A few weeks ago, EcoViva published an article on TruthOut about domestic seed production in El Salvador, and how the United States under its free trade agreement seeks modifications to Salvadoran law that enables domestic, small-scale enterprises to participate in the government seed purchasing program. So far, the issue remains unresolved as El Salvador’s new administration takes the reins this week, and domestic growers prepare to supply over 400,000 family farmers with certified corn seed to improve national food security.
Having signed CAFTA-DR, El Salvador must abide by Chapter 9.2, which states that it cannot “treat a locally established supplier less favorably than another locally established supplier on the basis of degree of foreign affiliation or ownership.” U.S. concern with this specific Chapter implies that the U.S. Trade Representative (USTR) thinks that E l Salvador’s current seed procurement law is systematically discriminating against a certain kind of seed supplier—in this case, foreign or transnational interests.
However, an examination of the current seed procurement rule, El Salvador’s history with seed procurement, and national frameworks for government contracting, makes USTR claims inconsistent at best, and misinformed at worst.
El Salvador set forth the current seed procurement process during the Funes administration, through an executive decree approved by the National Legislative Assembly. At the time it was established, the Ministry of Agriculture justified this special decree based on timing and growing requirements. El Salvador’s current government contracting rules, known as the “LACAP” law, required an approved national budget before any contracts could be solicited, and at minimum three-six months to manage the bidding process. When this procurement was proposed, El Salvador’s nearly 400,000 limited-resource farmers, and seasonal requirements for a successful corn harvest, couldn’t wait for a general national bureaucracy not designed for immediate food security needs to put food on their table.
During the first phase of seed procurement, the temporary decree that was established spoke about the categorical exclusion of international producers in Article 2. However, in the current procurement order, this article was modified to open contracts to both domestic and international producers. The current law was also endorsed by the Ministry of the Economy, which is tasked with overseeing CAFTA-DR compliance in El Salvador
Such special procurement rules are not new in El Salvador, nor was this particular seed procurement unprecedented. Even since EcoViva’s earlier blog post released just several weeks ago, the Salvadoran government produced a special procurement order for fungicide to combat coffee blight. This relied on a similar direct buying process with an oversight committee of appropriate authorities at the Ministry of Agriculture—the very same oversight committee structured with seed procurement that is now being criticized for non-transparent processes.
Neither the USTR, nor the same Salvadoran actors that criticize seed procurement, spoke up about this procurement order for fungicide, nor other similar prior contract processes.
The most recent seed procurement rule, which has already expired for the 2013-2014 growing season and is no longer valid, also followed an open and publicized process. The latest procurement cycle was published in national newspaper on April 8th, 2014, and conformed to a list of contractor requirements also made available to all soliciting contractors. Within these contractor requirements, under Section 4K, the procurement rule stipulates a verifiable process that “seed importers” must abide by if they are to be competitive for the bid. Nowhere in the latest seed procurement process were international producers categorically exempted from the bidding process…in fact, this special categorization allows for the oversight committee to provide specific attention to imported seeds, and their suppliers who produce or purchase this seed from the international marketplace.
U.S. authorities also signal problems with the “competitiveness” of the current seed procurement process. This seems odd given El Salvador’s history with these programs. Before the Funes administration, Ministry of Agriculture officials confirm that just three producers fulfilled the government’s purchase orders with 70% being awarded to the largest contractor, in this case, “Cristiani Burkard Seeds.” This company made the bid from their international affiliate “Pioneer”, a subsidiary of Monsanto, and negotiated a price at more than twice the amount currently given to domestic producers today, ($350 dollars per quintal versus $124 offered currently by local producers) according to Ministry officials.
Today, 16 distinct producers directly provide over 90% of the government’s certified corn seed stock, at a price nearly $10 dollars cheaper than if the government purchased them from the open commodity market. Three of these domestic businesses also participated in seed procurement processes prior to 2009, and continue to offer quality product at the cheapest price to the government. Through the current seed procurement process, El Salvador’s small scale farmers receive certified seed from a larger, more diverse array of producers than had been contracted previously.
By and large, these 16 producers (plus two non-domestic producers for a total of 18 producers countrywide) are agricultural cooperatives that represent hundreds of limited-resource families. These producers have worked with agronomists at the Ministry of Agriculture to produce the 88,000 quintales of certified corn specifically desired by the Ministry of Agriculture, and Salvadoran farmers nationwide for its adaptability, nutritional characteristics, and timely process (“fresh” seeds are ideal for higher corn yields).
It’s true that these local cooperatives aren’t equipped with the administrative capacity, lawyers or certified accountants required to access conventional contracting processes. Among 5 of these 18 producers relied on EcoViva’s partner at the Mangrove Association to assist with the administration and oversight, as well as the technical assistance to train cooperatives to produce certified seed in line with government requirements. Gearing government procurement procedures to small and medium enterprises, with accompanying technical assistance, conforms to WTO standards and also abides by recent reforms of Article 38 of El Salvador’s LACAP contracting procedures. Again, USTR did not comment when these reforms were passed in 2012 to provide categorical inclusion of small and medium enterprises in El Salvador’s contracting processes, even when actors like Salvadoran Chamber of Commerce (ANEP) publically criticized the reform.
In many respects, the current seed procurement law is actually more competitive than El Salvador’s previous contracting process, and certainly cheaper for the government. These 16 growers are currently negotiating as a sector with the Ministry of Agriculture to offer corn seed already in the ground for the next growing cycle, are producing on credit that relies on these future contracts as collateral. Likewise, the specific variety of corn seed, H59—developed by growers in El Salvador over the last 17 years–is resistant to blight, provides enhanced nutritional value and characteristics that Salvadorans enjoy in the ubiquitous tortilla, and offers efficient yields given the limited capacity of small-scale producers in El Salvador to purchase expensive additives that other seeds require.