Seed distribution is the backbone for El Salvador’s Family Agriculture Program. It is heralded by the United States Agency for International Development (USAID) and the U.N.’s Food and Agriculture Organization (FAO) as a model for rural development across the Central American region. Its seed distribution program responds to immediate food security needs of over 325,000 impoverished, small scale family farmers who would otherwise not have access to affordable farming inputs that helps them put food on their table, and feed their communities.
The Salvadoran government’s ability to respond in a timely way to seasonal and growing requirements is fundamental to the success of this program. Corn and bean crops do not conform to bureaucratic procedures or national budgeting timelines. Thanks to the particular producers who have currently supplied the kind of seed that the Salvadoran government desires, at the cheapest price, this distribution program surpassed its goals in 2013, and reached over 400,000 small scale farmers while contributing over $25 million to the rural economy that led to record corn yields nationwide.
Below is a response to the Embassy’s arguments on free trade compliance and seed procurement, published on the U.S. Embassy homepage on Thursday, June 19.
Embassy: “The U.S. government concern with the Ministry of Agriculture’s procurement program is completely unrelated to the purchase of genetically modified seeds. Any rumor to the contrary is false.”
EcoViva believes that recent civil society comments on U.S. support of Monsanto and GMOs reflect a general frustration with inconsistencies by the United States per seed procurement policy. Past procurement orders prior to 2012 clearly reflect a less competitive process that led to the acceptance of an inferior product at a higher price, from a fewer number of businesses. Through procurements prior to 2012, a Monsanto affiliate was awarded over 70% of the procurement order with more expensive seed product that offered yields achievable only with expensive chemical additives provided by the same company. Such expenses, when applied to the Government of El Salvador’s limited budget, made their outreach to the small scale farming sector less effective, in that they could not reach as many farmers that contribute to greater overall national yields. In contrast, current procurements have led to record yields and service to more farmers, thanks to a product especially adapted to El Salvador’s growing conditions.
If the United States is not providing preference to specific U.S. providers like Monsanto, it should clarify why it did not comment on procurement procedures prior to 2012, when these procedures clearly reflect difficulties in the same criteria of “openness, transparency, objectiveness and competitiveness” per CAFTA-DR Chapter 9.
Embassy: “For the past two years, the Government of El Salvador has conducted its procurement program in a manner that raises concerns with regard to its government procurement obligations under the CAFTA-DR (Chapter 9 and its associated annexes), which requires an open, transparent, objective and competitive government procurement process that does not prejudge the outcome of a tender.”
In December of 2012, El Salvador approved a procurement order that explicitly excluded non-domestic producers from eligibility for bidding. Passed by executive decree, this particular procurement order had a limited lifespan, and is now no longer valid policy. In January of 2014, the Salvadoran government produced a new call for bids, which provided a much more open bidding process with no exclusions, and even included categorical consideration of seed “importers” under its base for contractor qualifications. The government is currently working with three businesses that import seed from international sources. It’s important to note that these three businesses also participated in past procurement processes, and clearly have not been excluded based on domestic or foreign affiliation.
The timeline (the last two years) that the United States identifies per their concerns is decidedly convenient for the U.S. argument, especially when analyzing the Salvadoran government’s procurement process prior to two years ago. Records from the Ministry of Agriculture in 2009 and 2010 reveal a number of procurement orders for seed, agricultural supplies, and other goods and services (like gasoline for ministry vehicles) that were completed “by invitation” and “direct purchase” methods from a pre-selected business or group of businesses. These methods are the very same purchasing methods that the U.S. currently criticizes El Salvador for on its seed procurement starting 2012.
To our knowledge, the United States did not raise any concerns on agricultural procurement methods prior to 2012.
Embassy: “We are asking the Government of El Salvador to implement the procurement program for corn and bean seeds in a competitive, objective, and transparent manner that demonstrates to all stakeholders both El Salvador’s commitment to the CAFTA-DR, as well as its commitment to good governance. Such principles are inherent in the provisions of the CAFTA-DR.”
Salvadoran small-scale farmers who receive seed through the government distribution program indeed deserve to have access to products procured in an open, competitive, objective, and transparent way. For that reason, it is odd that the United States would criticize the current process that has allowed for product procurement from a more diverse array of businesses that offer cheaper and more competitive prices to the government, and ignore the previous, seemingly less competitive procurement methods. Prior to 2012, just five businesses fulfilled the procurement order for corn, compared to 18 currently. These five businesses, one of which garnered 70% of the procurement order alone, offered corn at nearly double the price currently offered by largely domestic producers: $350 per 100 pound unit, compared to $124 by current local producers. This price of $124 is also cheaper than what the Government of El Salvador would get on the open commodity market, BOLPROS, which currently offers corn seed at over $130.
Though the United States has yet to define what “competitive” means in practice under CAFTA-DR with seed procurement, more businesses currently offer the government of El Salvador a better product that it prefers at a cheaper price. The fact that the majority of these 18 businesses happen to be local, domestic producers should not be cause for “prejudgement” by the U.S. government and USTR.
Embassy: “[The Millennium Challenge Corporation] MCC is holding the government to its commitments in its action plan, including those related to the procurement program, prior to signing.”
An analysis of Chapter 9 acknowledges that seed procurement can be made by executive decree as long as it is transparent, open, objective and competitive. The Salvadoran government has clearly made substantial progress since 2012 – especially when compared to procurement methods utilized prior to 2012. Given the Salvadoran government’s action plan to address a number of other concerns per CAFTA compliance, the United States should stop moving the goal posts on policy reform, and should cease to make an example of domestic growers for the symbolic purpose of pressing a new Salvadoran government on its intent to fulfill an international agreement.
Though USTR holds a seat on the MCC’s Board of Directors, it cannot veto compact approval based on “concerns” per El Salvador’s domestic policies and free trade, especially when no explicit legal action has taken place. Nor is USTR in a position to define for the MCC what “specific progress” means in regard to the Government of El Salvador’s Plan of Action to address, in good faith, free trade concerns. USTR has its own mechanisms for addressing free trade concerns without leveraging other agencies to pressure for things that fall outside of their mandate. Based on the federal legislation that established the Millennium Challenge Corporation, its mandate does not include enforcement mechanisms of free trade compliance. Nor do the MCC’s independent indicators of good governance and trade policy indicate a failure on El Salvador’s part, and therefore do not justify an unprecedented hold up in signing this second compact.