Agricultural subsidies for farmers of rich nations are “ethically indefensible”, the senior vice president of the World Bank argued on Wednesday.
Nicholas Stern condemned the practice, costing US $300 billion a year, which he said fuelled Third World poverty.
He was speaking after a day-long “brainstorming” session with Ethiopian Prime Minister Meles Zenawi on a recovery programme for the impoverished nation.
The talks on “Sources of growth in Ethiopia” came as Stern returned from Dubai, where the World Bank has been holding its annual conference, en route for Washington.
The chief economist charged that subsidies are “politically antiquated, economically illiterate, environmentally destructive and ethically indefensible.”
Agricultural subsidies, which are around five times the size of development aid to Africa, also waste public money and lead to higher food prices, he told journalists.
He also spoke of his disappointment after the failure of the World Trade Organisation (WTO) development talks in Cancun, Mexico, which collapsed last week.
Third World nations complain bitterly that subsidies by the European Union and US effectively bar them from competing in lucrative markets of the western world.
“Subsidies shut out poor countries from rich countries' markets precisely in the areas they can compete,” Stern pointed out.
He added that rich nations need to “at least double” aid to Ethiopia – currently US $900 million a year - saying the right policies were in place to combat the entrenched poverty.
“Developing countries have created the conditions in which aid has never been more productive but the fraction of aid that rich nations give has never been lower,” Stern said.
“It is the job of the international community to step forward with support when countries have done that, and I think Ethiopia has done that,” he added.
Stern said opportunities existed in horticulture, the textile industry, processing of coffee and improving the leather industry.
Ethiopian government officials and the bank are looking to improve the “investment” made by millions of subsistence farmers in Ethiopia in their land.