Uganda: Smart Protectionism
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The Nation (Nairobi)
OPINION
28 August 2008
Posted to the web 29 August 2008
G. Pascal Zachary
Nairobi
I met Dr Gilbert Bukenya at his home on the shores of Lake Victoria, where we talked about the future of farming in Uganda.
"By farming smarter," he said, "Ugandans not only can grow more, they can earn more money."
Working smarter is no empty slogan; it is the key to modernising African agriculture. An advocate of food self-sufficiency for Uganda, Bukenya wants Ugandans to eat more home-grown rice, thereby boosting local farmers and rice millers while freeing hard cash for higher uses.
He has long promoted a new strain of rice that grows in uplands (as opposed to paddies) and requires less water.
Embracing the new rice is part of the working-smarter formula.
Once rice output began to expand, Bukenya and other Ugandan politicians played another smart card: they lobbied successfully for a 75 per cent duty on foreign rice, which stimulated rice production further.
Rice output has risen by two and a half times since 2004 to 180,000 tonnes, while consumption of imported rice fell by half from 2004 to 2005 alone.
Uganda's importers, seeing the shift, have invested in new mills, expanding employment and creating competition for farmers' output, improving prices. New mills, meanwhile, lowered the cost of bringing domestic rice to market, so that consumers now still pay about the same for rice as they always have.
Uganda's success in expanding rice production is especially interesting given that the people of sub-Saharan Africa spend nearly $2 billion a year on rice grown outside of Africa.
As more Africans move to cities, they acquire a taste for rice, which is easy to store and can be cooked quickly.
But such spending on imported rice is a scandal, because, with the help of wise policies, African farmers could grow much more rice, perhaps enough to eliminate virtually all imports.
Much of the rice grown in Pakistan, Vietnam, and America is stimulated by subsidies, and then dumped into African markets at low prices - sometimes below the cost of production. These exporters, including the US, maintain stiff import duties, thereby protecting domestic farmers from global competition.
African governments sharply reduced or eliminated duties on imported rice in the 1990s, urged on by the World Bank, the IMF, and influential free-market economists. The assumption was that rich countries would cut subsidies to their farmers. But they haven't.
In response, a few African countries have raised duties on rice, violating a key tenet of neo-liberal trade philosophy.
But rice duties are working in Uganda - and in Nigeria, where rice output is also soaring - and policy-makers rightly believe that they must be maintained.
Virtually every successful Asian economy was built on selective trade barriers - and in China and India, the world's two fastest growing economies, such barriers remain in place. Even Korea and Japan maintain massive duties on imported rice simply to protect their rice farmers.
Uganda and other African countries need to be careful that protectionism doesn't become a cover for inefficiency or corruption. And selective protectionism is, of course, no panacea for Africa, even when such policies effectively aid local producers.
Relevant Links
G. Pascal Mr Zachary teaches at Stanford University.
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