An African Model for Agricultural Food Security: Why the Failed Policies of Structural Adjustment Offer a Unique Opportunity for “Smart Subsidization”

By Katie Martin
posted on April 16, 2014 in Economics and Finance, Global Development

*This article is based on Story 28 “Can Smarter Carrots Save Soil?” of “40 Chances: Finding Hope in a Hungry World” by Howard G. Buffett

It would be reckless to assert that individual citizens of developing countries have benefitted from issues associated with a lack of development. Pervasive poverty, a lack of reliable infrastructure, and subpar education and health systems have certainly led to devastating outcomes for entire generations in the developing world. It is plausible to argue, however, that an unintended consequence of a hitherto ineffective development agenda is an opportunity to use lessons learned from the developed world to create more resilient public systems. This is especially the case in the agricultural sector.

Take for example, a policy that has garnered widespread criticism: the World Bank’s neoliberal structural adjustment programs in the 1980s. As a means to promote growth and development (and our own economic model of the time), the World Bank and IMF offered structural adjustment loans (SALs) to developing nations. SALs came with an important caveat, however: recipient nations must focus their economies largely on privatization and deregulation. In the agricultural sector, this meant a near-elimination of subsidies.

Starved for capital, many developing countries accepted these terms – despite the fact that many developed nations, including the United States, relied heavily on agricultural subsidies. Regardless of any good intentions behind them, SAL terms proved devastating to sub-Saharan African farmers. Like the U.S. farmers who faced daunting odds developing a comprehensive agricultural system, African farmers desperately needed the government subsidies akin to those that U.S. farmers began receiving during the Great Depression. The effect of limiting this support, in Warren Buffett’s words, was “…to shove fragile economies into a ‘free market’ mode too early and without the ability to compete.”

Regardless, it is possible that this failed policy may have provided an opportunity to build a more sustainable agricultural sector. Through the use of “smart” subsidies that reward eco-friendly farming approaches, developing nations in Africa and elsewhere may be able to build a system focused not on yield maximization, but rather on conservation and long-term food security.

At a time when croplands are facing sobering challenges from a changing climate and exploding population, the world has an opportunity to incentivize a sustainable African agricultural system that rewards long-term thinking. Instead of trying to rollback decades of subsidization policies that promote short-term output and harm long-term production, African states can start fresh with smart subsidization of conservation-friendly farming approaches. In turn, they can provide a model for the developed world to modify their agricultural systems. It is possible that “smart subsidization” may diminish US farmers’ share of the global market? Perhaps. The necessity for comprehensive food security, however, is one that far exceeds the geographic confines of our borders.

In fact, it is not difficult to imagine that industrialized countries like the U.S. come to learn from this alternative strategy. Indeed, while crop subsidies have been a staple of the U.S. agricultural industry since the Great Depression era, they have recently become a source of contention and debate. Some argue that the needed policies of the time have become outdated and encourage depressed commodity prices on the international market. Even further, the subsidies (based mainly on crop outputs) place an uneven focus on short-term yields instead of long-term investments in soil and water conservation.

Now is the time that we need to develop agricultural systems that reward farmers worldwide for making long-term investments in soil and water conservation. This, in turn, will ensure that cropland will continue to be fruitful for generations to come. While the dividends of conservation-based agriculture may not result in astounding yearly crop surpluses, rewarding farmers for short-term yield maximization may inhibit our future ability to produce enough food for our exponentially growing population.

For all of the assumptions structural adjustment got wrong, it may have gotten one thing unintentionally right: Africa has an opportunity to build a new kind of agricultural system devoid of short-term thinking and full of possibility.