Why agriculture is a do or die for Kenya in global trade talks

Representatives of ‘Our World Is Not For Sale Campaign’ (from left) Biraj Patnaik, India, Justus Lavi, Kenya and USA’s Deborah James during a press conference warning that the WTO talks could push world’s poorest into more misery. [PHOTO: JONAH ONYANGO/STANDARD] 

NAIROBI: Sixty-year-old Justus Lavi could be the harshest critic of the World Trade Organisation’s meeting in Nairobi, whose likely outcomes he thinks will devastate small scale farmers in Kenya. Ravages of a liberal market will not only kill peasant farmers but also the few processing factories across Africa, says Lavi who is the National General Secretary of Kenya Small Scale Farmers Forum with membership drawn from 23 districts. 

“Our supermarkets are already stocking imported tinned meat. Can you imagine what that could mean for the Maasai or Borana herder?” he posed. His is a selfish interest and rightly so because he grows maize and beans and keeps a ‘few’ cattle in his small farm in Makueni County. None of the produce from his farm gets any subsidies, he says, but the milk he produces has been placed in competition with imported milk powder that is stocked in different retail stores. 

While most of the meat consumed in Kenya is unprocessed, emerging trends indicate some preference to tinned products, including meat. Lavi’s fears are based on agricultural subsidies given by governments of developed countries to their farmers to enhance their competitiveness in global trade. In the end, the subsidies translate to lower production costs per unit, indicating the opening up of local markets to imports would kill domestic products. 

US is giving its farmers a total of Sh13.5 trillion ($134 billion), more than six times Kenya’s annual budget, in agricultural subsidies starting this year in either Price Loss Coverage and Agricultural Risk Coverage which allows them to receive payments when price for their produce or revenues drops below a set benchmark. 

On average, a farmer will receive Sh5.5 million ($55,000) in subsidies a year, according to research done by Indian researcher Biraj Patnaik. In contrast, India which is thought to have stalled the Nairobi talks spends a total of Sh5.1 trillion on agricultural subsidies to its farmers, translating to an average of Sh19,200 ($192) per farmer. 

The subsidies are the main bone of contention between the developed and developing nations, because it has a direct impact on the competitiveness of the final produce at the marketplace. But the differences on the level of agricultural subsidies given, or if they should be granted at all. WTO is envisaging the latter scenario as a way to leveling the playing field so that international trade is fair. 

Back home, elimination of subsidies is a political question which could see governments collapse since such decisions would be highly contested and unpopular. It is therefore easy to see why the talks have collapsed severally before, and Nairobi might not be any different. 

HEAVY TAXATION 

In Kenya, farmers in different sectors have been granted wide subsidies in the form of cheaper fertilisers and debt right-offs, among other incentives. Tea and coffee sectors are specifically big beneficiaries of the subsidies since the two are the main agricultural exports and sources of foreign currencies. 

The level of inducements however, is a tiny proportion of what farmers in the developed nations are given. A liberal global economy means that consumers have the choice of the costlier domestic produce and the cheaper imports, thanks to subsidisation in the US, EU, Japan and Australia, among other developed nations.

The logical buyer would almost certainly go for the cheaper alternative, ignoring the patriotism thinking like ‘Buy Kenya Build Kenya’ tag line. In a particular example, Kenyan sugar costs up to 50 per cent more than imported sugar at the shelf, despite heavy taxation meant to cushion the local farmers and industries. 

Considering the taste of the two sugars is hardly noticeable, the consumers is unlikely to pick on the local produce. Developed nations are also presenting the ‘new issues’ which include global liberalisation of markets, which bars any member of the WTO from imposing tariffs on imports.

Read more at: http://www.standardmedia.co.ke/business/article/2000185699/why-agriculture-is-a-do-or-die-for-kenya-in-global-trade-talks?articleID=2000185699&story_title=why-agriculture-is-a-do-or-die-for-kenya-in-global-trade-talks&pageNo=2

http://www.standardmedia.co.ke/business/article/2000185699/why-agriculture-is-a-do-or-die-for-kenya-in-global-trade-talks

Last modified onFriday, 08 January 2016 13:44
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