Structural adjustment and food security in the Sahel: the example of Senegal

by Tom Amadou SECK

Many countries of the Sahel, like Senegal, have been trying to apply a policy of food security since 1986 (when the Cereal Plan was set up), as part of a structural adjustment drive. In Senegal, this is called the Medium- and Long-Term Adjustment Plan, or PAMLT, covering 1985-90. It is perhaps a good idea to look at the past five years to produce a partial summary of the New Agricultural Policy and its limitations and of the constant effort needed to ensure it fits in with regional cereal policies in the Sahel.

Combining structural adjustment and food security is no easy matter. We shall attempt to examine the practical difficulties involved in any structural adjustment policy aimed at fitting in with an agricultural development drive.

A strong lever

The system suggested by the funders, particularly the World Bank, hinges on a farm price policy which makes imported cereals (such as rice) more expensive’ removes the subsidies on agricultural inputs and urban consumption, liberates the input market and ensures remunerative prices for the peasants. What is actually being proposed here is a cut in the real price of the rice produced locally in the River Valley, given the very high production costs (rice being a strategic product in that it is a staple for the majority of Senegalese). In fact, a farm price policy can be a strong lever when it comes to changing the terms of domestic trade to the benefit of the rural community and the detriment of the people in the towns (by pushing up the price of local products, doing away with urban consumer subsidies and engineering a change in eating habits in relation to imported cereals such as Thai rice). But it will not promote a food security policy on its own. There are political constraints- such things as political upheavals among the urban consumers-which are not easy to get round. In February 1986, for example, political upheavals forced the Senegalese authorities into lowering the price of imported rice from CFAF 160 to CFAF 130 per kg, thereby compromising their food security policy and showing just how difficult it is to run a cereal plan properly. Encroaching on the urban consumers’ privileges by making cereals more expensive, doing away with consumer subsidies or charging real prices can easily threaten the nation’s political stability. Political constraints of this kind are a real dilemma for any Sahel country attempting to run a food security policy during a period of structural adjustment.

They are indeed preventing the introduction of the Farm Sector Adjustment Policy (PASA) and they have been holding up Senegal’s SAP III (structural adjustment, phase three) negotiations with the funders (the IMF, the IBRD, France’s CCCE, the EDF etc) for nearly a year now. What is causing the friction, of course, is the rise in the price of imported rice from CFAF 130 to CFAF 160 per kg.

Senegal may be what the IMF considers to be ‘a good pupil’, but its political leaders also have public opinion to take into account, since they are living in what has long been rare in Africa, a political democracy. But a compromise is on the cards.

The funders see a rise in the price of imported rice from CFAF 130 to CFAF 160 per kg as tantamount to discouraging its consumption and encouraging people to eat locally-grown cereals (millet, maize and local rice), bringing in selective protectionism and making for the emergence of a food security policy as advocated in the Cereal Plan (established in 1986, as a complement to the New Agricultural Policy of 1984, to exploit the agricultural potential of the Diama and Manantali dams in the Senegal River Valley and achieve 80 % food security for the nation by the year 2000).

They also propose doing away with various subsidies (on seed, fertiliser, transport etc) to rationalise the management of agriculture and bring down the price of local rice which is presently high because of the heavy production costs. If the negotiations are to get going again, both sides have to compromise. Over and above the divergences of opinion between Senegal and the funders, no farm price policy will have any real chance of success unless it goes hand in hand with a series of land and credit reforms, selective subsidies, road infrastructure, agricultural research, technical extension work, nutritional surveys, meteorological monitoring of rainfall (an essential factor) and institutional changes in the administration. If it is to work, it must aim to harmonise with the policies of the other countries in the region on cereals, exchange rates and structural adjustment. But national policies are frequently drawn up without taking all of this into account.

Farm price policy-the challenge

An efficient farm price policy must be a synthesis of all the above factors, a culmination rather than a starting point -something the funders do not seem to realise. If it is to make a proper job of inverting the domestic patterns of trade to the benefit of the people living in rural areas, then it must also introduce selective protectionism (hence the search for a good nominal rate of protection-40 %, say, in the case of Senegal), which is completely different from looking for comparative advantages.

It all hinges on selective subsidies, decent agricultural credit facilities and land reforms.

Subsidies: Subsidisation (of inputs and urban consumption) is a very delicate matter. Let us start by looking at urban consumer subsidies, since town-dwellers are politicised and therefore in a good position when it comes to defending their privileges and causing political strife. Farm subsidies cannot last for ever, either, because that would turn them into assistance.

However, some subsidies are worth maintaining to protect underprivileged target-groups in the cities-low-paid employees, for example, children, pregnant women and old people in working class areas such as Pikine, Guediawaye, Grand Dakar etc.

Selective subsidisation may mean handing out food or using a percentage of food aid (Food for Work, for example), combined with information campaigns to change eating habits-’Eat Senegalese’, say, to get Thai rice replaced by local maize and millet.

Nutritional surveys of poor household budgets and cereal markets may also go some way to a solution.

Import taxes on the luxury goods used by the comfortably-off can also yield revenue to provide food stocks for associations in working-class districts (fairness through taxation). This kind of selective subsidisation, which can help improve the nutritional situation of the underprivileged sections of society, could be accompanied by a policy of better primary health care.

Food for Work programmes are very common in Sri Lanka among the landless peasants and unemployed in poor districts.

Efficiently used food aid can be a help here too (with the construction of village dispensaries etc).

Such schemes would aim to cushion the social effects of structural adjustment policies. Unless the weight of structural adjustment is spread fairly amongst the different social categories of the population, adjustment will always be synonymous with austerity.

Some forms of selective subsidisation -of seed and fertiliser-have to be maintained and the right sort of rural credit facilities chosen for small farmers when the input market is freed.

Total liberalisation of the seed market could lead to speculation by rural middlemen and better-off peasants, penalising the small producers.

It is generally agreed that small farmers can run up debts with rural middle-men and better-off peasants during periods of non-production and pay them back when they harvest. The creditors are paid in seed during the harvest period (at very high rates) and they then sell the seed back to the small farmers during the sowing period (at even higher rates, thus ensuring very high profit margins of, say, 45 %).

The SEDES report clearly explains the strategy of the various people involved in the cereal market. The whole seed problem hinges on storage capacity and the better-off peasants really do have good facilities here, which is more than can be said for the small ones. The authorities have made a considerable but as yet limited effort with USAID help, but there is a long way to go before village associations of small farmers have largescale storage capacity (thanks to the building of sheds, for example).

Credit facilities: Selective subsidies must be arranged so that small farmers can get fertiliser and avoid situations in which high prices preclude its use and output dwindles, as has happened over the past year or two.

There is a lot to do in the credit sector. Access to loans should go some way to solving the problem of seed use, fertiliser supply and farm equipment utilisation. Any farm price policy not accompanied by a credit system that is available to the small farmers is not likely to be a success.

Senagal’s National Agricultural Credit Fund (CNCAS) is being set up gradually, but the interest rates are very high (13 %)? the individual guarantee unsuitable for the needs of the small farmer, the paper-werk expensive (about CFAF 25000) and beyond illiterate peasants and the management too centralised.

The NGOs have done some interesting work in their Green Africa campaign, providing credit at low or zero interest, setting up cereal banks to suit the small farmers’ storage capacity, introducing local-language training and simplified management, generalising primary health care in the regions concerned, converting food aid into financial means so as to even out the harvest over areas with surpluses and areas with shortfalls and so on. The funders (the World Bank and USAID, for example) and the authorities should get together with the NGOs and the village association representatives to take these original ideas further. Other forms of credit should be tried out along with a kind of federation of Farm Economy Interest Groups and NGOs. The Interest Groups have to form a federation to ensure their future effectiveness.

Alongside this, the CNCAS management should be more decentralised and the representativeness of the delegates of village associations, economic interest groups and other groups of well-off peasants greater, so that every member of society in the rural areas is represented.

All the problems attached to obtaining input supplies depend on accessible credit facilities.

Small farmers need to form groups

The local powers: Unless the small farmers form proper, autonomous groups which are independent of the influence of leading rural figures, there is no chance of an efficient food security policy or even a decentralised agricultural development model.

As the NGOs showed in the Green Africa campaign, there is a potential for the emergence of small farmer groups in rural areas everywhere. Encouraging their formation means a policy of offering training in the local language, providing an introduction to simplified management (human resource management) and ensuring decent credit facilities- all leading to the creation of different forms of non-official power (including peasant women in the rural areas), which could be partners involved in a dialogue with the authorities and the funders and have an effect when major rural development decisions are taken and structural adjustment policies brought in.

Unless such powers exist, society will never be revitalised. No dynamic movements will occur and no decentralised agricultural development model geared to the culture of the Sahel countries will emerge.

Land reform: Other reforms should go along with the farm price policy (agricultural research and a reform of the land arrangements). A land reform would be aimed at updating the 1964 National Domain Act and giving the peasants greater security of tenure and broader individual rights to encourage them to invest in the land and improve its value. This sort of reform could be a kind of individual guarantee of better access to credit.

The law adopted at the time of independence (during a period of State centralisation, that is to say) ought to be reformed in the light of the New Agricultural Policy, which recommends that the State withdraw and producers be freed from administrative supervision. A detailed account of the content and practical arrangements of such a land reform is outside the scope of this article, but, undeniably, with the new economic deal which adjustment brings, some provisions, and maybe even the spirit of the law are now outmoded.

Lastly, agricultural research and extension work should emphasise cereals, not just groundnuts, and involve such things as the investigation of new strains of cereals and pulses, modern extension methods and so on.

Ultimately, a cereal policy will only be effective if it aims to harmonise with the policies of neighbouring states in the region and sub-region.

Regional harmonisation of agricultural price, exchange rate and structural adjustment policies in the Sahel.

Differing agricultural price policies in neighbouring countries (Senegal, Gambia, Mauritania, Mali etc) are barriers when it comes to harmonising cereal policies throughout the Sahel region. Maize (see table) is one example.

Cereal prices in Mali and Senegal are different. In 1981-82, for example, maize was CFAF 42.5 per kg in Mali and CFAF 50 in Senegal, while Niger’s price was twice that of Mali.

Mali had a surplus at the 1990 cereal harvest (about 600 000 t of sorghum, millet, maize and rice), which it was barely able to dispose of in Senegal.

Mauritania sells imported rice (CFAF 250 per kg) to its consumers at about twice the price asked in Senegal (CFAF 130 per kg).

A sack of Thai rice is far cheaper in Gambia than Senegal (around CFAF 9 000), a situation which encourages smuggling along the frontiers, partly neutralises Senegal’s policy of charging more for imported rice and loses it revenue from tax and customs duties.

In some years, Burkina Faso has had good cereal harvests which it has found difficult to sell to the neighbouring countries. In some years, the Senegalese peasants go and sell their groundouts and groundout oil in Gambia and Mali where the prices are higher, which encourages parallel marketing and home grinding and thereby reduces the revenue of the State.

The effect of all these farm price imbalances is to encourage informal trade between consumers in different countries and hamper the efficiency of the tax, customs and price policies of the states in question-which is why farm prices in the sub-region (Senegal, Gambia, Mauritania, Mali and Niger) and region (Nigeria, Cd’lvoire, Senegal, Mali and so on) have to be harmonised.

Towards a solution

-The countries in question could agree to common prices for some cereals, in the light of the different transport and marketing costs and exchange rates.

-Regional food security stocks, gradual production cost alignment measures and more technical cooperation (meetings of national experts and then of Ministers of Agriculture, Finance, Cooperation etc. in the form of quarterly meetings, lectures and work sessions coordinated by CILSS could be arranged in the short and medium term.

In the immediate future, CILSS (the Permanent Inter-State Committee on Drought Control in the Sahel) could, say, take the initiative for a meeting to discuss this in 1991. Although there is a lot of controversy over regional exchange rate harmonisation, the World Bank, the French Treasury and the various States could come to some provisional arrangement. The problem is one that will of course come up in the medium term with the opening of the single European market in 1993. A provisional solution, or even a permanent one, could be found at that time. Sub-regional-and then regional-harmonisation of structural adjustment policies could be outlined with the help of the World Bank, the other funders and the states concerned- although the question is one which is often only seen from a national angle.

Table 1: Price producers obtained for maize, 1981-82, November - April

The adjustment of the economies of the Sahel and the whole series of social and political reforms (protection of the most underprivileged groups and involvement of the operators, particularly the rural and urban associations) that goes with it I can only be achieved on a regional basis I and the World Bank, representatives I the national authorities and, most important, various African and foreign research workers (in universities, consultancies etc) interested in the subject should suggest ways of doing this.

Lastly, no regional harmonisation of agricultural and cereal price policies will ever be successful unless it actively involves CILSS, the Club du Sahel and the other operators (i.e. the groups of small producers, who are primarily concerned). Unless there are local non-official powers, regional harmonisation decisions could well be little more than ‘ inefficient red tape. It is upstream, with the public authorities, and downstream, with the local operators, that the question of regional integration has to be envisaged in both the Sahel and on the continent as a whole.

Without local democracy, without fresh responsibility for the local operators, no cereal policy (at either national or local level) will work and no efficient decentralised development model will emerge. So lessons should be learned from the NGOs’ educational approach and the ideas disseminated. Lastly, in the institutions, the states should try and take a closer lock at the farm price policy scenarios and their financial consequences on the balance of payments.

Farm price policy scenarios to be investigated

It is worth taking the investigation of farm price policies, and the effect they have on the balance of payments, further, as this should make the relevant administrative decisions more efficient.

Although it has shortcomings, the World Bank’s first study has at least merit of actually being there. The main virtue of the SEDES 1989 report, by far the fullest and most original, is that it sets out four series of scenarios.

In particular, Scenario No 3, the ‘quest for greater self sufficiency in cereals’, explores some very interesting ways of setting up an efficient farm price policy to obtain food security-although it does raise problems of practical application at an institutional level. The Sahel countries have to encourage more of these studies to promote the harmonisation of their cereal policies.

The funders, especially the World Bank and the CCCE, have to give their financial backing to studies of this kind. More generally, they should increase the flow of finance to help the states bring in the reforms attendant on the economic social consequences of structural adjustment (finding work for redundant civil servants and providing selective subsidies for target groups). Unless the international flow of finance is increased, the Sahel countries will continue to be prey to damage to the fabric of their societies and destabilisation of their political situations.

In turn, the Sahel countries, like Senegal, have to use this improved international financial flow to bring in reforms to go with their structural adjustment policies, spread the burden of adjustment more fairly (via tax reforms, educating the people to change their eating habits etc), make a better job of explaining the scope of the adjustment policies and try to devise alternatives.

Imported rice has to go up in price if the cereal plan and the food security policies are to work. But the reform has to be gradual and go hand in hand with such things as selective subsidies.

It is in its practical arrangements that the Senegalese state has to try and find flexible answers to the question of higher Thai rice prices. Both partners have to compromise to get the PASA negotiations off the ground again, in the interests of the people and the politica. stability of the nation. When it comes to selective subsidisation, the funders have to be more flexible, since no country so far has managed to achieve self sufficiency in food without subsidising its farm sector.

Even developed countries such as Japan subsidise cereals such as rice, as do the EC Member States and the USA (see table).

Adjustment, a condition of economic development- necessary but not sufficient

Financial adjustment is unavoidable for the Sahel countries, but an adjustment policy, while necessary is not sufficient of itself to promote economic development. Priorities have to be changed to favour economic development. Institutional, economic and social reforms, first at national and then at regional level, may suggest a decentralised development model which puts priority on the needs of the ordinary operator rather than just aiming for large-scale macro-economic equilibrium.

Table 2: Hypotheses based on the 1 May 1986 scenario

Table 3: Subsidisation of main products (including assimilated transfers) in some developed countries, 1979-80 to 1984-85 (%)

Unless something is done about the dynamics of ordinary society, there will be no democratic development, no food security, no regional market and no possible success for structural adjustment. Adjustment will only work if it adapts to the peasant way of thinking, not vice versa, as has been the case so far. The natural, Darwinian selection of economic operators and states, as recommended by the adjustment policies (a real cult of the market and its comparative advantages), can only hope to succeed if it harmonises with the Socratic-type approach of the NGOs. And reconciling Darwin and Socrates means explaining the full complexity of the links between economic development and structural adjustment. Greater emphasis has to go on Socrates and his approach. Economic development is not only a financial parameter. It is a fact of life.

T.A.S.