Oxfam America | 3 July 2014

Seeds of discord or seeds for development – which way for US policy with El Salvador?

Does US trade policy dictate US development policy, and what’s at stake for the seed component of El Salvador’s national food security program?

Stephanie Burgos is a senior policy advisor at Oxfam America.

A farmer anywhere in the world will tell you how critical good seeds are for successful production. After land and water, seeds are a farmer’s most fundamental input. So it came as a surprise that an important US development agency – the Millennium Challenge Corporation, MCC – had conditioned its compact with El Salvador on changing that country’s seed procurement process, which has enabled the government to buy lower priced and better quality corn and bean seeds for distribution to resource-poor farmers.

Why has the MCC been trying to change El Salvador’s seed procurement and potentially undermine the government’s Family Agriculture Plan? The grant approved by the MCC Board doesn’t even include any support for agriculture or food security. But it turns out that the US Trade Representative (USTR) sits on the MCC Board and has sought to use that position to leverage the MCC as a trade enforcement mechanism.

USTR asserts that El Salvador is not meeting its commitments under the Dominican Republic-Central America-US Free Trade Agreement (CAFTA-DR), including provisions in the government procurement chapter. Thus, the US demand to change El Salvador’s seed procurement process.

Oxfam complained about this to USTR, and I had a rather tense exchange with USTR staff about it. By the end of our discussion, it seemed clear they didn’t really know much about El Salvador’s seed program and didn’t see it as their responsibility to find out more – they believe the burden is on the Salvadoran government to provide them with adequate information and to quell their concerns. Meanwhile, USTR helped to block the development project.

Well, it’s fairly easy to find out about the seed program that is part of El Salvador’s Family Agriculture Plan (PAF), first launched in 2011. Supported by the UN Food and Agriculture Organization (FAO), the PAF is a holistic program designed to reduce rural poverty and strengthen national food security by addressing the needs of El Salvador’s 400,000 family farmers who are struggling to improve their livelihoods.

In addition to providing packets of corn and bean seeds and fertilizer to these resource-poor farmers during the planting season, the government is providing technical support to some cooperatives and small farmers to build their capacity to produce quality seeds. And to enable these farmers to gain access to the process through which the government buys seeds, the Salvadoran legislature passed a bill that streamlines the normal government procurement bureaucracy to make it more agile and accessible to domestic cooperatives and small-scale farmers.

This is the crux of the US government complaint – or rather, “concern” – that El Salvador’s seed purchase under the new law is not “open, transparent, objective and competitive”. Yet the Salvadoran government published ads in local papers announcing this year’s seed tenders and established a clear process and technical criteria for assessing bids. The result was more than tripling the number of bids received, which enabled the government to purchase higher quality seeds at a lower price.

That’s what I found out when I inquired at the Ministry of Agriculture about this year’s seed purchases. What better evidence could there be of strong competition? It looks to me like a double success for the PAF when domestic farmers improve their livelihoods by selling high quality seeds that result in better yields for the resource-poor farmers who are beneficiaries of the government seed distribution program. So I find the USTR “concern” to be quite misguided. And I can’t help but being suspicious about possible hidden motives behind the US pressure.

I actually asked USTR staff whether they considered El Salvador’s past seed procurement process to be preferable – did they assess that as being more open and competitive than the current process? Previously, one company – Cristiani Burkard, now a subsidiary of Monsanto – dominated the market, cornered the bidding process and supplied the vast majority of seeds. Those seeds were not well adapted to El Salvador’s growing conditions and were more expensive, according to technical experts at the Salvadoran Ministry of Agriculture. Did USTR want El Salvador to return to that scenario? I got no answer, just an earful of free trade rhetoric about how trade openness is the best path for El Salvador to attract needed investment – about as relevant as an old wives tale.

Not surprisingly, the US government has been receiving quite a bit of flak recently, including from Members of US Congress and NGOs, about this misguided insistence that the Salvadoran government change its seed program. And the new Salvadoran government, which has been in office for a month now, seems to have provided some helpful information about its seed program to the USTR, which has responded positively.

Now the pressure and bad press seem to have had an effect. Just this morning, the US Embassy in El Salvador announced that it is satisfied with the Salvadoran government’s commitment to use a transparent and competitive mechanism for future procurement of seeds, thus removing this issue as a condition for the MCC compact to enter into force.

This is certainly welcome news! It appears that the Obama administration has come to its senses to right this wrong in US development policy. But does this mean the USTR will stop insisting El Salvador procure seeds through a process that hinders the participation of domestic, small-scale producers who can provide quality seeds at a low price?

Only time will tell, so it’s important to keep a watchful eye. And a fundamental issue still remains unresolved.

This controversy over government procurement of seeds in El Salvador is a clear example of how US free trade agreements with developing countries can undermine national development goals, as Oxfam warned during the negotiation and debate over CAFTA. Now, as if adding insult to injury, USTR has become emboldened to use its seat on the MCC Board to harness a US development agency for trade enforcement with developing countries. This should be unacceptable from the perspective of US development policy. Development advocates must stay vigilant!