Beyond Urban Bias

Ashutosh Varshney

• Publisher: Routledge
• Year: 2014
• eBook ISBN: 9781135235130
• Topic: Business
• Subtopic: Business General
• Index: Business

First Published in 1993. This title sets out to spark debate and learn from the urban bias theory. The author suggests that recent political economy research suggests that it is time to redefine the problem of urban bias. Viewed as a collective engagement with the urban bias theory, this volume presents the new research along with the responses of Bates and Lipton. These studies do not add up to an alternative theory of why the state behaves the way it does towards the countryside. They do, however, point to the factors that need careful attention in future research. These papers can be seen as building blocks for the construction of an alternative theory of 'the state and agriculture'.

II. Cases

The Origins of Agricultural Policy in Ivory Coast 1960–86

Jennifer A. Widner

There is a more limited degree of ‘urban bias’ in Côte d’Ivoire than in most other African countries. Different explanations for relatively high producer price shares, reliable extension services, etc. are required for the periods 1960–70 and 1970–86. The arguments offered focus on the composition of the income portfolios of senior political elites and on the rise of special kinds of urban, informal associations that have acted as lobbying organisations on behalf of rural household members. The article seeks to dispel the notion that differences in opportunities for political participation alone can account for the variations in the outcomes observed in the African cases.

Africa specialists usually classify the Ivory Coast (henceforth Côte d’Ivoire), along with Kenya and Zimbabwe, as a country whose government has created a policy environment favourable to producers of export crops and exhibited less ‘urban bias’ than others. That is, it has (1) allocated a higher proportion of the world price of export commodities to the producer than most others, (2) until recently, kept its exchange rate in line with the market rate, limiting indirect taxation of farmers, and (3) provided generally reliable extension services and infrastructure to rural areas without which high farmgate prices may mean little. It has performed less well with respect to a fourth criterion: level of productive investment in agriculture, where it has provided funds both for projects that have reduced costs of production, such as roads, as well as for programmes of sugar development, port facilities and hydropower that promised very low or negative returns on investment even under the most optimistic scenarios. None the less, despite a number of misdirected agricultural development projects and transfer of resources from agriculture to less productive uses, such as the construction of Notre Dame de La Paix, the enormous basilica at Yamoussoukro, agriculturalists have fared better in Côte d’Ivoire than in most countries of sub-Saharan Africa.

In the period between 1960 and the mid-1980s, farmers saw producer prices for major export crops grow gradually, keeping pace with inflation so that real prices were relatively stable [Hecht, 1983: 26]. Thus, despite a net outflow of financial resources from agriculture for much of the post-independence period, agriculture long remained remunerative relative to the kinds of urban alternatives available to most low-skill people. In a World Bank study published almost 20 years after the country gained independence, Bastiaan den Tuinder noted that unlike many sub-Saharan countries, Côte d’Ivoire

continued to encourage its export-oriented agricultural sector. At first this encouragement was mainly through public investment in infrastructure, but later it was broadened to a host of direct incentives to production, particularly high and stable producer prices for the main agricultural products. Recognizing the economic vulnerability of too much dependence on three export commodities (unprocessed cocoa, coffee, and timber), the government diversified agriculture by introducing or expanding the cultivation of oil palm, coconut, pineapple, rice, rubber, cotton, and later sugarcane … [Tuinder, 1978: 5].

Although the policies or their management failed to generate sustained economic expansion and indeed sometimes proved quite deleterious to the country’s general economic condition over the long term, it is none the less correct to suggest that they have favoured export-crop producers and that through the early 1970s, they fuelled the seven per cent average annual rates of growth that so astonished observers.

At a time when multilateral development agencies are pondering the kinds of political arrangements that can support development of African agriculture, the case of Côte d’Ivoire is especially instructive. The government of long-time president Félix Houphouët-Boigny chose to emphasise export agriculture as a key source of economic growth at Independence and has maintained this focus over a 30-year period, with some variation depending on crop. Although several attempts to explain this kind of pattern in other countries suggest that favourable policy environments for agriculture are associated with more open political systems in which regular, competitive elections take place, the case of Côte d’Ivoire shows that ‘democratic political processes’ are neither necessary nor sufficient to produce the outcomes desired. Côte d’Ivoire’s policy-makers enacted and implemented a favourable policy environment in a single-party system which limited electoral choice to approval or disapproval of a party list, until 1980. Even after 1980, debate within the National Assembly was rare, as reflected in the request of one deputy after a special session in 1986. ‘Until now, the National Assembly had always waited for legislative bills to arrive from the government or for ministers of the government to present their views here’, he said. ‘This is the first time that we have presented and developed our own views. I like that idea. Following this example, perhaps the députés could interrupt and express themselves freely, before being divided into committees’ [Assemblée Nationale, 1 July 1986:16]. Major diversions of funds from agriculture to non-productive, urban uses took place after 1980, when multi-candidate single-party elections on the model of Kenya were held.

No single account of the maintenance of a policy environment favourable to agriculture has explanatory power for the full period of Côte d’Ivoire’s post-Independence history. Robert Bates, Michael Lofchie, and others have argued that collective action on the part of rural producers to protect their economic status occurs when a few large landholders, who bear a disproportionate stake in the character of the policy environment, organise to influence decision-making. If the chief of state himself derives private income from farming, a country is also more likely to pursue policies favourable to agriculture. This argument sheds considerable light on the early independence period. Not only did many key political elites farm considerable acreage, they also shared beliefs about market structure and behaviour that led them to favour high producer prices for export crops. Houphouët-Boigny himself was the model, the owner of large plantations of cocoa, coffee, coconut palms, oil palms, and other crops who once told his compatriots, ‘If you don’t want to vegetate in bamboo huts, concentrate your efforts on growing good cocoa and good coffee. They will fetch a good price, and you will become rich’ [Zolberg, 1964: 151]. As president, he defended the ‘bon prix’ [high price], arguing that it was also a ‘prix juste’ [fair price] and struggled constantly to improve his country’s leverage against Hes speculateurs’

With time, the rationale for maintaining the policy environment changed, and the influence of elites with private agricultural interests diminished, although their role in decision-making did not disappear entirely. Economic strategy fostered the rise of a new interest group, a small but influential coterie of Ivorian and French managers whose firms dealt primarily with processing of agricultural commodities. These men had a stake in a continued, reliable supply of high-quality agricultural inputs. Because the president’s own background prejudiced him against extraction of farm surpluses through use of force (he had built his political career through the fight against forced agricultural labour), the only way to sustain the new agri-businesses was to offer comparatively high prices and hope either to secure subsidies for other aspects of operation or to boost efficiency in order to turn a profit.

Further, institutional choices made a difference in the bargaining power of the parties to this convergence of interest. In the early years of Independence, Ivorian law had prevented the formation of independent associations outside of the ethnic units that provided a base for the Parti Démocratique de Côte d’Ivoire (PDCI). Pressure from younger elites resulted in a loosening of restrictions in 1969–70, however, and provided the impetus for a new and unusual form of political exchange: the dialogue, a convocation of Ivorians from different walks of life, or couches sociales, who came to Abidjan to express their views directly to the President and his advisors, bypassing the ministries. Although a farmers’ union or syndicat did not emerge until 1991, the anticipation of periodic ‘jours de dialogue’ was a spur to formation of new kinds of interest groups and to articulation of demands for higher producer prices.

This study assesses and rejects the argument that favourable policy environments for agriculture are associated with the existence of competitive elections by way of a careful examination of the Côte d’Ivoire case. It first explores the dependent variable, asking the question, ‘in what respects did the government in Abidjan favour rural producers?’ It briefly considers alternative explanations for the patterns observed, then discusses the roots of agricultural policy in Côte d’Ivoire, 1960–69 and 1970 through the present. Finally, it assesses the significance of the Côte d’Ivoire case for understanding the political economy of agricultural policy in other developing countries.

The Policy Environment in Comparative Perspective

Distinguishing the degree of urban bias in agricultural policy, or whether a country has a ‘favourable’ and ‘unfavourable’ agricultural policy environment, is more easily said than done. The ideal measure would adjust the proportion of the world market price a farmer received for a crop for the costs of transport under open-economy conditions, input subsidies, direct taxes and indirect taxation created by currency overvaluation and import licensing. As Anne Krueger et al. have pointed out, however, ‘While international trade theorists have long known that protection of some activities discriminates against the remainder, that knowledge has not been transformed into usable estimates of the extent of total discrimination against agriculture’ [Krueger et al, 1989: 256]. Although the comparative project on the political economy of agricultural pricing Krueger launched was designed to produce such estimates, participants were often hard-pressed to obtain the data required.

The elaborate comparison of actual producer prices to what prices would have been had there been a free trade regime is beyond the scope of this research. Partially-adjusted comparative data on producer price shares, parallel market to official exchange rate ratios, and transport costs can provide rough estimates of the degree of urban bias in Côte d’Ivoire, compared to other African countries, however. Because most food crops, except rice, are traded in Côte d’Ivoire without government intervention, the measures are used to assess policy toward export crops only. For these crops, evaluation according to multiple criteria, as accuracy would dictate, suggests that although the policy environment in Côte d’Ivoire is not as unambiguously favourable as it is in Kenya or Zimbabwe, it none the less displays less urban bias than other African producers of the same major export crops: cocoa, coffee, oil palms, and cotton.

Producer–Price Shares

A simple, although limited measure of urban bias is the producer–price ratio, the ratio of the farm-gate price to the international price of a commodity. In a world without government intervention, the ratio would approach unity, with transport costs accounting for the remaining divergence from the world price. Where governments extract tax revenues from exports, where marketing is inefficient, or where some portion of the difference between prices goes to a stabilisation fund, to be paid out in the form of subsidies when world prices drop, the producer-price ratio may be quite low. The degree to which a low ratio indicates strong urban bias depends on the reason for the difference in prices and the ultimate destination of the government’s share of the funds extracted, the degree to which government subsidises inputs, and the extent of the divergence between the real exchange rate and the official exchange rate, which is used to convert producer–prices in local currency to dollars in the computation of the ratio.

At first glance, Côte d’Ivoire appears to offer producers of its major export crops only about 50 per cent of the international reference price, on average, while several other countries have offered producers higher shares (see Table 1). By this rough approximation, Cameroon also appears to perform on a par with Côte d’Ivoire, and Zaire is not nearly the policy disaster it is so often considered. Careful examination of the time series data suggests that the relatively low shares accorded producers during the mid to late 1970s in Côte d’Ivoire correspond with the boom in beverage crop prices, howeve...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• I: Introduction
• II: Cases
• III: Commentary