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IV. TRADE POLICIES by SECTOR1 (1) (I) Overview2 1. Gabon Covers

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IV. TRADE POLICIES by SECTOR1 (1) (I) Overview2 1. Gabon Covers Gabon WT/TPR/S/86 Page 69 IV. TRADE POLICIES BY SECTOR1 (1) AGRICULTURE (i) Overview2 1. Gabon covers an area of 26.8 million hectares. About 20 million of them are classified as forest or savannah (75 per cent of the country) and almost all the rest is classified as agricultural land, which is used for crop farming and pasture. Virtually all of this area is the property of the State (Law 14/63). 2. Agricultural production is dominated by two types of activity. On the one hand, peasant farmers work the land near their villages independently. The land is worked either under the ownership system or the concession system. Concessions are granted without charge and may not be called into question unless the land is not kept in production. New concessions are also granted over uncultivated land and fall under the jurisdiction of the village authorities. Ownership rights have been recognized over land entered in the property register (Law 14/63) and may sometimes be granted on land in production. The power of assignment is held by the provincial authorities, subject to the consent of the village community. 3. Thirty-eight per cent of the area under cultivation by peasant farmers is used to grow plantains, for production of 250,000 tonnes a year. Manioc accounts for 37 per cent of the area planted, for production of 220,000 tonnes a year. Other root crops – taro, yams, sweet potatoes – and maize take up 21 per cent of the area under cultivation and production is 60,000 tonnes a year. Almost all plantain, manioc, other root crops and maize production is used for domestic consumption. 4. Peasant farmers face major structural problems: the low productivity of an activity essentially intended for on-farm consumption and therefore largely unmechanized; the rural exodus, which does not encourage the development of more profitable agriculture3, and the difficulty of meeting demand by the large cities (where most of the population lives), owing to problems with overland transport (see below) and logistics. Over time, this combination of problems has reduced the average income of peasant farmers and their standard of living, which has contributed to the rural exodus and to weakening the sector. However, agriculture continues to be of high social importance, since the rural population still accounts for 25 per cent of the population. 5. In an attempt to ease the difficulties of supplying cities with fresh produce, in 1992 the government established marketing gardening areas (truck gardens and family plots) on the outskirts of cities, where farmers could operate close to the market. Their activities are supported by the Institut gabonais d'appui au développement (IGAD) [Gabonese Institute for Development Support].4 The total area set aside for that purpose is nearly 113,000 square metres, but just 32 per cent is actually under cultivation. 1 The basic sources for this chapter are information presented to the WTO Secretariat by the Gabonese authorities and the following documents: Ministère du commerce, du tourisme, du développement industriel et de l’artisanat (2000b); Ministère de l'économie, des finances, du budget et de la privatisation (1999, 2000a, 2000b); and IMF (1999, 2000a). 2 The Gabonese authorities have provided the WTO Secretariat with restricted information on the agricultural sector prepared by the Ministry of Agriculture, Livestock and Fisheries. 3 Average growth in the population of Libreville, the capital of Gabon, was an estimated 8.3 per cent from 1960-1993, while the figure for the country’s population as a whole was an estimated 2.4 per cent. 4 IGAD is supported by the Government of Gabon, Elf Gabon, Caisse française de développement and Mission française de coopération. WT/TPR/S/86 Trade Policy Review Page 70 6. The other main line of agricultural production is based on the activities of State-owned enterprises. Since 1980, the government's agricultural policy has revolved around the creation of eight agri-businesses intended to boost Gabon's capacity to meet its own food requirements and to reduce spending on imports. The main companies are AGROGABON (palm oil and soap), AGRIPOG (truck farming), HEVEGAB (rubber), SIAEB (poultry), SMAG (eggs), SMOG (flour), SOCAGAB (coffee and cocoa), SOGADEL (livestock), SOSUHO (sugar cane and sugar refining), EAULECO (mineral water), SOBRAGA (beer and other carbonated beverages), and SOCIGA (cigarettes). 7. Gabon's cash crops are mainly rubber, cocoa and coffee. Rubber production, which was close to 11,000 tonnes in 1998, fell sharply in 1999. Production of 3,677 tonnes in that year was due to the fact that fewer trees were tapped since the decline in the price of natural rubber on international markets means that export earnings were low. Earnings were about CFAF 5 billion in 1996, CFAF 4 billion in 1998 and over CFAF 2 billion in 1999. Coffee and cocoa grown on unmechanized plantations and the crops produced by SOCAGAB are purchased by Caisse CAFÉ-CACAO which sells them on the domestic market and exports the surplus to the Netherlands, Italy and Spain. However, Gabon is a minor producer of those crops, with a total of 65.5 tonnes of cocoa in 1998/99 and 34.8 tonnes of coffee. (ii) Agricultural policy 8. Gabon has a long history of using the main agricultural policy instruments – border measures and production subsidies – and control of prices and mark-ups on products sold on its domestic market to support its State-owned enterprises on that market. They benefited from monopolies over the production, import and sale of imported and domestic products. They also benefited from government investments in production units and infrastructure and from different tax breaks, which were actually production subsidies. However, they were subject to administrative controls over prices and mark-ups, which are still in place in many enterprises in order to prevent abuse of their dominant position. The example of the palm oil and soap industry illustrates the measures in question and their evolution over the period 1976-2000 (Box IV.1). 9. Despite the different types of support provided by the government, the financial situation of most of the enterprises declined sharply during the 1990s. Only SMAG posts profits, while the others post losses. Gabon's authorities have priced the cumulative losses (before subsidies) at CFAF 32.9 billion over the period 1987-1992. Other types of subsidies for these businesses include tax benefits in their founding agreements, such as exemptions from duties and taxes on all imports (including imports to complement domestic production) and taxes on inputs. 10. The current status of border measures applicable to finished products is as follows: - The only import ban is on sugar (until 2004) to enable Sucaf-Gabon (which has taken over the operations of the privatized company SOSUHO) to retain its monopoly over production and sale on the domestic market; - some imported agricultural products in direct competition with locally produced or manufactured products – edible oil, soap, cigarettes, natural mineral water – are subject to a 30 per cent tariff, which is the maximum under the CET, to which a temporary 20 per cent surcharge is added; - import licences are required for different kinds of meat and are subject to a 10 per cent charge on the CIF value; Gabon WT/TPR/S/86 Page 71 Box IV.1 Measures to support the palm oil and soap industry since 1976 The palm oil industry was established in 1976 to help supply the domestic market and earn income from exports. It was composed of industrial oil-palm plantations, an oil refinery, a bottling unit and a soap factory and was given to the AGROGABON company. The company also has a monopoly over the sale of edible oil on the domestic market. Domestic edible oil consumption is 12,000 tonnes and demand is almost completely covered by AGROGABON, which exports its surpluses at a loss and imports edible oil to complement domestic production. The market for household soaps is an estimated 6,000 tonnes and AGROGABON covers about 40 per cent of it, while imports make up the rest. Measures to support the industry on the domestic market first took the form of administrative controls over prices and mark-ups on edible oil and soap. They were kept in place under Order 541 of May 1989, even though Gabon has liberalized the mark-ups on imported and local products. The domestic market was opened up to greater competition in the context of CACEU's fiscal and customs reform. Customs duties on salad oil and soap are 30 per cent today, which is the maximum CET, to which a temporary surcharge of 20 per cent is added, for a cumulative rate of 50 per cent. On the fiscal front, AGROGABON has a 25-year founding agreement that expires in 2004. Under it, the company benefits from a full exemption from import duties and taxes and from indirect taxes on raw materials and key inputs used to obtain finished products. This duty and tax exemption also applies to edible oil and soap imported to help meet domestic requirements, which permits the company to earn additional profits. The Government has also provided financial support. From 1988-1992, AGROGABON's cumulative financial losses were CFAF 5.5 billion, which were covered by an investment program, with the debt service paid by the State. AGROGABON is slated for privatization. Source: Information provided by Gabonese authorities. - a minimum price of CFAF 1,000 per kilogram is applied to poultry and poultry and poultry cuts (SIAB's production cost is about CFAF 980 per kg), for which Gabon has obtained authorization
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