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Ghana: Playing Chicken
AfricaFocus Bulletin
Jul 5, 2005 (050705)
(Reposted from sources cited below)
Editor's Note
"For the last few years the Ghanaian market has been flooded with
cheap imported chicken from the European Union and the United
States. These are usually fatty chicken parts that come in packages
without labels. Nonetheless, demand for local poultry has
collapsed, threatening the livelihoods of over 400,000 poultry
farmers in the small West African nation." - Corpwatch
Of the major issues on the agenda for rich country leaders and
demonstrators as the G8 Summit begins today in Scotland, trade has
received less attention than the more prominent duo of debt
cancellation and increased aid. It is also the one on which
observers expect least from the Summit. Instead, highly technical
negotiations in other venues remain stacked against attention to
concerns of African and other developing countries.
The damage done to Africa by rich countries' trade policies, many
critics note, goes beyond the relatively well-publicized subsidies
to rich country agribusiness. Indeed, the very policies promoted as
"reforms" and set as conditions for countries to access debt relief
and aid, may themselves cause more damage than the benefits
delivered by concessions on debt and aid. This theme appears in
protesters' demands under the rubric of "trade justice," but risks
being drowned out by the dominant media emphasis on how much aid is
promised. .
This AfricaFocus Bulletin contains an article from Corpwatch
documenting the devastating effect of trade liberalization on the
poultry industry in Ghana. Another Bulletin sent out today contains
excerpts from a report by Christian Aid estimating the cumulative
negative effect of trade liberalization on African countries.
For previous AfricaFocus Bulletins on trade issues, visit
http://www.africafocus.org/tradexp.php
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
Playing Chicken: Ghana vs. the IMF
by Linus Atarah, Special to CorpWatch
http://www.corpwatch.org/article.php?id=12394
Pratap Chatterjee and T. Eve Greenaway contributed to this article.
June 14th, 2005
Francis Kumajor runs up and down a busy road in the center of the
Ghanaian capital Accra. The 17-year-old is trying to sell chickens
to commuters in the sweltering heat. The drivers, sealed in
air-conditioning, cast sullen glances as they drift by. Very few of
them stop.
"For the whole day I have not managed to sell enough to pay my
rent, less than ten chickens" Kumajor complains, stopping
mid-sentence to catch a rare stopped vehicle. He still has three
cages full of birds standing by the roadside.
The cause of Kumajor's plight is not difficult to locate. In fact,
he articulates the problem well. "Walk into any of the supermarkets
and you will find that they are bulging with imported frozen
chicken," he says. "People don't want to buy local chicken because
the imported ones are much cheaper," he adds, trying to force a
smile.
For the last few years the Ghanaian market has been flooded with
cheap imported chicken from the European Union and the United
States. These are usually fatty chicken parts that come in packages
without labels. Nonetheless, demand for local poultry has
collapsed, threatening the livelihoods of over 400,000 poultry
farmers in the small West African nation. In 2002 alone, more than
26,000 tonnes (one tonne is roughly the same measurement as a US
ton) of chicken was imported into the country, mostly from the
European Union where farmers receive generous subsidies for their
products. In 2004, that figure was estimated to be as high as
40,000 tonnes.
This phenomenon is known as "dumping." Developed countries -- such
as the EU and the US -- will often take excess product, whose
production has been heavily subsidized and sell it to the
developing world at prices that are so low, they ruin local
markets.
In 1992 domestic poultry farmers supplied 95 percent of the
Ghanaian market, but by 2001 their market share had shrunk to just
11 percent. The imported chicken is available (wholesale) at a
price that is only slightly more than half of the wholesale price
of local chicken.
The accompanying loss of jobs has also been remarkable. The
industry has lost 150 jobs in the past few months alone, say the
Farmers Associations. Commercial poultry farms -- which do not
include small rural producers -- employ up to 5,000 people. Any job
loss has far reaching implications for Ghana's 20 million people
because each worker often provides support for numerous others in
their household.
Foreign producers currently pay a 20 percent tariff or tax on the
poultry they send to Ghana. Two years ago, the Ghanaian Parliament
passed a law allowing an additional 20 percent tariff to be imposed
on imported chicken, bringing the overall tariffs to 40 per cent.
In a dramatic move, just two months after the law was passed, the
Customs and Excise Preventive Services (CEPS), the body responsible
for implementing the tariffs, issued an order reversing the
decision. The new tariffs were said to be in conflict with regional
tariffs. In other words, the proposal have been blocked by the
International Monetary Fund (IMF), an institution in which the
Ghanaian government has less than 0.5 per cent of the vote.
The National Association of Poultry Farmers, a body representing
small and medium-sized local poultry farmers, has cried foul and
has taken the CEPS to court, in order to force application of the
law.
But Kumajor and his fellow poultry farmers in Ghana did not know
the power of the IMF. Although it is an unelected body, it can
overrule judicial processes in their country.
The Ghanaian government let go of the new tariffs because it had
already reached an agreement with the Fund to suspend the higher
tariffs on poultry during the government's Article 4 consultations
- an annual dialogue the IMF has with member countries.
The IMF made it clear that it was opposed to the higher tariffs on
the grounds that it will hurt Ghana's poverty reduction program.
Alphecca Muttardy, the IMF's current representative in Gahna
claimed that Ghana could only increase the tariffs under a special
dispensation provided to successful businesses only. Speaking to
Olivia McDonald from the non-governmental organization (NGO)
Christian Aid in Ghana, Muttardy said, "we pointed it out to
government that this [raising of tariffs] was not a good idea, they
reflected on it and we agreed."
"The actions of the government show clearly the desperation with
which they seek to please the World Bank and the IMF," says Dominic
Ayine, the director of the Center for Public Interest Law (CEPIL)
and a lawyer representing the poultry farmers. "The opposition of
the Bank and the IMF to increased tariffs is based on pure
ideological reasons and it has little or no connection at all to
the welfare of Ghanaian poultry farmers or the consuming public,"
said Ayine.
Moreover, as Ayine argues, the action of the Ghanaian government,
under pressure from the IMF, has greatly undermined the tenets of
good governance and the rule of law, which are said to be promoted
by world financial institutions all over the world. "Overriding a
judgment obtained through normal judicial processes does nothing
but undercut the confidence with which citizens perceive the
judicial process," he adds.
In its defense, the government argued that the decision to suspend
the increased tariffs stems from its obligation to adhere to
international treaties, referring to World Trade Organization (WTO)
agreements on agriculture which, the government says prevents it
from proceeding with the measure.
But trade experts say the increased tariffs do not breach official
WTO agreements. Under the organization's Agreement on
Agriculture(AoA) Ghana's tariffs on agriculture products can be as
high as 90 percent.
The WTO agreement on Subsidies and Countervailing Measures also
permits member countries to impose increased custom duties on
products that have been subsidized in their countries of origin, if
such subsidies have caused or threatens injury to a domestic
industry in the importing country. The European Union, the source
of most of the imported chicken provides 43 billion euros to its
farmers annually.
Ghana imports almost one third of the EU frozen chicken that goes
to Africa. Cameroon, Togo, Senegal and South Africa are among the
other nations receiving imported frozen chickens and chicken parts.
As much as 87 percent of the poultry in Cameroon, comes from
Belgium and Spain. In the case of Senegal, the Netherlands and
Belgium combined account for 60 percent.
In Cameroon, French activists, have taken up their case to lobby
the EU for a better protection of African farmers. And in Senegal,
according to reports by the Agence France Presse (AFP), 40 percent
of the nation's poultry farmers have gone out of business because
they are unable to compete with EU imports.
Level Playing Field
There is some question as to whether a 40 percent tariff on the
chicken would actually solve the problem. According "For Richer or
Poorer" an April 2004 report released by Christian AID, it was
estimated that "tariffs would need to be 80 percent, four times
their current level" to allow local producers and processors to
compete fairly with EU imports," because "European producers gave
enjoyed decades of subsidies, support and protection from their
government."
The world playing field, Domonin Ayine believes, is not even close
to level. "Cut-throat competition is not countenanced anywhere in
the world, not even in the so-called industrialized market
economies," he argues. "These countries have spurned a spider's web
of elaborate anti-competition laws to counteract the effects of
anti-competitive market behavior." Kenneth Quartey, President of
the Poultry Farmers Association and the owner of Sydal Farms,
agrees. "You don't build your local industries by opening the
floodgates for cheap imported goods to come and compete with
locally produced goods that, through no fault of the producers, are
bound to be more expensive." Quartey says has 15,000 broilers in
his cold store which he is unable to sell.
"It is through no fault of ours that our production costs are
high," he adds. "Just look at electricity and water tariffs, as
well as the price of petrol and diesel. So, in plain terms, our
government is telling us to fold up."
In fact, most members of the once thriving 400,000 member National
Association of Poultry Farmers have folded up. And Ghana's rice and
tomato industries are equally threatened.
All over the capital city, large billboards are advertising
American long-grained rice, which, thanks to huge subsidies from
the US government, has displaced local Ghanaian rice from the
shelves. Most of the subsidies are paid to big rice farmers in
states such as Arkansas. According to Oxfam, the British NGO, one
company alone, Ricelands of Arkansas, was the recipient of US
federal government agricultural subsidies totaling $490m between
1995 and 2003.
Ghana was on the way to becoming self-sufficient in rice production
in the 1970s and 1980s. But the IMF structural adjustment program
halted farm subsidies to rice farmers. Ghana now produces a mere
150,000 tonnes of rice, or 35 percent of its domestic need.
No longer able to farm because of the high prices of agriculture
inputs, many young people are flocking to the urban centers
searching for non-existent jobs. More displaced people from the
rice and poultry sectors are bound to increase the numbers drifting
to the urban centers, causing social problems. Mr Ernest Debrah,
Minister for Agriculture admits the gravity of the situation and
yet says he does not favor increasing tariffs.
Sub-standard quality
Over-reliance on imported chicken also has its health hazards. The
poorly-resourced Ghanaian health service does not have the capacity
to detect and prevent an outbreak of salmonella which might
accompany imported chicken.
In Cameroon, which has been importing frozen poultry for a number
of years, two local associations have studied the quality of
product, itself. The Service of Assistance to Local and Developing
Initiatives (SAILD) and the Association for the Defense of Common
Interests (ACDIC) came together in 2004 in the city of Yaounde with
ten participating countries to study a grouping of 200 chicken
samples. 15 percent of it was infested with salmonellae
In a report called "Farming Dynamics," the Belgian NGO SOS Faim
reported on the impacts of the transit of the poultry, which tends
to thaw out between freezing several times from the EU to Africa.
According to the report, "Deep frozen chicken parts have no value
with in the EU, as there is no demand and no market for these
products If traders sell the product in Africa, it is because the
price is higher than the price offered by pet food producers."
Between a rock and a hard place
On March 18th, the Ghanaian Parliament officially overturned the
two-year-old act to raise tariffs on poultry and rice. Although the
act had never been put in effect, a Ghanaian judge had ruled, just
one week earlier, in favor of a group of farmers trying to force
the government to enforce the higher tariffs.
The farmers had brought a case against the government body in
charge of enacting the increase, and Judge Ivy N Ashing-Yakubu had
ruled in their favor. When the act on which it was based was
overturned, however, Ashing-yakuba's ruling was made irrelevant.
"Her ruling was a historic moment for Ghana," Dominic Ayine told
Christina AID, "because it was the first time that the government
was censured by the courts for not putting into practice what
parliament had approved. Her ruling means that the government has
effectively defied the constitution."
Indeed, the Ghanaian government is in a challenging position. By
obeying the dictates of the IMF, it has also drawn the anger of
many citizen groups around the country who have rallied to the
cause of the poultry farmers. A sign-on statement campaign
sponsored by the Economic Justice Coalition is trying to force a
parliamentary hearing on the issue and possibly oblige the
government to follow through on its decision to implement the
tariff increase. According to the statement the government should
not abdicate its primary responsibility toward the people of Ghana
just to stay within the policy strictures and instructions of
foreign bodies like the World Bank and the IMF.
A number of activists in the EU and elsewhere are also rallying to
change policy. In April, 10 million people in 80 countries came
together for the Global Week of Action. Launched by trade activists
world wide, the week sought to highlight the plight of poor people
in developing countries affected by skewed trade rules.
Meanwhile, the poultry farmers and their lawyers have vowed to send
the matter to the Supreme Court, because the they believe the
action violates the nation's constitution.
Frozen Assets
Ships laden with frozen chicken sail regularly from the Dutch port
of Eemshaven to Ghana and Nigeria. Packed into the giant containers
on board are blue boxes with frozen chicken gizzards from
Zevenhuizen in south Holland, orange boxes with chicken legs from
Nunspeet in central Holland and yellow boxes full of chicken wings
from Epe in northeastern Holland.
"We ship more poultry than any other company in Holland," says
Jakob van Bek of Socar, a Dutch company in Lelystad which owns the
Eemshaven terminal. "Every week we send ten to twenty containers of
poultry, beef and pork, each weighing 28 tons. But 80 percent of
the meat is chicken."
Socar is just one of several traders that buy whole chickens and
parts from Dutch poultry producers to ship to West Africa. They
started direct shipments to Ghana a decade ago, simplifying the
export chain for producers like Gecombineerde Pluimvee Slachterijen
(GPS), based in Nunspeet. Today the bulk of the 150,000 chickens
that GPS slaughters every day, is exported to other European
nations, while the cheaper cuts are exported to Africa.
"European customers prefer the fillet to the chicken legs because
of the bones," says Patrick Lordet, a French salesman working at
the Rotterdam-based Khne + Heitz, another large chicken exporter
to Ghana. "I prefer the chicken legs myself but the fillet has a
higher sales price." Unlike Socar, Khne + Heitz raise their own
chicken at five locations around the country.
Poultry is a huge business in Holland - for every person in the
country, there are roughly five chickens. Although Holland is one
of the smallest countries on the European continent, it is also one
of the most densely populated nations in the world with about 500
people per square kilometer. This adds up to a total of 16 million
people and 80 million chickens in the country.
Almost a third of European poultry exports come from the Holland,
according to statistics published by the Dutch Agricultural
Economics Research Institute (LEI) and Eurostat.
What may seem surprising is that, like Ghana, the number of farms
and farmers in the Netherlands are also declining rapidly. Over the
last half century the number of farms have declined from over
315,000 in 1950 to a quarter that number today, employing just over
three percent of the Dutch population.
The answer to the statistical puzzle is the fact that the chickens
are almost entirely raised by giant agri-businesses and then
exported to the rest of Europe and the world.
Nutreco, one of the world's largest agri-business companies,
headquartered in the tiny town of Boxmeer, with global sales of
almost 3.85 billion Euro, is the biggest producer of chickens in
the country. Pingo, the company poultry division, employs just over
1,000 people.
These companies squeeze thousands of chickens into tiny production
facilities, which is the cause of rapid spread of diseases. The
avian flu outbreak in 2003 forced Nutreco alone to slaughter 30
million birds.
Chicken factories are on the way to Africa, however. Indeed, the
only poultry business in Ghana that is expanding is Darko farms,
which has set up a joint venture with Tyson Foods from the United
States.
Today the company says it produces five million day-old-chicks, 30
million table eggs, 780,000 chicken units, and 30,000 tons of
animal feed, making it Ghana's largest fresh poultry producer.
Reverend Kwabena Darko, the principal shareholder in the family
enterprise, says the company has achieved this by introducing new
technology. "Previously we had about 600 staff but for now due to
automation, our staff strength has been reduced. At the moment we
are 260," he told World Investment News recently.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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