THE HUMAN DEVELOPMENT REPORT
When Finance Minister Jaswant Singh increased farm subsidies in the Budget for 2003-04, he spoke of how he was still spending less per farmer per day than the West did on cows.
Well, according to the United Nations Development Programme's (UNDP) latest Human Development Report, the annual dairy subsidy in the European Union (EU) is $913 per cow, which is almost double the per capita income of sub-Saharan Africa at $490 and 114 times the annual per capita aid given by the EU to this region.
It gets worse when it comes to Japan, where each cow gets $2,700 to chew on each year, a figure that's more than five times the per capita income of sub-Saharan Africa.
The US spends $10.7 million per day subsidising its cotton farmers, which is three times the total aid given to sub-Saharan Africa.
On an aggregate, rich countries spend around $311 billion subsidising their farmers, against $52 billion they give in aid to all countries.
In other words, if the rich countries stopped all aid, but removed farm subsidies and allowed developing and underdeveloped countries to export their farm products, the latter would benefit six times more.
The gross domestic product (GDP) of sub-Saharan Africa is a mere $301 billion. Huge subsidies depress farm prices, often the only income for poor countries.
The EU's subsidised exports have contributed to the decline of the dairy industries in Brazil and Jamaica and the sugar industry in South Africa.
Interestingly, even the aid given by the rich has been declining steadily over the years. Even in absolute numbers, aid given in 1990 was $58 billion, or 0.33 per cent of the GDP of the donor countries. By 2001, this had come down to 0.22 per cent.
Apart from the direct subsidies, tariffs in the Organisation for Economic Co-operation and Development (OECD) countries are also biased against the low-priced produce of poor countries.
In the 90s, the average OECD tariff on manufactures from the developing world was 3.4 per cent, or more than four times the 0.8 per cent paid by other OECD manufactured products.
Bangladesh's $2.4 billion exports to the US attract an import duty of 14 per cent, while France exports more than $30 billion but just pays a 1 per cent tariff.
The OECD countries also impose higher tariffs on finished products than on primary products to force developing countries to export raw materials instead of finished products.
New Zealand charges a 5 per cent import tariff on coffee beans, but trebles this for ground coffee. Japan charges a mere 0.1 per cent import tariff on unprocessed textiles, against an 8.6 per cent duty on fully processed textiles.
And we're not even talking textile quotas yet, which in 2002, still covered most of the items in the list in the late 80s.
As the Human Development Report 2003 puts it, "It is hard to imagine the poorest countries achieving their social sector goals without the policy changes required in rich countries."
