Africa Pavilion of organic products to feature at Biofach for second year running

At BioFach 2009 in Nuremberg, Germany there will again be an Africa Pavilion where visitors will enjoy African designs, colours, sounds and flavours. More than a hundred exporters, national organic movements and export promotion agencies will showcase the specialities from the Sub-Sahara Africa countries. For the participants it is a chance to display their products and to link up with interested buyers and colleagues. For the buyers it is an opportunity to make contacts with professional suppliers.


There will be about 35 stands with 120 exhibitors in the whole Pavilion from 14 African countries. Countries represented are: Burkina Faso; Ethiopia; Kenya; Madagascar; Namibia; Nigeria; Rwanda; Senegal; Sierra Leone; South Africa; Tanzania; Uganda; Zambia and Zimbabwe.


The Pavilion will also serve as a hub of information on activities and services of different importers, trade promotion agencies, consultancies, NGO’s and certifiers. It will offer an opportunity for exhibitors to exchange information and contacts with relevant businesses from all over the world.


2008 was the first time in the history of the BioFach that African organisations were exhibiting their products in one Pavilion of this size. It was a big success with 73 exporters exhibiting from thirteen African countries. The event generated a lot of media attention and undoubtedly resulted in an improved image of Africa as a supplier of organic products.


Products exhibited are:
Cashew nuts; cereals; cocoa; coconut oil; coffee; cotton; dairy; dried fruit; essential oils; organic fertilizer; flowers; fruits; spices; groundnuts; herbs; hibiscus, honey; wax; macadamia; natural products; oilseed; processed food; pulses; rice; sesame; shea butter; spices; tea and vegetables.
The organisers plan to have an African Pavilion again next year and hope to host even more African countries. If all goes well Africa could be the BioFach Continent of the year in 2011.


For more info: http://www.organicafrica2009.com/
For photos of 2008: http://www.organicafrica2008.com/

South Africa bars Kenyan avocados

A trade row between Kenya and South Africa is simmering following the failure to resolve an administrative barrier that has seen Kenyan exports to the regional powerhouse shrink drastically over the last one year.

At issue is what Kenyan exporters consider a non administrative trade barrier that has blocked avocados from accessing the Sh150 million a year market. South Africa instituted the measure, saying the product posed a fruit fly threat to the country.

Since the ban was imposed in April last year, Kenya has lost 80 per cent of its fresh avocado exports going to South Africa. South Africa’s import inspection body raised the phytosanitary issues which Kenya exporters see as a form of protectionism.

Although the partial ban was attributed to a fruit fly threat, the chief executive of the Fresh Produce Exporters Association of Kenya (FPEAK), Dr Stephen Mbithi, said fruit flies affect avocados from all African countries and did not warrant such punitive action.

Avocado exports are big business for Kenya, accounting for Sh2.2 billion in direct exports annually. “Fuerte” is the leading export variety followed by “Hass.”

South Africa alone imports fresh avocados worth Kshs 150 million annually, which are mainly used in the foods and cosmetics industry 80 per cent of exports to South Africa represent Kshs 120 million in earnings which have been lost due to trade barriers.

Exports say that the South Africa government has been known to resort to non-tariff trade barriers as a way of protecting the industries from external competition

"They are trying to protect their industry by banning imports," said Dr.M.Mbithi.

However, the South African government may be legally using a provision in international trade laws that allows countries to institute trade barriers in certain circumstances. "

International laws allow countries to protect themselves from hazardous imports that threaten their crops and this is what the south Africans government has used," said Mr. Edward Maina of the Horticultural Crop Development Authority. South Africa is also a major producer of avocado with most of its exports going to Europe.

However the avocado industry in South Africa is said to be seasonal due to the pressure of very cold winters, leading to very low production. The production season for the country avocados is only between March and October.

Kenya on the other hand enjoys an equatorial climate and avocado trees in the country produce all year round. The main production areas are around Mt.Kenya and the North Rift.

The country's exporters are now working with the Agriculture and Trade ministries to resolve the issue.

Business Daily Africa

Botswana agriculture anxious about effect of SADC Free Trade Area

A few days after the Southern African Development Community (SADC) became a free trade area, fears are mounting that the move may spell doom for Botswana's agricultural industry.

A study is now being commissioned by the Botswana Agricultural Union (BAU) to find ways government can help sustain rural livelihoods in the face of external competition.

BAU chairman, Phillip Fischer, said the elimination of import duties would seriously threaten the beef, dairy, small stock, piggery, poultry, ostrich, grains, and horticulture industries. He said under the SADC Free Trade Area, agricultural products are not eligible for preferential treatment.

Following the announcement at the recent SADC heads of state summit held in Johannesburg, South Africa, the BAU is commissioning a sector-wide study to assess the nature and extent of adverse effects on Botswana's eight commodity value chains (CVCs) that will be caused by the elimination of tariffs. Upon completion, the document will be presented to government, outlining the adverse effects of elimination of the tariffs, as well as how government can assist the local industry to survive the challenges.

"As no adjustment strategies have been developed or implemented in anticipation of the inevitable elimination of tariffs under the SADC Protocol on Trade, it is anticipated that the elimination of tariffs, and in particular, the elimination of Botswana's import permit system under the Control of Goods Act, will adversely of effect all eight of our agricultural commodity value chains," the BAU chief says.

Fischer is sceptical about remedial measures on local industry as proposed in Article 20 of the SADC Free Trade Act. It does not only override the existing SACU infant industry protection law, but the article in question says governments can only safeguard their industries if there is evidence that the affected industry is adjusting to competition.

The proposed study will, among others, assess the immediate adverse economic and social effects of eliminating tariffs on each agricultural sector, as well as the potential commercial viability of each sector without tariffs. For those sectors that have the potential to be competitive without tariffs, the BAU is seeking adjustment strategies to enhance and sustain their competitiveness.

The BAU study will also look at how to assist producers in those inherently uncompetitive sectors so they can dump their businesses and migrate to competitive sectors. For those producers who cannot migrate to competitive sectors, the BAU is seeking social strategies to prop up rural livelihoods.

Mmegi

Local food security concerns explain Chana's tough stance at failed WTO talks

China's tough stance at the 'Doha' trade talks in Geneva has less to do with political posturing than with the country's long-standing obsession with food security, experts have suggested.

Jettisoning a long period of silence at the Doha rounds, China joined hands with developing nations and let disagreement over agricultural tariffs derail the dialogue.

"Recent food riots in several countries have made Chinese leaders realise even more than before that food security must be resolved internally," Meng Zhou, a Beijing-based independent researcher suggested in a column in the Xinjingbao newspaper. "If food supply is dependent on imports then you can never guarantee social stability and even national sovereignty can be jeopardised. It serves to explain the much harder line taken by China at the trade negotiations this time."

Chen Taifeng, China studies scholar at Qinghua University, concurred. "Skyrocketing food prices have made developing countries very nervous," he said. "Before it opens its agricultural markets entirely, China needs guarantees that it can rely on safeguard mechanisms to protect its own farm produce.''

The Geneva talks broke down in late July after member countries could not agree on a proposal to allow developing nations to use special safeguard tariffs to shield their farmers from floods of cheap imports.

With its huge exports, China has benefited generously from liberalised trade, which has delivered markets for its cheap manufactured goods. At previous talks of the so-called Doha development round Beijing had chosen to remain a low-profile participant if not a silent observer of the bargaining between rich nations and the developing world.

But in a sign of deep anxiety over food security, this time around China shared India’s opposition to a Doha deal that New Delhi had argued would hurt its millions of poor farmers. The move comes amid mounting challenges for Beijing to feed its 1.3 billion people against shrinking arable land and water shortage.

Wealthy nations led by the United States have blamed India and China for not ceding enough ground at the trade liberalisation talks and thus blocking solutions to recent food shortages and a continuing spiral of soaring food prices. The U.S. trade representative, Susan Schwab, said it was "unconscionable" that developing countries were clinging to such protectionist attitudes.

"In the face of the food price crisis, it is ironic that the debate came down to how much and how fast nations could raise their barriers to imports of food," she was quoted as saying.

But China has pointed a finger at developed countries for killing the talks, saying it is unfairly maligned by the West. Commerce minister Chen Deming told the official newspaper of the communist party, the People’s Daily, that China should not be blamed for the failure of the WTO talks.

"We are a new member of the WTO, and must still enjoy treatment as a new member," he said. "The collapse of the talks has nothing to do with China". Chen, who represented China at the Geneva talks, described the failure of the negotiations as a "heavy blow." In his initial statements after the foundering of the talks, Chen had blamed the U.S. saying that "after satisfying its own demands the U.S. had demanded from the developing world a price as high as heaven."

The U.S. had objected to the details of a "special safeguard mechanism", designed to protect farmers in the developing world against temporary surges in cut-price imports of cotton, rice and sugar.

China has long insisted on protecting the livelihoods of its subsistence farmers. The country has between 750 and 800 million farmers -- nearly double the entire population of the European Union. The majority survive on two dollars a day.

"It is unfair to pitch wealthy farm owners of the West, regularly subsidized by their countries’ finance ministries, against the millions of unprotected small-size farmers of China," argued Meng Zhou. "Farmers and agriculture are still the pillars of many developing countries’ economies. In the West though, peasants represent only a fraction of the population and agriculture accounts for only a small portion of the rich nations’ GDPs".

Editorials in some Chinese newspapers have accused the U.S. of "hypocritical compromises" negotiated at the Doha round tables. The U.S. agreed to cap its trade-distorting farm subsidies at 14.5 billion dollars but an editorial in the "21st Century Business Herald" said the compromise was "meaningless."

"As the world’s most efficient grain producer whose exports account for 40 percent of the global grain exports, the U.S. is the biggest beneficiary of soaring food prices," the paper said. "The U.S. has calculated rightly that high grain prices would offset the decrease in its agricultural subsides. In fact, last year the U.S. spent only 9 billion (dollars) on such subsides".

Chinese academics predict high food prices would continue for at least another 10 years. Last month the State Council, or China’s cabinet, approved a mid- and long-term grain security plan that aims for the country to be 95 percent self-sufficient in grain over the next 12 years.

The plan outlines a state goal of reaching annual grain output above 500 million tonnes by 2010, and increasing production to more than 540 million tonnes a year by 2020.

After years of debate, Beijing gave the green light, last month, to a controversial plan to cultivate high-yield and pest-resistant genetically modified (GM) crops designed to boost the country’s agricultural productivity.

"Departments must fully understand the importance and urgency of this significant project and waste no time to implement it," said a circular posted on the website of the State Council.

IPS

Kenya, Uganda in row over barriers to agricultural trade

A trade row is brewing between Uganda and Kenya over the alleged use of non-trade barriers by authorities in the two countries to block the entry of certain agricultural products into their respective markets.

The issue first came to light late last year when officials in Kampala protested a decision by their counterparts in Nairobi to deny Ugandan poultry breeders export permits that would enable them to sell day-old chicks in the Kenyan market.

Matters took an interesting turn this April when Nairobi’s envoy to Kampala wrote to Uganda’s Trade Minister arguing that an 11-year-old ban on the exportation of Kenyan livestock and associated products to Uganda not only violates the World Trade Organisation’s Sanitary and Phytosanitary (SPS) agreement, but also contradicts the spirit of the East African Community’s Customs Union.

Kenya’s High Commissioner to Uganda, Japheth Getugi, noted in an April 8 letter to Uganda’s State Minister for Trade, Nelson Gaggawala Wambuzi, that the ban on Kenyan meat and meat products as well as bull semen, was unwarranted because the country had put the necessary safety measures in place.

“Kenya considers the bans on both beef and bull semen as non-trade barriers that must be removed,” wrote Mr Getugi.

However, senior officials in Uganda’s Agriculture Ministry said a committee had been set up to review the ban — not just for Kenya but for all the other countries affected. We are already working on lifting it,” said the Director of Animal Services Dr William Olaho Mukani, who is also the chairman of the Ban Review Committee. “The ban could be lifted in a year’s time.”

Dr Olaho Mukani said the government still had reservations about lifting the ban because of cases of crafty individuals claiming to import livestock products into Uganda from Kenya when they are actually importing them from other disease-infested countries using Kenya as a transit route.

Mr Getugi defended Kenyan livestock in his letter, saying that according to Kenya’s Livestock and Fisheries Development Ministry, the level of safety of Kenyan meat and meat products as stipulated in the country’s Meat Control Act and sanitary measures is consistent with OIE (World Organisation for Animal Health) and Codex guidelines on BSE (Mad Cow Disease) and food safety.

Mr Getugi further advised Uganda to note that BSE, which led to the ban on bull semen from Kenya, is classified as a notifiable disease — making it mandatory for the authorities to make any cases public.

“Further, there has not been any scientific proof of transmission of the disease through semen. Kenya considers the ban on beef and bull semen as a non-trade barrier that must be removed,” added the Kenyan diplomat.

While statistics on the quantity of bull semen that Uganda imported from Kenya prior to the ban were not readily available, it has been established that by the time of the ban, Uganda was importing an average of 20,000 straws — measures used during service of an animal — of semen per annum.

The national co-ordinator of Uganda’s Animal Breeding Centre in Entebbe, Dr Nelson Semambo Kiwanuka, said Uganda is currently importing an average of 35,000 straws of semen per annum, mainly from New Zealand and South Africa. He said this was way below the country’s needs.

“There are 3.5 million head of cattle that we can inseminate countrywide, but the actual number that we inseminate is 35,000 every year, so the scope is really wide. Our target is to inseminate at least 50,000 every year, and in the next two years we should have increased the number to half a million,” said Dr Semambo.

It is this potential market that Kenyan breeders are looking to take advantage of should the ban on the export of the country’s livestock and livestock products to Uganda be lifted.

The current beef between the two countries is the latest episode in an evolving trade dispute over agricultural products and livestock. The EastAfrican reported in its February 18-24 issue that the Poultry Association of Uganda had protested Kenya’s continued reluctance to open its market to Ugandan exporters although Kenchick — Kenya’s largest exporter of day-old chicks — was allowed to export freely to the Ugandan market.

In a bid to solve the impasse, Kenya’s Deputy Director of Veterinary Services and Principal Veterinary Officer visited Uganda on November 17–22 to carry out a risk assessment of the two Ugandan poultry firms exporting to Kenya, as well as to assess the state of the country’s veterinary services.

With one Ugandan exporter — Ugachick — saying that it was losing up to Ush18 million ($10,000) a week since it could not export the 15,000 day-old chicks for which it had secured a deal in Kenya, Uganda’s Third Deputy Prime Minister and Minister for East African Community Affairs, Eriya Kategaya, along with the Trade Minister, pursued the matter with their Kenyan counterparts when the release of the report was delayed by four months.

Commenting on the findings by the Kenyan team, Mr Getugi noted that not only did they find the disease reporting systems of the two exporting firms they visited to be inadequate, they also found the legal framework governing operations of hatcheries in Uganda in relation to disease control to be wanting.

“The general finding is that the capacity of the Veterinary Department in disease surveillance is wanting and diagnosis is not adequate. The central laboratory in Entebbe lacks the capacity to deal with most poultry diseases,” he noted.

The Director of Animal Services in Uganda’s Agriculture Ministry, Dr William Olaho Mukani, acknowledged that Uganda’s laboratory had been neglected in the past. He, however, added that it was now being refurbished after the government received funding from the World Bank to improve the country’s preparedness to tackle the Avian influenza (bird flu) epidemic.

“In the restructuring exercise, the laboratory was left out, which was very unfortunate. But we have increased the equipment and refurbished the laboratory after we got funding from the World Bank. In the future, we are planning for the laboratory to get its own separate funding from government,” said Dr Olaho Mukani.

However, Ugandan authorities have threatened to reject the report by the visiting Kenyan veterinary services team on the state of Uganda’s veterinary services. Uganda accuses Kenya of breaching guidelines on confidentiality set by the World Organisation for Animal Health (OIE), and of trying to unfairly influence matters by raising them at the political level before they are discussed by the technical experts.

Dr David Kauta Nawa, the Commissioner for Livestock Health and Entomology in Uganda’s Agriculture Ministry, accused his Kenyan counterparts of jumping the gun.

He stated: “The method that they are using to make their submissions is irregular. We are supposed to communicate as veterinary service professionals, study the report and then bring it jointly to the political level, but now the things have started at the political level.

“According to the guidelines given by the OIE, all of us as veterinary service professionals are supposed to act impartially and not to be swayed by political sentiments. But when such a report first goes to the political level, it means they don’t want to work impartially.”

The Kenyan report further noted that Uganda does not have a policy on poultry, meaning that the government does not have a comprehensive plan for monitoring the sector.

Dr Kauta however shot down this argument, saying Uganda did not need a poultry-specific policy since it already had a sector-wide policy.

He said: “We have a disease control policy in this country. What they fear is the spread of diseases, and the policy handles the issue of poultry diseases. So why do they want a poultry policy? Do they now want us to have a separate goat policy, cattle policy, sheep policy? You can’t have a policy on maize, cassava, rice and every other plant under the sun.”

The Kenyan team’s report, according to Mr Getugi, added: “The linkage between the Ugandan government veterinary department and the poultry industry is weak, with a lack of regular inspection and monitoring of poultry industry activities.”

Mukani however said that the problem had been sorted out and that more personnel had been recruited to carry out monitoring.

The report from the Kenyan assessment team further noted that the linkages between the District Veterinary Services and the Directorate of Veterinary Services are weak since the former operate under the local authorities.

“Though the country is strong in terms of veterinary services human capacity, the backing services (laboratory services and vaccines) are weak. Consequently, the country relies on services from South Africa and Makerere University. This is mainly driven by the demands of the poultry firms and not the government/department mandate,” reported Mr Getugi in his letter.

The Kenyan government has now set tough new conditions for their counterparts in Kampala to adhere to if Ugandan poultry breeders are to be allowed to export their products.

The most controversial of the conditions is the requirement that the Kenyan Director of Veterinary Services be granted free access to evaluate Ugandan veterinary services on a biannual basis and at the same time carry out a risk analysis.

Dr Kauta however argued that the issue the Kenyan government was raising as a condition is supposed to be standard practice between countries that are involved in cross-border trade, according to OIE guidelines.

These people are talking what is obvious,” he said.

“The law says any country is free to ask another country to evaluate their services, especially if goods are being imported from that country. Why are they again bringing it up as a condition? Have we ever resisted when they ask to evaluate our services? In fact, we are the ones who wrote to them in the first place to come and inspect our facilities so I don’t know why they are putting it as a condition.”

Dr Kauta said the two countries should be working for a common cause rather than finger-pointing. He said: “We are establishing common trends in the control of animal diseases so the idea of one country going behind our back and saying the services of the other are not good enough doesn’t help. We should be talking of a team at the centre helping all countries to perform together.”

The East African

Food trade barriers contribute to shortages

By Tyler Cowen*

Rising food prices mean hunger for millions and also political unrest, as has already been seen in Haiti, Egypt and Ivory Coast. Yes, more expensive energy and bad weather are partly at fault, but the real question is why adjustment hasn’t been easier. A big problem is that the world doesn’t have enough trade in foodstuffs.

The damage that trade restrictions cause is probably most evident in the case of rice. Although rice is the major foodstuff for about half of the world, it is highly protected and regulated. Only about 5 to 7 percent of the world’s rice production is traded across borders; that’s unusually low for an agricultural commodity.

So when the price goes up — indeed, many varieties of rice have roughly doubled in price since 2007 — this highly segmented market means that the trade in rice doesn’t flow to the places of highest demand.

Poor rice yields are not the major problem. The United Nations Food and Agriculture Organization estimates that global rice production increased by 1 percent last year and says that it is expected to increase 1.8 percent this year. That’s not impressive, but it shouldn’t cause starvation.

The more telling figure is that over the next year, international trade in rice is expected to decline more than 3 percent, when it should be expanding. The decline is attributable mainly to recent restrictions on rice exports in rice-producing countries like India, Indonesia, Vietnam, China, Cambodia and Egypt.

At first glance, this seems understandable, because a country may not wish to send valuable foodstuffs abroad in a time of need. Nonetheless, the longer-run incentives are counterproductive.

Export restrictions send a message to farmers that their crops are least profitable precisely when they are most needed. There is little incentive to plant, harvest or store enough rice — or any other crop, for that matter — as a hedge against bad times. This tendency to skew supply and demand is also apparent in the Philippines, where the government is tracking down and arresting rice hoarders, who, of course, are simply storing rice for the possibility of even harder times to come.

In commodity markets, it’s not uncommon for high demand to cause sharp increases in prices; on short notice, it’s often hard to match the new demand with more supply. The question is whether supply, and trade, can grow to offset market tightness.

Restrictions on the rice trade run the risk of making shortages and high prices permanent. Export restrictions treat rice trade and production as a zero- or negative-sum game where one country’s gain comes at the expense of another. That’s hardly the best way to move forward in a rapidly growing world economy.

This lack of support for trade reflects a broader and disturbing trend. An increasing percentage of the world’s production, including that for agriculture, comes from poor countries. Over all, that’s good for rich countries, which can focus on creating other goods and services, and for the poor countries, which are producing more wealth. But it can slow the speed of adjustment to changing global conditions.

For example, if demand for rice rises, Vietnamese farmers — who remain shackled by many longstanding regulations of communism — aren’t always able to respond quickly. They don’t even have complete freedom to ship and trade rice within their own country.

Poorer countries also tend to be the most protectionist. To make matters worse, about half of the global rice trade is run by politicized state trading boards.

The reality is that many of today’s commodity shortages, including that for oil, occur because ever more production and trade take place in relatively inefficient and inflexible countries. We’re accustomed to the response times of Silicon Valley, but when it comes to commodities production, many of the relevant institutions abroad have only one foot in the modern age. In other words, the world’s commodities table is very far from flat.

Many poor countries, including some in Africa, could be growing much more rice than they do now. The major culprits include corruption in the rice supply chain, poorly conceived irrigation systems, terrible or even nonexistent roads, insecure property rights, ill-considered land reforms, and price controls on rice.

The ability of a country to grow rice depends not just on its weather, but also on its institutions. Burma, now Myanmar, was once the world’s leading rice exporter, but it is now an economic basket case and many of its people go hungry.

Of course, wealthy countries are partly at fault, too. Japan, South Korea and Taiwan all protect their native rice farmers; you’ll even see rice being grown in Spain and Italy, aided by European Union subsidies and protectionism. The United States spends billions subsidizing domestic rice farmers.

In the short run, these domestic rice producers mean less demand pressure on the world market, which might seem like a good thing. But, again, the longer-term effects are pernicious.

Low cost rice production in countries like Thailand isn’t geared to meeting higher foreign demand, as it would be in a freer market. When more rice is needed, capacity is limited and the grains are slow in coming. And the protected rice from wealthy countries is simply too expensive to alleviate hunger in very poor countries.

Lately, it’s become fashionable to assert that, in this time of financial market turmoil, the market-oriented teachings of Milton Friedman belong more to the past than to the future. The sadder truth is that when it comes to food production — arguably the most important of all human activities — Mr. Friedman’s free-trade ideas still haven’t seen the light of day.

*Tyler Cowen is a professor of economics at George Mason University.

NYTimes

UNCTAD should regulate trade in agriculture commodities to reduce dominance of multinational corporations

ActionAid has hit out at resistance by the EU and the US to demands by G77 for a stronger role for UNCTAD to regulate trade in agriculture commodities. The EU and US are also accused of starving UNCTAD of resources and limiting its mandate.

“The EU and US are pushing this responsibility to national governments knowing too well that they do not have capacity to negotiate with powerful multinationals dominating agricultural commodity trading,” said Aftab Alam Khan, ActionAid’s International Trade Policy Coordinator.

At the heart of commodity issues are complex agricultural commodity issues where multinational companies dominating the sector dictate the terms adversely affecting commodity-reliant developing countries while extracting unfair profits from the supply chain.

Joint ActionAid and South Centre research reveals six top coffee trading companies held half of the world market in 1998 while in 2002 only two companies controlled three-quarters of the global grain trade and another two, half of world’s banana trade.

UNCTAD has a clear mandate to work effectively on commodity issues so that small scale farmers are encouraged to produce more food to ensure national food sovereignty.

ActionAid believes a lasting solution to the pressures in the current food supply must include increased investment in smallholder agriculture and mechanisms to ensure they benefit adequately from commodities trading.

“ActionAid condemns moves by the EU and the US to further marginalise UNCTAD from the international trade and development agenda. While poor countries are facing increased challenges from globalisation, the EU and US are opposing G77 (Group of Developing Countries) demands to create an UNCTAD commission on globalisation,” said Alam Khan. “It will be a travesty of justice if the goals and aspirations of poor countries are neglected at this conference,” he added.

Resources must be provided to UNCTAD to implement its mandate in trade and development. Any interference from any quarter is deemed as a betrayal to the cause of the developing world.

allafrica.com

Asian competitiveness is engendering a Western anti-free trade backlash

By Chan Akya

No good deed ever goes unpunished. Asians are quickly discovering the wisdom of this idiom, as they suddenly confront staggering shortages in basic food items. The price of rice has gone up exponentially in the past few weeks, crossing US$1,000 a tonne, despite the absence of any discernible decrease in global production nor a concurrent increase in consumption.

The upshot for Asian governments is increased social tensions in many countries where food shortages were unheard of until very recently, as well as a number of others where economic fragility has increased on the back of rising food prices. People have to eat, and if it costs them too much to eat, they will in turn demand to be paid more. This creates a vicious cycle of inflation that will eventually reduce the living standards of pretty much every second person in the region.

The source of this sudden spike in food prices, led by rice, has been the weakening purchasing power of the world's favorite currency. The second reason is what military strategists would euphemistically term 'collateral damage' from the ongoing reshaping of the world economic order, namely increased difficulties being faced in international trade.

Tackling the second problem first, the world appears inexorably headed for a period of increased trade confrontations that would make trade terms much more onerous for most countries. The primary target is Asian exports, which are much more competitive now than say 10 or 20 years ago.

Grumbling about the losses of jobs in America and Europe, and using the environment as an excuse, the West is already imposing substantial penalties on the natural advantages of Asian manufacturing. This will lead to higher tariffs on most products, as well as the tying of investments with trade, a key demand from Western countries seeking to overturn the savings advantage of Asians by erecting monopolistic structures around their entrepreneurs.

Agricultural produce has been the source of much abuse by the Europeans, whose Common Agricultural Policy (CAP - surely an acronym that deserves an "R" as its second letter) is uniquely responsible for keeping a billion people in dire poverty. The American response has been both through their own subsidies, and by increasing the alternative uses of agricultural crops such as ethanol for corn that is heavily subsidized in the name of energy self sufficiency.

CAP ensures that vast farms producing overly expensive produce in Europe are sustained at taxpayer expense, leaving fallow the fertile lands of Africa and many parts of Asia as excess production is dumped on global markets. These countries cannot export to Europe or the United States due to the tying of agricultural trade with unrelated items, creating astounding tariff and non-tariff barriers to trade.

A simple example is sugar. Over a fifth of the world's sugar is derived from beet, even though it is more than five times inefficient compared with sugarcane product due to its higher consumption of energy and other factor inputs. The reason that beet sugar is produced at all is the CAP subsidies in Europe, which in turn make it uneconomical for many farming countries in central Africa to grow sugarcane. The result is a constant search for employment, income in turn creating a mess of tribal conflicts across the region.

Any European who talks about how much more civilized the continent has been relative to America's war-mongering clearly doesn't understand the horrific costs on poor farmers elsewhere in the world. Put simply, while it's easy to count America's war dead perhaps in the hundreds of thousands, victims of European farm subsidies number in the hundreds of millions.

The eagerness of unctuous European politicians to protect schemes like CAP has proved to be the biggest stumbling block in talks in free up global trade and has led to a complex web of tariffs on agricultural produce. Each layer of tariffs imposed by a country creates an additional issue for every bilateral agreement. If you wanted to picture this, the best would be a large spider's web, but with every node hosting a separate web connecting with a specific group of countries.

The upshot of all this is that trading in agricultural products is by far the most complex issue in international trade with lack of uniform standards, multiple layers of bureaucracy, zero price transparency and most importantly, a complete absence of free markets.

All too often, these arrangements fail - imagine the spider's web above and think that a ball bearing were to fall through multiple layers - and you get the idea that what starts as a minor problem, such as a weather disturbance, in one country can quickly degenerate into global panic on the price of the produce affected.

This is what has happened to rice of late. The largest consumers of rice being in Asia, a few minor weather disturbances caused exports to decline and as prices rose as a consequence, quickly caused a domino effect of trade bans and other barriers, accentuating the problem. The Philippines is the worst affected by the mess, but others like Indonesia are also suffering.

Rice may be an Asian problem, but the unnecessarily complex system of trade agreements in place is clearly a legacy of corrupt European governments, who bear all the moral shame in this matter.

There is however another culprit here, one that gets away scot-free usually. As most regular readers of this column know, I am referring to the root cause of the current mess of inflation amid excessively depressed interest rates, the US dollar. More simply, the idiot central bankers of Asia who squander their responsibility at the altar of conformity by purchasing billions of dollars worth of useless financial assets have done their region a great disservice.
This is really simple to understand for even a child of five, but since central bankers often forget basic things like tying their shoelaces, lets remind them.

Purchasing too much of anything increases its price, not its value if the latter is defined purely as the marginal utility of consumption. The US dollar is too strong relative to inherent industrial and service sector advantages of the US economy today. Put differently, America's economy if far bigger than it deserves to be, thanks mainly to the unregulated appetite of Asian central bankers in accumulating US dollars and its overvalued counterparts such as the euro.

This is why Americans continue to drive gas-guzzling SUVs to collect their unemployment benefits from an increasingly indebted US government that in turn borrows the money from Asian governments by giving them IOUs that return less than the domestic inflation rates of all these countries. (Note: if you are a central banker, you are encouraged to read that sentence a few times. Anyone else will have understood it in the first read and can proceed).

The other side of this wealth transfer is that Asian currencies are stupidly cheap compared with the competitive advantages that have been heaped on the region for the past few decades. That in turn attunes an excessive number of factor inputs to the production of goods for the US consumer rather than serving domestic consumption. Looking through the economic make-up of most of the region, only Australia and India stand out as countries with a defensible mix of domestic consumption against goods produced for exports.

Locking up savings in a currency that has terminally declining purchasing power means that Asian authorities have less fiscal and monetary policy leeway to regulate the dynamics of their own economies. This is what causes structural inflation, that is, the achievement of a new level in prices, as different from a cyclical increase in prices, which has in turn manifested in food prices.

As governments in countries like the Philippines scurry for cover, very little is being said about the main culprits, namely European farm subsidies and the overvalued US dollar.

Asia Times

Kenya launches new agricultural commodities market

Kenya will on April 21 launch a new agricultural commodities market that will see farmers instantly realise the value of their produce and free them from the grips of exploitative middlemen.

Establishment of the warehouse facility, the first of its kind in Kenya, is also seen as the precursor to the long awaited setting up of a commodities exchange in Nairobi.

The facility, which will trade as the Nakuru Wheat Silos is expected to shield farmers from the sharp swings in commodity prices by offering safer storage when prices are down while at the same time allowing them to use stored produce as promissory notes upon which they can access bank loans to grow their business.

For many years, Kenyan farmers, who form the bulk of the population, have been forced to sell their produce to profiteering middlemen at throw away prices, only for the middlemen to reap huge profits from the same as prices rise with scarcity. Farmers will now have a chance to temporarily store their produce in well equipped and professionally managed warehouses as they await the stabilizing of prices in the post harvest period.

While their produce is stored at the warehouses, farmers will use receipts issued at the warehouses to get loans from commercial banks using their produce as security. This is money they can use to finance their growth needs and prepare for the next planting season before selling their previous harvests. Millers and other organizations wishing to procure grain such as the numerous food aid agencies operating in the country can buy the warehouse receipts, whose quality is guaranteed.

The warehousing initiative is being supported by the Financial Sector Deepening Trust, the USAID Kenya Maize Development Program (KMDP) and Regional Agricultural Trade Expansion Support (RATES) and Lesiolo Grain Handlers Ltd. A self regulatory members body, the Eastern Africa Grain Council (EAGC) will be charged with regulating the commodities warehousing scheme, setting the rules and admitting new members.

Ms Anne Mbaabu is the new council’s executive director. EAGC marketing information manager Bridget Okumu says that the warehouse receipt system initiative started operating in mid March, but the official launch is set for April 21 in Nakuru.

Core members of the council include producers, millers and traders while other associate service provider members such as banks, warehouses and insurance companies.

Equity Bank has already advanced loans to six farmers based on the ‘warehousing receipt’ system while other banks such as KCB, Cooperative and Family are said to be interested in joining the scheme. “The warehousing receipt system will help farmers to pay their school fees and meet other household needs without feeling the undue pressure to turn to exploitative middlemen,” says Ms Okumu.

And as the commodities market opens up even more, the ‘warehousing receipt’ is likely to form the basis for the formation of a commodities exchange market; opening up a new, potentially huge economic front. The envisaged commodities exchange market would operate by trading in the warehouse receipts on the same principle as shareholders at the Nairobi Stock Exchange (NSE) trade in shares, creating a new investment opportunity for all Kenyans.

The NSE Chief executive officer Chris Mwebesa says that the stock exchange is willing to provide necessary expertise and the platform for hosting a commodities exchange, as a basis for developing a fully fledged futures exchange market. However, the warehousing receipt would have to first gain acceptance as a financial instrument before it can be traded at a commodities exchange. “The launch of the warehousing system is a major development but other steps will need to be taken before the establishment of a commodities exchange and later a futures exchange,” says Mr Mwebesa.

The EAGC says that farmers will deposit maize in certain certified warehouses during the harvest period between the months of December to March after which they will be issued with warehousing receipts.

Farmers with an urgent need for cash will then borrow from commercial banks using the warehousing receipts, after which they can then sell their stored maize at a margin in the months of May to August when prices are expected to have stabilized.

EAGC has negotiated for minimum storage costs with warehousing owners, who shall be approved by the council based on specified criteria that spells out the technical aspects of the warehouses.

The council has approved only maize as the acceptable product so far, but Ms Okumu says that other commodities such as wheat and beans shall be acceptable later in the year.

Each farmer will be issued with a single warehousing receipt upon the submission of 100 metric tomes (MT) of maize, equivalent to 1,111 90 kilogram bags of maize. The warehouse has so far received 1,000 MT of maize from 10 individual farmers, but is encouraging the small scale farmers to form small groups and submit their harvest in bulk. Six of the ten farmers have already applied and received loans from Equity Bank using the warehouse receipts as collateral.

Ms Okumu says that the council hopes to have warehouses in all the agriculture rich areas including Eldoret, Kitale and the South Rift regions.

Kenya already has three commodities exchanges: The Nairobi Coffee Exchanges dealing with coffee, Tea Auction in Mombasa and the Kenya Agriculture Commodity Exchange (KACE), a spot exchange that deals with a variety of commodities but mostly maize and beans.

KACE’s managing director James Kundu said additional commodities exchange would be welcome as it would help improve marketing of produce in the region. “The main challenge, however remains the quality of the produce that farmers deliver and the reality that most are small scale and find it difficult to deliver in bulk, which is the ideal for an exchange like this,” said Mr Kundu.

Other challenges are that most of the commodities in Kenya are heavily regulated by boards and are grown and marketed in an environment of struggling cooperatives, which are inefficient, mismanaged and have cumbersome internal bureaucracies.

Commodities that would be popular in the local commodity exchanges include maize, beans, potatoes, vegetables, wheat and barley.

Ethiopia and South Africa are other countries in Africa that have functional commodity exchanges, complete with warehouses. The Ethiopia Commodity Exchange (ECX) trades in six commodities: coffee, sesame, haricot beans, wheat and maize.

ECX provides a marketplace where buyers and sellers can come together to trade and be assured of quality, delivery and payment. The exchange includes a trading floor in Addis Ababa, six warehouse delivery locations, and 20 electronic price tickers in major market towns.

““ECX will allow farmers and traders to link to the global economy, propelling Ethiopian agriculture forward to a whole new level,” said Gabre-Madhin, the exchange CEO.

The Johannesburg Stock Exchange houses the South African Futures Exchange for farm produce.

Business Daily Africa

WTO says EU banana import practices violate trade rules

The World Trade Organisation ruled November 29 that the European Union's banana importing practices violate international trade rules, a diplomatic source said here.

The WTO upheld a complaint from Ecuador challenging an EU system governing banana imports, implemented January 1, 2006, that imposed custom duties of 176 euros (260 dollars) per tonne on bananas from countries outside the Africa-Caribbean-Pacific (ACP) group.

Ecuador, the leading exporter of bananas to the European Union, argued that the system was preventing it from maintaining its share of the European market.

Quito said its share fell to 27.5 percent in the first eight months of 2006 from 29.9 percent in the same period of 2005.

A preliminary report from the WTO delivered confidentially to the parties earlier this week found that the EU importing scheme was inconsistent with global trade rules, the source said.

Bananas from Latin America account for four fifths of EU imports, with the remainder coming from African, Caribbean and Pacific nations.

ACP bananas enter the European Union duty free under a quota of 750,000 tonnes a year.

Under previous practices, bananas from Latin America and non-ACP countries were subject to a tariff of 75 euros a tonne under a certain quota level and 680 euros a tonne above that level.

A spokesman for the European Union, referring to the preliminary finding, claimed earlier Thursday that imports in the EU had increased from Latin American producers.

"Data show that imports from Latin American countries have increased substantially -- 10.7 percent in 2006 compared to 2005 and 8.0 percent in the first three quarters of 2007 compared to the same period in 2006 -- since the introduction of the Tariff Only regime in 2006."

He maintained that "it is through negotiations, not litigation, that we will find a solution that is satisfactory for all suppliers."

AFP

Ghanaian horticultural sector urges signing of EPA to prevent EU export disruption

Ghanaian fresh produce exporters are urging government to go it alone and sign the interim Economic Partnership Agreements (EPA Light) with the European Union if the Economic Commission of Western African States (ECOWAS) bloc was not ready to do so.

They said that was to avoid disruption to trade in January 2008.

West African trade negotiators at a meeting in Abidjan had asked for extension of the World Trade Organization’s waiver but the EU is unwilling to accede to the request.

Instead, the EU has proposed a two stage approach to the EPAs; that is concluding an agreement in the area of market access by the end of November this year, while negotiations on services and other trade related issues such as government procurement should continue till 2008.

The Sea-Freight Pineapple Exporters of Ghana (SPEG) and the Horticulturists’ Association of Ghana, two leading fresh produce export associations and others, said without the government signing onto the EPA, future trade relations with the EU looked bleak.

Mr Stephen Mintah, General Manager, SPEG said, “Our support for this option is also based on the fact that it includes the opportunity to protect vulnerable domestic industry and products. We understand that the protection of local industry can be achieved through the submission of a list of sensitive products that are protected from immediate liberalization and negotiated market access schedule for the liberalization of the remaining product lines.”

The EU is a principal market for Ghanaian fresh produce exports with earnings ranging between 60 and 80 million dollars every year. It is also a significant market for non-traditional exports in general, taking on average between 50 per cent and 55 per cent.

Mr. Mintah said an estimated 372 million Euros would be lost by the exporting firms in 2008 alone in the event of failure to conclude the negotiations in full or to adopt any other option that could prevent disruptions to trade. In addition, more than 33,000 direct jobs would be lost and hundreds of thousands of indirect jobs and livelihoods would also be put under threat in the industry. Mintah said the uncertainty surrounding the negotiations did not augur well for planning, which was key to success in the fresh produce industry.

Mr. Fred Adongo, Chief Executive of the Federation of the Association of Ghanaian Exporters, said Ghana would not be undermining regional integration when she decided to sign onto the EPA light alone.

Civil society groups, including the Third World Network and the Ghana Trade Union Congress, have asked government to put on the negotiating table the enhanced Generalised System of Preferences (GSP+) rather than sign onto the EPA. They argued that the GSP+ would provide the same market access to exporters to the EU market as the one currently being enjoyed under the Cotonou Agreement.

The EU is seeking under the EPAs the opening up of the markets of the Africa, Caribbean and Pacific (ACP) countries duty and quota free for goods from Europe in exchange for the same treatment to products from the ACP countries.

The EU said the current Cotonou Agreement under which the Africa, Carribean and Pacific countries had enjoyed preferential treatment, is incompatible with World Trade Organization (WTO) rules that demanded equal treatment for all member countries and there was therefore the need for a trade agreement compatible with WTO rules.

The EU further argued that the EPAs would push forward the regional integration agenda by ensuring that countries rationalized and harmonized their regional trade arrangements and in the process strengthen the integration process and the economies.

The EU also maintained that it could not extend the existing system and that the only legal alternative to EPA, which was called the Generalised System of Preferences or "GSP", offered much less generous market access, unless a country was classed as "Least Developed" by the United Nations - which Ghana is not.

My Joy

UNCTAD commodities exchange meeting slated for Geneva, September 3

Structural changes in commodity markets – in particular, liberalization and the substantial withdrawal of government support for the sector – initially drove the promotion by developing country governments of exchanges as an instrument of commodity-sector development. In recent years, a more ambitious approach has been taken. Largely driven by advances in information and communications technology, commodity exchanges are now moving beyond earlier constraints to become institutional catalysts for improving performance in the commodity sector and integrating supply chains.

A UNCTAD-organised meeting to be held on 3 September in Geneva, Switzerland will look at the trade and development aspects of these institutions as public and private efforts to establish African commodities exchanges pick up, as well as in the developing world in general. Under the heading "Trade and Development Implications of Commodity Exchanges," the discussions will serve to inform UNCTAD member States about the growing usefulness of commodity exchanges in liberalizing and globalizing commodity markets.

The discussions will provide a forum for appraising the extent to which a commodity exchange can trigger a wide range of potential benefits for developing countries’ commodity sectors by : creating markets and broadening access to them; building confidence among commodity-sector participants to enter into trading relationships; improving the price discovery process; facilitating risk management and access to finance; enhancing infrastructure; and upgrading the quality of production.

Experts will also examine the key challenges in promoting a robust but facilitative regulatory environment within which commodity exchange can operate effectively, as well as the role of commodity exchanges in stimulating the expansion of South–South commodity trade and regional economic integration.

To facilitate the discussion, the UNCTAD secretariat has prepared a background note entitled "The development role of commodity exchanges," which together with further details about the September meeting can be found at www.unctad.org/c1em33_comex

Contacts: Ms. Leonela Santana-Boado (leonela.santana-boado@unctad.org) or
Mr. Adam Gross (adam.gross@unctad.org)

African cotton growers worry over trade talks setback

African cotton producers said on June 22 the collapse of talks critical to salvaging global trade negotiations was a blow to their hopes of obtaining an end to US cotton subsidies. But the struggling African growers vowed to pursue their campaign in the World Trade Organisation against hefty subsidies paid to American cotton farmers which they say shut them out of the market and keep them stuck in poverty.

On June 21, discussions in Potsdam, Germany, between four of the world's big trade powers ended in failure, throwing into doubt the future of global WTO talks on free commerce.

The United States and European Union, representing rich nations, and Brazil and India, for the developing world, were attempting to overcome deep differences over how far to open up farm and industry markets and cut rich country farm subsidies.

"It's a shame the big states flee from their responsibilities over such a vital issue... their attitude is purely and simply an affront against human rights," said Francois Traore, president of the African Cotton Producers' Union (APROCA). Traore, who also heads Burkina Faso's National Union of Cotton Producers, said African growers would keep lobbying within the WTO. "The WTO is still the structure which should find a solution to this farm subsidies problem ... short of taking up arms against them (the subsidy-paying countries), the only option is negotiation and we'll continue with that," he said.

African cotton producers such as Burkina Faso, Mali, Benin, Togo, Chad and Ivory Coast call the subsidies issue a matter of survival for their farm-based economies. They want Washington to help compensate for what they see as millions of dollars of losses due to lower prices they say are caused by subsidies.

"The failure of the talks has ruined our hopes. We were hoping they would finish up with something favourable," said Laurent Fihox Gbegbe, spokesman for Ivory Coast's Professional Association of Cotton Companies.

Bassiaka Dao, president of Burkina Faso's Confederation of Peasant Farmers, accused the big trade powers, and especially the United States, of "dictating their law".

"I'm convinced that's what they want, to keep us poor countries in poverty," he said.

The European Union's top aid official said the collapse of the Potsdam talks could threaten the
so-called Doha round of WTO negotiations. "It will not have a positive impact, I think everybody knows that," EU Aid and Development Commissioner Louis Michel said. He said the EU imported more agricultural goods from the developing world than the rest of the G8 countries together, adding that 97 percent of goods from Africa entered the EU free of duties and duty quotas. "By 2008, that will be 99.99 percent, and in 2015, it will be 100 percent. We cannot go further than that," he said, adding that Europe's trading partners needed to make concessions too.

Brazil and India said the United States and the EU were demanding too high a price for cutting their trade distorting farm policies. The U.S. and EU said Brazil and India refused to offer significant new market openings in manufacturing.

Engineering News

Agricultural trade reforms key to reducing poverty

With almost 70% of the poor people in developing countries living in rural areas, agricultural sector reforms - in particular global trade liberalization - will be crucial in giving them opportunities for better lives, according to a new World Bank report.

The report, 'Global Agricultural Trade and Developing Countries,' notes that despite the recent framework agreement in Geneva, agricultural protection continues to be among the most contentious issues in global trade negotiations. High protection of agriculture in industrial countries was the main cause of the breakdown of the Cancún Ministerial Meetings in 2003, and remains among the key outstanding issues in the Doha Round of global trade negotiations.

Developing countries are investing to increase their agricultural productivity, but these gains will not be fully translated into poverty reduction unless industrial and some middle-income countries reduce agricultural trade protection, the report says. In the absence of reduced protection in these countries, increased productivity in agriculture will instead give rise to overproduction and price declines for many commodities, undermining competitive poor countries' efforts to expand exports and rural incomes. It also increases pressure for greater protection globally.

Business in Africa

New African commodities exchanges aim to help producers

Two new African commodity exchanges, one already launched and another due within a year, aim to boost producers' returns and give small farmers access to credit.

The Agricultural Commodity Exchange for Africa (ACE), launched six months ago for spot and forward trade in agricultural commodities in Malawi, Zambia and South Africa, has so far seen trade worth $3 million.

The Pan African Commodities Platform has a more ambitious project to launch a commodities exchange in every African country from a hub in Botswana, and aims for a delayed start in November 2007 or April 2008.

India's fast-growing Multi-Commodity Exchange (MCX) is also looking at opportunities in Africa, Joint Managing Director Lamon Rutton said on May 16.

"Small producers are marginalised (a) by small volumes and (b) by a lack of information," ACE Chief Executive Ian Goggin said on the sidelines of an international commodity exchanges conference in Istanbul, Turkey.

Advances in technology have made these new exchanges possible. Goggin's exchange is looking into sending market information by mobile phone while electronic exchanges are cheaper than conventional market places. "Technology has made it infinitely more accessible and viable for these exchanges to establish themselves ... today you can basically do it on a desktop and you can communicate and handle a very high workload," said Pan African Commodities Platform CEO Anthony Adendorff.

That exchange, which expects to invest $28 million in the first three years, will start in Botswana, Egypt, Uganda, Nigeria and Zambia. Energy, minerals and agricultural commodities will be traded on spot and derivative markets.

Both African projects aim to bring producers directly to the market, boosting their prices. Future contracts also provide a kind of insurance to allow small farmers better access to credit, which in turn can boost productivity. "We regard (the exchanges) as an essential part of this whole strategy of improving access to credit for farmers through hedging," said Alexander Sarris, director of the U.N. Food and Agriculture Organization's Trade and Markets Division.

Some African officials at the Istanbul conference were cautious about the pan-African plan, and are focused instead on national projects, for example in Senegal where a futures market for cereals and fruit is expected to in 2008, according to Fatou Gaye Sarr, an agriculture ministry director.

Goggin says ACE, indirectly funded by USAID, has already affected quality by establishing four different tradable types of maize in Malawi instead of the one standard used before. It also creates markets that previously did not exist as products usually discarded in one country, such as maize bran, can now be sold to another where there is a use for it. They will also encourage donors to buy through the exchange.

Goggin says such exchange can develop quickly, citing growth of volumes in Zimbabwe's agricultural exchange ZIMACE from $1 million at its launch in the mid-1990s to almost $700 million in 2001 before government controls undermined it.

But experts say harmonising regulation is the biggest challenge for an international market. "That is the main obstacle, all the other issues can be addressed at very short notice. It's harmonising regulation that is the important one," Adendorff said.

Reuters

China's growth to stimulate African agriculture

China's industrialisation would help stimulate Africa's agriculture and services sectors, says a Standard Chartered Bank (SCB) report released in early May. The SCB paper says China's trade and investment with Africa are expected to benefit not only the natural resources sector but also services such as tourism.

The SCB report says that in 2004, China investments in Africa accounted for about 6 percent of the $16 billion of total foreign direct investment into the continent. Most investments are directed towards the energy sector, particularly petroleum. According to the African Development Bank, China's trade with the continent increased from $10 billion in 2000 to more than $40 billion in 2006. The Asian country's huge appetite for natural resources such as petroleum, platinum, gold and base metals, has pushed it to maintain close ties with Africa.

Abah Ofon, global research economist at SCB, said that over the next quarter of a century China might face an even bigger problem than its current demand for natural resources: feeding its growing population, which exceeds 1 billion, poses a serious challenge. He said about 285 million people were expected to move into towns, reducing the size of arable land in use in China. This would increase the demand for "soft commodities".

Dennis Dykes, chief economist at Nedbank, said that over the long term, China's growth would stimulate food production in Africa, as the continent was likely to export food to it. He said China's relationship with Africa had already improved the continent's terms of trade, albeit on the support of high commodity prices.

The report shows that Africa's trade with China has improved from a deficit of $1.3 billion in 2003 to a surplus of $3.3 billion in 2006, mainly on the back of strong commodity prices.

However, Ofon said there were risks associated with the growing economic links between Africa and China. For weaker African economies, any problems in China, such as recent market volatility, might have a serious economic impact.

Business Report

Investor forces ethics on to Tesco agenda

A report from War on Want in 2006 found evidence that mainly women workers in Bangladesh regularly work 80 hours a week for 2 cents an hour in what it called "death trap" factories to produce garments for supermarket chains Primark, Tesco and Asda. The Fashion Victims report was based on research at six Dhaka factories employing more than 5,000 workers. The UK stores have all made commitments to pay a minimum £22 ($44) a month - calculated as a living wage in Bangladesh - but War on Want said wages started at £8 a month. Last month Action Aid published a report showing workers at overseas suppliers of UK supermarkets being paid poverty wages.

Now comes news that a small shareholder has amassed enough support to force the issue of ethical trading with suppliers onto the agenda at Tesco's annual shareholders' meeting on June 29. Ben Birnberg, a retired solicitor, wants to force the supermarket to adopt higher standards in its dealings with suppliers and farmers in low-wage countries.

Birnberg, who is also the company secretary at War on Want, has won the support of more than 100 shareholders, who speak for six times the number of shares required, to force Tesco to include a resolution demanding higher standards to be put to shareholders. The resolution would oblige Tesco to appoint independent auditors to ensure that workers in its supplier factories and farms are guaranteed "decent working conditions, a living wage, job security" and the right to join a trade union of their choice.

Birnberg had asked Tesco's directors to include the resolution to demonstrate their commitment to ethical sourcing by backing his resolution and circulating it to shareholders. Company secretary Jonathan Lloyd turned down the request, claiming it was "not valid", so Birnberg turned to measures included in the Companies Act to force the retailer to comply. Under Section 376 of the act he needed the support of at least 100 other shareholders who held an average of 2,000 shares each.

By the weekend of May 12, however, he had gained the support of more than 100 shareholders who speak for an average of nearly 13,000 shares each. He has had several large shareholders pledge their support, including the Joseph Rowntree Charitable Trust, an independent organisation based on Quaker values which is committed to "philanthropy which changes the existing power imbalances in society to effect real change."

Birnberg intends to deliver his letters of support to Lloyd at Tesco's head office, in Cheshunt, this week. The deadline for the resolution to be received in time for the June 29 annual general meeting is May 18. Lloyd had hoped to avoid the confrontation and had arranged to meet War on Want's campaigns director. A spokesman for Tesco said the supermarket group wanted "to chat through the issues" and believed it was better to do that "out of the public sphere."

Tesco could yet try to block the issue going before shareholders by demanding that Birnberg or War on Want pay for circulating the resolution and a statement explaining its aims. Birnberg, however, said the cost should only be small as it would be mailed out with other AGM documents. "This has been a bit of a struggle, but there has been enormous goodwill behind this from forward-thinking people," he said. "It chimes with the times and the arrival of Gordon Brown, who has always been concerned about conditions in the third world. We are trying to address this using shareholder power."

Support for Birnberg's resolution was boosted after an exchange of letters in the Guardian last month. Birnberg pointed out that Tesco boasted of its "market-leading package of pay and benefits" and insisted that it believed in "treating our partners as we like to be treated." The grocer has also stated that it is keen "to uphold labour standards in the supply chain."

Tesco's legal affairs director Lucy Neville-Rolfe responded with a letter saying it would be easier for the UK's biggest retailer to stop sourcing from countries with economic and social problems it cannot fix, but that trade was the right way to lift living standards.

The Guardian

Trade liberalization may harm poorest nations, FAO report warns

The results of renewed negotiations aimed at liberalizing international trade might hurt rather than help the world's poorest countries unless those nations are given the necessary leeway to protect their food security and essential development needs, the United Nations Food and Agriculture Organization has warned.

FAO urged government ministers participating in the revived Doha Round of trade talks to make sure any new rules are compatible with the Millennium Development Goal that calls for the proportion of people living in extreme poverty to be halved by 2015.

The report stated that while economically advanced countries are likely to benefit from further liberalization of the global trading system, and some developing countries are becoming much more competitive as well, others could be left behind. "Many lower-income countries, especially in sub-Saharan Africa, are less well placed to gain in the short- to medium run from trade liberalization," it said, pointing especially to those most dependent on agricultural commodities to support their development and efforts to reduce poverty.

Launching the report, the Chief of the FAO's Trade Policy Service, David Hallam, said it was not surprising that the world's poorest nations regard trade liberalization "as a threat to their domestic production and food security." If tariffs are reduced, there will be increased competition from imported foods for local products, and domestic production systems may not be able to adequately respond, threatening rural incomes and employment levels,Hallam said. "It is clear that many countries will need to be allowed some flexibility in the implementation of new trade rules, and also to be given assistance, at least for the short term, while they adjust to the new market realities arising from trade liberalization."

The report called for action to be taken to ensure that the potential benefits from trade liberalization are spread as broadly and equitably as possible, suggesting developing nations be given more training and greater policy advice on how to defend their interests during trade negotiations.

The Doha Round of trade talks stalled in 2006 year amid disputes between developed and developing countries over agricultural subsidies.

News Blaze

Africa's booming food exports

Africans feeding Americans - it sounds like one whopper of a fish tale. Africa remains a continent of episodic starvation and chronic food shortages; tens of millions of sub-Saharan Africans are unable to reliably and consistently feed themselves. But these imbalances coexist with pockets of increasingly vibrant commercial farming throughout much of the continent.

"Africans are starting to prove that not only can they feed themselves, but they'll help feed the rest of the world too," says Ken Stalder, president of SW Africa Holdings, of Rockville, Md., which ships lobster tails from Mozambique to Florida and the Northeast.

Uganda is ground zero for a startling transformation of African agribusiness that's spawning scores of entrepreneurial opportunities. The country boasts two growing seasons, ample rain, rich volcanic soils, and millions of small farmers eager to expand production of cash crops. Output of everything from fish to rice, vanilla to sunflower seeds, roses to potatoes is soaring. Overall, Ugandan farm output increased nearly 50 percent during the past decade.

Investors and agriculture experts from the world over are flocking to Uganda, seeking ways to ride the emerging boom in African agribusiness. Israelis are building greenhouses and setting up the latest in hydroponic irrigation systems. Indians are growing rice and sunflower seeds. South Africans and Americans have invested in cotton gins. Europeans have opened fish-processing plants. Chinese traders are buying up specialty woods, leather hides, and fish innards - a delicacy not relished by most Westerners but big in Asia.

Scouring Uganda for other food sources, Chinese officials are talking about buying a million tons of soybeans a year from Uganda and an equally gargantuan amount of cassava, a tuber the Chinese fry up and gobble the way Westerners devour french fries.

Western investment in Africa has a sad history of promising starts with heartbreaking finishes, and many things, corruption, coups, climate change, could kill efforts to create a global breadbasket on the continent.

"I've been telling Americans, 'Come to East Africa; there are tremendous opportunities here," says Calvin Burgess, a real estate developer from Oklahoma City. He is launching rice- and fish-farming enterprises in western Kenya, across the border from one of Uganda's most fertile areas, where he hopes to expand. "Americans are crazy if we don't come," he says. "Opportunities like this around the world are rare indeed."

Uganda's unfolding agricultural boom is, like much in the world economy today, partly fed by the roaring growth of China and India. Just as those countries are prospecting across the globe for fuel to power their superheated economies, they must also search abroad for foodstuffs to meet their surging middle classes' hunger for a more varied and richer diet.

The boom is also fueled by Europe's emerging taste for year-round and exotic fresh foods and by increases in the wholesale prices of specialty items that make it economical to fly certain goods halfway around the world on commercial airlines so American consumers can enjoy Africa's bounty just days after harvest.

CNN

Fears that revamped US farm policy could increase subsidies, devastate African cotton farmers

Washington's proposed farm policy overhaul threatens to worsen the plight of Africa's cotton farmers by providing fresh assistance to U.S. producers, African ministers have said.

Speaking after a mid-March two-day World Trade Organization (WTO) meeting on cotton, representatives of cotton producers said they believed the 2007 farm bill, an umbrella law that will set most U.S. agriculture policy for five years, could boost aid to American cotton farmers by up to 66 percent. This would make it even harder for Africa's 15 million cotton farmers to compete with subsidized crops from the United States, the world's largest cotton exporter, selling 80 percent of its cotton abroad.

"The new U.S. farm law is counterproductive, it will aggravate the situation," Benin's trade minister Moudjaidou Issifou Soumanou said, flanked by ministers from Angola, Burkina Faso, Chad, Ghana, Mali, South Africa, Tanzania, Uganda and Zimbabwe. The ministers said they were still analyzing the potential impact of the U.S. law, but said early readings suggested the bill would boost the amount of heavily-subsidized cotton leaving the United States.

U.S. cotton subsidies totaled $4 billion in fiscal 2006, which ended in August, and the government estimates they will decrease to $2.8 billion in fiscal 2007. African governments and farmers blame the subsidies to cotton producers in rich nations by their governments for flooding the market, driving down global prices and causing poor farmers to run at a loss.

Brazil has already successfully attacked the U.S. cotton program, winning a landmark 2004 verdict at the WTO that caused the United States to repeal certain export and import subsidies on cotton. But other U.S. assistance programs remain in place.

Domestic supports on farm goods are a sticking point in negotiations over a new WTO trade accord, known as the Doha round, which was launched five years ago in the Qatari capital. Washington has said it can only cut subsidies so far until others, such as the European Union, roll back import duties and create new markets for U.S. farm products overseas.

WTO Director-General Pascal Lamy, who suspended talks over the pact last in July 2006 because of a deadlock between major parties, said progress on a global deal was the best prospect for Africa's cotton farmers. "The single most important contribution we can make to solving this cotton problem is to finish the Doha round as soon as possible."

Washington Post