Here’s why Cameroon and others got to the recent commodity price explosion, and how governments are making it worse!

By Hinsley Njila (contributor)

Pretty much every developing country (Cameroon included), no matter whether they have democratic or totalitarian political systems, heavily tax farmers in order to subsidize their urban populations, while developed nations like France, Germany, Great Britain, Japan and others heavily subsidize their farmers, no matter how small the agricultural sectors. In fact, some countries in Europe subsidize farmers more generously than the United States which has a slightly larger farm sector than most in Europe. On the surface, this universal tendency for rich countries to subsidize farming, no matter how different are the details of their political systems, is a paradox. For since only a small fraction of the populations of these countries work in agriculture, farmers cannot contribute much to any majority voting coalition.

Taxing of farmers in developing countries is as true of India as of China, Cameroon as well as Peru, Libya as well as South Africa, and similarly for the other poorer nations. In all these countries, farmers are a significant fraction of their populations, and they form a majority in many, such as Cameroon, India and China.

Make no mistake that the recent strikes in Cameroon, South Africa, and other developing countries about the global explosion in the prices of commodities is a direct result of these differences in the ways farmers are treated. The United States and European Union have been subsidizing biofuels which is an important factor behind the rise in food prices, for these subsidies directly raised the price of corn to consumers, and indirectly raised the prices of other grains. Riots broke out in many cities around the world in protest against the increases in the prices of bread and other food stables.

Well here’s the interesting part about all these. People like Paul Biya and others decided to either reduce the prices of commodities or restrict exports as a way of quelling the riots and increase supply. Of course you don’t have to be an economist to realize that this obviously reduced the incomes of farmers (which are already low), and denied them the ability to trade on Global markets were prices are higher.
This response to rising food prices by third world governments is clear evidence that they have no idea how to fight poverty in their countries. Farmers in countries like Cameroon are on average vastly poorer than their city residents, and reducing their incomes in such a manner fuels migration, less interest in farming and continuing high prices because fewer crops will be grown, on top of the already poor investment in farm technology.

So by reducing the prices of commodities in the case of Paul Biya, or restricting exports in the case of China and others, developing countries are not only making their economies less efficient, but also they are adding to the overall incidence of poverty among their populations. The gap between the incomes of rural and urban families is much smaller in developed countries that subsidize rather than tax farmers.
It may seem very simple, but with high prices of commodities like cereal and other foods, subsidized farmers are getting far richer than city residents, while taxed farmers are getting poorer as the taxes have increased on those situations to accommodate city living.

In the last few months, everyone from the UK minister of Agriculture to the chief of the UN world food program have been warning of a looming global food crisis, but the only ones who do not seem to be bothered by such an alarm are the developing nations who incidentally are the most under-prepared to deal with it.

The solution to this crisis is not as simple as just subsiding the developing farmers, for this would require imposing high per capita taxes on their relatively small urban populations since farmers are a rather large proportion of the total population in these countries. Instead, the same political pressures as in developed countries lead poorer countries, regardless of the nature of their political systems, to subsidize the smaller urban populations at the expense of the larger farm populations.

People far smarter than me have shown that a common approach to the political process based on interest group pressures can explain both the taxing of poor farmers in developing nations, and the subsidies to well off farmers in richer nations. Whatever the case may be, unless actions are urgently taken to help poor farmers in developing countries and the agriculture sector as a whole, we are in for a period of unavoidable violence resulting from massive global food shortages.