Coffee is a vital crop in Burundi. It accounts for 60-80% of the country’s export revenues, and 55% of the population is dependent on coffee growing for their livelihoods. Thus, a reform of the coffee sector could make a huge difference for this country’s development – it currently ranks as the third-poorest nation in the world – but could also have vast impacts on the poor. Now two UN experts ring the alarm bells that the World Bank-backed reforms might do just that and repeat the mistakes made during the Structural Adjustment Programs (SAP) implemented in the 1980s and ’90s.
Olivier de Schutter, the UN Special Rapporteur for the Right to Food, and Cephas Lumina, the Independent Expert on Foreign Debt and Human Rights, say that the planned privatization of the coffee sector neglects the interests of the small-scale farmers it is supposed to help, and could undermine their livelihoods. According to the experts,
“There are worrying signs that the interests of coffee growers have been shut out of the reform process, despite coffee producer organizations showing themselves open to reform of the sector in a way that allows them to climb up the value chain.”
The main debate surrounds the coffee washing stations that were built by the government in the 1980s. They allow Burundi to export more upscale fully washed coffee and capture at least some of the value added in processing the raw commodity, although more than 90% of processing activities still occur outside of the country. One of the main reform elements is the continuing privatization of these washing stations (in 2011, around 10% of them were already owned by the Swiss corporation Webcor).
According to de Schutter and Lumina, this might have volatile and negative effects on grower revenues compared to the current scenario. Right now, the reform of 2007 is still in effect, which gave coffee growers the ownership of the coffee until it is exported, allowing them to receive around 72% of the revenues of coffee sales in international markets. This percentage is expected to drop with the introduction of another private actor in the value chain which will try to maximize its own profits.
Allegedly, the World Bank put pressure on the Burundian government to finalize the privatization and made its support for public health programmes contingent on the coffee reform process.
The UN experts stress that this path does not take human rights and rural development objectives sufficiently into consideration:
“States must not confuse their own priorities with those of corporations. Institutional actors like the World Bank must support States in their attempts to reform key economic sectors in ways that do not expose vulnerable farmers and growers to the uncertainties of the market.”
What struck me is that the World Bank itself commissioned a Strategic Environmental Assessment of the reform in 2011, which looked at potential ecological and socio-economic impacts. Its findings:
- An increase in coffee production might lead to an increase in agrochemical pollution, since fertilizer use is estimated to increase by 1/4 to 1/3 from today, and there are no regulations in place to control such use.
- Unsustainable practices might lead to land degradation, biodiversity loss, and an expansion of farming activities into the country’s protected areas.
- Also, the increase of throughput in the coffee washing stations would lead to higher water use up to an estimated level of 3,840,000 m3 per year in 2015. Relatedly, it would also increase water pollution.
- The report mentions the dependence of farmers on coffee as their sole commodity, but gets even more concrete when it talks of socio-economic impacts of the processing reform (aka the privatization of washing stations we talked about):
“The main socioeconomic issues that the reform could generate or aggravate are the poor representation of farmers in coffee processing, loss of employment due to privatization of CWSs, increasing conflicts due to a lack of transparency and efficiency in the privatization process, and inadequate hygiene conditions and practices for workers.” (p. 2)
This is basically exactly what de Schutter and Lumina were saying!
- Furthermore, when suggesting mitigation strategies, the report comes up with environmental regulation, municipal land-use plans, training programs on sustainable resource use, and other options to address the environmental impacts. However, for the socio-economic aspect, the only suggestion they had was the “implementation of a capacity-building program for coffee cooperatives“, presumably at the farmer level. This fails to address the exclusion of farmers in coffee processing entirely.
Since I am taking a class on Impact Evaluation of Environmental and Development Programs, it is interesting to see how ex-ante impact assessments are used (or not) to inform real policy decisions. It appears as though the Burundi government (at the urging of the World Bank or not) decided to equate their objectives with neoclassical, market-based ones – which again is eerily reminiscent of the time of Structural Adjustment Programs which had enormous consequences for the poor.
How do you feel about such liberalization reforms?