To be poor is expensive! It is easier for the rich to tackle high living costs than for the destitute. This is true both of individuals and of governments. It is something the government of Burkina Faso has come to realise, by sad experience at present. However, it must be remembered that “to govern is to foresee”!
The daily paper SIDWAYA of Friday 29th of February had this to say: “The Government of Burkina decided, at a meeting of Cabinet ministers on February 27th, to exonerate a number of widely consumed foodstuffs from customs duties for a three month period, starting immediately: rice, salt, sweetened condensed milk, milk powder and baby formula.
Let us take a look at the impact of one or the other of these measures
Rice will now enter Burkina free of customs tax. However, prior to the new regulation, the tax was only 10%. The government realises the implications of this: “We have informed economic operators that fraud is on the increase in our country, because of underreporting quantities in customs declarations.” According to some estimates, only 30% of all imports are declared. On this basis, assuming that import traders reflect the tax relief entirely on the price, the abolition of the customs duty could have a very low impact on the consumer price, around 3%, or a reduction of 500 CFA francs on 50 kg bags, sold at 15.000 francs. At the same time the Economics and Finance Minister, Jean-Baptiste Compaoré, informs us : “Thai rice” has gone up from 200 000 CFA francs to 500 000 francs per ton, an increase of 150%!” One has to ask: “But which kind of Thai rice? High quality rice sold at 600 to 700 francs/kg in general grocery stores? Or old, poor quality rice, which is now even invading small village stalls?”
If we take a closer look at milk powder imports, what do we see? If we are talking of the large industrial 25 kg bags (often however sold at retail shops in small, unlabeled plastic bags), the tax is a mere 5% across the entire WAEMOU territory! Here again, one may estimate that only 30% are declared. For importers the exemption from customs tax therefore only represents a 1.5% saving! And this is not likely to be carried over as a reduction of the consumer price.
Hence, rather than coming up with a knee jerk reaction to public discontent with the rising cost of living, it would be more appropriate to use these events to ask the right questions and then to make the right decisions.
Should a country the size of Burkina Faso, where 80% of the population are farmers and herders really accept dependence on imports to feed itself? Can Burkina really do without an authentic agricultural and food policy? Should a country, which has a livestock of 7 million allow itself to import milk products for 9 billion annually? Should Burkina, whose government has invested billions in the development of well irrigated farm land for rice fields, remain indifferent to the fate of rice farmers, by letting massive quantities of low quality rice enter at undercut prices?
“To govern is to anticipate”. But at present the government is rushing to action. Could it do otherwise? A few years ago it would have been possible to levy taxes on milk powder and use the money to develop the milk trade of West Africa more widely. Kenya has succeeded in doing so and today the country is virtually self-sufficient in milk supply. In Burkina local fresh milk is in stark shortage. And the situation is not improving.
Everything goes on as if neither the cattle farmers nor the government had ever heard of anything but cotton seed oil cake for animal feed supplements. But all across the rest of the world, everyone has their eyes on soy. Burkina is capable of producing as much as it needs. Go out to the cotton district and ask farmers what they prefer to grow, cotton now selling for 150 CFA francs/kg or soy for the same amount?
Some time in the 70’s I asked a candidate standing for Parliament what his party programme had to offer farmers?
“Oh, the farmers, we are not afraid of them”, he replied. It seems to me that the situation has hardly changed today. Because of its lack of foresight the government is now reacting under pressure from street demonstrations. Perhaps it has no other choice? But it knows full well what the bottom line is : that the measures it has just decided on will have very little effect.
For its own credibility the government should propose action tol reduce food dependence in the next few years. It could declare: “Today we abolish tax on powder milk and rice imports. But at the same time we wish to send a strong signal to producers. We pledge support to the (domestic) milk and rice sector and guarantee investments there. If the price of milk powder falls dramatically, we shall not only reinstate taxes but even increase them, if necessary. We will no longer allow the use of milk powder to make formula, selling at 200 CFA francs. We will no longer allow old Thai rice to outsell our domestic rice at cut throat prices. We will take the necessary action to maintain the price of local rice at a reasonable level.
A last remark
A few days ago I travelled to the vast irrigated plains of Sourou. Rice farmers there were alarmed. There was no longer any water. According to the farmers, there had been abundant water supply two months earlier. If there was no water now, it was because of the AMVS – Authorité de Mise en Valeur de la Vallée de Sourou (The River Valley Management and Development Authority), which alone decides when to open or close the dam gates at Lery. Reportedly there was too much water! The managers had ordered the opening of the gates to drain out a flooded area (so far, so good), but had then forgotten to have them closed again.
To make this entirely clear, it must be noted that the irrigated plains of Sourou are not situated downstream of the flood-gates but along the banks surrounding the dam. From there the water is pumped around to the fields. Therefore, when the gates are opened, the water level sinks and the supply of irrigation water runs out.
The result in this case was that farmers had to reduce their production by 50%. As we approached some of the AMVS staff about this, they only gave us elusive answers. The Headquarters are in Ouagadougou. Could we hope to have a public inquiry carried out and the culprits held to account?
Koudougou, March 1st, 2008