Farm subsidies: a problem for Africa too

Supporting European farmers through agricultural subsidies has negative impacts on African agricultural development. But what about subsidising African agriculture too? This paper argues that a more selective and flexible approach to African farm subsidy is essential if agriculture is to help in reducing poverty.

The author distinguishes between two types of African agriculture- large scale and commercially oriented, and resource poor subsistence farming. The latter is a primary candidate for input and credit subsidy. Two-track agricultural policy is needed to promote competitive agricultural markets (stimulating research, infrastructure provision and trade policy) on one hand, and to provide direct incentives for smallholder production and community welfare on the other.

African Ministries of Agriculture have often been reluctant to make this policy distinction, not willing to recognise that a singular agriculture policy can undermine other rural welfare or food security objectives. There is, however, now an increasing interest in targeted activities, such as "smart subsidies" - subsidies on services and products only the poor are likely to benefit from.

The paper argues that donors must allow a more pemissive approach to policy conditions. The diversity and scope of the agricultural sector means that divergent policy objectives should ultimately embrace subsidy flexibility and experimentation.