Tuesday, May 13, 2008

The rice success story in Uganda

The lesson from Uganda - Ignore the WTO and free market economists and subsidize local production just like all the big countries and you too can keep prices down and even export rice.
Uganda’s importers, seeing the shift, have invested in new mills in the country, expanding employment and creating competition for farmer output, thereby improving prices. New mills, meanwhile, lowered the cost of bringing domestic rice to market. While people in developing countries across the globe are clamoring about the sharp rise in food prices, Ugandans are still paying about the same for rice as they always have. And Uganda is poised to start exporting rice within East Africa—and beyond.

The secret of Uganda’s homegrown success? Ignoring decades of bad Western advice....

What Uganda recognized is that the world’s major rice exporters actually practice the opposite of what the World Bank and IMF preach. Much of the rice grown in Pakistan, Vietnam, and especially the United States is stimulated by subsidy payments to farmers. Then the rice is “dumped” into African markets at low prices—sometimes below the cost of production. These producers also maintain stiff duties against imported rice, contradicting free-market ideology but helping protect domestic farmers against global competition. And for good reason: Virtually every successful Asian economy was built on selective trade barriers—and in China and India, the world’s two fastest growing economies, such barriers remain in force. Even South Korea and Japan maintain massive duties on imported rice simply to protect the livelihoods of their own rice farmers. Rice duties are working in Uganda—and also in Nigeria, where rice output is also soaring. In both countries, the value of imported rice is declining and locally produced rice is winning the hearts and minds of ordinary consumers.
That is from those "far-left radical hippies" at Foreign Policy magazine.

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