Root Cause Problems Conclusion / Losses 15

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Declining national production
While the gains to consumers from liberalisation are subject to many caveats, the losses in
production are glaring.

There is an established consensus now in Haiti that national
agricultural production is in decline and that the increase in food imports, much extended by
liberalisation, has directly contributed to this fall in production.

99
Haitian producers have simply
not been able to compete against imports, given the pre-existing (and continuing) low levels of
productivity in the agriculture sector.

In addition, an increasingly urbanised population,
coupled with access to a larger market, has left domestic producers with a much smaller
share of the market.

The phrase `decapitalisation' is used to describe the situation of the rural
population since liberalisation.

Numbers affected
As discussed above, losses to the poor, which include negative impacts on income for a large
number of farmers, have been widespread.

Following our sectoral analysis the numbers
directly affected can be summarised as follows:

Table 7
Numbers affected by trade liberalisation
Number
of
farmers/workers
affected by income
loss
Family members
affected (each person
working supports five
others)
Total
Rice
52,000 260,000
312,000
Sugar
85,000
425,000
510,000
Intensive chicken
production
1,650
8,250
9,900
Total
138,650 693,250 831,900
Our estimate, of more than 800,000 poor people affected by liberalisation, is in fact extremely
conservative, as it does not include:
·
the true number of seasonal workers involved in sugar production
·
small farmers raising pigs, goat, beef and sheep who would have also experienced a drop
in income due to import competition (this figure must be in the hundreds of thousands)
·
people working within the semi-industrial pork supply chain
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30
·
workers affected by losses suffered by rice mills
·
maize farmers affected by the closure of animal feed units and factories
·
workers in the sugar factories and animal feed factories who lost their jobs
·
workers who lost their jobs when the railroads closed
·
lost jobs and incomes that were linked to intermediary sales and distribution activities in
these four product sectors.

Although it is impossible to quantify the real number affected by liberalisation, with such a long
list there are likely to be well over one million people directly affected by trade policy reforms.

It is also important to remember that a dollar lost by all of the rural poor is not offset by a dollar
gained in the urban sector.

Even if the dollar gains and losses were equal ­ which was clearly
not the case in Haiti ­ it would still be a net loss overall, because the rural inhabitants are
poorer and a dollar is worth more to them than to the more affluent, albeit still very poor, urban
population.

Effects of agricultural contraction on the urban sector
It is clear that Haiti's rural areas have lost out. The premise of agricultural liberalisation is that
the decline in production in rural areas will be matched by an expansion in urban areas.

Yet,
as we have seen, much of the displaced rural workforce cannot find gainful employment and
is left to labour in the informal, unproductive sector of the economy.

The increased supply of
labour in this sector means urban incomes fall.

The evolution of the statutory minimum wage in Haiti demonstrates the wage trend since the
early 1980s:
Real minimum wage
0
20
40
60
80
100
120
1980
1983
1986
1989
1992
1995
1998
2001
2004
Index of real
minimum wage
Source: Wage data provided by IMF Haiti: Selected Issues, Country Report
No 05/205, June 2005
The only available wage data for Haiti relates to the minimum wage. As this does not
represent all incomes, this analysis might not stand up if the trends were weaker.

However,
the trend is extremely strong.

Clearly, urban purchasing power in Haiti has declined dramatically, falling by a staggering 70
per cent between 1981 and 2003. The fall is a long-term trend, not confined to the post-
liberalisation period.

However, it's clear that pre-liberalisation real wages were declining at a
much slower rate than after the second structural-adjustment, when tariffs were significantly
lowered.

This is all the more noteworthy because in the period immediately preceding these
reforms Haiti, was subject to economic sanctions from which it suffered grievously

Lionne, April 24 2008, 7:33 PM

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