In This Article
30-Second Summary
Headline Links: ‘Ending Famine Simply by Ignoring the Experts’
Reactions: World Bank supports ‘targeted subsidies’
Opinion & Analysis: Do subsidies contribute to a ‘cycle of poverty’ in Africa?
Historical Context: The Great Depression era U.S. Farm Bill
Reference Material: The effect of U.S. subsidies on developing economies and the environment
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Did Malawi Defeat Famine by Defying the World Bank?
December 16, 2007 04:49 PM
by
findingDulcinea Staff
Malawi’s president increases fertilizer aid to farmers and the harvest improves substantially, prompting a reappraisal of U.S. and EU policymakers’ and the World Bank’s stance on agricultural subsidies.
30-Second Summary
In an effort to overcome a year of famine in 2005, during which more than one-third of the population required emergency food aid, Malawian President Bingu Was Mutharika ignored the advice of global agriculture leaders and provided farmers with fertilizer subsidies.
In the 1980s and 1990s, the World Bank reacted to what it saw as inefficiencies in the Malawian government, cutting agricultural assistance and urging the country to focus on producing non-edible cash crops for export and to use the profit to import food.
In return, the World Bank supplied aid, but the country remained destitute and dependent on food from outside sources.
Now, according to The New York Times, Malawi is selling more corn than any other country in Southern Africa.
In response to Malawi’s agricultural success, the World Bank has published a defense of its policies on its Web site. The accusation that Malawi’s situation improved only through ignoring World Bank advice receives the following response: “The only thing the Bank advised against was a universal subsidy, which the Government of Malawi concurred with. The Government eventually implemented (and is still implementing) a targeted subsidy.”
Meanwhile, the 1933 Farm Bill, which provides billions of dollars in subsidies to American farmers, remains under debate. Changes are being considered that would improve the situation for small farms in the United States and in developing countries, which many claim are stifled by Western overproduction.
In the 1980s and 1990s, the World Bank reacted to what it saw as inefficiencies in the Malawian government, cutting agricultural assistance and urging the country to focus on producing non-edible cash crops for export and to use the profit to import food.
In return, the World Bank supplied aid, but the country remained destitute and dependent on food from outside sources.
Now, according to The New York Times, Malawi is selling more corn than any other country in Southern Africa.
In response to Malawi’s agricultural success, the World Bank has published a defense of its policies on its Web site. The accusation that Malawi’s situation improved only through ignoring World Bank advice receives the following response: “The only thing the Bank advised against was a universal subsidy, which the Government of Malawi concurred with. The Government eventually implemented (and is still implementing) a targeted subsidy.”
Meanwhile, the 1933 Farm Bill, which provides billions of dollars in subsidies to American farmers, remains under debate. Changes are being considered that would improve the situation for small farms in the United States and in developing countries, which many claim are stifled by Western overproduction.
Headline Links: ‘Ending Famine Simply by Ignoring the Experts’
According to The New York Times, Malawi followed the example of agriculture heavyweights in the United States and European Union, offering fertilizer subsidies to its farmers instead of following the World Bank’s advice to focus on cash crops. “As long as I’m president, I don’t want to be going to other capitals begging for food,” proclaimed Malawi’s president Bingu wa Mutharika. Now, Malawi is not only feeding its own people, it is exporting corn to other African nations.
Source: The New York Times
Reactions: World Bank supports ‘targeted subsidies’
The World Bank has posted a page of responses to the questions that have arisen from Malawi’s agricultural success. The bank states that it advised Malawi to implement “targeted” rather than “universal” subsidies and that Malawi agreed to that idea. According to the World Bank, the concept of targeting subsidies to achieve the “highest possible payoff” was always in place.
Source: The World Bank
Opinion & Analysis: Do subsidies contribute to a ‘cycle of poverty’ in Africa?
According to an NPR study, Africa’s cycle of poverty arises in large part from agricultural subsidies in the United States and the EU that drive up production, lower prices, and flood the world market with cheap goods, particularly cotton. Africa’s lack of influence over global trade leaves it at the mercy of richer nations, so many of its nations are forced to accept outside help and import food in order to survive.
Source: National Public Radio
Janet McKinley, who sits on Oxfam America’s board of directors, writes that although cotton growers in California represent less than 1 percent of American farmers, they receive close to 3 billion dollars in government subsidies every year, enabling them to dominate the world market. McKinley asserts that American overproduction thwarts Africa’s attempts to compete and, for example, leaves Mali villagers, whose livelihoods depend on cotton, in abject poverty.
Source: San Francisco Gate
In 2004, Oxfam International judged that the United States and the EU were guilty of illegal trade practices. Government subsidies enabled and encouraged the overproduction of sugar and cotton, damaging the trade of farmers in developing countries.
Source: Oxfam International
According to the International Herald Tribune, a recent internal evaluation at the World Bank published in October concluded that the bank’s advice to Third World countries that they should “pull back” from agriculture and let market forces boost growth has had a negative impact. "The whole thing was based on the idea that if you take away the government for the poorest of the poor that somehow these markets will solve the problems," said Columbia University Professor Jeffery Sachs. The evaluation committee has urged the Bank to commit more funding to African agriculture, while the Bank claims it has already done so.
Source: International Herald Tribune
Historical Context: The Great Depression era U.S. Farm Bill
The U.S. Farm Bill was launched during the Great Depression as one of the New Deal’s emergency programs to protect indebted farmers. Today, the bill offers financial aid to farmers at a time when commodity prices for corn are rising, buoyed up by the booming ethanol industry.
Source: findingDulcinea
The bill is under reform consideration, but subsidies are not being included in the discussions, according to the United States Department of Agriculture.
Source: United States Department of Agriculture
Reference Material: The effect of U.S. subsidies on developing economies and the environment
The National Center for Policy Analysis, a nonprofit policy research organization promoting private alternatives to government regulation, looks at the effects of subsidized agriculture in the developed world, namely the economic impact on developing countries in Africa and the environmental impact of overproduction often associated with government subsidy programs.
Source: National Center for Policy Analysis
© 2009 Dulcinea Media, Inc.
