2.3 Nuts

Question 1

Senegal

Answer 1

• Ground nut was largest industry since 1900s.
• Low order, low value, perishable and volatile - risk of shock
• Newly independent needed money so took loans from World Bank who encouraged specialisation in ground nuts to pay off debt. In 1980s other countries saw profits and followed, so value fell.
• Economy shrank since, needed to take more loans from World Bank on the terms they they liberalise trade and set forth economic reforms in the 1980s
• Removed tariffs and duties, cut government spending and privatised businesses - this caused the value of the nut to continue to fall, no funding for fertiliser or tractors - spend more on debt a year than education and health combined.

Question 2

Mozambique

Answer 2

Cashew Nut one of its main exports

• In 90s over 10,000 employed in industry
• Processing added value to the nut, allowing more money from the exports
• Too many raw nuts were exported to be processed elsewhere so they put tariffs on it to prevent it being processes elsewhere - once processed the nuts had no tariff
• Borrowed from the IMF and World Bank - on condition to liberalise trade, cut spending and remove the tariffs of raw nuts to open trade in exchange for loans needed due to colonial debt
• Free trade meant they would sell to best possible buyer or else they would make losses
• In short run values rose as more competition meant more value as sold to the highest bidder
• The value of raw nuts rose so high factories could not afford to buy them and so most factories shut down
• By 1999, 9,000 people lost their jobs
• 2 large export companies took over and dictated the price - farmers had to sell to them as the factories shut down and other so value fell fast
• IMF concluded they were wrong and allowed Mozambique to return to tariffs

Question 3

Bolivia

Answer 3

• Only grow in Amazon
• Added value by processing as hard to remove shell
• Led to rapid growth - 80% lived in extreme poverty
• Charities and NGOs invested in factories in Bolivia to expand
• 1999 health and safety regulations from EU lowered aflatoxin level in Brazil nuts to an unachievable level for Bolivia but more achievable for other countries
• EU demand fell significantly as a result
• Bolivia complained to WTI arguing there is no evidence that the aflatoxin is any more dangerous and tried to protect domestic industry however they still have not responded the idiots.