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Subject: Haiti Info 3:24 9/16/95 (excerpt)

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From: Haitian Information Bureau <hib@igc.apc.org>

Neoliberalism in Haiti: The case of rice

Haiti Info, Vol. 3, #24, 16 September 1995

With the focus on the impending privatization of state-owned enterprises, it is easy to forget Haiti has been undergoing similar measures since the early eighties, when the Jean-Claude Duvalier government began to apply some liberal measures, and with the big push for liberalization in 1987. The current privatizations are only one aspect of an over-arching program aimed at integrating Haiti more into the international market which, in Haiti's case, means the U.S. and its multinational companies.

An examination of the plight of Haitian rice, of symbolic and food security importance because it is the second-most consumed cereal crop, offers a look at how liberalization has effected and will continue to effect the Haitian population and economy, and shows clearly the cynicism of the international lenders (the International Monetary Fund [IMF], the World Bank and Inter- American Bank [IDB]), U.S. government agencies, and the current government, all of which know their policies are leading to the further impoverishment of peasants, further dependence of Haiti on the U.S. for basic foodstuffs, and the shift of Haiti's best lands into the hands of export-crop agribusinesses.

Historical/Economic Background

Not long ago, Haiti was self-sufficient in rice. Haitian rice is expensive to produce (for example, in the 80s, it was 40% more expensive to produce than Thai rice), due to a number of reasons: low level of mechanization; high cost of leasing land; high cost of fertilizers and other inputs; usurious credit systems where peasants pay up to 100% interest per month; high taxes; high transport costs, and a disorganized, exploitative system of distribution and marketing. Like other agricultural products, historically it has been produced in the complete absence of state regulating agencies or support and an untrammeled exploitation of the peasants. An IDB study in the 80s determined, for instance, that in the Artibonite Valley, where most rice is grown, about 22% of the land are plots of 3.26-10.25 hectares and are owned by 1.7% of owners; 23% of the land are plots of 1.01-3.25 ha., owned by 4%; 37% of plots measure .26-1 ha., owned by 31%, and the majority of landowners, 63%, have plots measuring .01-.25 ha., accounting for only 18% of the land.

Another interesting statistic is that only 70,000 ha. of land in Haiti (32,000 in the Artibonite) is irrigated, whereas studies indicate 200,000 ha. (a total of 40,000 in the Artibonite) could be irrigated, showing the potential for higher production.

Haitian rice production kept pace with its population growth over the years. The Duvalier governments kept the Haitian market more or less protected. Only one port, Port-au-Prince, was open, allowing control of imports and keeping the level of contraband down. Imported rice sold for about the same price as Haitian rice up through Jean-Claude Duvalier's flight in 1986.

In the seventies, however, the destucturation of Haitian rice began when the government imported tons of U.S. rice following a drought. With a shortage of food and an exodus of hungry peasants to the capital to look for work, the government feared unrest.

Rice Steamrollered by Neoliberalism

Despite the increased imports, in 1987 Haiti still produced three- quarters of its rice needs, but the U.S.-managed and -advised Henri Namphy regime and its whiz kid Minister of Finance, Leslie Delatour (now governor of the Central Bank) swiftly moved to liberalize the country by slashing tariffs, closing state-owned industries, cutting the budget of the government agricultural agency in the Artibonite by 30% and opening all the ports.

The 50% tariff on imported rice was not cut immediately, but a growing massive contraband of extremely cheap Miami rice was, at best, cynically overlooked by the government. U.S. rice has a faux low price, since the U.S. protects its rice (and sugar beet and other) farmers with multitudes of programs, so U.S. farmers produce rice for less than Haitian farmers thanks to massive subsidies totalling literally hundreds of millions of U.S. tax dollars. The U.S. regularly produces hundreds of tons more than it needs and competes on the international market with traditional rice growers like Indonesia and Thailand.

Contrary to its clarion call of free trade, the U.S. protects its own while it wrenches open the borders of nearby countries in order to market its over-production. (Despite its often lower price, very little, if any, Thai rice is imported, thanks to U.S. hegemony of this lucrative market which has the highest per capita consumption of rice in the hemisphere.)

In addition to legally imported and smuggled rice, food aid (corn meal, beans, soy, oil) also undermined and continues to undermine local products by driving all prices down. Tons of aid makes its way onto the market, legally or illegally, and is sold, thus competing with local products.

The breaking down of Haiti's rural economy through the flood of U.S. products, the destruction of the creole pig and other measures are not by hazard. They are part of the same neoliberal vision pushed by the U.S. and the multilateral institutions in all dependent countries. By the early 1980s, the U.S. Agency for International Development (AID), had decided Haiti should not grow its own food or develop any national industries. The international division of labor, AID and the other planners and bankers said, called for Haiti to do export manufactur[ing] and process[ed] agricultural products, but with a sharply growing need to import grain. Through Ronald Reagan's Caribbean Basin Initiative (CBI) in 1983, a vast increase in food aid and credit for agroindustries and other programs, during the 80s, experts worked consciously to dismantle the rural economy even though, according to authors DeWind and Kinley, AID knew that would cause increased poverty and a decline in income and nutritional status.

Although the programs started before Duvalier's exit, Haitian rice farmers felt the first big blow with the flow of contraband. The price of Miami rice fell below that of local rice as tons flooded into the country. In December of 1987, farmers associations organized protests, blocking highways and ports. In one clash, police killed a peasant and injured many others. Organizations like the Federation Nationale des Etudiants Haitiens (FENEH), the Association Nationale des Agro-professionels Haitiens (ANDAH) raised their voices in protest. Meanwhile, the military government looked the other way as the merchants and contrabandists made thousands.

By 1990 and 1991, Haitian production covered only about two-thirds of the country's needs. Peasants grew 195,000 MT of rice and a total of 100,000 MT was imported. Under the Jean-Bertrand Aristide government, 50 peasant associations and unions got together and with officials to discuss ways to preserve the portion of the market Haitian's still controlled. The government discussed a plan to buy all rice (and thus stabilize the price) and also to manage the imports, allowing in only a certain amount, between local harvests.

But the writing was already on the wall. Prior to the coup d'etat, the Aristide government had begun to negotiate with the IMF, which opposes such non- free market policies, and the most powerful overseas dealer of U.S. rice, Erly Industries, had already laid the groundwork to set up shop.

Coup Buries Farmers Further

With the coup, Haitian peasants were driven into the ground. The few state supports (like credit, seeds, rehabilitation of irrigation systems, subsidized inputs) set up during the Aristide era evaporated. Most non-governmental organizations (NGOs) working in the countryside cut programs back drastically. One of the few to flourish was AID, which increased many programs, including its food program. In 1994 it brought in over US$35 million worth of food commodities, almost half of which were marketed. Many NGOs who wanted to stay in business during the crisis began feeding programs with U.S. aid.

In the meantime, peasants went more and more into debt. An NGO expert interviewed (anonymously) by Agence France Presse in 1994 (Aug. 17) estimated that 800,000 family plots (of 1 to 1.5 ha.) were indebted for over US$70, about one-third an average Haitian income. In the meantime, due to the cuts in programs coupled with the drop in the gourde and subsequent rise in the prices of inputs, tools, gasoline and other supplies, peasants grew less and less rice. In 1992, Haiti imported 136 MT and then over 140 MT in 1993 and 1994. The expert noted: We should let out a real cry of alarm in the face of the degradation of Haitian food production to the profit of U.S. farmers.

Rice Corporation of Haiti

One of the companies to profit was Erly Industries, which had positioned its Rice Corporation of Haiti (RCH) perfectly to take advantage of the coup.

Erly, a massive agribusiness headed by Gerald Murphy and his son Douglas, is the largest marketer of U.S. rice (as well making agricultural chemicals and orange juice). Its 1994 rice sales topped $350 million.

In December, 1992, a year after the coup and three years after filing papers in Port-au-Prince, it signed a nine-year contract with the illegal government of neoliberal champion, former World Bank employee and illegal Prime Minister Marc L. Bazin, where it promised to import at least 5.5 MT per month. (RCH also promised to help improve rice production in the Artibonite with U.S. agronomists, but three years later, they are not evident. What is more likely is that RCH will position itself to buy up land as little and big landowners go broke, and then grow export products like oranges.)

The RCH deal was squired through the various Washington and Port- au-Prince agencies by Larry Theriot, the first director of CBI and now V.P. of American Rice, one of the Erly rice spin-offs.

Erly knows the ins and outs of Washington. Despite a reputation that even the New York Times questioned and a brush with bankruptcy a few years ago, the Murphys still have many friends and they get subsidized loans, government contracts and other perks. In addition to the agribusiness, Gerald Murphy, a longtime Republican and supposed close friend of Ronald Reagan, wholly owns Chemonics, one of a myriad of parasitic consulting firms that live off of AID. Founded in 1976, Chemonics had won over US$89 million in AID contracts during the first six months of 1995 alone, and is now bidding heavily for contracts in at least two ministries here (justice and environment). Murphy, a Harvard Business School graduate, said he set up Chemonics because he always wanted a way to do two things: one, have my own CIA; and two, be helpful to people.

Positioned to monopolize the Haitian rice market (it is already the main rice importer by a long shot), to potentially shift other Erly operations here and now to win lucrative AID contracts which will help it influence or control governmental policy, Erly is well ahead in the race to get a piece of the Haitian's agricultural pie.

Returned Gov't: The Final Nails

With the return of democracy to Haiti, the last nails are being driven into the coffin of Haitian rice farmers. Haiti still produces 70% of its cereal needs and 90% of its vegetable needs, but that will change if land is shifted from producing for local consumption to export agribusiness.

Tariffs protecting rice have been cut back to a mere 3% and Miami rice now sells for 30 to 50% less than local rice. Also, incredibly, at least some NGO programs for market ladies are helping undermine local rice farmers. A myriad of credit programs enable women from the countryside to borrow money at low rates. Many buy cheap U.S. rice (or illegally sold aid ) and take it back to their communities to sell.

Is it a pro-peasant strategy or a strategy to open up the stomach of Haiti? asked an agronomist at a meeting sponsored by the Kolektif Mobilizasyon Kont FMI ak Neyoliberalis which recently sponsored an international conference on IMF policies. What kinds of products are these women buying? The question is never posed!

An Artibonite peasant speaking at the same event criticized the Aristide government but noted also that step by step we have arrived at this situation... They have been pushing this agenda for a long time. They have to destroy the peasant economy.

ANDAH agronomists working with peasants are very critical of neoliberal policies and of the current government's lack of will to do anything to try to block them. In conversations and documents, the agronomists point out the need for a strong state to provide support for farmers, to undertake a real land reform and restructuring of the rural economy, to irrigate land, to subsidize inputs and tools and to organize the market.

In the neoliberal system they say the state should 'be efficient,' but that is not what they really want. They want the state to disappear, one said.

To the contrary, in order to boost production, Haiti needs a strong state which could, for example, use cement from its cement plant to build irrigation canals, take over underutilized land or tax land-owners.

We need a state that is strong and that works in favor of the peasants and the people, an agronomist said. Right now, the population thinks that the government in place is that kind of government, that it wants to create jobs and increase food production, when in fact, it is doing just the opposite.

SOURCES

ANDAH & IDB documents.

Cooley-Prost, Worth & John Cannum-Clyne, The Haiti Aid Scam, The Progressive.

Dewind, Josh & David H. Kinley III, AIDING MIGRATION: The Impact of International Development Assistance on Haiti, `Boulder: 1988.

Henriques, Diana B., A Rice Exporter's Cozy Link to U.S. Agency Reaps Profit, New York Times, Oct. 11, 1993.