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January 26, 2009

Plummeting food prices worry West African farmers

by Michael Kamber

Ndeye Sarr Diop hardly looks like a bit player on the global commodities market. Resplendent in a flowing brown and mauve bou bou and carrying a dainty purse, she gazed across the watery expanse of her rice fields. She had invested everything she had, and borrowed hundreds of dollars on top of that.

Like some others in Senegal and other countries in the region, Mrs. Diop, who also grows rice, fears losing everything if the price of rice falls much below $20 for a 50-kilogram (110-pound) bag. “I can double my money,” she said. “Or I can lose everything.” “I hope rice will make me rich,” she said, running a hand over the green stalks and fingering the sheathed grains.

Hoping to take advantage of high global food prices that brought many poor nations to the brink of chaos last year, farmers across West Africa are reaping what experts say is one of the best harvests in recent memory. But after investing and borrowing heavily to expand their production, these farmers also run the risk of being wiped out as global food prices plummet.

The price of unprocessed rice in Senegal has steadily fallen from its peak early last year of more than $30 per 110-pound sack. The drop has not been as drastic as the ones experienced in corn and wheat markets across the world. But the price for rice needs to be at least $20 for farmers here to make a profit, and as the harvest approached late last year, the price was hovering at $22 a sack.

“I am worried,” said Mrs. Diop, a 57-year-old trader and farmer. “I can double my money. Or I can lose everything.” African farmers and consumers have often been stuck with the sharp end of globalization, and when food prices soared in 2008, poor African nations with liberalized economies suffered enormously.

In countries like Senegal, which, with a population of 13 million, consumes about 600,000 tons of rice a year, cheap imports of staples like rice and wheat from farms in Asia that are vastly more efficient, and often government-subsidized, typically flood local markets. The imports drive out more expensive locally produced rice. So when prices rose last year and many countries stopped or curtailed exports amid global panic over food supplies, this country had virtually no local supply to replace it.

As the crisis spread, riots over high prices broke out in poor nations across the globe. In Haiti, the anger was so deep that the prime minister was forced to resign. In Senegal, angry demonstrators thronged the streets, demanding to know what the government would do to bring down prices. President Abdoulaye Wade quickly announced plans to increase agricultural production, offering subsidized seed, fertilizer and equipment, on the theory that self-sufficiency was a matter of national security.

But the crisis also presented an opportunity to millions of farmers across Africa: high prices could finally make their crops competitive. In Senegal, farmers eyed the long-neglected Senegal River valley, which snakes along the country’s northern border with Mauritania. A government project in the 1970s built irrigation canals that made more than 600,000 acres of land ready to produce rice, but farmers were too poor to afford the materials to farm the land on a large scale. The project was largely abandoned. Nevertheless, the dream of creating a rice basket here never really died. The area has the potential to satisfy not just the local markets but those of neighboring countries as well, along with providing jobs for the vast army of unemployed young people with few prospects beyond the dream of migrating to Europe.

Rice is the staple of the Senegalese diet — the national dish, thieboudienne, consists of fish and broken rice grains cooked in a thick and spicy tomato sauce. But the price of producing rice locally made it more expensive than imports, and as a result, Senegalese farmers produce on average only about 80,000 tons of rice a year, and often struggle to sell that much, according to farming experts here. “It simply didn’t pay to grow rice,” said Arona Diakhate, technical director of a rice processing factory here. “Why grow something you can’t sell? It doesn’t make any sense.” When the global food crisis drove prices up, the equation changed.

Ibrahima Ly, secretary general of Pinord, a local organization supported by the British charity Oxfam to help farmers get access to credit and markets for their crops, says that only 70,000 acres of rice is being farmed. Well over 500,000 acres could be planted in this region, he says, producing more than enough to feed the entire nation and beyond.

“We have a sweet-water river; we have heat, which rice likes; we have people who need jobs and know how to grow rice,” he said. “Nature has given these things, but you need to manage it, and you need to make sure there is a market for this rice.” It is a great thing that local growers are finally expanding production, he said, but their investments are incredibly fragile. “We don’t have any control of the market,” he said. “There is huge volatility, and that makes it very difficult to protect their investments.” If farmers lose a lot of money this year, they are unlikely to risk planting again, Mr. Ly said, which could prove catastrophic.

In a report released in November, the Food and Agriculture Organization of the United Nations warned that low prices this season could create an even worse replay of last year’s crisis by discouraging planters from producing. “If prices were to remain depressed in 2008-9 and plantings for next year are affected,” the report said, “a similar, if not more pronounced, price surge may be witnessed in 2009-10, unleashing even more severe food crises than those experienced in the current season.”

That wild card is the gamble for growers like Mame Bassine Gaye. A trader who had been dabbling in rice farming, she has struggled to turn a profit. The first year she tried planting rice, her yields were meager and the prices low. This year, however, she went all out, borrowing more than $1,000 from a local credit cooperative and family members to expand her production. Mrs. Gaye surveyed her 250 acres in the village of Ronkh as the year drew to a close and the harvest was about to begin. It had been a good season across much of West Africa, and she expected a bumper crop. “If I win, I will win big,” she said. “But if I lose, I’ll lose big. I am worried because of my debts. If you don’t pay, they cut you off. I could lose everything.”

NY Times

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