World Bank `Destroyed Basic Grains’ in Honduras

Fidencio Alvarez abandoned his bean and corn farm in southern Honduras because of the rising cost of seeds, fuel and food. After months of one meal a day, he hiked with his wife and six children to find work in the city.
“We would wake up with empty stomachs and go to bed with empty stomachs,” said Alvarez, 37, who sought help from the Mission Lazarus aid group in Choluteca in January. “We couldn’t afford the seeds to plant food or the bus fare to buy the food.”

Honduran farmers like Alvarez can’t compete in a global marketplace where the costs of fuel and fertilizer soared and rice prices doubled in the past year. The former breadbasket of Central America now imports 83 percent of the rice it consumes — a dependency triggered almost two decades ago when it adopted free-market policies pushed by the World Bank and other lenders.

The country was $3.6 billion in debt in 1990. In return for loans from the World Bank, Honduras became one of dozens of developing nations that abandoned policies designed to protect farmers and citizens from volatile food prices. The U.S. House Financial Services Committee in Washington today explored the causes of the global food crisis and possible solutions.

The committee examined whether policies advocated by the bank and the International Monetary Fund contributed to the situation. Governments from Ghana to the Philippines were pressured to cut protective tariffs and farm supports and to grow more high-value crops for export, reports by the Washington-based World Bank show.

Haiti Pressure

The IMF pressed Haiti, as a condition of a 1994 loan, to open its economy to trade, Raj Patel, a scholar at the Center for African Studies in the University of California at Berkeley told the committee. When trade barriers fell, imports of subsidized rice from the U.S. surged, devastating the local rice farmers, Patel said.

“That is very odd,” said committee chair Barney Frank, a Massachusetts Democrat. “For anyone to have looked at Haiti at that time and thought that it was a functioning economy is a sign I think of ideology going rampant.”

“Of course they got it wrong,” said Robert S. Zeigler, director-general at the International Rice Research Institute, southeast of Manila. “It will work if you’re an extremely wealthy country and you can import rice at any price. But if you’re not an extremely wealthy country, I think that’s very poor advice.”

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