Transcript Decade of Globalization

WORLD TRADE ORGANIZATION, TRADE LIBERALIZATION,
AGRICULTURE AND FOOD SECURITY IN NIGERIA: AN
ASSESSMENT OF A DECADE OF GLOBALIZATION
Chinedum Nwajiuba Ph.D.
Department of Agricultural Economics
Imo State University, Owerri.
1.
Background Concepts
a. Poverty
b. Corruption
c. Market Economy
d. Autarky
e. Technological Stagnation
2.
Definition of Terms
a. The World Trade Organisation
b. Trade Liberalization
c. Globalization
d. Agriculture and Food Security
3.
Case Studies
a. Cassava
b. Oil Palm
c. Poultry
4.
Free Market Myth
5.
What Lessons Do We Learn?
1.
Background Concepts
a.
Poverty: The role of material and socio-cultural poverty in the
evolution of our society, livelihood, and attitude.
b.
Corruption: The pervading but destructive influence of corruption.
c.
Market Economy: The market- economy paradigm in a world of
inter-sectional, inter-geographical, gender and the reality of class
inequalities and inequities.
d.
Autarky:
A world of trade, that is interconnected, and has no
place for autarky.
e.
Technological Stagnation: The immortal words of the 1979
Nobel Laureate for Economics, Professor Theodore Schulz: The man
who farms as his forefather did cannot produce much food no
matter how rich the land or how hard he works. The farmer who
access to and knows how to use what science knows about soils,
plants, animals and machines can produce an abundance of food
though the land be put. Nor need he work nearly so hard and long.
He can produce so much food that his brothers and some of his
neighbors will move to
town to earn their living” (Schulz, 1983).
2.
Definition of Terms
a.
The World Trade Organisation: The successors to the
General Agreement on Trade and Tariffs (GATT) commenced since 1995 with
the objective to ensure free international trade in a manner that results in “a
more prosperous, peaceful and accountable economic world” … “The goal is
to improve welfare of the people of the member countries” (Devnet,
2004). There are key issues to note here.
These include Free trade,
prosperous accountable world, welfare and people.
b.
Trade Liberalization: This implies the opening-up to trade.
The absence of or reduced restriction and barriers to trade.
c.
Globalization: The integration of world markets.
d.
Agricultural and Food Security: Food security is access to
food at all times in the right quantity and quality (Nwajiuba, 2002; World
Bank 1986; World Food Summit, 1996). Over nearly 800 million people in
the developing world are undernourished (FAO, 1999). Many Nigerians are
food insecure. Per-capita food intake is low (Table 1). The average rate of
growth is not enough although agriculture’s rate of growth exceeds that of
the entire economy.
“...most of our players are too short for the task of playing at the world cup
and we have been finding it difficult to get tall players like we used to have
in our time,” – Taiwo Ogunjobi (NFA Secretary-General).
Table 1: Some Selected Agricultural Statistics
Year Agric Share of GDP (%) Annual Growth rate in Agric. Share of
GDP (%)
Annual growth in Aggregate Agric prod. (%)
Labour force in Agric. (%)
Daily calories per capita
1993
30.23
2.90
6.2
64
na
1994
30.63
3.02
4.2
64
na
1995
31.00
3.38
3.4
64
2000.5
1996
31.13
3.80
3.7
64
1910.5
1997
31.47
4.29
4.1
-
19155.0
1998
32.27
4.95
3.5
-
1915.0
Notes:
(a) 1994 – 1998 figures were obtained from CBN Annual Reports
(1998).
(b) 1993 figures were obtained from CBN Annual Report (1994).
na = not available
Table 2: Nigeria Estimated Output of Selected Major
Agricultural Commodities (‘000 tonnes)
Year
Cassava
Total staples Palm kernel Palm Oil
Poultry meat
1998
34,092.0
93,401.0
572.0
794.0
77.0
96,654.0
600.0
825.0
82.0
99,902.0
629.0
860.0
88.0
103,942.0
632.0
872.0
95.0
108,269.0
645.0
884.0
107.0
436.0
1999
35,980.0
450.0
2000
36,795.0
465.0
2001
37,949.0
487.0
2002
39,410.0
514.0
Source:
CBN
(2002)
Table 3: Exports of Some Agricultural products (Thousand
Tonnes)
Year
Cocoa Palm
%
1993
200.7
38.7
1994
59.6
8.8
1995
17.4
2.4
1996
773.5
15.5
1986
148.4
23.4
Source: CBN (1997)
Produce
Rubber Cocoa Cake
Total Processed Agric. Pdts
106.7
98.2
4.1
240
49.7
54.4
3.5
-77.3
17.4
125.3
0.9
-727
773.5
46.3
5.7
545.8
61.3
33.0
13.1
-
Total Agric. Pdu.
%
420.3
14.7
263.2
(37.4)
304.1
15.5
896.0
194%
242.7
-
Table 4: Some Imports by S. I. T. C. Section (Naira Million)
Year
Food and Live Animals
Vegetable oils and fats
1998
102,165.1 3,349.7
1999
103,489.8 4,312.1
2000
113,630.5 6,740.8
2001
159,002.1 9,432.3
2002
139,930.6 9620,2
Beverages and Tobacco Animals and
10,886.4
12,073.8
14,444.6
20,212.2
21,739.2
Table 5: Distribution of Nigerian Oil and Non-oil Exports (= N =
Million)
Year
exports
exports
1986
Agric Products
Total oil Exports
Semi-manufactures
Total Exports
Total Non-oil
% of Oil in Total
406.6
54.3
551.4
8,368.4
8,919.8
93.8
1994
3,437.3
Na
5022.3
213778.8
218801.1
97.7
1995
3,818.8
1,203.5
5,349.0
206059.2
97.4
1996
13,441.1
6,067.1
20,102.8
748,368.1
97.3
1997
18,020.4
4,391.9
22,862.8
1,309,110.3 98.3
Source:
CBN
(1997)
3.
Case Studies
a.
Arable crops – Cassava (Manihot esculenta)
Nigeria is the world’s largest producer of cassava.
How did we come to this?
1.
An attitudinal change from a purely subsistence crop to the
emergence of agribusinesses engaged in commercial cassava
production for profit purposes.
2.
The roles of the International Institute of Topical Agriculture (IITA)
Ibadan, and the National Root Crops Research Institute, (NRCRI)
Umudike has been outstanding in breeding early maturing, disease
resistant and high yielding varieties.
3.
The Agricultural Development Projects (ADP’s) before their present
comatose states did a good job multiplying and extending improved
varieties.
Problems
1.
The production stage advantage of cassava is lost at the postharvest level.
2.
Farmers are reporting marketing difficulties, yet there are uses in the
starch, pharmaceutical, Etharol, bread, livestock feed, and other
industries.
b.
Tree Crops: Oil Palm
Here we have a lot of lessons to learn from what the colonialist did,
and these lessons are relevant to cocoa, rubber, groundnut, etc.
Man including our farmers, is an economic being. They respond to
economic signals and incentives.
What did they do?
1.
They created economic incentives and markets with returns that
encouraged people to produce these crops and sell to them for
exports. These include marketing boards, Licensed buying agents,
guaranteed minimum prices etc.
2.
Research institutes devoted to these crops where established
especially NIFOR, CRIN, etc.
3.
Aggressive input provision
4.
Technology advancement including the introduction of oil presses
and oil mills.
The Problem
1.
Domestic economic incentives are either non-existent or antiproduction of these crops.
2.
Foreign markets have found, or are seeking alternatives.
3.
Devaluation creates money illusion where farmers earnings may
have nominally increased but farmers are in real terms poorer. A
simple illustration: A farmer in 1966 sells a tin of palm oil to pay
school fees for a child, but now sells three tins just to pay WAEC
fees. Farmers know this and feel it beyond statistics.
4.
Stagnant technology: Olaudah Equiano (1789), describing Igboland
of the 18th century painted a culture of hoe and cutlass agriculture.
That is where we still are.
c.
1.
Livestock: Poultry
We need a scientific investigation of the impact of the policy banning
poultry products importation. Before the ban on poultry products
importation, Nigeria was spending upto $877.3 million on food
imports, a significant part of which was on poultry (Osadalor, 2002).
This must but be detrimental to domestic production.
How did we get to that?
The burst in oil income from the early 1980’s and the policies of
austerity and adjustment embarked upon had detrimental effects on
consumer purchasing power, especially the middle class. Poultry was
a casualty. Per unit weight, beef (cattle meat) made better
economic sense to consumers with declining purchasing power than
locally produced poultry.
2.
High cost of feeds (about 67%) of production cost arising from high
cost of maize (about 70% of feed cost) led to rising prices, and
therefore reduced demand. This worsened the effect of (1) above
and therefore led to the collapse of Nigeria’s poultry industry
(Nwajiuba and Nwoke, 2001). Cost of vaccines and other imported
input also increased, particularly with devaluation of the Naira.
3.
(a)
Imported poultry came with some advantages. These include:
Available when needed and in the quantity and typed (parts), and
size of meat needed
Not time wasting in processing
Cheaper than local poultry
Purchasable in smaller units in kilos.
Processed and storable by importers and marketers.
(b)
(c)
(d)
(e)
Since the ban: The ban on the importation of imported poultry has not
eliminated the availability of imported poultry. Interested consumers know that
stocks are still available in cold rooms and shops in Nigeria. I do not believe
these were imported and have been stored since 2002.
Preliminary investigations show that apart from still being available the policy has
impacted on the market in the following ways:
1.
2.
3.
Increase in price from an average of N200/kg in April 2002 to
N420/kg in November 2003, and about N500/kg in May, 2004 for
imported chicken.
Availability of processed local chicken in neighborhood shops at
about N600/ kg.
Emergence of local processing even in local markets at N20 per fowl.
4.
Free market myth or lessons from other countries
The market economy paradigm can claim victory particularly since the
collapse of the Soviet Union and the rest of the Eastern bloc. Even China
has opened up and so has Cuba relaxed. Yet even free marketers are
concerned with equity issues and the distribution of the benefits of
economic growth.
Industrialized countries spend up to $300b each year on subsidies (Rogoff,
2003). We can take examples from three of the most important economic units
of the world. These are the United States, the European Union and Japan.
a) The United States: A great subsidizer of her agricultural and industrial
sectors. Farm subsidies exceed the billion dollar range and so does subsidies
for her steel industries. On the consumption side, outright welfare or “dole”
to poor people exists.
b) The European Union: Another great subsidizer of her agricultural sector
and direct welfare payment to the poor and unemployed. A contentious
political issue particularly with powerful farmers organisations and pressure
groups, as well as consumers watch dogs. These civil society organisations
exert tremendous political influence. This is a key lesson for Nigeria’s civil
societies.
c) Japan: A great subsidizer of her rice producers against onslaught from
American rice exports. Her primary reason is socio-cultural and political, before
economic.
The question then is: If key rich leading lights of free markets with far less
than 50% of their populations as farmers subsidize various aspects of their
agricultural sectors, why not Nigeria with more than 50% of her population as
farmers and even majority of her citizens immersed in poverty in both rural and
urban areas?
5.
What Lessons do we Learn?
a.
That inequality is a necessary fall out of all competitions and is a fact
of life and therefore an externality of the free market paradigm
which must be addressed responsibly.
b.
That the leading societies of free marketers recognize this as an
unavoidable consequence of free market, free trade, trade
liberalization and this ought be a key issue in the activities of the
WTO and her predecessors. Because these industrialized countries
realise this, they have therefore taken time over years to recognize
and cushion the effects of these among themselves because of the
adverse effects of uncontrolled competition. This courtesy ought be
extended to the poorer parts of the world.
c.
That subsidies and other forms of cushion are to the general benefit
of society because of the potential of unbridled competition to create
larger social crises, elements of which includes crime and insecurity,
which may discourage free trade and a true market economic
system.d.
That there are sensible production-oriented (not
consumption-oriented) subsidies and support that Nigeria’s
petroleum earnings could be used for. It was the huge consumptionoriented expenditure since the oil boom era, that has altered societal
values, hanging a distorted, corrupt culture that rewards
consumption over production and crime over work.
e.
Subsidies and support can be employed in the promotion of cassava,
oil palm, poultry, post-harvest systems, strengthening marketoriented production, agricultural technology development and
mechanization. These matters have to be addressed seriously and
urgently.