24/07/2012 (BusinessDay) - The free trade flows that have powered robust global economic growth since the end of World War II are increasingly coming under threat. If left unchecked, a wave of trade-distorting regulation will harm people in the developing world, particularly small farmers in poor countries.

Consider that the World Trade Organization found that the Group of 20 (G-20) economies – the world’s biggest, which account for a vast majority of the world’s economic output and trade – added 124 new restrictive measures to international trade between April 2011 and April 2012. These are the countries that have benefited most from lower trade barriers. It appears some in these nations now want to prevent others from enjoying the blessings of free trade.

Many of these regulations are in the form of non-tariff barriers to trade. These include rules, standards, and principles imposed by governments or industry groups designed to restrict and regulate the flow of goods and services. They are no less an impediment to trade than blanket prohibitions or taxes and tariffs.

For example, standards designed to regulate the trade in palm oil are now taking hold. These rules will shape the global market for vegetable oils and biofuels. They will make winners out of established vegetable oil producers in the West; and they will harm small farmers in Nigeria and elsewhere in Africa by blocking them from international markets.

Nigeria has a rich history when it comes to palm oil. The nation was the world’s largest producer of the valuable and versatile vegetable oil back in the 1960s. Nigerian business and political leaders believe the country can once again move to the top ranks of global producers. The sector now employs 1.8 million people in Nigeria alone, many of whom are smallholders cultivating their own small plots of land to provide for their families – some for many generations.

This resurrection of the national sector is being jeopardised, however, by environmental activists seeking to deny market access to palm oil exports. These groups promote sourcing policies and the application of standards designed to regulate trade in palm oil. These efforts, whatever their intention, are harmful to Nigeria, as well as other developing nations hoping to expand agriculture through profitable crops like palm oil.

Certification is costly, and while large companies may be able to accommodate the costs of auditing, independent small farmers without economies of scale of large companies are less capable of affording these costs.

Despite this clear discrepancy between the ability of large producers of palm oil and that of small producers to undertake certification, activists are campaigning for European and US markets to impose de facto trade bans on non-certified palm oil. The result will be to effectively exclude and therefore deny market access to any palm oil produced by small farmers in Nigeria and elsewhere in the developing countries.

A recent fundraising event held at the Sheraton Hotel in Lagos – where the Roundtable for Sustainable Palm Oil (RSPO) was looking to raise N109 million – is testament to the fact that significant sums of money are at stake. A facilitator at the event admitted, perhaps unwittingly, that to implement RSPO certification in Nigeria, stakeholders will have to ‘make financial contributions to fund the budget,’ including the small farmers and rural communities that this development was meant to help lift out of poverty.

Nigerian small farmers cultivate 80 percent of production, which comes largely from scattered smallholdings spread over an estimated 1.6 million hectares of land. These small farmers typically operate on razor-thin profit margins, so every additional naira is precious and can’t be redirected to support a complex certification scheme.

The US and Europe benefitted from their agricultural revolution throughout their history, paving the way for conditions for the US and many European countries to prosper. This is the same pathway to prosperity that Nigeria and all other countries in African aspire to achieve. But additional regulation would make the road to prosperity thorny and riddled with potholes.

Minister of Trade and Investments, Olusegun Aganga, and his agriculture counterpart, Akinwunmi Adesina, therefore do not need to be reminded that just over 50 years ago, Nigeria accounted for more than 40 percent of global output of palm oil, and this crop contributed 82 percent of national export revenue.

Given a history of successful cultivation, the potential for palm oil to catapult Nigeria towards its goals for accelerated economic development should not be downplayed. It remains very real; we only have to look at the blessings this crop has brought Malaysia and the efforts Liberia, Ghana, Uganda, and other African countries are making to promote its cultivation to understand that this industry deserves support.

The ability of Nigerian small oil palm farmers to contribute to the nation’s growth and success must not be compromised by expensive certification schemes that will tip market in favour of established producers or other regions. Nigeria’s small farmers must be free to compete on equal footing, using their talents and hard work to build a better future for themselves.