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2. The role of the export sector
The decline in agricultural production
Failure
of the export model
Alternative strategies: Algeria and Ethiopia
Social relations and agricultural development
Hamid Aït Amara
Today, all African countries are facing the limitations of a development strategy based on expanding the export sector. The 1970s were marked by an almost universal slowing down of growth in GNP and economic expansion came to a halt, or became negative in many countries. This happened in Chad and Uganda whose problems are well known; but it has also affected mineral-rich countries such as Zaire. Liberia and Zambia and even the Ivory Coast which, in the 1960s and the first half of the 1970s, had registered high growth rates.
In these countries, GNP has regressed in absolute terms as a result of a decline in both agricultural and industrial production. On average, per capita income in sub-Saharan Africa fell by 0.4% per annum during the 1970s, and the end or slowing down of economic growth has led to growing unemployment, increased pressure on land, and unproductive tertiary sectors.
The 'modem' economic system's capacity to absorb a labour force that is growing rapidly as a result of population growth and urbanization is reaching breaking point. This trend is appearing at a very low level of industrialization, such that the proportion of the economically active population employed in industry is still very low, compared to what can be observed in other Third World regions.
The decline in agricultural production
Paradoxically, the fact that most of the labour force is in agriculture has not prevented the decline in food production and the growth of imports. The food production index fell from 100 to 91 during the 1970s (World Bank. 1981).
Africa south of the Sahara - although the Arab countries of Africa should also he included - is thus the only region in the world where per capita food production has fallen over the last two decades. Furthermore, the rate of cover of Africa's (including North Africa and Egypt) external agricultural trade (export receipts as a percentage of expenditure on imports) is declining rapidly, falling from an index of 216 in 1970-71 to 134.2 in 1976-77 and 68.8 in 1983-84: and for sub-Saharan African countries alone. 138.2. 223.6 and 128.5 over the same periods.
This downward trend in the food balance reflects the situation of the vast majority of countries, including those such as the Ivory Coast or Kenya, which recorded a smaller fall in their agricultural surplus.' In the Ivory Coast, rice imports rose from 149,000 metric tons in 1973 to 382,500 metric tons in 1982, and wheat imports from 139,000 metric tons in 1973 to 200,000 metric tons in 1983.
Globally, the period 1975-85 saw a large increase in food imports, cereal imports rose from six to 21 million metric tons.2 This development was due mainly to rapid urban growth which reached an average rate of 6 or 7% per annum; but in a growing number of countries, such imports have also become necessary to cover the needs of the rural areas.3 This new situation arises from the increasing integration of agricultural production into both the local and the external market and increased monetization of the rural economy.
Faced with the aggravation of the food crisis, most countries have, on the recommendations of the IMF, implemented policies aimed at extending private exploitation and control of agricultural resources, and further promoting the role of the market in both the production and distribution of agricultural inputs and commodities. Additionally, in many countries the state has disbanded public agencies that had previously performed major economic functions in the organization of production and exchange.
Official aid and the grant of new loans are being made subject to measures designed to promote the further liberalization of African economies. Thus the EC intervenes directly in the formulation of agricultural and food policies in countries to which it gives aid.4 Raising producer prices, input subsidies, and reorganizing the collection of local products are designed to create conditions favourable to a growth of production for the market.
These policies have been in effect for a few years, but it appears that the situation has not greatly changed. The fall in the standard of living of urban workers consequent upon increased prices of foodstuffs has had no counterpart in a measurable improvement in peasant incomes. While the relative prices of food crops and export crops have, in a number of countries, shifted in favour of food crops, they have been insufficient to slow down the growth of wheat, rice and maize imports. Food production rose by only 1.5% per annum during the 1970s, whereas population was rising by 2.7%.
With the rise of agricultural food prices and the deepening of the urban food supply crisis, trends have emerged towards the control of land and the principal means of production and exchange by small groups of capitalist farmers, traders or entrepreneurs. This development is marked in countries where the food deficits are large, where the rise in prices has been highest (Nigeria, Kenya. Egypt, Algeria) and where the reduction in the availability of foreign exchange for external procurement has given more scope for local production for the market.
In countries where the 'green revolution' has occurred, government measures, especially in the area of price rises, mainly benefit the big farmers. Experience, particularly Africa's, shows that transfers of the social product in favour of agriculture through a pricing policy, operate, in practice, to the benefit of a particular category of farmers and that the mess of small or landless peasants who must substitute insufficient production with foodstuffs bought on the market are penalized by higher agricultural prices just as much as urban workers.
The increase in the role of the market and reference to prices have generally led to African agriculture becoming more closely integrated into the international division of labour and their dependence.
Reducing the areas in which the state intervened heavily, notably in the trade in cereal products.5 has not led to an improvement in the conditions of supply to the cities, or the collection and stocking of products. Overall, after the implementation of a series of measures, the situation of agriculture has not improved. This is the message of the report drawn up by the Comité permanent Inter-Etats de la lutte contre la sécheresse au Sahel6 meeting in 1986 in Cape Verde: it also observed that in regions where a co-ordinated and systematic effort had been made to promote food production, the situation had barely improved. The Sahel's dependence had even deepened, and production everywhere was growing more slowly than population. Finally, the Comité stressed' that the efforts made at the technical level of the production of inputs, production infrastructures, and intensification... have not borne the fruits expected of them'.
The difficulties in promoting agricultural production by sectoral measures alone show quite clearly that the problem of agricultural failure must be looked at in a more global context, that of the choice of development. As Samir Amin notes, famine and rural poverty are the product of the relations of the subsistence sector with other sectors and with the international economy.
The fact is that, beyond the sectoral crisis of agriculture, what needs to be examined is the validity of accumulation strategies based on expanding the export sector (whether agricultural, mining or energy exports) and the effects of a process of accumulation and the development dynamic.
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
Alternative strategies: Algeria and Ethiopia
The extraverted pattern of accumulation has finally led to blocking the development dynamic and an irreducible dualism of economic and social structures. Promotion of the export sector has produced 'structural effects', a trend to social and economic polarization that marginalizes the vast majority of the rural population.
The alternative experiences, illustrated by the Algerian and Ethiopian cases, have concentrated on building up relations between agriculture and industry and meeting rural demand for producer and consumer goods. Modernizing agriculture and improving rural labour's productivity are thus placed at the very centre of the development problematic.
In Algeria, the stress on industrialization, in a first phase, aimed 1) to set up industries capable 'of bringing technological progress to the heart of the most backward sector, agriculture';18 and. 2) by diversifying economic activities, to create sufficient jobs eventually to absorb the surplus of rural labour, without which rapid growth of agricultural productivity is impeded.
The relationship between agriculture and industry has thus been accorded special attention and priority has been given to investment designed to provide agriculture with the means to modernize its techniques of production. The development of iron and steel and petro-chemical industries, which form the backbone of the industrialization process, served as the focus for the construction of engineering, electrical and chemical sectors designed to meet agriculture's demand for producer goods: agricultural implements, machinery, fertilizers, irrigation equipment and so on. After a decade and a half, large quantities of various capital goods have been delivered to agriculture, notably in the area of mechanization.
But relations between agriculture and industry could intensify only in so far as conditions of productivity in the employment of capital and labour existed, enabling agriculture to develop and finance purchases from industry and raise the purchasing power of rural households. The question of the evolution of agricultural productivity thus becomes of fundamental importance.
In Algeria, where the land is relatively overpopulated, improving labour productivity necessarily involves an increase in physical production per unit of surface area. Raising peasant incomes is then possible only if agricultural productivity is rising faster than agricultural employment. For it is possible to increase production per hectare without altering labour productivity if agriculture has proportionally to absorb as many new workers as it creates extra goods.
In China, for example, labour productivity calculated in man-days appears to have declined considerably between 1950 and 1975, most of the increase in incomes having been provided by an increase in the number of days worked per worker in agriculture; from 175 days in the late 1950s to 275 days per worker per annum in 1975.19
The movement of employment is thus a strategic variable, determining the productivity gains of labour in agriculture and final demand by sector. Agriculture will perform its role in the development process all the better when other sectors, and principally industry, are in a position to reduce population pressure on the land.
The numerous criticisms of the Algerian strategy 'based on priority for industry and the abandonment of agriculture', criticisms generally directed at countries which attempt to escape from the import-substitution industrialization model, thus fundamentally misunderstand the basic facts about its development model. Algeria has based its industrialization on an internal dynamic that makes growth of the local market a condition of the development process, and agriculture's demand, both for producer and industrially produced consumer goods, is an essential dimension of that process.
Contrary to what has often been written, the autocentred strategy is a true 'rehabilitation of agriculture and the rural areas' that starts from the need for purchasing power in the rural areas in order to extend the local market and pursue development.20 It is also necessary to emphasize that Algeria is half-way along in its industrialization process. The phase of capital goods industries 'whose size testifies to the capacity for self-transformation of the economic system'21 has not yet reached a significant level. The 1980-84 and 1985-89 plans proposed to continue the establishment of capital goods industries and thus reduce dependence on imports necessary for the functioning of the production apparatus. Capital and intermediate goods still represent almost 50% of total imports. It thus appears that the inter-sectoral and intra-sectoral integration project has not been pushed far enough to give the economy a (relative) autonomy in its accumulation project.
The more or less rapid and sizeable transfer of the surplus rural labour force to non-agricultural activities can help or hinder the growth of productivity, and thus determine the intensity of relations between agriculture and industry. In other words, the development problematic consisted in seeking the conditions of a continuous improvement of rural labour productivity, given the specific constraints of the economy.
Naturally, given Algeria's demographic situation, an absolute reduction of the rural population in order to accelerate the process of labour productivity growth, such as happened in Europe from the late 19th century, was ruled out. In the most favourable circumstances, agriculture will have to absorb a proportion of the annual growth of the labour force for an indeterminate period.
This explains the strategic role of industrialization and the growth of non-agricultural employment, in realizing a growth rate of productivity per worker in agriculture that would make it possible both to fuel agriculture's demand for industrial goods and to improve the producers' standard of living.
Globally, the analysis suggested by Aït Amara shows that the industry-led development dynamic has had positive effects on the growth of the agricultural sector, notably in employment and incomes. Throughout the 1970s and the first half of the 1980s, job creation was sufficiently sustained to absorb the whole of the additional demand for jobs both in the towns and in the countryside, thus making it possible to stabilize the numbers of those working in agriculture at the 1960s level, at the same time as extending mechanization. The industrialization process also made it possible to widen the domestic outlets for agriculture and to increase agricultural incomes as a result of rising demand and prices. In addition, it contributed to keeping the majority of the small peasantry, living on holdings that were too small, in the rural areas by providing them with extra jobs and incomes without which they could not have remained in the countryside.
Analysis of the Algerian case, however, shows that in countries with strong population pressure on the land, if industrialization is a necessary prior condition, then an increase in yields is essential; by itself, industrialization is not sufficient to sustain a lasting process of agricultural growth.22 Progress cannot be limited to the material factors of production, it also concerns the biological aspects that influence the evolution of yields and the capacity of peasants to master new production techniques. This interdependence, or interaction, of different links in 'the chain of agricultural progress' explains the very slow diffusion of technological change in agriculture, and the importance of structural policies that attempt to accelerate its spread. Structural reforms are thus a fundamental aspect of the problematic of the modernization of agriculture. 'in so far as concerns both the ownership of land and the performance of labour itself.'23
In Algeria, the process of structural reform was deliberately limited, and in addition interrupted, in the 1980s. In 1982, the government dissolved the agrarian reform sector established in the 1970s, and terminated aid provided to the subsistence sector through service co-operatives. The collective sector that had emerged from the nationalization of settler lands in 1963 was once again reorganized, stressing intervention by the state in the functioning and management of the 'socialist agricultural estates'. The policy of gradually reducing the agrarian dualism inherited from the colonial period, initiated by the 1971 agrarian reform through a gradual reorganization of labour and ownership, has been abandoned in favour of a path for developing agriculture that seeks to rely on individual exploitation of the land and a greater role given to the market.
The result is a limited employment of agricultural resources, despite a very high rate of food dependency and the maintenance of distortions in the productive structure compared to the demand for food, notably in order to contain the rise in farm prices within limits that do not excessively compromise the global economic balances. This evolution of agrarian relations further accentuates the importance of the oil rent in the development process and neglects the mobilization of a domestic surplus generated by a broad development of productive forces in agriculture. It also testifies to the class limits that may impede the full realization of an autocentred development model. Ethiopia appears not to have set such limits, but bases the accumulation dynamic on the effects of a radical reform of agrarian structures.
Ethiopia completely reversed its approach to development after the advent of people's power. The agro-export model of import-substitution industrialization pursued until 1974 was abandoned and replaced by a strategy of mobilizing the principally agricultural domestic surplus. This surplus, writes M. Douri, can result only from increasing the yields and labour productivity of the whole peasant sector. This explains the vital importance of the agrarian reform in Ethiopia in opening up access to all of technological progress. The abolition of the feudal tenure system simultaneously transformed both the ownership regime and the social relations of production. It created a new mode of organization and production that literally liberated the rural productive forces and cast aside the obstacles to intensifying labour and improving productivity. This movement rests on peasant associations, which are responsible for allocating land and promoting service co-operatives.
Since 1976, the peasant associations have been developing forms of cooperation between their members and embarking on a process of rural industrialization built around peasant needs. Service co-operatives constitute an increasing source of employment and accumulation that benefits the development of the rural economy. The key question, writes M. Douri, is how to meet the new peasant demand consequent upon the agrarian reform and the changes in the distribution of the country's wealth. Thus, the agrarian reform has been accompanied by a process of industrialization more closely subordinated to meet the needs of agriculture whose social, structural and technical transformation it sustains.
The Ethiopian experience testifies to the key role of structural reforms, in the broad sense, in the dynamic of relations between agriculture and industry and brings out the importance of the knock-on effects peasant demand and new modes of organizing labour and agricultural production can have on the development process. Which types of social relations should be chosen in order to accelerate the development of agriculture thus reappears as an essential question in the problematic of the modernization of agriculture.