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  • How Poor Countries Pay for the EU’s Agricultural Policy Webinar on saturday

  • BlackandWhite

    14. Oktober 2020 at 13:12

    How Poor Countries Pay for the EU’s Agricultural Policy – webinar, Saturday, Oct. 17.

    By Alice Schmidt

    EU agricultural subsidies are not just expensive and distort the internal market, they also have far-reaching effects on developing countries. How do African farmers feel about the fact that the EU subsidises its farmers and exports their products to Africa?

    To this day, more than a third of the EU Budget — nearly 60 billion Euros a year — flows into the pockets of European farmers. Although the portion of the budget for “Natural Resources and Environment” will probably fall in the upcoming budget (the Multiannual Financial Framework 2021-2027), it will remain a major part of the EU’s expenditure. In the medium term this will not change. From a liberal perspective, there are two reasons why this is problematic. First of all, we believe that governments should invest in our future capabilities, both as individuals and as a continent, rather than propping up today’s industries. Meaning that education and research should be prioritised over subsidising agriculture. Second of all, subsidies distort competition, both inside and outside the internal market.

    The EU however refuses to accept responsibility: since subsidies are no longer paid per product (coupled payments), but per hectare (decoupled payments) and money is being spent on sustainability, the EU claims the subsidies no longer have any market-distorting effects. Although this decoupling is an improvement — eliminating the artificial incentive to produce, subsidising by the acre still makes the products of subsidised farmers cheaper. Moreover, these subsidies distort the market by making farmers engage in more risky investments, because they can count on subsidies to secure their cash flow. Without subsidies it is likely that different investments would be made, which would probably result in lower surpluses.

    These distortions are not just noticeable within the internal market. People in the poorest countries in particular feel the consequences of these policies every day, because that is where the EU’s massive overproduction of agricultural products ends up. Local producers, who have to manage without subsidies, cannot compete with subsidised EU farmers, which means jobs in agriculture are lost.

    Ghana loses a flourishing sector

    The export of poultry from the EU to West African countries like Ghana is a good example. Until the start of the 90s Ghana was self-sufficient when it came to poultry. From farmers to those who process the birds to traders, the sector offered a lot of people a job. In 1996, the first 5,000 tons of poultry was exported to Ghana from the EU. In 2001 this had already risen to 35,000 and in 2009 even to 70,000. Right now, only ten to twenty percent of poultry consumed in Ghana is domestically produced. Farmers report that the expensive locally produced poultry is now seen as a delicacy and is only eaten on holidays. By now subsidised poultry from Brazil and the US is also imported to Ghana. But it was the EU which had started exporting, which according to local producers has seriously contributed to the destruction of jobs.

    EU poultry gets smuggled into Nigeria

    Nigeria also suffers due to subsidised EU exports. Even though it is the only West African country that, due to its oil reserves, has enough geopolitical power to resist signing a free trade agreement with the EU. From a liberal perspective a free trade agreement may seem beneficial, but, as a rule, the EU uses these agreements to prescribe how much import duty countries can levy on agricultural products from the EU, which includes poultry. And even through Nigeria refuses to sign such a treaty, the Nigerian market is still flooded with poultry produced in the EU. The reason for this: the EU exports large amounts of poultry into Nigeria’s neighbouring country Benin, much more than its small population can consume. The rest then gets smuggled to Nigeria, which leaves local producers no better off than in Ghana.


    Link to the webinars, saturday Ghana 5 p.m. Germany 19 Uhr:

    • This discussion was modified 8 months aktiv. by  BlackandWhite.
    • This discussion was modified 8 months aktiv. by  BlackandWhite.
    • This discussion was modified 8 months aktiv. by  BlackandWhite.
    • This discussion was modified 8 months aktiv. by  BlackandWhite.
    • This discussion was modified 8 months aktiv. by  BlackandWhite.
    • This discussion was modified 8 months aktiv. by  BlackandWhite.

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