The development of the African continent is both helped and hindered by EU policy, but relations between these continents might change in the near future.
In big warehouses with long corridors and high ceilings Brussels hides 400,000 tons of skim milk powder in storage in different locations in France, Germany and Belgium. It is the yearly surplus of milk EU farmers have produced in the last three years, because of overproduction and lack of markets to export it to.
The Common Agricultural Policy (CAP) which guzzles 40% of the EU’s total budget every year, was created to ensure that Europeans would not have to rely on crops from outside to feed themselves. It has also provided the farmers with a more stable income which is not subject to the will of the market.
Throughout the years, the surplus of produce has been either destroyed to keep prices low, sold outside or bought by the EU, creating the popular image of mountains of cheese and lakes of wine that Brussels used to keep some decades ago. Although it has been reformed many times to avoid just this, it still causes disruptions.
Together with other factors it causes many problems for the African continent, which struggles to advance and grow. The most prominent of these reasons are a lack of industrialisation and infrastructure and the arguably quasi-protectionist measures that the EU sets as safety regulations.
In a sense the EU takes advantage of the lack of industrialization of underdeveloped countries. For example, the whole African continent where around 20 countries produce coffee in a large scale earned €1.9 billion from the crop in 2014, while Germany, earned €3 billion from processed coffee sales.
Germany, which does not grow coffee, earnt around 50% more from it in 2014 than the 20 African countries that produce it combined.
This is not precisely the EU’s fault but it is a fact that refined products make much bigger profits than raw materials and the EU sets a higher tariff for the former group than for the latter.
It is a similar case with cocoa, which is mostly produced in underdeveloped countries but refined in the richer, industrialised ones. Some might argue if it is legitimate for countries that don’t even have the meteorological characteristics to grow said products to get most of the profit out of them.
If African countries could set up their own coffee and cocoa (together with many other products) processing plants and export their by-products to the rest of the world, many of the problems that cripple the continent might be solved.
Poul-Erik Heilbuth, a Danish documentary filmmaker who has investigated EU’s subsidies believes that its policy is not optimal.
“With one hand we say we want to give more development to Africa so that they don’t want to move away and then with the other hand we smash their agricultural system. Then our policy is counterproductive.”
"Any agricultural support from rich countries to their farmers is of course a disadvantage for the poorer countries”. Poul-Erik Heilbuth, Danish documentary filmmaker.
In essence, proper industry hinders these communities from advancing, and developed countries benefit from this by selling surplus milk they couldn’t sell in their national markets.
Aside from the tariffs, there are other ways developed countries avoid competence from other countries by establishing quasi-protectionist measures. One such measure that many criticise is regulatory standards, most of which have been put in place to protect the consumer, to ensure that the quality of the product is high and that it has been produced in an environmentally friendly way.
But Grady argues that many criticise that some of these standards have been set following arbitrary criteria that has less to do with safety and more to do with protectionism. He gives the example of South African citrus, an industry that employs 500,000 people in the country.
The safety standards for these products were very strict to avoid a fungus present in South African citrus trees to spread to Europe but were seen by some as a measure to protect the Spanish citrus industry. Especially after a South African scientific report in 2009 refuted the fact that the export of citrus products could do such a thing.
A different report published this year supported this theory as it argued that the pathogen could be found in some areas in Europe as well, but not the disease itself.
This is an example where Brexit could affect South Africa positively, because Britain alone imported around 36 per cent of all the citrus products the austral country produced in 2016.
Now that the UK is leaving the union, their future agricultural policy is still undecided, as they were one of the critical nations of the CAP which was in turn one of France’s main interests in the EU.
Britain will continue to support its farmers at the same level the CAP does while it transitions out of the EU until 2022. The UK’s environment secretary Michael Gove, mentioned that after Brexit, the country will be able to put British farmers and consumers first in an attempt to reassure workers of the first sector (most of whom reportedly voted leave) that they will not suffer from the exit.
Moreover, negotiating as a block might give them more power when sitting down at a table with the US or the EU. Also, a study by the United Nations Economic Commission for Africa estimated that trade with their continental neighbours would increase by more than 50 per cent from 2010 to 2022 (assuming that all tariffs are scraped off, which might not be the case).
There are many variables but it is clear that the road to economic prosperity must go through the industrialisation of the continent and increased trade between its member countries.
"EUROPE HAS TWO HANDS, AND ONE DOESN'T KNOW WHAT THE OTHER IS DOING"
Javier West
The CAP itself is being reformed now, after the Commission proposed some changes in November last year. The current plan gives money according to farm size, and therefore incentivises large estates.
Many states are in favour of a cap for each farmer to encourage small and medium sized estates and tackle industrial farming. This however might hurt big farms in former communist states such as in Czechia or Eastern Germany, where historically the farms where cooperatives but not necessarily heavily industrialised.
Some of the states in favour of capping the potential amount to be given to the farmers are the Netherlands and Italy. But Czechia opposes it outright and other countries are not yet sure. The caps being discussed are around 60.000-100.000€ but there are holdings that were paid nearly a million euros last year in these countries, which means such measures would severely affect them.
But it does not all come down to the EU’s tariffs on refined products. Some argue that many African countries lack the basic infrastructure of roads and ports to export refined coffee because this is more perishable compared to raw coffee. The high cost of electricity is also a factor.
This lack of infrastructure and industry therefore seems to be perpetuated in a neverending cycle. Dealing with any of these could be a driver for further development but the absence of industry “puts Africa’s long-term growth at risk” according to a senior United Nations official.
A 2009 report found out that farms in Uganda could not meet the demand for milk at times and that the people had to resort to powdered milk that was imported at a cheap price. This in turn deterred local suppliers from investing in processing plants that could save milk for times where it was needed more.
Milk goes bad very quickly without the means to appropriately store it, which smallholders do not have. Therefore many of these questions could be addressed by providing these communities with developed infrastructure.
Matt Grady, Senior Policy Adviser at Traidcraft, a fair-trade organisation that focuses on trade justice, points out that Britain getting out of the EU could relieve some pressure of the markets if Britain takes on a more progressive stance not only on subsidies but on tariffs themselves.
Even if Britain is just one of the 27 countries that constitute the current EU, the value of such a market opening up should not be underestimated, says Grady.
“For certain goods the UK is a disproportionately high destination, and for some developing countries the UK accounts for close to 100 per cent of all EU exports. In other areas even if the percentage isn’t high the value of the products is and it would clearly have an impact.”
There are various opinions on what the UK should do next. Tim Worstall, from the Adam Smith Institute, a neoliberal think-tank which bears the name of the economist who laid the theoretical foundations of capitalism, believes that the UK should get rid of agricultural subsidies altogether.
NGOs and fair-trade organizations have also asked for such subsidies to be scrapped as well, as they distort the market and create unfair advantages for the farmers in the richer countries.
The UK could set an example of what developed countries’ subsidy and tariff policy should be if it can prove that it works well for the state and a positive impact is seen on the underdeveloped ones.
The way out
Either way, Africa’s way forward won’t necessarily come out of change of EU policy. Grady argues that the EU often hinders regional cooperation. By signing separate partnership agreements they have often arbitrarily grouped different African countries together and negotiated terms of the EPA and oftentimes this has undermined local customs unions.
The African Union, however, is currently working to set a Continental Free Trade Area that would encompass all the countries. The treaty is set to be signed during this March and would come into force after 15 of the countries have ratified it through their parliaments.
Eventually an economic and monetary union will come out of it at the end of the next decade according to the plans the countries agreed on as part of the African Economic Community. This would function similarly to the EU and the body already has its own parliament.
This might be the drive the continent needs to address many of its problems. It would certainly encourage intra-African trade, which only accounts for half of what they as a continent export to Europe. In fact, around 82 per cent of all exports don’t go to other African countries but to other continents.
This means that only 18 per cent of all African exports go to other African countries making it one of the continents that trade the least with their continental partners, compared to more than 60 per cent in Europe.