The Economist on Contract Farming in India

Another good article about recent developments on India's agricultural sector. THIS piece argues that contract farming -where farmers commit to grow a commodity for a particular buyer- is growing rapidly in response to the severe problems faced in the sector. A combination of poor agronomic techniques, such as flooding irrigation and animal traction, combined with government policies that create incentives for over-fertilization (see WSJ article) and  use public money to get votes (see other Economist Article), have encouraged farmers to look elsewhere for a better future. That elsewhere is McDonald who, after five years of trying, now buys its potatos directly from Indian farmers.

These are good news for farmers in developing countries. They have traditionally been marginalized by better-off urban consumers who tend to preferred imports over local produce. A similar example is what Wall-Mart is doing in some Central American countries: through NGOs and other partners, Wall-mart equips farmers with the technical information (extension services), credit, and tools and inputs necessary to produce shelf-worthy products that meet the standards of the demanding urban consumer.

These types of relationships can be mutually-beneficial as they: a) make good local politics for the foreign-own corporation; b) can reduce the price of raw materials, especially now that transport cost is skyrocketing; and c) provide farmers with the markets they need to leave subsistence agriculture. However, it may be to early to name contract farming as the panacea for poor farmers. What it's clear, though, is that the McDonald and Wall-Mart examples show that the private sector can play a very positive role in helping farmers break their cycle of poverty. This, unfortunately, is often absent in the donor-driven agenda of agricultural development.

More en Español

Otra columna del Tiempo "El problema es la seguridad alimentaria nacional" y lo que yo respondi:

Aunque el Dr. Montoya no propone nada concreto, queda claro que el acento de esta columna se asemeja mucho a aquellos que promueven políticas proteccionistas bajo la excusa de la seguridad alimentaría. Japón primero dijo que era cuestión de seguridad, ahora dice que es por mantener su tradición, y en un futuro muy cercano se inventara otra excusa para mantener subsidiado su arroz que cuesta producir 11 veces más que en otras regiones del mundo. No podemos caer en la trampa en que están cayendo muchos al proteger nuestras fronteras y limitar nuestras exportaciones agrarias bajo el escudo de la seguridad alimentaría. No hay mejor forma de llegar a esta que con un campo prospero y competitivo y esto solo se hace con la dinámica de los mercados del mundo. ¿Acaso vemos inseguridad alimentaría en las lomas del eje cafetero o en las planicies del valle del cauca? ¿a donde va toda esa azúcar a ese grandioso café? Al extranjero.

En Burkina Faso (con una “s”) se sufre pero la crisis viene desde hace mucho antes. Con USA subsidiando su el algodón y otros granos bajo la excusa de la seguridad alimentaría, lo que han hecho es reducir los precios a nivel mundial. Ahora la crisis esta patas arriba, pero lo que queda claro es que esta crisis es el resultado de políticas miopes que tratan de controlar el sector agrícola generando consecuencias catastróficas en el resto del mundo, sobre todo en aquellos países que dependen de importaciones para alimentarse. La inseguridad alimentaría esta directamente relacionada a las acciones de gobiernos que tratan de “proteger” el sector generando así desincentivos a sus productores y alterando cada vez más el precio real de los productos. Para afrontar esta crisis mundial los países del mundo tienen que dejar el egoísmo y pensar en el bienestar global. Espero que Colombia lo haga.

Expensive fufu and other things

The food crisis has served as catalyst for social and economic discontent that predated the exponential increase in food crises. This is not to say that food has become extremely expensive and most of the poor are spending almost all of their income to feed themselves, creating a situation that in a global perspective is unprecedented. Yet, the countries that are been hit the hardest are those with very disfuntional goverments, that have neglected their people at the cost of maintaining an small, corrupt constituency pleased.
What better example than Somalia: As we speak, thousands are rioting the street of Mogadishu over the food prices, and other things that may get buried behind the headlines. This is important because there are many out there that believe everything was peace and love and then the prices hit. But Somalia is just one of many countries where the "perfect storm" is threating social stability: According to The Food and Agriculture Organisation (FAO) if this situation is not checked insecurity is bound to escalate and like the recent riots in Egypt, Cameroon, Burkina Faso, Senegal, Cote d'Ivoire and Haiti. FYI Senegal denies there are hungry people in the country and has even blame FAO for the contributing to the crisis.

VIEWS: Targeting Nicaraguans’ Stomachs

Hello,
Trying to remain partial in the discussion of politics in Nicaragua is a difficult task, specially now that we are four day away from the elections. So here is an article by Ben Beachy of Witness for Peace who talks about U.S interventionism in Nicaraguan elections, a subject I have to some extend ignore. As mentioned before, this blog is about Agriculture and Rural Development and the outcome of this election will have a certain effect on both.
Enjoy.

October 30, 2006
By Ben Beachy

Imagine the following: you and your family decide to remodel your kitchen. Your neighbor, also the principal at your children’s elementary school, hears of the plan and immediately states his opposition. He argues that the remodeling project is not the sort of investment your family needs and hints that carrying it out would jeopardize his friendship. Deciding to move ahead with the remodeling anyway, you and your family begin removing the kitchen cabinets one day, but are interrupted by a knock at the door. Your neighbor enters and grimly announces to the entire family that if the remodeling is carried out as planned, he will see to it that your children do not pass another grade in his elementary school.

Your neighbor’s behavior, however far-fetched it may seem, is no more ridiculous or offensive than the treatment U.S. political figures have been giving their neighboring Nicaraguans in the last several days. Nicaragua is currently gearing up for its national elections on Sunday, November 5.

For the last year, Nicaragua’s complicated electoral panorama has been further convoluted by a string of U.S. representatives endeavoring to ward off an electoral victory by Sandinista (FSLN) leader and former president Daniel Ortega. U.S. officials have publicly censured Ortega, attempted to unify his opposition, and threatened that an Ortega win would endanger U.S. financial support. The continuous intervention, however, has failed to unite Nicaragua’s divided right or significantly detract from Ortega’s base. Now U.S. meddlers are flustered and desperate in the face of recent polls revealing that Ortega is within a few percentage points of clinching the presidential office.

In a last-ditch effort to undermine Ortega, U.S. Congressman Dana Rohrabacher, chairman of the House’s International Relations Subcommittee on Oversight and Investigation, sent a letter on Friday, October 27, to Michael Chertoff, Secretary of Homeland Security. Rohrabacher enjoined Chertoff “to prepare in accordance with U.S. law, contingency plans to block any further money remittances from being sent to Nicaragua in the event that the FSLN enters government.” The nearly half million Nicaraguans currently living in the U.S. send around $500 million each year to their family members in Nicaragua, according to Nicaraguan economist Nestor Avendaño.

Nicaraguans have reason to believe Rohrabacher may not be bluffing. In the buildup to Nicaragua’s 1990 elections, the United States promised Nicaraguan voters that it would continue fueling the decade-old contra war and maintain its economic embargo on Nicaragua, both of which were wreaking havoc on Nicaragua’s economy, if Daniel Ortega were reelected as President. Beleaguered by a crippling war, food rationing, and empty supermarket shelves, Nicaraguans opted for U.S.-backed Violeta Chamorro over Ortega. Satisfied, the U.S. then released its stranglehold on the Nicaraguan economy.

Seeing that the FSLN now has a chance to return to power, Rohrabacher seems eager to once again target Nicaraguans’ stomachs with callous pressure. Thousands of Nicaraguan families depend on remittances to augment the meager wages paid for picking coffee, sewing jeans in assembly factories, or selling water at intersections. In an economy sacked with underemployment, stagnant salaries, and rising costs, remittances keep Nicaragua afloat by generating an income equivalent to 70% of the country’s total annual exports, according to the most recent estimates. Avendaño projects that a U.S. embargo on remittances would prove as disastrous for Nicaraguans as the U.S.-imposed trade embargo of the 1980’s. Once again, the hardest hit would be the impoverished majority.

Nicaraguan voters are not unaware of this reality. Nor is Rohrabacher, no doubt. Nicaraguans’ direct dependence on remittances is what makes his open threat particularly potent. In the face of a potential Ortega victory, Rohrabacher is striving to make longstanding U.S. interference more personal by pushing Nicaraguans to see a vote for Ortega as a vote against their own pocketbooks.

Rohrabacher’s letter is but one voice in a recent cacophony of U.S. meddling. Headlines of the last week have been laden with unsolicited U.S. opinions on Daniel Ortega and the sort of President Nicaraguans should want. The day after Rohrabacher sent his letter, Florida governor Jeb Bush authored a letter published in a La Prensa paid ad. Bush’s letter declares that Nicaraguans must choose between a “tragic step towards the past,” which he identifies as the “totalitarianism” of the Sandinistas, and “a vision towards the future.” Jeb Bush’s own vision for Nicaragua’s future is revealed at the bottom of the ad, where the Alianza Liberal Nicaraguense party, which is running the U.S.- preferred presidential candidate Eduardo Montealegre, is named as the ad’s sponsor.

Just a few pages away from Bush’s ad appears an article in which Adolfo Franco, USAID’s Assistant Administrator for Latin America and the Caribbean, warns that a FSLN victory next week could limit USAID support for Nicaragua, citing worries that Daniel Ortega might significantly alter Nicaragua’s current economic model. USAID’s admonition piggybacks on US Secretary of Commerce Carlos Gutierrez’s more explicit pressure in an interview publicized one week earlier. Gutierrez threatened that an Ortega win could preclude a $230 million combined investment from three foreign companies that would generate 123,000 jobs, a $220 million aid package promised through the Millenium Challenge Account, and implementation of CAFTA in Nicaragua.

On October 29, the day after printing Jeb Bush’s letter, La Prensa published an editorial by Otto Reich, former Assistant Secretary of State for Western Hemisphere Affairs, in which he accuses the FSLN of maintaining ties with terrorist groups, a claim that Reich does not attempt to substantiate. Though Reich does not currently hold a position in the U.S. government, he writes as if he does, stating, “If the Sandinistas control the government of Nicaragua, there will be strong pressure in Washington to review all aspects of the bilateral relationship, including remittances.” Reich equates a Sandinista victory with “a return to a past of poverty and international isolation.” Such a dismal outcome indeed seems likely if the U.S., as the party responsible for the isolation of the past, would implement Reich’s thinly cloaked threat of aid and remittance cutoffs.

Ironically, Reich precedes all the above statements with the disclaimer, “No one can tell [Nicaraguans] who to vote for.” Jeb Bush, Adolfo Franco, and other outspoken U.S. figures have similarly acknowledged Nicaraguans’ sovereign right to pick their own leaders. Unfortunately, such statements come across as meaningless niceties when subsequently contradicted with threats and admonishments against choosing a president not to the U.S.’s liking. As Nicaraguans make their way to the polls on Sunday, they must not only consider “What will this candidate do for my country if elected?” but also “What will the U.S. do to my country if this candidate is elected?” The product of relentless outside interference, this sad reality is profoundly undemocratic.

With numerous internal challenges posed by this election, Nicaraguans do not need to be further encumbered by fears of U.S. reprisal. If U.S. representatives truly wish to see free, unfettered elections in Nicaragua on November 5, they would do well to keep their mouths shut.

Ben Beachy is an educator with Witness for Peace in Nicaragua. Witness for Peace is a politically independent, grassroots organization that educates U.S. citizens on the impacts of U.S. policies and corporate practices in Latin America and the Caribbean. www.witness forpeace.org