Cabinet Office, Steering Committee, “British Obligations Overseas”, 14 April 58, Secret

“The last fifty years have seen a drastic diminution in our world status…Our trading position has suffered a relative decline; we no longer have a virtual monopoly of the industrial export markets, and our balance of payments has worsened accordingly. Two world wars have sapped the UK’s economic strength and also, to some extent, our will to dominate events”.

“In Europe…the security of the UK is paramount; in the Middle East, access to oil; in other parts of the world, the maintenance and promotion of the UK’s trading position. This should not be taken to imply that every obligation in, say, the Middle East, must be subordinated to one major interest there and assessed only by its contribution to it. The UK’s membership of the Baghdad Pact, for example, serves other aims besides protecting our access to oil, and could not perhaps be justified by this criterion alone. But access to oil is nevertheless an overriding consideration in the sense that our membership of the Pact must be compatible with it or, at least, not militate against it, and it seems realistic to measure the value of all our obligations in the Middle East in this way. Similar considerations apply to other areas”.

“In the last analysis, all parts of the world are not equally important to the aims of the UK and in some parts the main burden must fall upon the United States. Most of the Far East and Latin America, though not without importance to us, come into this category. These areas are those in which most of our interests are general, eg the containment of Communism and the maintenance of conditions in which trade can be carried on, rather than specific, eg, the defence of UK colonies. We can therefore afford to leave them to the US, whose resources are great enough to manage them… At the other end of the scale come Europe and the Middle East, where the UK has specific interests, home defence and access to oil… In between come South and South-East Asia and Africa, in which the UK has specific interests which she cannot afford to abandon or transfer to another power, but which are not immediately threatened or directly of such vital importance as those in Europe and the Middle East”.

“The basic task which confronts the United Kingdom in the Middle East is thus to pass smoothly from the previous patron-client relationship, suitable to our former strategic needs, to a new and more equally balanced commercial relationship which will preserve for as long as possible the continued supply of oil as a mutually advantageous basis of trade… in the most advanced countries, the problem is to convince the newly-arisen ruling classes that their interests lie with and their independence is not threatened by cooperation with us [sic]; in the most backward, to continue to support the present regimes without irrevocably associating ourselves with them in the eyes of the people who will one day supplant them, and with whom we must then be in a position to do business”.

Source: National Archives, T234 / 768

Report by the Joint Intelligence Commitee, “Nationalist and radical movements in the Arabian Peninsula”, 10 February 1958

“Arab nationalism, including the urge towards greater Arab unity and the removal of any foreign control, is already the most powerful emotional force in the area and it is beginning to penetrate even the most remote corners of the peninsula… The maintenance of our interests in the Persian Gulf states is dependent on continued stability in the area. At present only the Rulers can provide this. No alternative regimes are in sight, certainly not regimes which could provide the stability on which the maintenance of British interests depends. A failure to support any one of the Rulers would weaken the confidence of the others in our ability and willingness to protect them. It is on this confidence that our special position in the Gulf chiefly rests.”

Source: Public Record Office, CAB 158/31

Report by the Joint Intelligence Committee, “Development of nuclear weapons by fifth countries during the period up to 1970”, 5 September 1961

“Israel began an enlarged atomic energy programme in 1956/57. There is reason to suppose that its purpose was partly military, and the installations now being built could, when complete, be put to military use unless this were prevented by pressure from outside. It would be technically practicable for the Israelis to hold a nuclear test in 1965…”

Source: PRO/CAB 158/43

Joint Intelligence Committee, “Cuban developments and their impact on the Caribbean”, 2 June 1961

“Castro’s attempts to intervene in the affairs of other countries have alienated most governments and moderate opinion in Latin America; however, Castroism still retains much of its popular appeal. If, in the longer term, the Cuban revolution succeeds in achieving a stable regime which appears to meet the aspirations of the depressed classes, there will be a serious risk that it will inspire similar revolutions elsewhere in Latin America”.

Source, PRO, CAB 158/43

This paper by the Foreign Office planning committee considers the options of either a pro-Arab or a pro-Israel policy. It states:

“Neither…is practicable.  A pro-Arab policy would be unacceptable to British public opinion and opposed by the US government. A pro-Israeli policy would destroy all hopes of preserving British economic and political interests in the Arab Middle East… A pro-Arab policy in any thoroughgoing form would… be hard or impossible to adopt: (a) because of British public and political commitment to Israel as an ideal and the political force of support for Israel in the country; (b) because of the pressure which the United States government undoubtedly exert on HMG to keep us in line in any public pronouncements or negotiations on the dispute”.

The paper then considers middle options. The first is “active pursuit of a settlement with disassociation from the US” and, another, “active neutrality”. The first would mean the government doing “all we can to promote a settlement but without running the risk to our world-wide interests that would be involved in actively disassociating ourselves from the US position”. This has advantages and disadvantages but the first disadvantage is that “as long as we are associated with the US government in active policies toward the dispute, we shall confirm the Arab belief that we are pro-Israel”. The second option of “active neutrality” would mean “we should have to say and do things the US government did not like and to be more pro-Arab (or at least less pro-Israeli) than the Americans”. The disadvantages of this are the damage “to our world-wide relationship with the US”, that it would be criticised by some public opinion in the UK, that UK “could not affect the power structure of the conflict” (ie, have much influence) and that “there is no prospect of a European political entity” playing a “third force” role.

Therefore the paper argues for “the low risk policy”, described as “the less continuously active variant” of the last option above. “This policy should mean, in practical terms, that our efforts should first and foremost take the form of private pressure upon the US to do all in their power to bring about a settlement”. This would mean UK would have a “strictly limited role” and “modest contributions and not peace plans should be our aim”, keeping doing business with Arab world, including arms sales, and maintaining links with Israel, especially commercial.

The conclusion was that:

“In terms of the national interest, there would be much to be gained by adopting a thoroughgoing pro-Arab policy… It would, however, be difficult to defend such a policy on grounds of principle and it would be extremely unpopular in this country. The US government would dislike it intensely and oppose it strongly if it entailed (as logically it should) showing sympathy for the Arab point of view in the international effort to help bring about a settlement. It would be incompatible with support for, or even acquiescence in, the US position in the quest for a settlement”.

The paper rules out an openly pro-Israel policy, and considers the option of active pursuit of a settlement in alignment with the US, concluding:

“Our almost total lack of influence on the combatant countries means that our capacity to contribute to progress toward a settlement is very limited. We cannot make even that modest contribution effective (or convince the Arabs we are doing all we can) if we remain closely associated with the US position”.

The paper also objects to the option of dissociating UK policy from that of the US, saying that “relations with the Arabs would be improved, but this would not measure up to the importance of our global relationship with the US”. It concludes, again, in favour of the “low risk” strategy.

Reference: PRO/ FCO 49/295

Percy Cradock, Foreign and Commonwealth Office planning staff, to Sir Denis Greenhill, Permanent Under-Secretary, FCO, 24 July 1970

‘We start from the fact that our economic interests in the Arab world greatly outweigh those in Israel. It would be reasonable to expect that our policy should reflect this fact. It does not do so for a number of reasons, one of them the need for association with the United States over Middle East issues. Although out [sic] interests in the area are proportionately greater than those of the United States and although we are more vulnerable, we cannot afford to distance ourselves too far from the United States position without risk of injury to the general Anglo-US relationship. The United States, however, are identified with the Israeli position, at least in Arab eyes. Herein lies our dilemma, or one of them… As regards loss of our economic interests in Arab countries, it is impossible to point to specific current instances of loss attributable to our political posture alone. But this posture is the main reason why our economic interests in the Arab world are permanently at risk. And if we are to talk of potential [last word UL] trade… it is fair to argue that on the Arab side, where the economic stake is much bigger, our potential losses are much greater as a result of our attempt to take up a neutral position’.

Source: National Archives, FCO 49/305

Permanent Under-Secretary’s Steering Committee, “British Foreign Policy: Brief by the Foreign Office”, 26 January 1968

This long report is a briefing for the Foreigh Secretary’s forthcoming talks in Washington. It notes that the primary goal of British foreign policy is to make Britain economically strong, which was the reason for deciding to withdraw military forces from ‘East of Suez’. It continues:

“Positively, it demands that we should bend our energies to help to produce a world economic climate in which our external trade, our income from invisibles and our balance of payments can prosper. This demands that we should support and, where appropriate, initiate measures for freer and more expanded world trade, for tariff reductions, for the reduction of non-tariff barriers, for greater international liquidity and for satisfactory solutions to problems of international indebtedness, including that of the sterling balances… Although our entry into the European Communities has been blocked for the time being we must continue to develop our markets there, while increasing our efforts to open up new markets and making the best of existing opportunities elsewhere eg in Latin America, parts of the Far East such as Thailand, and indeed wherever devaluation has given us real competitive advantages. Negatively, we should for the time being adopt a ‘heads down’ attitude in regard to proposals which, however desirable in themselves, would throw a significantly greater strain upon our balance of payments, eg commodity schemes directed primarily to raise prices rather than at stability of markets”.

“We should work to harmonise US and European policies but so long as the objectives are in harmony we need not be shy about forward on the merits of the case different means of attaining them… We must ensure that our aid programme supports not only the developmental needs of recipient countries but also our own commercial and foreign policies… Wherever possible we should try to shape our aid programme to fit more appropriately the pattern of our trade and investment interests in different countries”.

Source: National Archives, FCO 49/13

Over the next few months, I will be publishing on this site some of the declassified British government documents I have used in my research. The following, a Foreign Office paper from March 1967, is the first:

FCO, “The British interest in oil”, paper, March 1967

“Oil is easily the largest single commodity moving in international trade. It supplies nearly 40 per cent of the world’s energy needs… British major interests in oil are twofold: (i) in common with all other industrialised nations dependent upon imported fuel supplies we have an interest in the continued and secure availability of imported oil at acceptable prices…(ii) through British Petroleum (BP)…and Shell… the United Kingdom has a stake in the international oil industry second only to that of the United States. The overseas assets of the British oil companies have a book value of £2,000 million without counting their rights to oil still in the ground. Because these companies supply nearly one half of the market, the United Kingdom obtains its own oil supplies at lower foreign exchange costs than would otherwise be the case: for example, in 1965, if the oil imported by Shell and BP had been imported by foreign companies, it would have cost £60 million more in balance of payments terms. Furthermore, remittance of money from their production, refining and marketing operations overseas makes an even more substantial direct contribution to the balance of payments; net foreign exchange earnings … from Shell’s and BP’s overseas operations in 1965 amounted to about £160 million; of that total, about £60 million was spent on equipment exports for those operations and about £100 million represented net earnings on investment”.

“In the United Nations and its associate bodies Her Majesty’s Government’s policy is to oppose, or at least attempt to moderate, resolutions which might: (a) encourage concessionary governments to expropriate or acquire too direct a control over Western oil investments; (b) give OPEC a status which could lead to its acceptance as a body with special competence or powers as regards the international oil industry as a whole; or (c) encourage direct links between consuming and producing countries or any form of commodity agreement for oil. The broad aim is to inhibit undue governmental interference in the international oil trade”.

“It seems likely (unwelcome though this is as regards the ‘profitability’ of the British investments in balance of payments terms) that unit payments to concessionary governments by the companies will continue to rise, it is hoped slowly, and that those governments will acquire an increasing direct stake in the development of oil resources in their countries… From our massive stake in the international oil industry, we enjoy two major advantages for the balance of payments: our oil costs a good deal less in overseas payments than it would if we bought it all from foreign companies; we get large invisible earnings from the business of producing and selling oil in other countries”.

Source: PRO / FCO 54/77

British mining companies are abusing human rights all over the world at the same time as making record profits and exploring new ‘frontiers’ in territories plagued by conflict. A report I’ve just authored for the NGO, Want on Want, documents the impacts of large-scale mining on communities in twenty countries. London is the centre of the world’s mining industry and many of the world’s largest mining companies are either UK-based or part-British, notably Anglo American, Rio Tinto, BHP Billiton and Xstrata.

The report shows that these largest four British companies made profits of around £14 billion in 2006. Much of this wealth is simply being extracted from poor countries, with the complicity of Southern governments, due to low tax rates and profit repatriation allowances; there is also evidence that some companies are using creative accounting techniques to avoid paying taxes.

The report includes analysis of the following cases:

• Two junior British mining companies are working in joint ventures with Chinese companies in Chinese-occupied Tibet, almost certainly illegally extracting that country’s rich natural resources.
• Some of the big British companies are fanning conflict by mining in countries such as Colombia and exploring on the Philippines island of Mindanao, where the military is eradicating opponents of mining to make way for the companies.
• In Uzbekistan, the British government is backing a gold mining company’s joint venture with the Uzbek regime, one of the region’s most repressive states.
• British mining operations have provoked massive local opposition in countries such as Bangladesh, Peru, South Africa and India, notably for forcing people off their land, while receiving virtually no media coverage in the UK.
• Severe environmental destruction, notably water pollution, is being caused in various countries including Ghana, Argentina, Papua New Guinea and Zambia

All this is being done with the active support of the British government, which continues to press for ‘favourable investment climates’ in developing countries while involving mining company leaders in various ‘corporate social responsibility’ initiatives and rejecting calls for increased regulation of corporations. Whitehall has close personal connections to the big mining companies. A director of Rio Tinto, for example, sits on the Ministry of Defence’s Defence Management Board, which is responsible for ‘success in the military tasks we undertake at home and abroad’.

The full report can be seen at:
http://www.waronwant.org/Fanning%20the%20Flames%2015142.twl

I’ve recently returned from visiting Ethiopia, Malawi and Zambia undertaking a detailed study of the impact of economic reforms on hunger-prone people. The primary purpose has been to assess whether food security has improved or worsened, and why. These three states are among the large number of developing countries that have promoted extensive liberalization of their economies over the past 15 or so years, under the auspices of the World Bank and International Monetary Fund. The full report, commissioned by a group of European NGOs and written for government policy-makers, can be seen here.  

It is useful to distinguish between two phases in the economic reforms – one of deep liberalization in the late 1980s and 1990s; and a phase of ‘partial liberalization’ in the early years of this century. In the first phase, these states transformed their agricultural sectors, in effect by privatizing them by abolishing or reducing the dominant role of the state and allowing free markets and private companies to operate. In the more recent phase, government intervention in agriculture has increased in certain areas in some countries: Zambia and Malawi have introduced new fertilizer subsidy programmes, after abolishing them in the 1990s, while in Ethiopia government-backed companies dominate the fertilizer supply markets and continue to intervene to set grain prices. At the same time, the World Bank, and other donors, have pulled back from their earlier promotion of virtually unfettered liberalization in the first phase of the reforms; now they at least tolerate a greater degree of government intervention, such as limited government subsidy programmes, but still within a clear push for a greater ‘commercialisation’ of agriculture. Currently, therefore, all three countries are pursuing a mix of state intervention and liberalization policies in agriculture.

The report’s conclusion is that not only has deep liberalization increased hunger for the poorest people but ‘partial liberalization’ is barely an improvement. The faults lie as much with national governments as with the World Bank, which are both essentially undemocratic, elitist actors, who are ignoring the needs of poor farmers. The price for the current unstrategic mix of policies is being paid by some of the poorest people in the world. The wider context is one of 820 million ‘hungry’ people in the world, of whom 150 million are children; this number has, according to the UN’s Food and Agriculture Organisation (FAO), risen by 20 million over the past decade. 

The major impacts of the economic reforms in the three countries, over the whole period of ‘deep liberalization’ and ‘partial liberalisation’, can be summarized as follows:

• Overall, the number of people hungry or vulnerable to hunger has increased and the poorest farmers have got poorer. Overall poverty levels have remained the same in Malawi and may have slightly decreased in Zambia (in rural areas not urban) and, possibly, Ethiopia, although in the latter ever larger numbers of people require food aid. Given population growth, poverty therefore remains alarmingly deep and entrenched while per capita incomes have fallen and inequalities between rich and poor have risen.
• Overall food production has increased but productivity in nearly all key crops has generally declined (although in Ethiopia, the rate of decline has slowed under the reforms).
• Economies have not substantially diversified away from dependence on agriculture, but in Malawi and Zambia there has been some diversification away from a dependence on maize towards other crops as a result of liberalization policies.
• Smallholders’ access to critical inputs such as fertilizer has declined, mainly due to increased prices. In Zambia, use of fertilizer has declined from around a third to around a quarter of small farmers over the reform period while in Malawi only a third of smallholders use fertilizers and then only in small amounts. In Ethiopia, the amount of fertilizer used has increased over the whole period of the reforms but has been stagnant in recent years. The use of fertilizer remains very low in all three countries in comparison with others countries and is far below recommended rates to seriously increase productivity. Access to seeds and credit is also low.
• Subsidy programmes have helped the poor and raised output but they reach only a small number of farmers and suffer from numerous problems, such as crowding out private sector suppliers and reinforcing political patronage. 
• Liberalization has deprived many farmers of access to markets and made farmers prey to exploitative private traders offering low prices for their produce. Government maize buying and price setting is critical for some farmers yet it has crowded out the development of private traders. Farmers have no adequate market information system for basic information such as market prices.
• Major cutbacks in government spending on extension services have deprived farmers of important sources of knowledge and advice to aid increases in productivity and diversification. Government spending on agriculture is low and also poorly targeted at small farmers.
• Deep trade liberalization has been accompanied by generally worsening trade performance, with imports rising faster than exports, vulnerability to import surges and ongoing dependence on a small number of commodities for export, which suffer from declining world prices. The three countries are likely to suffer further from the EU’s proposed regional free trade agreements (EPAs).

After well over a decade of sweeping economic reforms and then ‘partial liberalization’, deep poverty is endemic in all three countries: around 65 per cent of the population in Zambia and Malawi lives in poverty, while the figure for Ethiopia is 44 per cent. These three countries are in a state of more or less permanent crisis when it comes to hunger.

• Most of Malawi’s 11 million population go hungry for at least some time in the year: 36 per cent of the population – around 4 million people – live in ‘ultra poverty’ and thus are likely to suffer from chronic hunger, while a further 28 per cent of the population experience food insecurity at certain times. Malawi’s children suffer from deep and persistent malnutrition. Nearly half are all under-fives are stunted (too short for age), 40 per cent of these severely stunted. The levels of child stunting are the same as for 1990. As a result, an estimated 40,000 children under five years of age die each year from nutrition-related diseases, such as malaria, acute respiratory infection and gastroenteritis – although the under-five and infant mortality rate has declined from 1990 to 2000. 
• In Zambia, over 5 million people, or nearly half the population, are undernourished. Only a third can afford to eat three times a day – half have an average of two meals while one in ten survive on just one a day.
• In Ethiopia, nearly half the population (46 per cent or 33 million people) is undernourished, around 38 per cent is underweight while 47 per cent are stunted. Though these levels have decreased on figures from 2000, they remain abnormally high, describing a population that is permanently affected by the consequences of poor nutrition and poor health. The FAO notes that 6-13 million people risk starvation every year.

Malawi and Ethiopia both rank in the top four countries in the world for levels of chronic malnutrition, according to UNICEF. Chronic hunger is not only debilitating people but is holding back countries’ economic growth. The lack of adequate government investments in farming and in particular poor farmers’ lack of access to fertilizer is preventing increases in output and productivity while low prices for farmers’ produce is, by depriving people of income,  hindering smallholders from diversifying and investing in the future. These countries could in principle easily feed themselves but current productivity is merely a fraction of what it could be. Governments and donors may have learnt lessons from recent food crises but even if their emergency responses have improved, farmers’ underlying vulnerabilities remain and are getting worse. Government and donor policies are increasing hunger and exacerbating a permanent, silent crisis.

Problems faced by small farmers

There is broad consensus in all three countries that pro-poor agricultural growth needs to come principally from increasing productivity in smallholder farming. Yet smallholders face numerous problems in their farming, the most important of which are:

• Small plots. An increasing number of households farm small and unproductive plots, thus becoming more vulnerable to the vagaries of unpredictable rainfall. In the southern highlands of Ethiopia, average farmland per household has decreased to less than a quarter of a hectare. In Malawi, the average landholding size is declining and now stands at around 1.2 hectares per family but most farmers farm on plots less than one hectare in size – in the poor South, average plots are a minuscule 0.1 hectares, meaning farmers are in effect landless.
• Degraded land. In Ethiopia, due to increasing human and livestock population pressure, large areas of the country are exposed to loss of soil fertility and degradation. A recent study suggested that of the 54 million hectares of land in the highland areas, 29 million hectares were either seriously or moderately degraded or had soil cover too shallow to cultivate crops. In Malawi and Zambia, partly due to increasing land pressure, the traditional practice of leaving land fallow for a year has been replaced by continuous cropping whereby maize is grown on the same land year after year, resulting in declining crop yields and increasing soil erosion.
• Lack of irrigation. In Ethiopia and Malawi only 1 per cent of arable land is irrigated. Farmers practicing rain-fed agriculture are thus dependent on rains and at the mercy of the weather – especially serious in Malawi and Zambia which rely on a single, short rainy season.
• Lack of technology and access to inputs. Most farmers use basic farming techniques, relying on family labour, recycled seeds and a hoe. Cereal yields are low and post-harvest losses are frequently high due to inadequate structures for grain drying and storage. Most farmers cannot afford any modern technology or inputs such as fertilizer and seeds. This is an especially serious problem since much of the land is becoming degraded and large increases in the amount of nutrients applied to the soil are generally believed to be needed if smallholder farming is to increase its productivity. The World Bank notes that fertilizer use in Ethiopia is the lowest in sub-Saharan Africa.
• Inadequate access to markets. Food markets in rural areas are generally under-developed and, since the collapse of the state’s role in buying farmers’ produce at guaranteed prices, they are often dominated by exploitative private sector traders paying low prices for farmers’ produce. Road infrastructure is poor in remote areas, with many roads impassable in the rainy season, which constrains the ability to buy and sell crops in local markets. In Zambia, the most efficient markets and the large export-oriented farms which are linked to buyers are located along the ‘line of rail’ where about 60 per cent of the population lives. One in five rural Zambian households live more than 5 kms from their nearest food market while 3 in 5 live more than 5kms from their nearest market to purchases inputs such as fertilizers.
• Few extension services and credit. There is a lack of adequate, or any, credit facilities for most smallholder farmers while government extension services, such as training and support, are generally weak and often non-existent, especially in more remote rural areas.
• Weather. Erratic weather, varying from droughts to floods, severely affects crop production and hinders planning and investment. Zambia has experienced two major droughts in the past decade – in 1991/92 and in 1995/96, while the 2000/01 and following seasons were also beset with poor rainfall and a large amount of food aid was required to avert hunger. Major drought-related famines have occurred in Ethiopia 1973, 1984 (causing over one million deaths) and 2003 (when a fifth of the population required emergency food aid). In Malawi, droughts and major food shortages have occurred in 1992, 1994, 1997, 2001, 2002 and 2005. Climate change is increasingly recognized as likely to impact severely on African agriculture – with increased temperatures causing reductions in (often already scarce) water availability and crop yields.
• HIV/AIDS is exacting a huge toll on farming communities and food security. In Malawi and Zambia, for example, it is estimated that around one in every six adults are living with AIDS. AIDS-related deaths can lead to a loss of labour and agricultural production knowledge while those living with AIDS can have less energy to cultivate their crops and incur additional medical costs that could be used for farming investments.

Farmers’ views

Visits to farmers were undertaken in: North Wollo zone in Ethiopia, around 700 kms north of Addis Ababa, mainly a highland region where farmers practice rain-fed agriculture, principally of crops such as teff, barley and wheat; in Malawi, in western Dowa district, a two hour drive north of Lilongwe where farmers grow maize, groundnuts, soya beans, cassava and sweet potatoes; and in Zambia, in Chipata District of Eastern province, 550 kms east of Lusaka, where the principal crop is also maize.

Around half of the woredas (districts) in Ethiopia’s North Wollo zone are classified as food deficit and in some people go hungry for 6-9 months of the year. Mesven Tadesse and Daniel Kuma are wheat and barley farmers each working a very small plot – around a third of a hectare – near the town of Bilbala. They do not use improved seeds or fertilizers saying that there is not enough rain for them to take effect. When asked how their yields perform each year, they reply: ‘Down, down, down. The land is getting worse every year’. Both farmers fail to produce a surplus for sale in the market and cannot produce enough from their land to feed their families; every February, their families go hungry and are forced to cut out some meals, sometimes eating only once a day.

When the food runs out in North Wollo, many farmers look for work (which is hard to come by, especially for those far away from towns) or are forced to sell their assets, such as livestock. As for the problem of land degradation, the farmers interviewed said either that yields vary from year to year, depending on the rains, or that productivity is decreasing year by year. The poor quality land through soil erosion is visible all around and can be seen in numerous parts of the zone.

Zambia’s Chipata district has relatively good soils and usually sufficient rainfall, giving  it high potential for producing crops like maize, groundnuts, cotton, sunflower, tobacco and soya beans. Yet most people in the province go hungry for long periods; around half the families do not produce enough food themselves for more than six months a year in a normal season, the problem being worse in drought years. Government figures suggest that 11 per cent of all households Eastern province survive on just one meal per day – half have two meals and 38 per cent three.

A quarter of the farming households in Chipata district are female-headed. One of them is Priscilla Sagala, a farmer aged 52 from Kalonji village 10 kms outside the province’s main town, Chipata, who grows maize and groundnuts on a two acre plot. She says that many farmers in the village only produce enough food for two months a year, while she herself can feed her family for ‘a few months’. Priscilla tells us that: ‘When the food runs out, I eat less, sometimes eat roots, and sometimes I just have to go to bed and sleep.’ She would like to grow other crops ‘as long as the seed is available, but it’s not available. I would like to grow sunflower but I’d have to buy seeds which needs money. I’d need 35,000 kwachas ($8.7) for 5 kgs’. When asked what support she needed, she replies: ‘Fertilizer. If fertilizer was available, production would go up. The main problem is a shortage of fertilizer and the fact that the soil is bad. Food finishes very quickly due to our shortage of inputs like fertilizer. I don’t have money to buy it’.

Fertilizer was recognized as the single most important aid to farming among the farmers spoken to in all three countries. Yet few can afford to buy it though everyone questioned would use it if it were available free or at affordable prices. In Chilembampita village in Malawi’s Dowa district only 11 of the 46 households can afford to pay for the subsidized fertilizer in the government’s voucher programme. At 950 kwacha ($7) per 50 kg bag, this was beyond most farmers’ reach but even this buys only enough for use on 0.4 hectares of land. In the private market, fertilizer is available only at an astronomical 3,075 kwacha ($23). No credit is available to farmers to borrow money since the rural credit programme has collapsed. I was also told that the fertilizer vouchers distributed in the government-administered programme often went to the wrong people, sometimes the better-off farmers rather than the poorest, or else were politically-motivated, going to headmen, for example, who used it for their own purposes or to curry favours.

Of 91,000 households in Zambia’s Chipata district, 12,000 bought subsidized fertilizer in the government’s Fertilizer Support Programme (FSP), while a further 1,600 received ‘food security packs’. This means that the other 86 per cent of farmers need to buy fertilizer at market prices, which the overwhelming majority is not able to do, given the high price. But even the government’s subsidized price is beyond the reach of most farmers – farmers in the FSP have to pay 40 per cent of the market price of fertilizer, meaning they usually need to find 460,000 kwacha ($115) (for 8 bags, which is fixed). In Ethiopia, farmers said that under the government’s agricultural extension programme, fertilizer was available at a cost of 370-380 Birr ($43) which they can receive on credit at a 12.5 per cent interest rate, which is too high for many farmers.

Clara Pande, 65 year old farmer who grows maize and groundnuts on her 1.5 hectares farm, told me that when she uses fertilizer, production goes up. She recently clubbed together with others in the village and bought fertilizer for 210,000 kwacha ($52). ‘Most of the time I can’t afford it. I’m a widow. If we join with others, we can afford a little. My relatives and I put our money together’.

Farmers universally complained of the very low prices they receive for selling their produce in local markets. In Malawi’s Dowa district farmers say that maize generally sells for 10 kwacha ($0.07) per kg (while some had recently been ‘offered’ as low as 8 kwacha), a pitifully small amount which many farmers said was below the cost of production. The government sets a minimum price for maize of 20 kwacha ($0.14) but the parastatal, ADMARC, which used to guarantee buying produce from farmers at set prices, now has no resources to buy farmers’ produce in this area so farmers are forced to sell to private sector traders. ‘These companies are in Lilongwe, though they come here and buy at a cheap price and then sell back our maize at a higher price’, one local development worker said. Traders were making a 100 per cent profit on maize. In Lilongwe, maize was being sold for 1,000 kwacha ($28) per 50 kgs bag, after being bought in the Dowa area for 500 kwacha. ‘The companies are rich people’, the development worker added ‘and the problem is that farmers have no other place to sell’. Farmers received a better price for groundnuts – at 65 kwacha ($0.5) per kg, but private traders were selling these for 120 kwacha ($0.9) in Lilongwe and Kasungu, another major town nearby.

Farmers receive pitifully little support from government extension services, which have been massively cut back under the reforms. In Zambia’s Chipata province, extension officers are supposed to visit each zone twice a month but the reality is much less because the area each officer is expected to cover – 20 kms radius – is too great. When I asked the District Agricultural Officer where he would spend any increased funding from the government on agriculture, he pinpointed extension services as the critical area, to improve the knowledge base of farmers in crop management and growing techniques, including in the use of fertilizer. Other spending needed to take place on roads and bridges, he said, to make transportation easier between villages and towns. The lack of adequate infrastructure was the main reason why only a few private traders operate in the area to deliver inputs to farmers, he told me. ‘It is wishful thinking to think the private sector will come here. Look at our infrastructure. We’re not commercialized enough for this to work. It’s not profitable enough for the private sector except when they come in and knock down the price to farmers for their produce’.

Several farmers in Malawi recalled how farming had changed since the early 1990s, the beginning of the deeper phase of the reforms, all saying that farming was much easier then and that they produced more food and went less hungry. In Undi village, a group of older farmers recalled how they used to use fertilizer but after prices rocketed (in the mid-1990s) they could no longer afford it. All said their production was much lower now and that their land produced less than previously. Other older farmers said that, although in the past farming was still hard, it was formerly easier to obtain fertilizer and seeds, that credit schemes were available to give them affordable loans and that they received higher prices for their maize sales. One further important change now was the lack of predictability in price – farmers have no idea in advance what price they will get for their produce.

Most farmers also said they would like to grow other crops, such as Irish potatoes, rice or sorghum, to reduce their dependence on growing maize – mainly since the selling price of maize was so bad and since, for many, their productivity was going down year on year. What is preventing such diversification is partly the high price of new seeds and partly the lack of advice and support for growing and managing new crops. A packet of vegetable seed on the market currently costs 410 kwacha ($3) per kg, rice seed costs 130 ($1) kwacha and Irish potatoes seeds cost 400 kwachas – too much for many.

Most farmers told me that their productivity had been declining over the years, as their land produced less and less. And many of the farmers selling their produce said that if they received a better price for their outputs they would reinvest that income in their farming by buying fertilizer to increase their output. So farmers are locked into a vicious circle – low prices mean less money to buy fertilizer, meaning less ability to increase output, meaning less overall income etc.

Liberalization and the World Bank

Agricultural strategy in the three countries has been transformed in the past two decades under World Bank/IMF reforms. Before these were implemented, government policy was dominated by state intervention, involving the provision of subsidized fertilizers and maize/grain to farmers supported by government-administered credit schemes, while state marketing agencies – ADMARC in Malawi, NAMBOARD in Zambia and the AMC in Ethiopia – set guaranteed prices for farmers and bought their produce from depots around the country. Farmers were meant to have an assured market for their produce and access to farming inputs at affordable prices.

In Malawi, the performance of the agricultural sector was impressive in the 1960s and early 1970s but stagnated in the late 1970s and early 1980s. By the early 1980s ADMARC resorted to heavy borrowing from commercial banks to finance its crop purchases; yet in spite of this, it was still unable to buy all farmers offered to sell or meet the demand to provide fertilizer. Government intervention was defended on the grounds of promoting national food security and ensuring that all smallholder farmers, especially those in more remote areas, had access to markets to buy and sell their produce at guaranteed prices – but these policies came at a heavy financial cost, as the subsidies contributed to large government budget deficits. Malawi experienced an economic crisis in 1979/80 that led the government to adopt structural adjustment programmes (SAPs) under the auspices of the World Bank and IMF beginning in 1981.

Economic liberalization reforms began in Zambia in the mid-1980s and in Ethiopia in 1992 following the end of the civil war. The reforms involved: lifting restrictions on private sector participation in grain movements; removing price controls on agricultural commodities (pan-territorial pricing); reducing or removing fertilizer subsidies and liberalization of the fertilizer market; devaluing the currency, and maintaining tight fiscal and monetary policy; trade and labour market liberalization; and privatization of state-owned companies.

In Zambia, NAMBOARD (the National Agriculture Marketing Board) was abolished in 1989 and its functions allocated to local cooperatives, while prices of most agricultural commodities (excluding maize) were liberalized. Fertilizer and other input subsidies were removed in 1992 and consumer food subsidies in 1994. In Malawi, Bank and Fund-supported reforms deepened after the 1994 election, ending the system of guaranteed producer prices (except for maize), undertaking several devaluations of the currency and liberalizing maize pricing. ADMARC’s monopoly in purchasing maize and some other crops from smallholders was eliminated.

Ethiopia agreed a Poverty Reduction and Growth Facility (PRGF) arrangement with the IMF in 2001 and finalized its Poverty Reduction Strategy Paper (PRSP) in 2002. Zambia signed a three-year PRGF loan agreement with the IMF in June 2004 while the Bank approved a three-year country assistance strategy running from 2004-07. Since 2000 Malawi has been implementing a PRGF programme aimed at promoting macro-economic ’stability’. The programme went off track in 2001 due to the government’s fiscal slippages that prompted donors to withhold budget support; it resumed in 2003 after donors deemed Malawi to have improved fiscal management.

Bank/Fund loans in the 1990s invariably came with numerous conditions attached, notably involving the sweeping privatization of the economy generally and, in agriculture, the removal of subsidies and the privatization of state marketing boards. The Bank notes that between 1992 and 2003, it lent Zambia $2 billion, stating: ‘adjustment credits in support of sweeping liberalization of the economy dominated, accounting for nearly 40 per cent of total commitments’. As a 2006 Norwegian government-sponsored study concluded, privatization and liberalization are still included in Bank/Fund loans, notably in Zambia, where they are linked to the privatization of state-owned banks and utilities. Currently, however, there are few, if any, formal conditions attached to agricultural policy in these three countries, although one major exception is the Bank’s ongoing push to privatize Malawi’s state marketing board, ADMARC.

In recent years, the Bank has modified its previous opposition to some policies of government intervention. Regarding subsidies, the Bank is currently going along with fertilizer subsidy programmes in Malawi and Zambia. Although it is consistently arguing for the government to bring these to an end within a short space of time, loans are not conditional on this. Its concerns are mainly about transparency in the programme, ensuring that distribution is not determined by political considerations and enhancing rather than undermining the role of private fertilizer suppliers. In Ethiopia, the Bank is pushing for the government to end its de facto control of the fertilizer market, but again, without specific conditions or benchmarks being attached to loans.

The World Bank has been strongly pushing for liberalization of agriculture in the three countries for the past 20 years, but there have been shifts. In the 1980s, conditions attached to loans required removing subsidies and liberalizing prices within a rigid framework to roll back the state to a minor role. This position was somewhat revised towards the end of the 1980s and until the mid-1990s the Bank accepted the need for targeted subsidies in order to raise agricultural productivity. What followed was a reversion to a dogmatic belief in markets, opposition to fertilizer subsidies and a push for a complete government withdrawal from agricultural markets.

Currently, the Bank is still strongly pushing trade liberalization and market reforms, but with qualifications:

• On liberalization, it states that ‘market reforms have sometimes been implemented before the private sector gained the capacity to step in when public companies were closed. Policies to liberalize or privatize marketing functions must be sequentially implemented over time to ensure that the institutional framework for competitive markets develops, that support services are in place during the transition and that complementary investments are made that enable the private sector to function smoothly’. And it accepts the need for ‘appropriate transitional arrangements that may require some involvement of the public sector, but aiming for a medium- to long-term strategy that creates an enabling environment for private investment’.
• On subsidies, the Bank states that ‘subsidies may be useful in the transition to a more liberalized trading environment’, although it adds that ‘but when maintained over the longer run, they reduce equity and efficiency’. It also states that ‘sudden elimination of input subsidies…can cause a radical decline in the use of inputs’ and that ‘until private input suppliers become established, the public sector must assist poor producers by carefully phasing the removal of subsidies and/or supporting such institutions as voucher systems’.
• On privatizing parastatal organizations, the Bank notes that ‘policies to liberalize or privatize marketing functions must be carefully phased’.
• On price setting, it notes that ‘for sensitive commodities, including food staples, price bands and price floors might be used’. Price floors help to keep prices from falling while price bands help stabilize prices between a floor and a ceiling.

Some might argue that the three countries’ mix of continued government intervention and liberalization could provide the best of both worlds, yet the failure to address hunger is the result of a messy, unstrategic combination of policies. Liberalization was pursued quickly, deeply, and at the behest of outside actors, notably the donors, especially the World Bank, and therefore lacked real internal ownership. Now, continued state intervention is presided over by governments that are often untransparent, elitist and unaccountable, and where ‘patronage’ politics is the rule. The outcome is that they have the worst of both worlds – government intervention is not far-reaching, or good, enough to really benefit the poor, but it is sufficient to crowd out badly needed growth in private sector development that could provide farming inputs in competitive markets and functioning markets for outputs. Some government interventions under the reforms have improved food security for the most hunger-prone. Fertilizer subsidies, for example, have reached some of the poorest farmers. Their removal, under full liberalization, would have increased hunger. Yet neither fertilizer subsidies nor price setting have reached enough farmers to make a difference to hunger across the country, but at the same time the continued government role has set back the cause of building the capacity of the private sector.

The institutions presiding over government intervention have not been driven by the needs of the poor, and lack accountability. Over the past two decades, government spending and priorities have been driven more by the short-term interests of the elite, oriented towards consumption and maintaining power, rather than towards poverty reduction and food security for the majority.

The Bank retains a curious notion of democracy. Its Country Assistance Strategy for Malawi, released in February this year, states that ’substantial political risks exist to reform momentum’ and that local elections in 2007 and parliamentary elections in 2009 ‘are likely to further constrain the already limited political space for economic reform measures’. It continues:

‘While the government has demonstrated resolve in implementing fiscal control, as demonstrated during the 2005/2006 food crisis, institutional and procedural systems for the formulation, analysis and implementation of policy remain weak and vulnerable. Moreover, while the increasing role of the Malawian parliament in providing oversight to the executive is welcomed as crucial to accountability and transparency, there remain risks that the maturing political system will crucially constrain the ability of the minority government to implement difficult reforms. In order to mitigate these risks the Bank is engaging more forcefully with parliament and civil society in order to disseminate and make the case for the growth-oriented reforms and policies’.

In other words, the Bank is lamenting the possibility that democratically-elected politicians may prevent Bank-supported policies. This aversion to democracy was confirmed by a Bank official based in Lilongwe, a Malawian, who told me of the key importance to the Bank of the privatisation of ADMARC. He noted that ‘one of the problems we have in Malawi is that some decisions have to go through parliament’. Asked why he was concerned about this, he said: ‘because it will come out unsuccessfully. Many people don’t understand the issues in terms of government no longer intervening in the market. It’s difficult for them to come to terms with that’. He did accept that ADMARC should play a role in the remote rural areas but not in the areas where the private sector might thrive.

The basic problem in all three countries is that people have never determined policies. Decisions are made by two undemocratic actors and the combination is explosive: donors, such as the World Bank, who are accountable to themselves; and governments, in reality accountable to the Bank, and a small domestic elite. In the middle is the general population, especially the small farmers, who are largely voiceless. Hunger can be largely laid at the door of this terrible mix.

Alternative reforms

Clearly, fundamental changes are needed at all levels of policy-making. Southern governments must be pressed to invest in the basics, including formulating clear and coherent national agricultural strategies, increasing their investment in extension services for small farmers and market information systems, spending more on agriculture and better targeting current resources, reforming land tenure and security, which will mean more equitable land redistribution policies, and tailoring government support programmes to women farmers, who comprise a fifth to a third of the all farmers in the three countries. 

Over the long-term, little positive will happen until a developmental state emerges. It is not simply, or mainly, a question of what policies should be implemented but who is implementing them – how accountable, transparent and democratic are the institutions. Increased government intervention will not benefit the poor if implemented in favour of elites, as is currently the case with various policies in the three countries. Government intervention needs to become smarter, more transparent and predictable to enable greater coordination between private and public decisions. Governments should have the ability to promote price stabilization measures to establish guaranteed minimum prices, in certain geographical areas if the institutions undertaking this task are reformed to act transparently and predictably. Civil society needs to be massively supported and developed to encourage cultures of democracy. Farmers cooperatives need to be strongly developed as independent (of government) as well as profit-oriented organizations.

The international community needs to massively increase its support for organic farming. Global research in agriculture has overwhelmingly focused on maximizing yields under chemical fertilizers and conventional agriculture. This must change. Increasing research shows that organic farming can dramatically increase yields as well as being more environmentally sustainable than conventional, fertilizer-based agriculture. Southern governments and donors must move away from a sole reliance on high-input agriculture to promoting sustainable, low-input farming techniques, and maximizing knowledge-sharing among farmers.

Programmes of free inputs and smart subsidies need to be implemented. Raising productivity is critical to eliminating hunger. The key to this in some places may come from increasing smallholders’ access to inputs such as fertilizer, though alongside increased extension services to develop low input agriculture: the choice should be the farmer’s and ‘solutions’ must not be externally imposed. Free inputs might be given to the poorest group of subsistence farmers for a specified period with a clear phase out plan – say 5 years. A subsidies programme may also be needed, running over a longer time scale, which must be well targeted at those most in need.

Governments need a strategy to build up the private sector. Governments should outline strategies for developing the private sector over a 10 year period, showing how they are aligned with policies of government intervention. But private companies need to be regulated. In remote rural areas where farmers are exploited by private traders offering low prices, government should establish mechanisms to monitor prices and ensure private sector compliance with minimum prices.

As for the World Bank, my own view is that it should be pressed to withdraw from any role in these countries’ agricultural policies; its past record is simply too disastrous to be trusted with peoples’ future food security.

Edited extract from:
Norwegian Church Aid and other European NGOs, Deadly combination: The role of Southern governments and the World Bank in the rise of hunger, October 2007.

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