a1001: Re: Re: a960: Re: a943: Comments on Rice Scandal (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: JoAnn Jaffe <joann.jaffe@uregina.ca>

> From: kevin pina <kpinbox@hotmail.com>
>
> I would love to have Joann Jaffe's reactions to the following questions:
>
> 1. I have been told that price of rice in Haiti was at an artificial high
> due to the market being controlled by a monopoly. That the first step was
to
> break the monopoly by allowing the market price to reach its real
price(sans
> monopoly)with the second phase being the institution of a program of
relief
> for farmers affected. Does this make sense to you?

In my analysis, I would say that the price of rice was high in good measure
because the Duvalier Dynasty actually received much of its rural support or
at least stability by preventing external competition in basic commodities
and thereby protecting (and don't get me wrong--I mean in a very minimal
way) producer livelihoods. (Another factor was that the army and macoutes
provided a means of social mobility for rural people, but that's another
story.) When Baby Doc was pursuaded by the technocrats to reduce
agricultural trade barriers, it ended up being a large blow to the
dictatorship due to the rapid worsening of so many rural livelihoods. As I
said earlier, coming on the heels of the pig eradication, it was too much to
bear.
What I call "structural monopolies" or really "structural monopsonies"--that
is, monopsonies (single buyers) which essentially represent opportunities to
fix prices--have been much more important in the area of export crops.
Geographic concentration of production of rice in Haiti allows the formation
of these structural monopsonies to some degree, but evidence that they were
not that important in the mid-1980s and earlier can be seen in the fact that
producers were receiving a good portion of the market price--and that
continued whether prices were high or low unlike, for example, coffee (this
is based on IICA data). Spekulate (intermediaries) and exporters tend to
pass on low coffee prices to producers--they are able to because their's is
an effective monopsony due to the structure of the market system. So the
price may have been artificially high--I would have to see that data again
and I don't have it in front of me--but what is certain is that it came down
farther than its "natural" price would have been in the protected system
without monopoly.

Haiti is in a very difficult situation (tell you something you don't know)
by being so tightly integrated into the US sphere. Remember Porfirio Diaz'
remark made about Mexico "Pity poor Mexico, so far from God and so close to
the United States."  With open markets, Haitian producers are in direct
competition with US producers, who are highly capitalized and have among the
highest labour productivity in the world. This is not a situation in which
Haitians are going to win. Yes, Haitian producers need help. It is
absolutely amazing to me that the general ideology of agricultural
development in Haiti , in large part promoted by the American government, is
that Haitian producers should go through a series of costly transitions
without some kind of buffer. When the US thinks it is in the best interest
of the public for trees to be planted on private land, they give significant
cash incentives to producers to plant them. Some of the poorest farmers in
the world, however, are supposed to go it virtually alone, however, because
to do otherwise would make them "dependent." It is in the interests of Haiti
in general--and the US and Canada, for that matter--for Haiti's
environmental situation to improve. Why should individual rural Haitians
have to bear all the costs?

I also think the Haitian government would make a tremendous impact on rural
production by instituting a program of free education. This would give many
producers some needed breathing room to back off, or at least slow down,
intensification. To quote my monograph, Land Use, Soil Degradation, and
Farmer Decision-Making (1989), "Farmers will also try to assure a sizable
harvest or the sale of an animal at a time when they know they will have
major expenses, such as at the beginning of the school year, or for the new
year..... the ability to receive a rapid and steady cash flow from the
garden (is) an important criterion in crop decision-making.  This need for
quick return is one of the major reasons we see a shift to annual and short
season crops, and has led to the sub-optimal management of crops such as
vetiver.  Vetiver roots are frequently dug after six months, although peak
oil production is reached after 12 to 13.  Total cash received in these two
sales is less than that in one, but in this case the more frequent cash flow
is the overriding objective.  It is worth underlining that in this case, as
with much other peasant production, profit maximization is not the dominant
goal."

> 2. Given that we are now dealing with the reality of globalization and
> considering the current political and economic isolation of Haiti, would
it
> not be next impossible for the Haitian government to institute
protectionist
> policies on behalf of rice producers in Haiti? If so, then how would you
> suggest the GOH deal with growing hunger, due to the defacto embargo, in
the
> context of artificial prices dictated by a monopoly?

You are absolutely right that it is politically next to impossible for the
Haitian government to reinstitute protectionism. However, the Haitian
government needs to do whatever it can to avoid exacerbating the problem.
Remember, this is not just a problem for rice producers, but producers of
corn, millet and sorghum, as well--meaning virtually every rural producer. I
suspect, however, that Haiti has more of a capacity to feed itself than is
commonly assumed. I have not done any research myself on this question in
the last few years, but in the late '80s, our and other research indicated
that at least one-third to one-half of agricultural production was lost from
rot, vermin, etc. Much production just sat in the market waiting for someone
with money to buy it. One major problem is the limited local market for
goods. This in turn leads to very supply sensitive markets in which slight
increases in production are met by crashes in price.

The GOH, I think, needs to have a short and long-term strategy. (Of course
long-term strategies suggest the possibility of continuity of policy, which
is in itself problematic.) One element is that small improvements in the
standard of living of most Haitians would make a big difference in their
quality of life. A multi-pronged approach is necessary that addresses
organizational, as well as appropriate technical, innovation. In the
short-term, equitable employment that puts some money in people's pockets,
and focuses on building the country and developing skills, basic literacy,
and organizational capacity (along the lines of the CECI project in the SW,
for example) would be an important step forward. This could include bringing
rural producers together to accomplish soil conservation tasks or
environmental rehabilitation. At the same time, the GOH needs to focus on
basic needs--clean water, sanitation, primary health care, and education. In
my mind, the long term future of the country (partly) lies in the
development of rurally-oriented industry that allows producers to get and
share value from trees, livestock, green manures, etc. Coming up with
technical solutions is not that hard. Unfortunately, what is difficult is
developing the political will (which is at root a socio-political question
of interest in the main)--to get the nation and the state to say "this is
our historic mission, we will be revolutionaries and be the ones who finally
moved our country to develop its great gifts."