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22 Jun 2016
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US leans on El Salvador to open up its seed market

Farmers in El Salvador are protesting against a multi million-dollar grant from a US aid agency that would force the country to open its seed market to international companies.

Last month, farmers protested outside the US embassy in the capital, San Salvador, amid concerns about conditions attached to a grant from the Millennium Corporation Challenge (MCC), an agency established by Congress under the Bush administration a decade ago.

El Salvador has been awarded a $277m (£161m) grant to improve its “competitiveness and productivity in international markets” on condition that the country opens its markets to competition, which would undermine the current system.

The previous Farabundo Martí National Liberation Front (FMLN) government, El Salvador’s first left wing rulers, introduced a seed scheme as a poverty reduction policy. Under the initiative, the poorest 375,000 subsistence farmers are given packets of maize and bean seeds every year. The seeds are locally produced and bought from farmers, providing them with economic opportunities.

The US ambassador to the country, Mari Carmen Aponte, has denounced El Salvador’s failure to comply with the conditions attached to the new tranche of money, which led to the protests. Environmentalists and public health experts have also expressed concerned over the conditions.

Ricardo Navarro, director of Cesta, the Salvadoran Center for Appropriate Technology – an environmental group that is part of Friends of the Earth International – believes that if the MCC gets its way, the country will be flooded with genetically modified seeds, as multinationals will inevitably undercut local producers. “More GM seeds means more pesticides. This would be a big step back and environmentally wrong,” Navarro said.

The US insists it simply wants El Salvador to honor its commitment, and denies any link between what it wants and the procurement of GM seeds.

The MCC was established with a pledge to revolutionize the way US aid was awarded, delivered and overseen. It promised to help reduce poverty by promoting economic growth in the world’s poorest countries in a way that also benefited Americans.
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Poor countries compete for MCC aid packages, known as compacts, by demonstrating their commitment to good governance, free-market principles and investment in people. Organizations such as the World Bank, The International Monetary Fund, the Heritage Foundation, Freedom House, Unesco and the World Health Organization score countries on 17 indicators, including inflation rates, fiscal and trade policies, civil liberties, immunization programmes, control of corruption and spending on health.

If successful, the country is awarded a five-year multimillion-dollar grant to fund specific development programmes in areas such as agriculture, transport, water supplies, anti-corruption and education. Countries that nearly make the grade can receive smaller grants, as long as the MCC is convinced that its public policies are going in the right direction.

Grants are often conditional on countries agreeing to certain policy changes, such as opening public services to private contracts and tackling money laundering. The money can be suspended if a country is deemed to be rescinding on its commitments.

El Salvador is the smallest Central American country, and one of three in the region to receive MCC money. It is recovering from the 1979 to 1992 civil war, which left 80,000 people dead, 1 million displaced and huge health and wealth inequalities.

Its 5 million people rely heavily on remittances from the diaspora in the US, who last year sent $4.2bn – more than 15% of El Salvador’s GDP. Economic growth plummeted amid the recent global financial crisis, which – together with high levels of violence and organized crime – triggered another exodus to the US. Growth is hovering at about 2% and poverty rates have increased amid falling wages and high unemployment.

Between 2007 and 2012, El Salvador received $461m from the MCC to improve transportation, agriculture and education in the north. The region was subjected to some of the worst massacres and scorched-earth operations during the civil war by US-trained armed forces.

The MCC says services and economic growth improved (pdf) in the region by opening up public services like water and sanitation to investment from US businesses and Salvadoran diaspora.

A similar model to the MCC is being promoted by the G8 in Africa under the New Alliance for Food Security and Nutrition initiative, which has led to a raft of pro-agribusiness policy changes in 10 African countries.

22 Jun 2016
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Uganda seed entrepreneur calls time on hand-held hoe as a tool for farmers

 

Josephine Okot cannot stay quiet, her voice getting louder and louder as she gets carried away with the point she is making. “I’d be sacked if I worked here,” says Okot. “I’m much too loud … you have a horrible office, I’m not coming back.”

The founder of Victoria Seeds, Uganda’s leading seed company, which caters to smallholder farmers and exports to South Sudan, Rwanda, Tanzania and the Democratic Republic of the Congo, is no shrinking violet.

The day before visiting the Guardian, Okot spoke on a panel at the Overseas Development Institute (ODI) to discuss two reports on linking smallholders to markets in Africa. Despite having flown in only that morning, Okot was a lively and forceful presence on the panel, befitting an entrepreneur who has won awards including a Africa Award for Entrepreneurship in 2011.

Okot founded her company in 2004, at a time when commercial banks considered agricultural investments to be too risky. She only succeeded in securing start-up capital because of a guarantee from a USAid project. Victoria Seeds has grown into a business with a $2.5m turnover, employing 140 people. More than 900 farmers, mostly women, grow seeds for the company. It markets more than 95 varieties of cereal, legume, vegetable, oil, horticultural and forage crops. The company disseminates seeds across Uganda through more than 400 agro-dealer outlets.

In her interview in the Guardian’s hushed atmosphere and during her appearance at the ODI, Okot bemoaned Africa’s farmers’ lack of productivity and their reliance on rudimentary tools. “The hand-held hoe should no longer be a tool of production, it is an embarrassment that it still is,” she says.

Okot laments the lack of agricultural extension services – the provision of training and advice to smallholders. The absence of advice and good seeds account for crop yields in Uganda that reach only a third of their potential, she says.

“There was an efficient extension service when I was growing up in the 1970s, but such extension is available to 14% or fewer farming households today,” she says. “We need people to advise farmers on how to apply fertilizer, control pests and prevent post-harvest losses [such as those caused by inadequate storage].”
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Okot is not alone in stressing the importance of extension services. A report on global food security from the parliamentary development committee this month urged the Department for International Development (DfID) to devote a greater portion of its budget to supporting agricultural extension services, particularly those targeted at women.

More controversially, Okot argues that DfID should not focus on those at the “low end of the value chain”, ie the smallholder farmers themselves, but on businesses that can make a real impact on agriculture – not unlike her own. She recommends that aid agencies support Ugandan companies to become globally competitive, helping them to adopt the latest technologies and skills to increase productivity and drive demand.

“Donors should focus on those higher up the value chain. It is enterprises that are the critical drivers, they drive demand from farmers,” she says. “If donors want to achieve their objectives, if they want to improve livelihoods, they should focus on businesses that add value to output.”

Okot thinks a commodity exchange along the lines of the one recently set up in Ethiopia would improve Uganda’s agricultural sector. “Why not cut and paste for Uganda?” she asks. An exchange, she believes, would improve quality, encourage the construction of adequate storage facilities and boost trading volumes.
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While development experts may question Okot’s priorities for donors, few would quarrel with her assertion that lack of finance is a big problem for farmers. She is particularly critical of the absence of longer-term loans. “To bring a seed from breeder stage to the market can take three years,” she says, “but loans often are for a maximum of 12 months. Twenty-year loans are needed at low rates.”

Victoria Seeds commissioned a third seed-processing plant last year to double processing capacity to meet the increasing demand for improved quality seed, and it is planning to move its head office to the Kampala industrial and business park, east of the capital. But the lack of basic facilities there is proving to be a major headache.

Okot is characteristically blunt about the park’s shortcomings. “We can’t operate our business without water, electricity or an access road,” she says, expressing her frustration that the Uganda Investment Authority has so far failed to deliver these basic services.