Globalization, International Trade and the Challenge of

Agriculture and Food Security: A Nigeria Case

Study

BYDR A.A. ADUBI

HEAD OF TRAINING (Sectoral)NCEMAIbadan 1

INTRODUCTIONINTRODUCTION• Importance of Agriculture:

Income, employment (>65%), food, raw materials, linkages appropriate for exchange

• Trade is therefore critical to development of the sector WTO – intends to create a world where trade flows will be less restricted

• Uruguay Article 20 AoA. Intends to reform trade and

make policies more market-oriented

2

•New Rules of WTO apply to Market Access, Domestic Support and Export Subsidies

•Trade liberalization offers risks and opportunities for Agriculture. But no country can operate in autarky. Products must be exported and technology imported

• Globalization refers to increased economic integration between countries through the flow of information, goods, services, technologies and people

• Will Africa be able to cope? Competitive Domestic Agriculture? Integrated international supply

chains Institutional deficiencies Production response rate Technology Export potential

• Globalization is multidimensional and not only “Global free market” It has cultural, environmental, economic, political, legal and technological dimensions

• Globalization is the integration of economies and societies through the flow among countries, of information, ideas, activities, technologies, goods and services, capital and people.

• UNCTAD - 3 layers – Expansion of International trade, Financial Integration, then Globalization which places IT and technology at the forefront of competition.

Concept of GlobalizationConcept of Globalization

•Growth of the global financial markets

•Collapse of the former Soviet Union and the end of cold war. War has shifted from “geo-politics” to “geo-economics”

•Growth of Corporate activities or multinational Corporation (MNC)

Factors that assisted spread of Factors that assisted spread of GlobalizationGlobalization

Factors that assisted spread of Factors that assisted spread of GlobalizationGlobalization

• The revolution of information, Communication and transportation technology, which makes business and financial transactions easy to conduct at a distance.

• The international environmental problems of global warming and acid rain cut across countries, requiring global solutions and cooperation.

• Internal opening of the economy – political and economic decentralization. Privatization is encouraged with market forces given prominence

• External opening of the economy – there is general liberalization and deregulation.- call for reduction in tariffs and import taxes- formation of regional unions and multinational.

ConsequencesConsequences

• Effects on the economy – opinions are divided.

Table 1: Gross Domestic Product At 1984 Factor Coast (Naira Billion)

Activity Sector 1998 1999 2000 2001 2002

1. Agriculture (a) Crop Production (b) Live stock (c) Forestry (d) Fishing  2. Industry (a) Crude Petroleum (b) Mining & Quarrying (c) Manufacturing 3. Building & Construction4. Wholesale & Retail Trade5. Services TOTAL (GDP)NON-OIL (GDP)GDP Growth Rate (%) Agriculture as % of Total Non-Oil GDP

45.2536.10 5.89 1.38 1.88 20.5313.48 0.36 6.69  2.3613.2931.52 112.9599.472.3042

47.6037.99 6.06 1.40 2.15 19.7712.47 0.37 6.93  2.4613.6232.69 116.14103.672.8245.91

48.9939.13 6.20 1.42 2.24 21.4413.87 0.39 7.18  2.5513.8433.82 120.64106.773.8745.88

50.8540.61 6.38 1.45 2.41 22.4914.59 0.42 7.48  2.8614.1835.34 125.72111.134.2145.76

53.5342.73 6.64 1.48 2.68 20.8912.60 0.48 7.81   3.3514.6837.38 129.83117.233.2745.67 Source: CBN Annual Report and Statement of Account, 2002

Item 1998 1999 2000 2001 2002

Import Oil sectorNon-Oil sector Export Oil sectorNon-Oil sector Total Trade Oil sectorNon-Oil sector

837,418.90

175,854.20661,564.70 

751,856.70

717,786.5034,070.20 1,589,275.60

893,640.70695,634.90

862,515.65 211,661.75650,853.90

1,188,969.84

1,169,476.8719,492.97

2,051,485.49

 1,381,138.62670,346.87

962,963.92

198,735.92764,228.00 1,945,723.31 1,920,900.3824,822.93 2,908,687.23 2,119,636.30789,050.93

1,347,466.24

215,474.641,131,991.60 2,001,230.79 1,973,222.2228,008.57 3,348,697.03 2,188,696.861,160,000.17

1,249,380.73 239.071.131,010,309.60 1,874,874.21 1,780,221.5694,652.65

3,124,254.94 2,019,292.691,104,962.25

Table 2: Visible Trade (Naira Million)

Source: CBN Annual Report and Statement of Account, 2002

Table 3: Imports By Major Groups(Naira Million)

Import Group 1998 1999 2000 2001 2002

Consumer Goods DurableNon Durable Capital Goods And Raw Materials Capital GoodsRaw MaterialsMiscellaneous TOTAL

326,323.4 25,690.0

300,633.4 

508,313.3  

166,646.4

341,666.92,512.2

 

837,148.9

344,965.9 31,046.9313,919.0 515,724.0  198,355.4317,368.6

1,825.8 862,515.7

373,632.3 30,815.0

342,817.3 

586,448.9  

203,186.7

383,262.22,882.7

 

962,963.9

522,816.9 43,118.9479,698.0 820,606.9  284,315.4536,291.6

4,042.4 1,347,466.2

489,757.3 36,232.0453,525.2 754,626.0  262,370.0492,256.04,997.5

1,249,380.7

CBN Annual Report and Statement of Account, 2002

 

Table 4: Structure of Nigeria’s import and exports, 1980-96

  Exports Imports

  1980 1985 1990 1995 1996 1980 1985 1990 1995 1996

Share (percent)FoodAgricultural raw materialMiningManufactures

 2.20.2 95.61.8

 1.70.3 96.01.9

 1.71.1 92.94.2

 2.72.4 86.88.0

 2.51.8 92.03.7

 15.10.4 1.782.6

 15.11.2 1.780.2

 8.30.8 1.588.5

 11.00.9 1.085.5

 12.70.4 0.785.2

Value ($ billion)TotalFood

 26.10.57

 15.60.27

 13.50.23

 12.70.34

 15.50.39

 14.32.16

 6.190.93

 5.180.43

 4.820.53

 5.200.66

Source: Computed from WTO (1998). 

Globalization Concerns

• Competitiveness of the domestic agricultural production

• Integrated international supply chains

• Decommodification through G.M.• Weak Institutions• Safe food culture• Displacement of the small

farmers

              Other Concerns

• Heavy use of pesticides may kill the pollinators – the bees and butterflies and therefore less fruits will be produced.

• Native seeds will be displaced by new hybrids which cannot be saved and need to be purchased every year at high cost. The new hybrids are also vulnerable to pest attacks.

•The introduction of genetically engineered seed is costly and will increase ecological risks.

•It is women and small farmers working with biodiversity who are the primary food producers.

•The call for removal of restriction on imports will adversely affect agricultural production in Nigeria negatively as the domestic products cannot compete effectively.

• Capital-intensive, corporately controlled agriculture will soon spread into regions where peasants are poor but until now have been self sufficient in food production. In those regions where industrial agriculture has been introduced through globalization, higher costs will make it virtually impossible for small farmers to survive.

• The globalization of the food system is likely to destroy the diversity of local food cultures and local food economies. A global monoculture may even be forced on people (consumers) by defining everything that is fresh, local and handmade as a health hazard.

• World Trade Organization (WTO) established in 1994 has expanded authority to cover Trade related Intellectual Property Rights (TRIPs). This has been interpreted to include the genetic code of living organisms.

• .

Conclusion

19

Conclusion

• Globalization must be viewed as a positive force for development especially with the wave of information and communication technology. There is need to promote learning from other country’s experience especially those having similar production features as Nigeria. This will allow immediate and faster adoption of positive developmental outcomes.

• Government policies should concentrate on exploring ways of reducing transaction cost in rural areas especially through encouraging community based organizations that will offer collective action and access to information, finance, insurance, research and other opportunities for the farmers

•There is no government in the world that does not offer subsidies to its agriculture in one form or the other. The peculiarity of Nigerian agriculture demands that subsidy support directed towards market failure affecting small holder agriculture will be effective in uplifting the status of small farmers production.

•The involvement of public sector in research should be continuous but such research efforts should be community (farmers) driven.

•The trade related intellectual property rights (TRIPs) agreement of WTO as it relates to plant varieties must be modified with plant breeders right which accommodates farmers and researchers rights as well as protect traditional knowledge about seeds, plants and animals.

•The country should be careful in accepting food aid when it is offered. Often food aid is increased when prices of agricultural food products are low and reduced when prices are high. This may be a policy of dumping surpluses.

Conclusion

Sustainability demands that we move out of the economic trap that is leaving no space for other species and other people.Economic globalization has become a war against nature and the poor.But the rules of globalization are not God -given.They can be changed.They must be changed to reflect consideration of people’s livelihood,sustainable use of resources and the right of people to have security.