The Rice Penalty

The Rice Penalty

The nation’s decision to ban the importation of rice and press ahead with the revival rice production for both local and international consumption was hailed as one of the positive steps towards reforming and diversifying the nation’s economy. Nigerians had acquired a strong taste for imported foods to the detriment of locally sourced products and this took its toll on the foreign exchange reserves. The ban on rice and other items was part of a larger policy to boost the flagging agricultural se or and make optimal use of its numerous potentials. After all, agriculture has long been identified as the largest non-oil export earner revenue but somehow in the face of the oil boom and petro-dollars, interest in it had waned.

Hence because of the need to reduce the nation’s dependence on oil revenue, generate employment, achieve food security and reduce poverty, agriculture has rightly found its way to the top of the nation’s economic development agenda. Today, it forms a major component of the NEEDS document. Indeed, a lot depends on the agricultural sector being transformed and sustained as a revenue earner for the nation. Some of the targets set for the agricultural sector include improvements in the annual growth rate, raise agricultural exports and reduction in food imports. There are indications that some of the targets have been met already. For instance, it was reported by the Federal Ministry of Agriculture that between 2005 and 2006 the agricultural sector grew-by seven per cent.

The nation’s efforts to revitalize the agriculture sector swathe birth of several initiatives such as the Presidential Initiative on Increased Rice Production and Export and presidential initiatives on other products such as cotton, sugar, vegetable oil, cereals, etc. This demonstrates the seriousness with which the government is seeking to promote agricultural development as a route to improve the country’s foreign exchange earnings and reduce poverty. Recently, the Federal Minister for Agriculture, Mr Adamu Bello was quoted as saying that the various initiatives on cassava, cocoa and rice had raised the country‚Äôs production from 34 million tonnes to 42 million tonnes of food crops between 2004 and 2005. He revealed that the rice initiative has reduced the importation from two million tonnes in 2002 to one million tonnes in 2004.

It was, therefore, somewhat alarming to read a news report that the nation’s decision to ban the importation of rice infringes on the trade agreement between Nigeria and the World Trade Organisation (WTO) and this may attract a heavy fine from the latter. It goes on to say that the development could lead to the withdrawal of WTO benefits to Nigeria in the area of agricultural inputs. According to the report if “Nigeria is found guilty, she would lose substantial revenue in millions of dollars as a penalty and legal bills”.

What impact could this have on the nation’s spirited efforts to transform agricultural production? Would the Federal Government extend the date of the ban on importation of rice beyond 2007, scrap it completely or comply with the penalty? The nation recorded astronomical import bill that ran into billions of US dollars through the importation rice over the years. The dumping of rice on the nation had huge implications for the nation’s smallholding farmers. Their livelihoods came under immense threat and they were prevented from fulfilling their agricultural potential. The renewed efforts in the production of rice locally have been recognized for alleviating poverty, employment generation and wealth creation. These may all suffer a setback if care is not taken.

Trading agricultural product is a global phenomenon which attracts a lot of politicking and decisions that can make or mar a nation’s economy and domestic policies. A lot has been said on the issue of subsidies on agricultural products by western countries and their effects on the farmers in the developing count1’es, especially in Africa.

According to news reports, the blame should be laid firmly on the shoulders of those who negotiated trade treaties for Nigeria under the Uruguay Agreement between 1995 and 2000. In other words, we were represented at these crucial trade agreements by people who lack sufficient experience to secure the best for the nation. The Report of the Commission for Africa also draws our attention to similar lapses during its discussion on fair trade: “The discussion must adopt a more transparent and inclusive style of decision-making than is often the norm at WTO negotiations. And it must ensure that poorly staffed African governments can get a fair deal when involved in highly complex rules-based trade negotiations in which rich countries have a large team of highly paid lawyers”. Although “this is an observation made from the perspective of the entire African continent, there is clearly a lesson to be learnt here. It is the reference to the fact that trade negotiations at the WTO need to be conducted by experienced and knowledgeable staff and not those lured by the prospect of estacode to handle briefs beyond their competencies

The report on the penalty further highlights the unfair and one-sided agreements that have been served to Africa especially where they concern access to the world markets and the impact on reducing poverty. Policies on subsidies and trade have variously come under strong criticism but so far not much has been done. The last WTO talks held in Hong Kong last December serves as a perfect reminder of the trade imbalances that exist between the North and the South.

Nigeria’s ban on the importation of rice should in no way attract a fine or withdrawal of WTO benefits. On the contrary, the nation should be commended for taking a bold step towards addressing some of its domestic problems such as unemployment, and poverty, as well as promoting agricultural development and diversifying the foreign exchange earner base. There has been a lot of rhetoric from the West about how African nations should make concerted moves towards achieving economic growth and progress. The first clear sign of shifting consumption patterns back to local food from imported foods gets slammed with a threat of a heavy fine. This development does not serve as a good example to other African nations struggling to find ways out of poverty. The level of commitments and double standards exhibited by the West towards the plight of sub-Saharan Africa on the issue of trade distortions is, to say the least quite scandalous.

A lot, however, depends on how the Government responds to this development. If anything the latest antics out of the corridors of the WTO should not see a reversal or slowdown in the nation’s drive towards agricultural development. Neither should it be a dampener on the robust export plans for rice and other products. The Commission for Africa’s Report perhaps best sums up the approach WTO should adopt towards developing nations: Individual African countries must be allowed to sequence their trade reforms in line with their poverty reduction and development plans, and not be forced to open up, their markets to foreign imports on terms that damage their infant industries”.

Originally published in Friday, July 28, 2006. Page 16, THISDAY, Vol. II No. 4115

Leave a Reply