How trade distortions are harming Ghana's rice sector

Poverty is the major cause of food insecurity worldwide. It is strongly argued that trade liberalisation has the tendency to impoverish small-scale domestic food producers. Increased trade liberalisation would lead to increased cheap imports which would in turn compete out local farmers. If trade liberalisation deprives rural farmers of their livelihood then it causes food security problems as well.

In Ghana the highest incidence of poverty occurs in the agricultural sector, dominated by small holders. Statistics indicate that food crop farmers had a poverty incidence of 68% in 1991/1992 and 59% in 1998/1999 (Offei-Nkansah and Antwi-Asare, 2005).

Arguably, the influx of cheap imported food items is depriving most farmers particularly from developing countries their source of livelihood through unfair competition. The situation with rice, which constitutes a staple food for about half of the world"s population and provides a source of living to about two billion people (growers and processors) shows the seriousness of the problem.

Millions of poor rice farmers in developing countries like Ghana cannot earn a living because of cheap, often dumped rice imports. Other countries' experiences with trade liberalisation provide similar conclusions but in different sectors such as maize and soybeans.

Research commissioned by the General Agricultural Workers' Union of Ghana, shows that concern for food security is based on the fact that the large small-holder farmers are the most vulnerable and women the hardest hit. GAWU maintains that food should not be viewed only according to the free market logic. The fate of thousands of small scale farmers is too important to be neglected for the sake of trade liberalisation.

According to Tetteh Homeku and Martin Khor of the Third World Network, the swift reduction of applied tariffs has resulted in a very significant increase in imports of rice, tomatoes and poultry products, which have been heavily subsidized by the governments of the countries producing them. Their studies find that the removal of government subsidies and support have adversely affected the competitiveness of small farmers, and contributed to the unequal market situation whereby farmers have to compete with farmers and companies in developed countries that are heavily subsidized.

The study emphasizes that imports liberalisation policy in Ghana has led especially to the displacement of local rice production. Increases in imported rice have diverted consumers away from the more nutritious local brown grains to the imported milled white rice. Competition from imported rice is noted to have reduced the commercial incentive that investors might have had to upgrade the country's rice mills and improve the quality of local rice.

The United States is singled out by the study as the major source of Ghana's rice imports. In 2003 for example, the US exported 111,000 tonnes of rice to Ghana, equivalent to about one third of the Ghana rice imports in 2002.

In the US, rice production has escalated to levels beyond domestic requirements and this has led the government to implement strategies to help the industry to export. This has resulted in the growth of US rice exports by 60% in the past 20 years, reaching 3.8 million tonnes in 2003. The US policy is particularly harmful for the rice-growers of Ghana. In 2003, the US paid $1.3bn in rice subsidies to its farmers and sold the crop for $1.7bn, effectively footing the bill for 72% of the crop.

In Accra's bustling markets the effect of US imported rice is easy to see. Huge billboard adverts for Chicago Star Rice stare down on hawkers. Bags of imported rice reach to the ceiling of Charles Yeboah's long, narrow shop. He does not stock Ghanaian rice. "I can't sell it. The quality of the imported rice is so much better that even though it costs more, people buy it," he says. He adds that Ghanaian rice is only available for six months of the year.

The poor quality of some Ghanaian rice is no secret. Lack of government subsidies mean the farmers cannot afford to invest in any machinery to help with harvesting the rice.

Many people come to Accra looking for work as the dwindling rice crop has resulted in high unemployment in the north. In the middle of a windy roundabout, a stone's throw from the market, a group of women and children have made the hard concrete their home. Fusheina Alhassan says the women try to sleep in the nearby railway station. "But if it rains, we cannot sleep. Often the men come and steal our clothes and money while we sleep. Sometimes they rape us," she says.

The Statesman