Ghana
and Senegal combined. With the help of wise policies, African farmers
could grow much more rice on their own, maybe even enough to eliminate
virtually all imported rice. Eliminating rice imports would benefit
Uganda by ensuring a local supply as Asian rice is becoming less
available and more expensive.

*What Uganda recognized is that the world=92s major rice exporters
actually practice the opposite of what the World Bank and IMF preach.
*Much of the rice grown in Pakistan, Vietnam, and especially the United
States is stimulated by subsidy payments to farmers. Then the rice is
=93dumped=94 into African markets at low prices=97sometimes below the cost =
of
production. These producers also maintain stiff duties against imported
rice, contradicting free-market ideology but helping protect domestic
farmers against global competition. And for good reason: Virtually every
successful Asian economy was built on selective trade barriers=97and in
China and India, the world=92s two fastest growing economies, such
barriers remain in force. Even South Korea and Japan maintain massive
duties on imported rice simply to protect the livelihoods of their own
rice farmers. Rice duties are working in Uganda=97and also in Nigeria,
where rice output is also soaring. In both countries, the value of
imported rice is declining and locally produced rice is winning the
hearts and minds of ordinary consumers.

Rice is just one example. African governments might wish to repeat
Uganda=92s success with other crops (which ones depends on specific trade
flows and the agricultural strengths of the particular country). But
African governments should be encouraged to rely on a mix of economic
tools, including farm protectionism, aimed at helping indigenous producers.

Uganda and other African countries need to be careful that protectionism
doesn=92t become a cover for inefficiency or corruption. And selective
protectionism is no panacea for Africa even when such policies
effectively aid local producers. But, after decades of hardship,
economic self-reliance is a worthy goal for most African countries.
Uganda=92s rice experiment deserves wider attention, if only because it
shows that Africans aren=92t passive victims of global economic forces.
They are fighting back.

// //

//G. Pascal Zachary, a former Wall Street Journal correspondent, teaches
journalism at Stanford University and is finishing a book on Africa for
Scribner.//