U.N. Official Blames IMF, World Bank For Poor Farmers' Crisis
June 18, 2004
By Patricia Kowsmann; U.N. Wire

SAO PAULO - The World Bank and the International Monetary Fund are to blame for the serious crisis poor countries are facing today in their agricultural sectors, a U.N. official told U.N. Wire in an interview at the U.N. Conference on Trade and Development's 11th ministerial meeting, which ends today.

According to the official, who asked not to be named, farmers in developing nations, particularly the poorest ones, are suffering today because of policies their governments had to adopt under loan agreements with the IMF and the World Bank, most of them during the 1970s and 1980s.

The official said that although people here at the UNCTAD meeting are focusing on problems developing countries face in exporting their products while having to compete with subsidized goods abroad, the real problem is on the domestic markets of those nations. After all, he said, 70 to 80 percent of farmers work in the subsistence agricultural market, while the rest are producing export crops.

"The vast majority of the poor are in the traditional subsistence," he said. "That is the sector that is the most important, and the market opportunity domestically is what those rural poor need in order to survive." However, he said, "what we have seen in the past 20 years is a pressure on those countries to open their markets to imports, in most cases to cheap subsidized products, which have made [it] very difficult for those subsistence farmers to even have access to their own domestic markets. This has been perhaps the reason why we see in some countries an increase in poverty numbers."

According to the U.N. official, the countries are being pressured to open their markets by the World Bank and the IMF, which impose certain rules in exchange for handing out debt loans, including asking governments to cut expenses, to cut subsidies to small and local farmers and to privatize services.

"We know that most African countries, in fact 98 percent of the countries, when they liberalized their domestic market, it was not something they decided to do on their own. It was part of conditionality of loans from the World Bank and the IMF. So in a way, it is not domestic policy, it is international policy that forces these countries to open up their markets so prematurely," he said.

The official added that these "misguided policies" of the IMF and World Bank have "led to a complete collapse of cash crops in many of these countries."

To solve the problem, he said, "the government's domestic policies should focus on how to modernize the agricultural sector as quickly as possible as a way to assist the rural farmers rapidly."

"What we advocate is that national policy issues focus first and foremost on improving productivity in the domestic market," because if farmers do not improve their productive capacity, they simply will not be able to compete with imports.

"It is completely ridiculous" to imagine that a poor country can compete with countries where farmers and the export business are highly supported, he said.

When asked if the bank and the fund continue to pressure poor and indebted countries to sign agreements that affect the agriculture sector and the national economy, the official said, "The bank has strived to change a little bit. Also the IMF, because at first, they were not taking into account the poverty effect at all. Now they have become a little bit more conscious of that. A little bit."