Cover Image
close this bookAfrican Agriculture: The Critical Choices (UNU, 1990, 227 pages)
close this folder2. The role of the export sector
View the document(introductory text...)
View the documentThe decline in agricultural production
View the documentFailure of the export model
View the documentAlternative strategies: Algeria and Ethiopia
View the documentSocial relations and agricultural development

Failure of the export model

The case study by Aly Traoré, on the Ivory Coast, represents the typical example of the agricultural export model implemented by most African countries at varying economic levels, depending on the potential of agricultural natural resources. Today it is quite clear that after a high growth rate during the 1970s and relatively high industrial growth, the Ivorian economy since 1978 has entered a period of unbroken recession: GDP growth after 1980 and 1985 became negative. There was a fall in external receipts, and a deficit in the current balance of payments with a debt service ratio that rose from 24% in 1980 to almost 39% in 1985, leading the Ivory Coast to turn to the IMF. In March 1981, a first stabilization plan was put into effect, and this was soon followed by a second programme in 1984.7

Theoretically, as Traoré points out, expansion of the export sector is supposed to fulfill a double function: to provide a financial base for the construction of an import-substitution industry: and to lead an increase in production by the food sub-sector so as to increase the supply of foodstuffs to meet urban demand.

Generally, in the long term, the growth of peasant incomes formed the basis for an enlargement of the domestic market for the products of a gradual industrialization. The analyses presented by Traoré and Kosura bring out the factors that slow down and distort the growth of the Ivorian and Kenyan economies and which, in varying degrees, mark all African economies of this type.

Western countries have a monopoly of the demand for coffee and cocoa, and their industrial processing and marketing leaves only a small proportion of the surplus realized to the Ivory Coast and Kenya. Traoré observes a falling trend of export receipts, which is as much the direct consequence of the decline of world market prices for the Ivory Coast as it is of an unequal distribution of the added value as a result of the unfavourable movement of the terms of trade.

The world market's limited absorptive capacity and the sharp competition between Third World countries for the export of tropical products mean that supplies are increasing much more rapidly than demand, leading to falling prices. In the last ten years, with a diminution of global receipts of the order of 20%, prices have fallen rapidly. The deterioration in trade terms now affects all export products. Thus, compared to the prices of wheat and rice, increasing quantities of which have to be purchased, the terms of trade have deteriorated for tea, groundnuts, rubber, pepper, sugar, among others (since 1984), cotton and oilseeds.8

Wide variations in prices on world markets have constituted another source of fragility for African economies that have specialized in an agriculture sector to take account of comparative advantage. Most export crops which, in the 19th-century framework of colonial policy had a comparative advantage, are today suffering the backlash of import-restricting policies practiced by the developed capitalist countries, and the development of import-substituting crops. This is the case, for example, with the advance of sweeteners at the expense of sugar. In 1974-76 world consumption of high fructose maize syrup was equivalent to 700,000 metric tons of raw sugar, in 1979-81 to three million metric tons, in 1982 to over four million metric tons, and in 1985 t0 5.5 million metric tons.9

Transnational companies have also embarked on the use of biological engineering to create substitutes for coffee and cocoa, the two principal agricultural products exported by Third World countries. Finally, a reorientation of the trade of the former colonial powers in the framework of Atlantic integration, has replaced the earlier colonial integration. Africa's share in France's external trade, for example, continues to fall, 13.3% in 1981 as against 17.6% in 1970 and 30% in 1960.10 The shift in France's agricultural trade policy has taken place in favour of its partners in the EC and the USA.

A varying proportion of external receipts has been reinvested in the expansion of the export sector. This has happened in the Ivory Coast which, given the large amount of land available and favourable climatic conditions, has encouraged the extension and diversification of crops and preliminary industrial processing activities in order to maximize its foreign exchange receipts. In order to accelerate the growth rate of exports it had to resort to massive external financing and accept a high level of indebtedness. Thus the Ivory Coast appears among the most indebted countries in Africa. In 1984, the debt-service ratio amounted to approximately 39%. This development reflects the situation of all African countries that have chosen to promote the extraversion of their economy through recourse to external capital.

During the 1970s, with the rise in international liquidity, the hanks had no difficulty in financing exports from industrialized to Third World countries. In many cases they even pushed some countries further into debt than was necessary. Thus the Ivory Coast had no difficulty in raising large loans to carry out a programme to produce 550.000 metric tons of sugar. 450,000 of which would be for export despite the collapse in the world market price of sugar. In 1984, at the request of the IMF and the World Bank, two sugar complexes were closed.11

Sub-Saharan Africa's global debt of between US$ 100 and 200 million represents a per capita burden similar to that of Latin America; and if the level of poverty is taken into account, it represents an even greater burden. Total external public debt represents a proportion of GNP that varies from 20% for Ethiopia and Zimbabwe to 146% for Mauritania, most countries falling between 30 and 80% of GNP. The yield on capital borrowed and invested in agro-export projects, notably the high foreign exchange costs for exploitation, considerably reduces the available net resources produced by the export activities that are the source of the mechanisms transferring value to the developed capitalist countries. One of the most obvious consequences of the export-led development model is the high level of the external debt which is directly proportional to the economy's degree of openness.

A more or less important function of the surplus derived from exports is to finance the establishment of industries. Industrialization strategies are based on the growth of industries to add value to export products and on import-substitution industries. The food, beverages and textile sectors, plus perhaps units manufacturing various consumer items, provide most of the value of industrial production. The mining sector (bauxite, copper, phosphates, and so on) remains in the hands of the big foreign companies.

Generally speaking, industry has been conceived of as a mere supplement to the traditional import-export economy.12 Given that domestic markets are small and people's purchasing power is low, particularly in the rural areas, the limits to substitution were soon reached. In Hirschman's words, 'industry ran out of steam before having achieved very much'. The export resources devoted to investment have been insufficient to finance the backward linkage towards the production of intermediate and capital goods that are the basis of a diversified process of industrialization. The Ivory Coast has had to abandon its projects to develop iron ore and paper industries.

In Senegal, the government doubled the price of fertilizers, leading to a massive fall in consumption. Fertilizer production in the Ivory Coast fell from 100.000 metric tons in 1981 to 50,000 metric tons in 1984, and cement production from 1.156,000 metric tons in 1980 to 500,000 metric tons in 1981. Peasant incomes are everywhere insufficient to fuel a demand for capital and manufactured goods that could constitute a significant domestic outlet for existing industries, and even less constitute a potential basis for industrialization.

Clearly, the expansion of the export sectors had no linkage effect on the rest of the economy and particularly no knock-on effect on food production. The concept of consumption linkage which, according to Hirschman,13 applies to 'the surplus of food production that arises from the increase in exports', is more relevant to the economies in the centre than to the local economy, where the increase in revenues from exports simply means an increase in imports of foodstuffs. Local agriculture, particularly food agriculture, as illustrated by the case of Nigeria, and to a lesser degree, that of the Ivory Coast, derives no advantage from a widening of domestic demand. The paradox could even be argued that it is where export revenues are reduced that local food production is encouraged. The under-utilized agricultural potential is then more efficiently mobilized through transfers of part of the factors of production from the export to the foodstuff sector.

The question of the repercussions of a policy of promoting exports over food production is a very vexed one. The World Bank (1981), argues that export crops represent the channel through which features of modernization can be introduced into food crop activities. Cash crops make possible the purchase of implements' fertilizers and pest-control agents which can be used to improve labour productivity and the yield per hectare of food crops.

Numerous studies have, however, demonstrated the absence of any knock-on effect of cash crops on food crops. More recent observations (Rwanda 1985) even report a deterioration in the daily calorie intake, almost 20% in peasant smallholder families that grow food crops, as compared to those which devote themselves exclusively to food production. The stagnation, or even regression, of food crops is more the consequence of the dualism of the structures of production brought about by the system of export crops.14

The expansion of the agro-export sector was in fact accompanied by a distinct shift in agricultural structures in favour of large mechanized holdings. The orientation of production towards world markets, writes A. Basler, 'may lead to changes in the structure of farmholdings in favour of "plantation" - type holdings exclusively oriented towards export crops and the retreat of family holdings growing both food and cash crops'.

In many countries a growth in the number of large holdings in commercial production and exports can be observed, while small-scale subsistence agriculture encounters increasing difficulties in reproducing itself. In Malawi, the government pursues a systematic policy in favour of large farms comprising between 100 and 9,000 hectares15 while smallholdings average 1.5 hectares.

Adding value to the main agricultural export products continues overwhelmingly to be done abroad, as Traoré shows for the Ivory Coast. Those that are processed on the spot, coconuts, oil palm, pineapples, all second rank products, are processed by foreign technology and capital. There has been no great development of the agricultural foodstuffs industry for the processing of products intended for the local market- millet, cassava and maize semolina and flour- despite a few attempts to do so in Nigeria, Sudan, Senegal and the Ivory Coast.

Although having the necessary resources (iron ore, petroleum' gas, phosphate' for example) African countries have not equipped themselves with industries producing capital goods for agriculture. With a few rare exceptions (Algeria, Zimbabwe) local production takes the form of assembly activities and processing chemical products (Kenya, the Ivory Coast) more than processing local raw materials or semi-finished products by a true backward-linking industrial sector.

Most of the equipment intended for agriculture is acquired from abroad. A UNIDO report estimates that between now and the year 2000, of 10 agricultural implements, Africans will have to import more than eight. This indicates that the fall in export receipts has had a negative impact on supplies to the agricultural sector. Fertilizer consumption, already very low' fell even further, contrary to what can be observed in other Third World countries where fertilizer consumption rose from 17 kg (1976) to 32 kg (1982) per hectare.

The use of fertilizers, a major factor in the increase in yields, is thus 8.8 kg in Africa, according to the FAO, less than 3 kg in half the countries of the continent, as against 33 kg for the Third World as a whole and 110 kg in developed countries.

In Kenya, the largest farms, those over 20 hectares in area, number 3,700 and cover 2.7 million hectares, while 1.7 million smallholdings have to share 3.5 million hectares; or an average of two per holding. In Zimbabwe. Iarge-scale agriculture, modern profitable commercial agriculture, is in the hands of some 3,500 European farmers (1977) employing 350,000 workers.

In most African countries, the share of large farms in overall marketed production increased considerably during the 1970s. Large farms accounted for over 70% of the increase in agricultural export volumes in Malawi, while the disparities in relative incomes between large farms and smallholders has continued to grow (Malawi. Kenya, Sudan, the Ivory Coast, amongst others). The corollary of such a trend is not only the economic weakening of small, increasingly marginalized farms, but the accentuation of the process of differentiation within the peasantry and increasing control by a small number of owners of the land and other means of production. It also implies, as in Kenya, the growing proletarianization of agricultural labourers as part and parcel of the development of a capitalist agriculture and movement towards the individualization of property rights. In many countries, stress is placed on consolidating a kulak-based agriculture, better equipped to increase production for the market, although peasant agriculture remains the essential productive base.16

The example of Cuba, however, shows that there is no contradiction between export production and food production. Cuba has maintained its sugar exports, and even sought to increase them (1970) by achieving a high growth rate. For the period 1981-83, despite the collapse in sugar prices, it managed to secure an increase in per capita production of 5.9%, whereas over the same period the other Latin American countries recorded a fall of 10% in their GNP (CEPAL). With much less land than the Ivory Coast, and more limited external financing, Cuba has pursued its development, improving the food, health and education levels of the population, achieving full employment of the labour force through diversifying agricultural production and developing its industry. 17