How can DFID help to increase the benefits from agricultural trade to poor people and poor countries?

The consultation aims to seek views, opinions and examples of innovative and established practice in order to inform future DFID policy and investment. Your moderator will lead the debate with the short introductory paper below, provide regular summaries and guide the dialogue.

Theme Outline

A great deal of political capital and public interest is currently being expended on international trade issues. In agriculture, this includes the Doha Round/WTO; the development impact of CAP reform and northern protection; growing awareness of the impact of the commodity crisis; GM imports and labelling; food miles and self-sufficiency. How do we chart a pro-poor path through these debates? Here are some questions to prompt discussion during the e-consultation:

1. OECD agriculture and trade policies

• Are policy makers and trade negotiators exaggerating the impact of northern subsidies and trade barriers on poverty (compared to issues such as standards, value chain concentration, low productivity growth, water shortages and technology gaps)?
• Is the distinction between trade distorting and non-trade distorting subsidies within the WTO based on evidence, or expediency for US/European trade negotiators trying to defend their farm policies?
• Is agriculture in the North ever likely to become an exit industry, opening the way for increased developing country exports?

2. Developing country agriculture and trade policies

• In what circumstances is agricultural trade liberalization most effective in reducing poverty in developing countries, taking into account the balance of interest between consumers and producers, and short-term v long-term impact? What complementary policies and/or institutions need to be in place for liberalization to be effective?
• Can/should trade rules differentiate between crops (as in the case of Special Products, or cotton in recent WTO discussions) rather than countries? Is this a way of overcoming the resistance to greater levels of differentiation between developing countries in their eligibility for ‘special and differential treatment’ within the WTO?

3. The commodity crisis

• Is the role of public policy merely to ‘manage the decline’ in commodities by smoothing price volatility, providing cheap credit and enhanced debt relief for commodity-dependent countries and encouraging diversification into a wider range of crops and labour intensive industry?
• What kinds of diversification offer credible options to commodity dependence on the scale required?
• What, if anything, can be salvaged from past failures in international supply management exercises such as the International Commodity Boards?

4. The Private Sector

• To what extent has the private sector, through issues such as the globalisation of supply chains, the growth in informal standards and value chain concentration, become the main source of both potential benefits and obstacles to poverty reduction in agriculture?
• What role is there for public policy (e.g. competition policy, political pressure on northern buyers, technical assistance, work on international standards) to increase producer benefits from the value chain, both in terms of higher prices and reduced volatility and insecurity?

5. Smallholders and trade

• From a poverty reduction perspective, should smallholders persist in trying and break into higher-value agricultural trade, given the endlessly receding standards frontier, entry costs etc, or should they be concentrating on producing for the domestic market (where standards and supermarket dominance are also growing)?
• What are the poverty implications in a country such as India of Simon Maxwell’s scenario of an increasing divide between commercialised larger-scale agriculture and homestead plots relying on off-farm income. How can growth sectors of the economy absorb hundreds of millions of surplus rural population?

6. Historical experiences

• What are the policy lessons of those successful agri-productivity or agroexport-led growth experiences that have had a sizeable impact on poverty? Do they endorse or conflict with the policy prescriptions of the ‘Washington Consensus on Agriculture’

Duncan Green
March 2004