7th November 2011

Spinning the Threads of Poverty: how US cotton subsidies cause poverty and trafficking in Southern Benin

Guest article from Neil Howard, a PhD student writing his thesis on anti-trafficking discourse and policy at the University of Oxford.

In 2003, Benin and a small group of cotton-producing African nations took a complaint to the World Trade Organization (WTO) citing massive economic evidence that US cotton subsidies reduced national and household incomes. Noting that US subsidies to 25,000 cotton conglomerates totaled three times the entire USAID budget for Africa’s 500 million people, the plaintiffs demanded the immediate cessation of subsidies and compensation for their lost national incomes.

Though in a separate case the WTO ruled that US subsidies did indeed affect global prices, US negotiators refuted any correlation between reduced prices and lost national or household income in countries such as Benin, and placed pressure on friends and foes alike to ensure that the African initiative was ultimately dropped.

In this article, I will present evidence from my research that challenges the US position. In fact:

  1. US claims of non-causality are false – it is demonstrably true that the effect of subsidy-reduced cotton prices is felt at the level of the farming household,

  2. US subsidies have thus impoverished many vulnerable rural households and this in turn has led to an increase in the labor migration of the young, including into work that has been classified as trafficking, and is often experienced by the young themselves as exploitative.

First, regarding causality, interviews with Beninese cotton farmers and agricultural extension agents demonstrate very clearly that, while state corruption or market inefficiencies can mean that local producers are denied the fruits of higher global prices, ultimately higher prices do trickle down, since the very nature of the agricultural chain in Benin ensures as much.

Octavio, the National Cotton Producers Union representative, explained the process to me. Initially, the government and private companies base their pre-harvest price for cotton farmers on close observation of international market data indicative of global price trends. Then, if prices rise, when farmers bring their harvest to the ginning factories to be weighed and receive payment, they receive a ‘windfall’ profit, representing the added difference between the pre- and post- harvest prices.

Honest compliance with this system is ensured by the monitoring of peasant organizations, and interviews with cotton farmers confirmed that price fluctuations are thus indeed reflected in their earnings. In fact, every farmer I interviewed identified the mid-90s as ‘when times were good’, pointing to the latter half of that decade and the early 2000s as ‘when times were bad’. It is no coincidence that this corresponds exactly to when cotton prices were last high and to the subsequent onset of global price depression and the activation of US subsidies.

What about the effect of lower prices on individual households?

When prices fall, household incomes diminish. When prices are pushed to record lows – as they were by US subsidies in the 1990s and 2000s – household incomes suffer even more gravely. In a paper for Oxfam’s Trade Justice campaign, the economists Alston, Sumner and Brunke calculated that subsidies depress farmer income by an extra 10,000 to 40,000 FCFA annually (around $20 to $85). In a context where margins are so tight that many survive on less than a dollar a day, and where schoolboys must engage in a summer of agricultural migrant labor to earn the $40 necessary to pay their coming year’s school fees, these are of course huge sums.

What my research with farming households clearly shows is that they are also real sums and that they have huge consequences for livelihoods. In interview after interview, farmers told me that ‘when cotton works, things are good, we have money, we can develop’. One elderly woman explained that ‘before prices stayed low, all the young people earned some cash. They worked the fields and the old owned the land and paid them’. A local agricultural official echoed this assessment: ‘I can tell you, [in the early 1990s], farmers used to look after us, they were so well off. They had money, people built houses, wells, had weddings and ceremonies, kids had money and went to school, people bought tractors’.

One of the major consequences of falling household incomes f was in the massive increase in out-migration by young males. Though the Southern Beninese region where I conducted my fieldwork used to be a major migrant destination (as workers would come from neighboring areas to work on cotton farms), this situation reversed with the price crash and subsequent depression. One village elder bluntly told me that, ‘when cotton worked, no-one went to Nigeria, because there was so much to do here, people had disposable cash, children went to school’. Now? ‘Young men migrate to Nigeria – to the mines – all the time, since there is nothing here to help them evolve’.

Interviews with dozens of current and former adolescent mine workers confirmed this picture. Boys repeatedly explained to me that they had reluctantly left school because their families didn’t have the $20 or $30 they needed to stay enrolled, or that they had moved to mines for work because, in the absence of an income from cotton, this was the only way they had to access capital. It is worth noting that in Southern Benin, cotton is literally the only way many farming communities have of obtaining cash without migrating. This is because the climate is perfectly adapted to the crop, substitutes do not benefit from similarly well-organised agricultural markets, and there is minimal industrial development.

In research similar to my own in the cotton-producing regions of Northern Benin, Abou-Bakari Imorou has found similar things. Significantly, he also found a rise in the labor exploitation of those migrating away from cotton regions. On many farms in the North, he explains, producers contract (principally) young migrant labor at the start of the season and agree wages based on the expected harvest and crop price. In the advent of unforeseen adverse climactic or political economic events that reduce the expected end of season earnings, ‘a farmer can find himself in a situation where he is unable to pay his workers, at times even having to go into debt in a desperate attempt to do so’. As such, he continues, what were at the outset simple contractual engagements between a farmer and his young workers ultimately become situations of exploitation when the young migrant worker goes unpaid.

What are the consequences of such a situation? In certain cases, written contracts are being adopted to prevent against exploitation; in others, farmers are looking towards younger and younger workers, who are more malleable and less likely (or able) to clamour for their agreed wages. This is classified in Benin as ‘child trafficking’.

What does all this mean?

It means that, when tracing the chain of causality, we are left with a relatively simple path: the politicized decision by US lawmakers to subsidise already wealthy cotton-producing multinationals diminishes international cotton prices; these diminished international prices result in lower household earnings among the cotton-producing peasants of Southern Benin; margins are so tight within these households that reduced incomes lead to changed household behavior, including in the increased migrant labor of adolescent males; this migration frequently involves boys moving to work in difficult conditions that have been identified as akin to trafficking.

The choice, then, is simple: either we continue subsidizing a handful of large agricultural companies in the more developed world to produce a crop that can be produced cheaper in the less developed world, or we end these subsidies, improving the lives of hundreds of thousands of peasant farmers and protecting their children from the migrant labor we call trafficking. Which is it to be?

To take action on US cotton subsidies in advance of the WTO meeting this December, sign this petition to the US ambassador.

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