11 July 2003

Time to narrow the gap
Aid, debt relief and improving governance must be part of any rescue strategy. But the truth is that the biggest single factor that would help developing countries would not cost the west anything at all. In fact, developed countries would gain by doing it.

And what is this elixir? It is simple: abolish agricultural subsidies. Not some of them, but all of them, so that there is no scope for wriggling out of it.

It almost beggars belief that the Bush administration, which came into office to reduce subsidies, has actually massively increased them to farmers.

This means that US farmers are paid by the US taxpayer to produce crops, such as cereals and cotton, that could be more economically produced by countries in the developing world. It is economic and social madness. In Europe, farmers in Scandinavia, thanks to EU subsidies, are growing sugar beet, a product far better suited to being grown in parts of Africa. This is barmy.

Not only do African producers find it extremely difficult to sell in export markets against this subsidised competition, but they are even undercut in their home markets by surplus EU beet produced at ludicrously subsidised prices.

Abolishing agricultural subsidies is, virtually, a free lunch. Practically everyone gains. Consumers in rich countries will gain from lower prices (worth �20 a week for a family of four, according to Oxfam), taxpayers will pay less to fund the subsidies, and developing countries will have the opportunity to sell products in which they have a competitive advantage (lots of land and low wages) on world markets.

Agricultural reform is a dry-as-dust topic but ultimately it would make a huge difference to millions of people in the developing world.

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