How Big Ag may eventually save Africa

A recent piece in the New York Times offers a fascinating look at rising investment in cotton growing in Africa. Dunavant, an American agricultural firm, has been pouring money into Uganda, Mozambique, and Zambia. They’re helping small farmers improve their productivity, fronting cash and seeds to anyone willing to plant, and making long-term buying commitments. And they’re making money doing it:

Part of the good news is that the Dunavants and the Cargills will be in Africa for a long time,” says John Baffes, an economist and cotton analyst at the World Bank. “Those guys are willing to invest a lot of money and to buy in good years and bad years.”

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Of course, all is not rosy. African farmers have long been engaged in bitter competition with heavily-subsidized American cotton growers. Economists and NGOs alike find the U.S. subsidies obscene—they lower the world cotton price to the point that many African farmers can’t compete, despite being able to grow the stuff far more cheaply than Americans. The dispute has led to WTO action from Brazil (which also has a large cotton sector) and is a prime cause of the breakdown in trade talks at Doha. The real news in the Times story is that the Doha talks may now get going again, as American agricultural firms move into African markets:

Though no one predicts a quick demise to American cotton subsidies, support of farmers with taxpayer dollars will have to be renewed by Congress before the Farm Bill expires this year. Mr. Laurin says he believes that it is “only a matter of time” before the subsidies disappear and that Dunavant’s entry into Africa is partly motivated by such possibilities. If the subsidies go, the price of African cotton, produced with lower costs for land and labor, will become more attractive — leaving Dunavant well-positioned to reap the benefits of working with loyal farmers like Mr. Okelo.

If Dunavant, Cargill, and others become more heavily involved in Africa, they’ll become less dependent on the U.S. subsidies, and more concerned that African agriculture remain viable. Ironically, it could be Big Ag itself that finally solves the subsidy problem. And that’s good news for Africans.