U.S. policy keeps poverty alive

1.WTO talks risk running aground
2.At the end of the chain, the farmers who face ruin
3.African officials: U.S. policy keeps poverty alive
4.US offers a glimmer of hope at WTO talks with offer on cotton

EXCERPT: The US gives approximately $3.4bn (GBP2bn) a year in subsidies to its 25,000 cotton farmers; more than the entire GDP of Burkina Faso. Subsidies dramatically increased in the US after the 2002 Farm Act and US cotton production has recently reached historic highs. It is now the world's second largest cotton producer, behind China, and the biggest exporter - an easy achievement because US cotton prices no longer bear any relation to production costs. (item 2)

COMMENT: In the run up to Hong Kong, the US announced the allocation of $7 million to a West African project intended to introduce GM cotton and help West African countries with their cotton marketing.

This "aid" can be directly measured against the cost and impact of the US's massive cotton subsidies which are now in the spotlight in Hong Kong, as can be seen in all the following articles.

These are subsidies which even the WTO has ruled to be wrong. And in response to the denunciations of its poverty-creating cotton subsidies, the US has said in Hong King that it is now ready to offer African cotton farmers duty-free access to US markets.

But as Phil Bloomer, head of Oxfam's Make Trade Fair campaign points out this is little short of a bad joke:

"Africa does not export a single gram of cotton to the US and has not done so for years. The problem for West African cotton farmers is not market access -- it is the US subsidies that lead to dumping." (item 4)

The development group Action Aid provides the following costing on the impact of US cotton subsidies:

- Production costs in Africa are amongst the lowest in the world and the cotton quality very high, making African producers potentially some of the most competitive global players.

- Cotton revenues constitute from 50-80% of the exports of Mali, Benin, Togo and Burkina Faso.

- More than 9 million people in West Africa rely on cotton for their livelihood.

- In 2002, the US produced 36% of the world's cotton exports. In the same year, subsidies to its 30,000 cotton farmers amounted to $3.6bn.

- The World Bank (2002) found that an end to all forms of global protection would increase cotton prices by an average of 12.7% over a 10-year period. The largest gains would go to Africa, with exports increased by an average of 12.6%.

- The African countries that rely on cotton are among the poorest of the world. http://www.lobbywatch.org/archive2.asp?arcid=5943

If the US really wanted to help people in West Africa, it would stop making hollow gestures and pushing GM crops and do what groups like Action Aid and Oxfam are asking:

- announce the immediate elimination of all forms of trade distorting subsidies to the cotton sector

- provide not "aid" but compensation to those involved in the cotton production sectors of poor countries who have suffered as a result of its policies.
http://www.lobbywatch.org/archive2.asp?arcid=5943

But far from offering poor countries even a modicum of redress in this area, a spokesman for the United States trade representative responded to the WTO's ruling by defending the US's farm subsidies, saying, "We will defend US agricultural interests in every form we need to."
http://www.lobbywatch.org/archive2.asp?arcid=3857

The US, incidentally, while happily using USAID to push GM crops in countries that it has itself impoverished, spends less than one-half of 1 percent of its federal budget on aid, making it the smallest contributor of foreign aid among major donor governments in terms of national wealth (GNP).
http://gbgm-umc.org/umw/action_foreignaid.html#_edn2
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1.WTO talks risk running aground
From Agencies in Hong Kong
The Times, December 14, 2005
http://business.timesonline.co.uk/article/0,,13130-1930394,00.html

Talks at the World Trade Organisation meeting in Hong Kong became increasingly acrimonious today and risked falling apart as the European Union, United States and Africa failed to find any common ground.

As South Korean farmers clashed with police outside the summit venue for a second day, inside American delegates accused an unmoved EU of jeopardising the talks by refusing to budge on farming subsidies and tariffs.

But the US also found itself under attack from African cotton producers who claim massive American subsidies drive down the prices of their crops, crippling their economies. African nations, angry at heavy subsidies paid to farmers in much of the developed world, were an important factor in the collapse of the 2003 WTO meeting in Cancun, Mexico.

Shrugging off African calls for cuts to American cotton subsidies, Rob Portman, the US trade representative, said that if the EU did not allow the developing world greater access to its markets he "did not see anyone else moving".

Suggesting he holds little hope for a successful conclusion to the Hong Kong meeting, he has already called for a date for further talks.

Meanwhile, African cotton producers warned that they would refuse to endorse any consensus that did manage to emerge from the talks if rich countries - including the US and EU - failed to commit themselves to reducing cotton subsidies.

"We came here to get concrete results, not to hear more proposals that will never be respected," Ibrahim Malloum, head of the African Cotton Producers Association, said.

"If we don’t get a concrete result, Africa will not be able to go along with a consensus."

African producers are seeking the abolition of official assistance to cotton exports from January 1.

In a plenary session today, WTO ministers heard impassioned pleas from west African delegates for prompt action against subsidies in the developed world.

"I would like to go back home with my soul in peace, my heart in peace, knowing that I've met people, human beings worthy of the name, who regardless of borders are prepared to support the cause of those Africans whose lives - I would not say misery, misery is not even an appropriate word to describe their state of utter abjection," said Odjimbaye Soukate Ngarmbatinan, Chad’s trade minister.

"Simply remember that we are human beings."

Mr Portman discounted claims that banning subsidies would support the cotton market. He said that if the US were to slash its scheme, which provides 25,000 US cotton growers with about $4 billion a year in assistance, prices would rise by between just 2 per cent and 12 per cent.

"We say the problem is all subsidies when the problem is bigger than that," he said.

"The efficiency of production would make much more difference than subsidies."

The Hong Kong talks are part of the WTO's Doha Round of negotiations which began in 2001 and were aimed at assisting developing countries through improved trerms of trade.
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2.At the end of the chain, the farmers who face ruin
As Western subsidies distort Africa's markets, Kate Eshelby in Burkina Faso reports on the victims
The Independent, 14 December 2005
http://news.independent.co.uk/world/africa/article333034.ece

Seydou, dressed in a ripped T-shirt that hangs off his shoulders, looks blank when questioned about the effects of United States subsidies on his only source of income, cotton farming.

"I don't know about cotton in the US but I know cotton prices have fallen here in Burkina Faso," he says solemnly. The farmers working in the cotton fields of Burkina Faso, often in remote locations, have little knowledge of the intricacies of world markets. What they do know is the price they receive for their cotton harvests, essential for basic necessities such as medicines and school fees, is dropping fast.

The end of cotton farming in Burkina Faso and other cotton-producing west African countries is rapidly approaching. World cotton prices have dropped to a historic low because of the EU and US trade subsidies which have artificially distorted world markets.

In Burkina Faso, a former French colony in West Africa, cotton is the country's main cash crop. It is the primary source of foreign income, making up one-third of export earnings, and the lifeblood for the majority of farmers. Here cotton is grown on small, family-owned farms, seldom bigger than five hectares. Yacouba, a farmer, explains: "I also grow maize and groundnuts on the farm, to feed my family, but cotton is my only source of cash."

In America, the benefits of subsidies only reach a small number of people, whereas two million people in Burkina Faso, one of the world's poorest countries with few other natural resources, depend on cotton for survival.

Burkinan farmers are forced to be efficient, also prevailing against climatic uncertainties and poor infrastructure - all this with no support from subsidies.

Fields are prepared by plough and seed planting and picking are done by hand, which explains why cotton is also vital for providing jobs. Pickers are dotted around the fields, plucking the cotton balls from the shoulder-high plants. Some of the women have children tied to their backs and the sacks of cotton are steadily piling up under the shade of a giant baobab tree.

At the World Trade Organisation talks, Burkina Faso is resting its hopes on cotton subsidies being eliminated, or at least reduced, in order to save its fundamental crop from demise.

The US gives approximately $3.4bn (£2bn) a year in subsidies to its 25,000 cotton farmers; more than the entire GDP of Burkina Faso. Subsidies dramatically increased in the US after the 2002 Farm Act and US cotton production has recently reached historic highs. It is now the world's second largest cotton producer, behind China, and the biggest exporter - an easy achievement because US cotton prices no longer bear any relation to production costs.

World cotton prices are in decline due to global over-production, fuelled by the agricultural subsidies. EU and US taxpayers and consumers pay farmers billions of dollars to overproduce products for a stagnant market. These surpluses are then dumped overseas, often in developing countries, destroying their markets and driving down world prices. The livelihood of West Africa's 12 million cotton farmers will soon be destroyed if subsidies are not slashed.

In March 2004, a World Trade Organisation panel ruled that the majority of US cotton subsidies were illegal. The US tried to appeal against this decision but was overruled. All eyes will be on the Bush administration in Hong Kong to see if it will abide by the global trade rules.

The Hong Kong trade talks are the climax of a year in which the European Union and G8 countries agreed to increase aid and provide debt relief to the developing countries. But they did not set a clear date for ending the trade-distorting subsidies and giving market access. For Africa, trade holds the key.

If Africa took just 1 per cent more in world trade it would earn $70bn more annually - three times what it now receives in aid. In 2003 Burkina Faso received $10m in US aid, but lost $13.7m in cotton export earnings, as a result of US subsidies. The US was legally required to eliminate all trade-distorting subsidies by 21 September, but has delayed taking action, in part due to a tussle with the EU.

Issaka Ouandago, from the British charity Oxfam in Burkina Faso, said: "Both the US and EU brag on their boldness, but the actual reform they propose is minuscule, tiny fractions of their massive farm support. The negotiations have recently moved into the finger-pointing phase in which rich countries criticise the inadequacy of each other's proposals. Meanwhile, poor countries await something real."

Oxfam has been supporting the struggle of African cotton farmers. "We can only hope the US reform their subsidy programmes and stop dumping cheap cotton onto the world market. Despite their WTO commitments to reduce trade-distorting subsidies, the EU and US have used loopholes and creative accounting to continue. Such practices are undermining the fragile national economics of countries that depend on cotton," Issaka says.

Burkina Faso will be represented at Hong Kong but it is the richer countries which drive the negotiations, with tools at their disposal, including enticements of aid. West African cotton producers are, however, becoming far stronger as a group. "We have become more united to make our voice heard. Africa is in Hong Kong as one, speaking the same idea," explains Yao, a member of Burkina Faso's National Union of Cotton Producers.

The only reason Burkinan cotton farmers are still surviving is that producer prices have been maintained at a minimum level. The minimum farmers need to break even is about 18p per kg - the price never goes below this level, despite being above current world prices. In recent years the Burkinan cotton companies used their profits from previous harvests to support the farmers; these savings are now depleted. The full effects of world prices have, therefore, not yet been felt by the farmers.

In front of Seydou's mud house, a pile of bright-white cotton sits drying in the glaring sun. Inside the walls are bare, except for a single cross; a bundle of clothes hang from a rope and a pile of maize is stacked in the corner. "I cannot afford to buy things because cotton prices keep fluctuating. I know cotton grows well here but prices are down so I cannot send my youngest son to school. This makes me sad. I know his only chance of a good future is school."

As the sun sets, the workers leave the fields, holding sacks of cotton above their heads. A donkey cart trundles by, carrying a mound of cotton, kicking up a trail of red earth. Their livelihood will depend on the decisions made at the WTO.

Seydou, dressed in a ripped T-shirt that hangs off his shoulders, looks blank when questioned about the effects of United States subsidies on his only source of income, cotton farming.

Burkinan farmers are forced to be efficient, also prevailing against climatic uncertainties and poor infrastructure - all this with no support from subsidies.

At the World Trade Organisation talks, Burkina Faso is resting its hopes on cotton subsidies being eliminated, or at least reduced, in order to save its fundamental crop from demise.

3. African officials: U.S. policy keeps poverty alive
By BARTHOLOMEW SULLIVAN
Scripps Howard News Service
December 13, 2005
http://www.knoxstudio.com/shns/story.cfm?pk=COTTON-AFRICA-12-13-05&cat=II

KOUMBIA, Burkina Faso - If all goes well, Dofougo Bognini will make about $935 growing cotton this year.

The 35-year-old farmer is out on his own for the first time, after years farming with his older brothers. On this day, he casts urea fertilizer by hand gently beneath each cotton plant while his wife, Ami, thins out the weakest seedlings, a sleeping baby tied loosely on her back. They farm roughly 7.4 acres. If he had more land, Bognini said in his native Bambara dialect, he'd probably need oxen.

Like almost all cotton in West Africa, the seed in these fields was planted by hand. The plants will be sprayed for insects by barefoot boys with backpack tanks and goggles. The fields will be weeded with short-handled hoes called tabas. And eventually the cotton will be harvested by hand, without the use of defoliants.

This is the way cotton was produced in America before mechanization drove sharecroppers to the cities.

Today, some of the differences between American and African cotton farming are obvious: barefoot boys with oxen, compared with air-conditioned 16-row pickers. Others are more subtle: African farmers claim with some justification that handpicked cotton is freer of the debris of leaves and stems American farmers call "trash," and is in that sense of better quality.

But in one respect, cotton farming in both places is the same. As Stephen Yafa says in his book Big Cotton: "When prosperity and calamity are never more than a heartbeat away, you know you're in cotton country."

The calamity for West African cotton farmers is the grinding poverty they see resulting from unfair and trade-distorting U.S. cotton subsidies. The calamity for American cotton farmers is what would happen if those subsidies went away. The collision of those two forces, and other global cotton issues, is on the agenda of trade ministers from around the world meeting in Hong Kong this week. Four African countries derailed similar talks in Cancun, Mexico, two years ago. The divisive issue was the same: Cotton subsidies.

In this part of French-speaking West Africa, they call cotton "l'or blanc" (white gold). It's by far the most important export commodity and largely sustains the entire region's wider economy. In Burkina Faso, which expects to surpass Mali to become sub-Saharan Africa's largest cotton producer this year, cotton represents 50 percent of the value of all exports. If the price of cotton on the world market increases, that increase can be passed along to farmers, and the fate of millions in small villages will improve.

One way to raise the world price of cotton, government trade and agriculture officials here say, is for the United States to end subsidies paid to American cotton farmers and traders. They say the subsidies only disguise the fact that America can't grow cotton nearly as cost effectively as Africa can, and that's indisputable.

The U.S. Department of Agriculture says 22,000 American cotton farmers will receive government payments totaling $4.281 billion this year. According to a recent report by the United Nations, that subsidy is "equivalent to the market value of the crop and more than U.S. aid to sub-Saharan Africa."

The subsidies, say African officials such as Burkina Faso's Minister of Commerce, Benoit Ouattara, have the effect of creating overproduction that suppresses the world market price, keeping the price for cotton grown by African farmers low and extending their crushing poverty.

"It is impossible for us to understand," he said.

In Benin, the fall of cotton prices in 2001-2002 resulted in an increase in poverty from 37 percent to 59 percent of the population, according to the UN.

Farmers here say that if the United States supports free trade, it should let African cotton compete against an American crop not shielded from the vicissitudes of market pricing. And since 2003, when the Cancun trade talks stalled over the issue of cotton subsidies, their plight is being taken seriously.

In an interview in his office in Bobo Dioulasso, Celestine T. Tiendrebeogo, the director general of Sofitex, the largest of the partly privatized cotton companies in Burkina Faso, used a Biblical metaphor to describe the African strategy.

African cotton countries are like the widow who kept demanding justice from the pitiless magistrate in the Gospel of Luke, he said. The judge, like the United States, couldn't be moved by compassion, but finally relented, exhausted by her relentless pestering. He said Africans can't count on compassion either, despite their just cause, but will use a policy - he used a French term, "emmerdant," meaning annoying - to bring an end to the subsidies.

Since the Geneva-based World Trade Organization declared that some U.S. cotton policies are trade-distorting last year and again this spring, the process of dismantling them has begun. Certain export marketing guarantees were suspended by the USDA this summer, and Congress has been asked to do more trimming before the end of the year. But many in Africa are skeptical.

"The U.S. government has acknowledged the wrong it has caused our farmers with the subsidies," Burkina Faso's Agriculture Minister Salif Diallo said. He said he's hopeful substantive changes are afoot, but couched his conviction that an end to subsidies is inevitable in moralistic terms.

Of course, not all of the cause for falling world cotton prices can be attributed to American subsidy payments. China is a huge producer and consumer of cotton and can affect the world price. The falling value of the dollar hurts, too, because the world price is set in dollars; some African leaders said it should be priced in euros. And cotton subsidies for European farmers are exceptionally high, with no imminent change expected. But because the United States is the largest cotton exporter, its effect on the world market is profound.

Third World African agriculture is a world away from the modern techniques used by cotton farmers in the Mid-South. In Benin, they've decided not to use genetically modified cotton seed designed to protect against boll worms or withstand chemical herbicides before 2007, said Pascal Houssou, sub-director of Benin's ministry of external trade. Part of the reason is that farmers are growing traditional subsistence food crops, like cassava, corn and ground nuts, in adjacent fields. Burkina Faso allowed Monsanto to set up test plots in 2003, but genetically modified cotton is not yet grown by farmers commercially, as it is elsewhere in Africa.

In the dusty, diesel-smoke-laden Burkina capital of Ouagadougou, Francois Traore, president of the 60,000-member Union Nationale des Producteurs de Coton, is arguably one of the most powerful men in the country; the union has an ownership stake in private cotton companies.

Traore, 53, who looks out for 325,000 cotton farming households, deplores the multinational corporate interests that hold down the price of cotton his people depend on to live.

In an interview, Traore talked about the culture of the Sahel, the desert region that gets just enough rain to produce cotton. He said hand-harvesting produces a "beautiful" fiber that mechanical pickers can't copy. And he said fairness demands that the hard work done by farmers sweating over their small plots should be rewarded with a fair price.

Comparing the interests of labor and capital, he said African slaves produced much American capital, and it's time for more of it to be invested in African development.

"We have nothing against the United States," he said in French. "We have no weapons against the United States. We are not terrorists. We just want to live."

Even without translation, his description of American cotton policy is unmistakable: A "catastrophe." The entire Burkina economy has been destabilized by the lower prices for cotton. The result is that some are leaving the sector, contributing to the government's fiscal problems. Ending the foreign subsidies would be "the most humane" thing to do, he says.

Over the past decade, the once state-owned cotton industries of both countries have been turned over to quasi-private companies. It seems fairly obvious that the privatization of the cotton sector wouldn't have come at all if left to the left-leaning governments of both countries. But both countries are dependent on donor aid and have been required to adjust the structure of their economies to repay debts. The process of privatization is hugely unpopular and has led to riots and boycotts.

According to Jocelyn N. Nenehidini, the official national spokesman for Sonapra, largest entity in Benin's cotton sector, farmers threatened to burn last year's crop and refused to plant in 2005 until the government agreed in January to raise the amount it was willing to pay farmers.

Tiendrebeogo said that when the African countries insisted on being heard on the issue of subsidies in Cancun, no one was ready to give in. But when the press in Europe and organizations critical of American agriculture policy looked at cotton subsidies in depth, people began to see, he said, that the payments were a "veritable gachis," a true waste.

"When we raised the issue, the taxpayers in America realized that they were giving $4 billion to only 25,000 individuals; they realized this was a distorted use of public funds," he said. "Beyond the imbalance, the cause at the domestic level - this wealth distribution - is a source of robust debate that may embarrass the (U.S.) government."
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4. US offers a glimmer of hope at WTO talks with offer on cotton
AFP, 12-15-2005, 05h11
HONG KONG (AFP)
http://www.turkishpress.com/news.asp?id=89672

A protestor puts his point across during a demonstration in Hong Kong against the sixth World Trade Organization ministerial conference. The United States said it was ready to offer African cotton farmers duty-free access to US markets, providing a possible glimmer of hope at trade talks that have floundered so far.

(AFP)

The United States said it was ready to offer African cotton farmers duty-free access to US markets, providing a possible glimmer of hope at trade talks that have floundered so far.

The move, however, was given only a lukewarm welcome by the European Union and immediately dismissed as "an empty promise" by Oxfam International.

Making the cotton offer, US Trade Representative Rob Portman said progress towards an overall trade liberalization pact was unlikely in Hong Kong, with another World Trade Organization session needed near the end of March.

"If we don't make all the progress we'd hoped for in Hong Kong, and I'm afraid we won't, I feel strongly we should set a date (for a new meeting) before we leave here," he told reporters.

World Bank vice president Danny Leipziger said that "so far the trade talks have been disappointing," blaming "vested interests within the national entities" for a standoff between the United States and the European Union on removing barriers to agricultural trade.

Earlier in the day the group of least developed countries within the WTO warned there was likely to be a "hardening of positions unless developed countries begin to offer tangible concessions."

African cotton producers have already warned they will refuse to endorse any consensus that might emerge in Hong Kong if rich countries fail to commit themselves to reducing official cotton subsidies.

Portman on Thursday said Washington was prepared to allow West African nations duty-free access to its cotton market.

"The United States is willing under the duty-free, quota-free commitments we will make to provide duty-free access to cotton for West African countries," he said at a press conference.

The move would be part of a package of measures aimed at helping the world's poorest countries that is under discussion here.

The European Union gave the announcement a cautious welcome but said it did not go far enough.

"It's a positive step that the US is prepared to allow cotton free access to its market," EU trade spokesman Fabian Delcros told AFP.

"However, this measure won't solve the current problem in the cotton market.

"The current problem is that the US pays subsidies which depress world prices and prevent African producers from being competitive. What's needed today is more discipline at the WTO to stop this dumping."

In a statement Phil Bloomer, head of Oxfam's Make Trade Fair campaign said the US move missed the point, claiming that Africa does not even export cotton to the United States.

"The US must immediately eliminate all of its cotton subsidies and put a stop once and for all to this unfair system," he said.

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