The latest negotiations in the Doha trade round of the World Trade Organisation (WTO) in Geneva collapsed on 29 July, as the US, India and China failed to reach agreement on import tariffs on agricultural products. The talks centred on the world’s developed countries trying to get developing countries to lower their tariffs on manufactured imports, in exchange for the developed countries lowering their agricultural subsidies.
This would make it easier for developing countries to export farm products to the developed world. Even before the talks collapsed Business Unity SA (Busa) expressed concern that the proposals would have “a disproportionate impact on certain key, relatively labour-intensive sectors of the SA economy. In a country with an unemployment rate of around 25%, these proposals are both politically and economically untenable.”
Tony Twine, senior economist at Econometrix, warned that if developed countries lowered farm subsidies international food prices could increase. “If developing countries have bigger export markets, their own people would also end up paying export parity prices for food,” Twine said. “Developed countries would also pay more as they’d have to pay unsubsidised prices, but they’d have the advantage of increased industrialised exports as they can export more freely to developing countries.” I n the long term foreign currency generated by higher exports can help developing countries expand and modernise their economies, raising their income levels and enabling their people to pay the higher prices.
“But this won’t happen simultaneously,” Twine warned. “It seems the negotiators didn’t take full account of the medium-term impact of these policies. The middle period could be extremely uncomfortable and when food is involved, it becomes political dynamite.” S A already made tariff cuts as a developed country under the Uruguay Round of the WTO that ended in 1993. SA’s negotiators thus argued for greater flexibility under the new deal, to offset these bigger cuts. ome of the key compromises at the talks included a 80% cut in farm subsidies in the EU and a 70% cut in the US.
The industrial tariff coefficient for developing countries, which determines tariff reductions, was far lower than they’d hoped for – the higher the coefficient, the lower the tariff cuts. Busa said developed countries are demanding greater market access in industrial tariffs in exchange for concessions in agriculture, which fall short of developing countries’ expectations. With the upcoming US presidential elections, it’s unlikely negotiators will meet again before the middle of next year. The Doha trade round has already been going on for seven years without a final outcome. – Drieka Burger
Policy framework could complicate carbon trading
Cabinet recently adopted a policy framework on climate change which could see carbon taxes being introduced, as well as incentives for businesses that adopt cleaner technologies. abinet reportedly believes the framework will, in future, smooth the way for agriculture and forestry operations to earn extra income in the form of carbon trading. But according to Mandy Momberg, the Designated Operational Entity (DOE) manager of sustainable business solutions at PricewaterhouseCoopers (PWC), 20 projects have already been certified in South Africa and are currently trading in carbon credits. “You don’t necessarily need a legal framework to trade in carbon credits,” she said, adding that while she hadn’t read the policy she was worried that it could complicate carbon trading.
“It all depends on how it’s regulated.” Greenhouse gas emission projects have to register with and work through a DOE, and PWC is the only DOE in also conducts validation and certification of projects. I n March this year, Farmer’s Weekly reported on a project in the Western and Eastern Cape to rehabilitate thousands of hectares of spekboomveld. he spekboom is an arid succulent that has the extraordinary ability to bind carbon from the environment. he plant could also generate income to rival livestock farming, despite the fluctuation of the market’s value. Up to 4t of carbon can be captured per year from each hectare of spekboom.
“For every ton of carbon captured, you earn a carbon credit,” said “and the value of the credit depends on which market you trade it on.” Government estimations in 2006 already placed the South African agricultural sector’s carbon earnings potential at around US$30 billion (about R230 billion). But not everyone is smiling, with businesses saying that the extra tax could add significantly to the cost of doing business in South Africa. They have asked for other options to be considered instead. – David Steynberg
Free State farmers threaten milk dumping
Free State milk producers made it absolutely clear at the province’s annual Milk Producers’ Organisation (MPO) conference that further reductions in the milk price will no longer be tolerated. They said the current pricing structure is already disastrous for the producers. D elegates have threatened drastic action to ensure their economic survival and have unanimously agreed to withhold milk from the market if it’s the only way to convince buyers of the severity of the situation.
They were seriously considering keeping 20 000â„“ of milk from the market for a period of four days and marketing it directly in places such as townships. K oos Pienaar, the MPO Free State chairperson said, “This illustrates the milk producers’ dire situation and the extent of the crisis. We have, however, decided not to take any action until after the North Region’s conference this week.
We will then decide on a plan of action. But be that as it may, the mere fact that issues such as the withdrawal of milk were tabled at the conference illustrates the urgency of the matter.” M arius Herselman, a delegate from Frankfort, commented, “We will not accept another price reduction. It will be the final straw and force the remaining few milk producers in the country out of the market.
It will result in South Africa becoming an importer of milk.” He said it was vitally important that producers took a firm stand on a national level and included all the relevant roleplayers, such as consumer organisations. P ienaar supported Herselman, saying that the time has come for milk producers not to give an inch. “We, as producers, must decide the price of our products. The buyers will eventually be left with no choice but to yield to our demands or they will not be able to supply in their clients’ needs.”
The debate at the conference also centred around regaining balance in the milk industry in its entirety through proactive management. he delegates were also unanimous about the future role of the – that of branching out into marketing. “We must re-invent ourselves and start looking for international markets,” said the MPO’s CEO, Etienne Terre’Blanche.
“Our neighbouring countries offer a host of possibilities and there is an ever-increasing international demand for milk and milk products.” “It is, however, of the essence that we position ourselves as a united front and take our collective destiny into our own hands. We must aggressively get involved in creating new markets,” Terre’Blanche stressed. – Annelie Coleman
