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close this bookEssays on Food, Hunger, Nutrition, Primary Health Care and Development (AVIVA, 480 p.)
close this folder12. Foreign Aid and its Role in Maintaining the Exploitation of the Agricultural Sector: Evidence from a Case Study in Africa
View the document(introduction...)
View the documentEvidence of the exploitation: A preamble and five exhibits
View the documentSources, uses, and sectoral distribution of foreign aid: A preamble and four exhibits
View the documentPutting it all together: A final balance sheet
View the documentPostscript
View the documentReferences

Evidence of the exploitation: A preamble and five exhibits

Preamble

For a country like Cameroon, favorable terms of trade for the agricultural sector should be the basis of development. Ideally, a significant proportion of the surpluses generated by the primary sector should be reinvested in some aspect of rural development, or in ventures servicing the primary sector. This is not what one finds when Cameroon’s official statistics are critically analyzed.

When a country is primarily an agricultural exporting country, it is not unreasonable that the primary sector’s surpluses become the major revenue source for the overall financing of development (2. p. 25). But when in the process of financing the growth of the secondary and tertiary sectors of the economy, a government stigmatizes the growth and growth potential of its primary sector the “goose that lays the golden eggs” -then one can safely assume that one is facing a process of exploitation, of wealth expropriation of that sector. The consequences of such a process-that is, urban migration and sharp decreases in agricultural production and productivity-can be irreversible. Since the peasants’ ability to exert pressure upon the government for the implementation of needed chances is limited. the only means of expressing rural discontent is through migration to urban centers.

In Cameroon, the government evidently tolerates a situation in which the primary sector furnishes the rest of the national economy with a sizable part of its surpluses. mostly export revenues, at the expense of limiting the growth of the real present source of weath. Cocoa and coffee are the main export crops in Cameroon. Since both crops are perennial plants, producers-originally motivated by attractive prices and prospects of high economic returns-became captives of the government, which fixes the prices once either crop has been planted. Today, both crops are no longer as profitable as they were twenty years ago, even discounting inflation and despite the fluctuations in prices observed in the international markets. As a consequence, food crops have increasingly become a potential source of relative higher profits in recent years. Food prices have not only followed overall inflationary trends, hut have surpassed the average consumer price index (3. pp. 30, 31). However, the problem of bringing such products to urban markets in time, at a reasonable cost. and with minimum spoilage still remains.

Exhibit 1.1

In Cameroon, the agricultural sub-sector alone employs 73 percent of the active population and produces 70 percent of the external revenues (4, p. 1). By major sectors of the economy, the distribution of employment is the following primary sector, 79.4 percent; secondary sector, 6.7 percent; and tertiary sector. 13.9 percent (5, p. 14).

In Cameroon’s 1979-1980 national budget, 6.4 percent of all budgeted expenditures were allocated to agriculture (for investments plus administrative expenses) (4, p. 58). In contrast, the contribution of the agricultural sector to the overall value of exports has been between 67 and 75 percent in the last few years (4. p. 5-11). Some 30 to 40 percent of the budgetary resources of the cm eminent derive from the primary sector (4, p. 1). More than 50 percent of the country’s budgetary resources come from customs duties levied on exports and imports (6, p. 4)

The contribution of the primary sector to the country’s Gross Domestic Product was 30 percent in 1979-1980 (5, p. 3). To analyze the returns to agriculture from this contribution, one has to look at several sources. The Ministry of Economic Affairs and Planning updates its estimations of the total cost of financing its five-year development plans yearly and presents those estimations in current dollar values each year. Table 1 compares investments planned in the fourth five-year plan and then actually made in agriculture and the primary sector. The analysis of these data demonstrates that agriculture and the primary sector get back only a small fraction of the cash surpluses they produce in the form of direct government and other public investments. That fraction decreases in the government’s own successive projections of its budget allocations toward the end of the plan. The fraction is also cut in the projections for the total investments planned by all sources (public, foreign, and private funds). Finally, the investments actually made in the first four years of the plan show a further reduction in the percentages of development funds finally allocated to agriculture and the primary sector1 The gap between projected and actual investments is thus shown in Table 1 in terms of the percentages of overall development funds available for the rural economy that were finally invested by the public sector plus all other sources.

1 A recent Food and Agriculture Organization study showed that agriculture’s share of government expenditures between 1967 and 1973 was less than one-fourth of its contribution to the gross national product in all but six of the 52 developing countries surveyed. As Harrison notes (8, p. 26), “The agricultural sector has all too often been used as a milk cow to provide resources to develop cities and industry.”

Table 1

Cameroon's Fourth Five-Year Plan (1976-1981) Investments planned and investments actually made in agriculture and the primary sector as percent of all development investments made by sourcea

Investments Planned (as % of source's total development investments)

Investments Actually Made as % of source's total development investments

End of 3rd Year Estimate

End of 4th Year Estimate

End of 4th Year

Investment Recipient

Govt. Budget

Overall Public Fundsb

All Sourcesc

Govt. Budget

Overall Public Funds

All Sources

Govt. Budget

Overall Public Funds

All Sources

Agriculture

6.6

12.5

12

6.4

9.4

7.5

4.3

7.3

6

Primary sectord

13.8

19.8

18

12.5

16.8

12.7

8.6

13.8

10e

a Sources for data: table on estimated financing costs of the fourth five-year development plan at the end of its third year (7, Annexe Statistique, p. 105); table on estimated financing costs of the plan at the end of its fourth year (6, p. 48); and table on total investments actually made in the plan at the end of its fourth year (6, p. 53).

b Includes government budget plus extrabudgetary funds, municipalities, a few specialized funds and boards (mainly the National Produce Marketing Board), and parastatal enterprises.

c Includes internally generated public funds, foreign aid funds (grants and loans), and private funds.

d Includes agriculture, livestock, forestry, fisheries, and integrated rural development.

e The equivalent percentages for the secondary and tertiary sectors were 52 and 26 percent, respectively.

The next step is to show what percentage of the investments planned for the five years of the Fourth Plan (updated to 1980 current dollars) were actually spent by the end of its fourth year. If investments had been evenly distributed throughout the five years of the plan, 80 percent of the funds should have been actually invested at the end of the fourth year. It is in the light of this latter consideration that the data in Table 2 have to be interpreted. The table presents all funding sources and the financial contributions made by them to the major sectors of the economy and for purposes of comparison, each source’s contribution to the total financing of the Fourth Plan.

Table 2

Cameroon’s Fourth Five-Year Development Plan (1976-1981): Percentage of total investments planned already invested at the end of the fourth year by sector

Source of Investment

Investment Recipient

Govt. Budget

Overall Public Fundsa

Foreign Aidb

Private Funds

Total Fundsc

Agriculture

39

48

49

82d

50

Primary sector

40

50

50

69

51

Secondary sectore

59

66

69

71

69

Tertiary sectorf

54

59

57

74

58

Total Fourth Plan (all sectors)

58

62

61

71

63

a Government budget included.

b Grants and loans.

c Funds from all sources.

d Theoretically beyond projection.

e Includes Industry, mines, and energy.

f Includes commerce, transport, tourism, ports, railroad, roads, aeronautics, meteorology, post and telecommunications, and all other activities.

Table 2 shows that agriculture, and the primary sector in general, lags behind the other sectors in the investments actually received in the first four years of the plan. It also shows that government contributions lag behind all other sources. The high level of investments attained by the private sector in agriculture at the end of the fourth year, as compared with what was projected, may be misleading in two ways. First, private investment actually represented only a small fraction (6 percent) of the overall investments in agriculture and most probably went to the modern sector within agriculture. Second, private investment in agriculture represents an even smaller proportion (1.5 percent) of the overall investments that sector made in the country’s economy, the latter being a good indicator of the decreasing profitability of agriculture in Cameroon (6, p. 53). This statement is true for productive investments in agriculture only, since the marketing of agricultural products (export cash-crops and domestic consumption food crops) has been and continues to be very lucrative.

Exhibit 1.2

A balance sheet of the financial relationships between the state and the agricultural sector in Cameroon in 1978-1979 (Table 3) shows that the government kept 81 percent of what it took from the agricultural sector and reinvested 19 percent; the National Produce Marketing Board kept 52 percent of what it took and reinvested 48 percent. In summary, the state, through direct or indirect means, kept 69 percent of what it took from the agricultural sector and reinvested 31 percent.

Table 3

Balance sheet of financial relationship between the state and the agricultural sector, Cameroon, 1978-1979

Contribution of the agricultural sector to the national treasury

$368 million

Assets directly contributed to the state in the form of taxes, customs duties, and other direct and indirect dues

($213 million)

Net returns collected by the National Produce Marketing Board

($155 million)

Participation of the state in financing the agricultural sector

$115.5 million (31%)

Operations budget

($21 million)

Investment budget

($19.5 million)

National Produce Marketing Board’s investment budget

($75 million)

Net contribution of the agricultural sector

$252.5 million (69%)

Moreover, the agricultural export sector (modern and traditional) received, in the same year, 60 percent of the above public investments and produced only 30 percent of the Gross Agricultural Product (4, p. 53). (It should be noted that some of these investments are long-term and may not yield results measurable in the Gross Agricultural Product until several years later.) The modern sector alone (public and private), in turn, got 60 percent of the preceding 60 percent and produced only 9 percent of the Gross Agricultural Product (4, p. 93). This left the traditional (nonmodern) agricultural export sector with only 40 percent of the public investment and producing 21 percent of the Gross Agricultural Product. On the other hand, the food producing sector-which produces 90 percent of all nationally consumed cereals, 100 percent of all consumed tubers and legumes, and 90 percent of all consumed fruits and vegetables, and is responsible for 70 percent of the Gross Agricultural Product-received only 40 percent of the overall government investments allotted to the sector (9, p. 38).

In summary, then, 69 percent of the revenues from agriculture were used to finance the other sectors of the economy. Thus, the other sectors of the economy have increased their share of the Gross Domestic Product at the expense and to the detriment of the Gross Agricultural Product (4, p. 51). In part as a response to this situation, urban migration toward Douala and Yaounde-the two major cities in Cameroon-has increased at a rate of about 8 percent a year (9. p. 3).

Exhibit 1.3

In the last 20 years, the agricultural sector in Cameroon has grown less than the other sectors of the economy (five times vs. seven times) (4, p. 7). Or, put in another way, the real growth of the Gross Agricultural Product (6 percent) is slower than the growth of the overall Gross Domestic Product for the country, which is 8 percent per year. According to another source (10, p. 3), the growth rates of the agricultural sector were evaluated at even lower levels, namely 4.1 percent for 1966-1971, 3.1 percent for 1971-1975, and 5.2 percent for 1976-1978. The latter broke down as 3.5, 4.6, and 7.0 percent, respectively, for food crops and as 6.1, 0.1, and 2.9 percent, respectively, for export crops.

The percentage of the overall Gross Domestic Product represented by the Gross Domestic Product of the primary sector has evolved from 38 percent in 1962-1963, to 30 percent in 1970-1971, to 34 percent in 1975-1976, to 32 percent in 1978-1979, to 30 percent in 1979-1980, and is expected to fall to 27 percent in 1982-1986 (5, p.3; 11, p.8).

Exhibit 1.4

In 1976 the export revenues in Cameroon increased 34 percent over what they were in 1975, with an increase of only 1.6 percent in the total tonnage of agricultural products exported. In 1977-1978 the export revenues increased 19 percent over the previous year, although the total tonnage of exports, especially arabica coffee, actually decreased (7, p. 206). The balance of payments for the country was negative for those two years: $65 million in 1976-1977 and $125 million In 1977-1978 (7, Annexe Statistique, p. 51). The balance of payments is particularly negative with France, the United States, Japan, the People’s Republic of China, and the United Kingdom, In that order. (The European Economic Community receives 78 percent of Cameroon’s exports and is the source of 67 percent of its imports; France receives 31 percent of Cameroon’s exports and is the source of 43 percent of its imports (12)).

In constant dollars (inflation discounted), the price received by the producers of arabica coffee in 1979 was 63 percent of what it was In 1960 (91 percent for robusta coffee); cocoa regained 100 percent of its 1960 price in 1977 and in 1980 this figure was 105 percent (4, p. 149). In 1979, one kilogram of coffee bought at $1.40 to the producer by the National Produce Marketing Board was sold at $4.45 in Europe; therefore, only 32 percent of the sales price reached the producer (4, p. 158). Furthermore, in 1977, one kilogram of cocoa bought at 75 cents to the producer was sold at $6 in the international market. (After that, the price to the producer was increased by 93 percent toward 1980, a time at which the international price dropped significantly (13, p. 95).)

The ratio of the producer price to the world price has evolved as follows in the last 20 years (4, p. 159): arabica coffee-76 percent of FOB price in 1960 and 43 percent in 1979; robusta coffee-69 percent of FOB price in 1964 and 40 percent in 1979;2 cocoa-65 percent of FOB price in 1961 and 43 percent in 1979.

2 In 1978-1979, the same ratio for other countries in the world which export robusta coffee was as follows: Ivory Coast, 38 percent; Madagascar, 33 percent; Indonesia, 64 percent; and the Philippines, 65 percent (14, pp. 39, 43).

Prices of agricultural inputs for farmers have grown faster in Cameroon than the prices of their agricultural export products (4, p. 51). In constant dollars, the real value of agricultural products, when the sector’s inputs costs are considered, lost 40 to 45 percent between 1963 and 1975. If one assigns an index value of 100 to the prices of agricultural export products and fertilizers in 1970, in 1976 the index for the same products was 166 and that of fertilizers was 456 (4, p. 150). Fertilizers are partly subsidized by the government, however. Forty-five percent of all the fertilizers consume. in the country go to coffee production (13, p. 95).

Exhibit 1.5

Between 1960 and 1975, the coffee producer’s real purchasing power fell by between 3 and 10 percent every year at a time when the average national purchasing power (Gross Domestic Product per capita) increased by 37 percent a year (in constant dollars, too), roughly doubling in 20 years to $233 in 1980 (4, p. 149; 5, p. 13).

The ratio of the Gross Domestic Product per capita for the agricultural sector to the Gross Domestic Product per capita for the national average has evolved as follows: 41 percent in 1965. 45 percent in 1970, and 48 percent in 1979 (4, p. 143). The per capita agricultural income is at present between one-fourth and one-half that of the national average and therefore much below the per capita income of the other sectors (4, p. 141).