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Food-importing countries in liberalized world trade

The rice market in Senegal


In the debate about
A g r i c u lt u r a l Tr a d e

the impact of world


trade and the WTO on
agricultural exports
from developing
countries, the fact that
many of these
countries are also
major importers of
agricultural products is
often forgotten.
Photo: Schucht

Indeed, most of Africa’s


poorest countries are
Storing the rice harvest at a
net importers of cooperative: the Union de Boundom.
eavy reliance on food imports has
agricultural products,
and the trend is H serious consequences for food
security, incomes and poverty
reduction. A basic distinction must be
increasing. The reasons made between households which are net Nigeria – a much larger country – Senegal
purchasers of food and those which are is the second largest rice importer in sub-
are highly diverse and net sellers. High agricultural imports Saharan Africa, ranking tenth in the
can be due to both push down food prices and tend to bene- world.
fit urban consumers, whereas high prices In view of rising imports of food, especial-
internal and external favour rural producers. ly rice, in almost all countries of sub-Saha-
factors. In reality, however, the situation is often ran Africa, the situation in Senegal is like-
rather more complex, because in develop- ly to be symptomatic of the future sce-
ing countries in particular, almost every nario in many countries on the African
household – rural and urban – buys and continent. The present case study high-
sells agricultural products. It is this com- lights the many aspects which must be
plex web of food purchases and sales by a taken into account when assessing this
diversity of household types which deter- situation.
mines the overall impact of changes in
the global agricultural markets. In this Imported broken rice in
context, food prices are key determinants
of the income and purchasing power of Senegal’s cereals market
poor households. This article examines
the complex interlinkages behind import Rice is the world’s most important food
dependency with reference to Senegal in product. However, it is not a homoge-
West Africa. neous commodity. The world rice market
Whereas in absolute terms, food produc- is extremely complex, and its individual
tion in Senegal has doubled since 1960, segments are highly volatile. This is due to
Michael Brüntrup due to the country’s high level of popula- natural production conditions as well as
Thao Nguyen tion growth, per capita food production to numerous interventions by industrial-
Christian Kaps has fallen by almost 50 percent. Virtually ized and developing countries.
German Development Institute – DIE no other country in sub-Saharan Africa Rice imports into Senegal consist almost
Bonn, Germany (SSA) is so food-import-dependent, espe- entirely of broken rice (see also footnote
Michael.Bruentrup@die-gdi.de cially on one specific product: rice. After to figure, p. 23). Broken rice is a by-product

22 agriculture & rural development 1/2006


of rice processing. In the international achieve this objective – but cheap labour intensive, than preparing Senegal’s tradi-
markets, broken rice is considered an infe- relies on cheap food, since food prices cru- tional millet dishes. In urban households
rior product and is therefore much cheap- cially determine purchasing power and in particular, these inputs – time, fuel and
er than whole rice. However, Senegalese therefore the minimum wages paid to labour – are scarce. This goes a long way
consumers have developed a marked pref- lower income groups. Imports are the sim- towards explaining why high rates of
erence for broken rice, with the result that plest way of ensuring cheap foods; devel- urbanization in the West African states
in 2003, broken rice on sale in St. Louis oping a system of marketable production are generally accompanied by increased
(close to the centre of local rice produc- at national level from a subsistence econ- rice consumption.
tion in the Senegal River Valley) costs 20- omy is a far more complex process. Fur- The promotion of imports, the industrial-
40 FCFA/kg or 10-20 percent more than thermore, the urban population in post- ization strategy and Senegal’s high level
locally produced whole rice – depending colonial sub-Saharan Africa was – and still of urbanization (around 50 percent), com-
on the season. This preference for broken is – of overriding importance in political bined with the positive image of rice as a
rice is probably due to changed consumer terms. Policies which aim to promote local foodstuff, created a new pattern of con-
behaviour in response to the type of prod- food production through price increases sumer behaviour based around rice as the
ucts available during the colonial and therefore encounter stiff opposition. staple food. Most of the demand for rice
post-colonial periods. Besides these circumstances specific to was – and still is – met by imports (see
Certain types of rice were available in Senegal, another major factor is that the graphs). Today, rice imports amount to
Senegal even in pre-colonial times, but preparation of rice dishes takes far less around FCFA 100 billion, accounting for
rice was a luxury, not a staple food. Rice time and fuelwood, and is far less labour- 7-8 percent of total imports and posing a
has only become an integral element of
the Senegalese diet since the colonial era.
Since independence in 1960, rice con-
sumption in Senegal has increased by
almost 1 000 percent in just four decades,
currently standing at around 1 million
tonnes. Rice consumption now exceeds 70
kg per capita per year and, since the 1970s,
has replaced millet as the most important
staple food. In urban households, rice
accounts for 54 percent of cereal con-
sumption and 18 percent of total house-
hold spending. In rural regions, the figures
are 24 percent of cereal consumption and
as much as 25 percent of total household
spending. The latter figure reflects the
fact that rural households are poorer and,
in percentage terms, have less money
available to spend on non-food products.
This dramatic increase in rice consump-
tion results from several factors which are
also revealing in terms of trends occurring
in other countries of sub-Saharan Africa
and possible policy responses. FAO data on imported broken rice are available for 2001-2003 only. During this
During the colonial period, rice was period, broken rice accounted for 99 % of total rice imports.
imported in large quantities in order to
keep food prices under control and at the
same time promote groundnut produc-
tion as an important cash crop. Senegal
was already exporting groundnut oil to
Europe in pre-colonial times; after colo-
nization, groundnuts became Senegal’s
main export product. A further factor
encouraging rice imports was that in the
French colonies of Indo-China, rice pro-
duction and export were under French
control. That region exported the bulk of
the rice going to the West African
colonies.
During the first two decades after inde-
pendence, this import policy remained
unchanged, and there was a continued
interest in exporting groundnuts and
importing rice. However, rapid industrial-
ization appeared to offer better prospects
for economic development, especially as
Senegal has virtually no natural resources
of its own. Cheap labour was essential to

agriculture & rural development 1/2006 23


major burden on the country’s trade and The progressive shift towards local food the wholesale price in Senegal amounted
foreign exchange balance. The fact that production from the early 1980s therefore to 28-31 FCFA/kg (compared with 8-19
only a proportion of Senegal’s food pro- took place under far more difficult envi- FCFA/kg under the liberalized conditions
duction actually reaches the market (the ronmental and economic conditions than introduced after 1996). Some of the rev-
figure for rice is 40-50 percent) further 20 years earlier. The development strategy enue from the import monopoly was used
highlights the importance of rice imports focussed primarily on rice cultivation to promote local production; however, a
for the Senegalese cereals market. based on large-scale irrigation. Over substantial proportion went towards
recent decades, more than 60 percent of funding the general state budget and the
Promoting national rice investment in the agricultural sector has Senegalese Progressive Union party.
been channelled into irrigated agricul- Yet despite this largely unintended pro-
production ture, especially in the Senegal River Valley. tectionism and the injection of substan-
The river valleys have always been regard- tial funding from the state and interna-
A g r i c u lt u r a l Tr a d e

More intensive efforts to encourage local ed as the regions which offer the greatest tional donors, satisfactory development
food production began in the early 1980s potential for more intensive agriculture, of rice production in Senegal remained
when the old model of industrialization at although they are home to just 10 percent elusive. Compared with the downturn
the expense of agricultural development of the rural population. The technical that had occurred during the previous
proved to be non-viable. The industrializa- parameters required for irrigated rice cul- decades, a slight increase in output was
tion strategy had yielded very little in the tivation appear to be in place: in principle, achieved, but the overall growth trend
way of internationally competitive prod- the disadvantage of costly dependence on during the period 1980-1996 stood at just
ucts. The Senegalese economy – initially a a system of irrigation which uses mecha- 3.1 percent per year, barely exceeding the
beacon of hope in sub-Saharan Africa – nized pumps is more than offset by the rate of population growth (see graph). The
outstanding climatic con- development of key production factors –
Since independence in 1960, rice ditions prevailing in these harvest yields, number of harvests per
areas, especially during year, water consumption and the expan-
consumption in Senegal has grown the dry season, which are sion of irrigated areas – lagged far behind
extremely conducive to Senegal’s potential. An important factor
almost ten-fold in just four decades, growth. By contrast, rain-
fed cultivation is viewed
was the powerful but often ineffective
role of the state in all areas of production
currently standing at around 1 million as very fragile and offers
little potential for more
development, starting with research into
irrigation management, agricultural
tonnes. intensive farming, al- extension, the granting of loans and deliv-
though 90 percent of ery of inputs, and extending to processing
farms depend on this and marketing. Faced with these unsatis-
lapsed into structural crisis. Rural regions form of cultivation. factory outcomes, donors scaled down
were worst affected, especially since the Until the mid 1990s, rice imports were a their funding for the irrigation projects,
urban bias of Senegalese politics now had key element of Senegal’s highly central- which led to a further stagnation of rice
a firm demographic basis. The austerity ized and regulated economic policy. The production.
measures imposed through the internal state’s price stabilization fund operated Another general disadvantage affecting
and external structural adjustment pro- an import monopoly; it organized the Senegal’s rice production was the increas-
grammes mainly hit the rural popula- marketing and fixed the prices of both ing overvaluation of the Senegalese cur-
tions. imported and local rice. The price of bro- rency from the end of the 1980s. This
Soil fertility in the Sahel’s fragile produc- ken rice was fixed at around 50 percent of pushed down the price of imports while
tion systems declined dramatically as a the price of whole rice. Within this system, intensifying price pressure on local food
result of the use of non-sustainable culti- a substantial levy was imposed on markets, making agriculture even less
vation techniques, especially in ground- imported rice; in 1994/95, the year before attractive. Other – rain-fed – crops were
nut production, and the increasing pres- the system was abolished, the difference affected even more than rice; production
sure on natural resources. A series of between the cif world market price and of these crops rose by just 1.3 percent over
droughts also occurred in the 1970s, lead-
ing to a permanent drop in rainfall and
harvest yields. The situation was exacer-
Photo: Schucht

bated by changes in the global vegetable


oil markets which greatly reduced the
profit margins for exported groundnut oil.

More than 60 percent of


investment in the agricultural
sector has been channelled into
irrigated agriculture, especially in
the Senegal River Valley.

24
The WTO agreements
should allow moderate
import protection
measures for Senegal in
order to protect local
rice production.
Photo: Schucht

this period, even though growth-imped- 1999. In cereals production as a whole this stability for producers while managing
ing state intervention in production and took until 2002. Due to the major fluctua- processing and marketing effectively. The
marketing were abolished in these sectors tions in production (see graph, p. 23), it is current scenario gives little cause for opti-
more rapidly than in the rice sector. still impossible to say whether this marks mism. In recent years, the situation in
Between early 1994 and mid 1996, the the start of a long-term trend. Ultimately, rural areas has worsened. The number of
economic parameters for food cultivation food production is influenced not only by rural poor remains constant in Senegal at
changed radically. The currency was deval- developments in the food markets but a very high level despite an acceptable
ued by 100 percent, imports were liberal- also by trends in the groundnut sector, rate of economic growth.
ized and privatized, and the role of the making it more difficult to draw any firm Could Senegal do more to promote and
rural development associations was conclusions. protect its local food production? This
reduced to a handful of core tasks such as question is not only significant for the
the granting of loans, agricultural exten- rural poor. A key question is whether a
Conclusions
sion and providing support to private pro- country which is so heavily dependent on
ducers and processing companies. The a handful of export products for its for-
transfer of responsibility for rice imports The high levels of food imports, especially eign currency reserves should be leaving
from the state to the private sector pro- broken rice, into Senegal undoubtedly the matter of its food security to the
ceeded smoothly, despite fears to the con- pose a major problem for local food pro- world markets to this extent. After all,
trary, although over time a significant ducers. They have created consumption with the increasing liberalization of the
concentration process has occurred. With patterns which local agriculture now finds global rice markets, higher prices and
the liberalization of imports, the state’s almost impossible to satisfy, while foreign wider price fluctuations are a distinct pos-
levies and quota system were abolished producers can meet this demand at very sibility. China’s future development poses
and the basic tariff now stood at around low cost with agricultural by-products. particular risks in this respect.
15 percent. Rice imports increased dramat- But it is debatable whether the imports However, even if politicians were able to
ically as a result. Two attempts to impose are the sole reason for, or rather the out- assert their will against the interests of
a special tax on broken rice imports come of, the weakness of local rice pro- the extremely influential import lobby, it
between 1996 and 1998 achieved only duction. Experience has shown that earli- would be almost impossible to enforce a
limited success, although it is unclear er policies which might have afforded massive increase in external protection
whether this was due to a lack of political some protection against imports have due to the ensuing price impacts on the
will and/or poor implementation. Since had very little impact on local production. urban population. Very high food prices
2001, the external protection of the rice The unfavourable economic parameters, would also curtail Senegal’s international
market has been regulated through the especially strong intervention by the competitiveness in its other economic
common trade policy of the West African state, have often made it impossible for sectors. The solution to the dilemma is to
Economic and Monetary Union and producers to respond by increasing sup- introduce moderate agricultural import
stands at between 5 and 10 percent. In all, ply. protection measures, which must be
imports of broken rice have increased So will the ongoing liberalization of im- accompanied by substantial support to
from around 400 000 to almost 900 000 ports and production, under way since improve agricultural productivity and pro-
tonnes since 1994. 1995, stimulate local production over the mote a range of diversification options in
Yet even after the structural adjustment long term? It is difficult to draw any firm rural regions. There is likely to be ade-
process, food production did not experi- conclusions at this stage. This will depend quate scope for such measures within the
ence the expected upturn; instead, it substantially on whether private and gov- WTO. Senegal is also supporting the
entered a phase of stagnation and even ernment actors are able to ensure an ade- demand being voiced by many developing
decline. Notable increases in production quate supply of loans, technology, agricul- countries for the introduction of special
were not achieved in the rice sector until tural extension, seeds, inputs and legal import protection measures.

agriculture & rural development 1/2006 25

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