Down to Earth IFIs Factsheet 23

Down to Earth IFIs Factsheet Series

No 23, June 2002

IFIs in Indonesia

This series of monthly factsheets on International Financial Institutions (IFIs) will include information on the World Bank Group, the International Monetary Fund (IMF) and the Asian Development Bank (ADB), focussing on their involvement in Indonesia.

The World Bank, Pest Management and Pesticide & Biotech Companies

The World Bank's revised policy on Integrated Pest Management (IPM) gave some hope to environmentalists, communities, and development practitioners who were concerned about the Bank's support for extensive chemical pesticide use in many developing countries. Recent studies, however, have shown that the policy has failed to commit the Bank to support IPM. The Bank's internal project management system and the development model it promotes are the culprits. The recent decision by the Bank to enter into partnerships with notorious pesticide and biotech companies has also worked against compliance with IPM policies and guidelines on developing partnershisp with private sector. This Factsheet summarizes various Pesticides Action Network North America (PANNA) reports on this issue.

The World Bank Policy on Integrated Pest Management: Sound on Paper

In 1998 the World Bank issued revised Operational Policy (OP) 4.09 on Pest Management. This Policy guides all bank lending towards supporting ecologically-based integrated pest management (IPM) strategies that promote the use of biological or environmental control methods and reduce reliance on synthetic chemical pesticides. The policy also stipulates that the Bank should ensure that farmers have the lead role in designing and implementing locally-appropriate IPM strategies.

What does the World Bank Policy Say about Integrated Pest Management?

"IPM refers to a mix of farmer-driven, ecologically-based pest control practices that seeks to reduce reliance on synthetic chemical pesticides. It involves (a) managing pests (keeping them below economically damaging levels) rather than seeking to eradicate them; (b) relying, as far as possible, on non-chemical measures to keep pest populations low; and c) selecting and applying pesticides, when they have to be used, in a way that minimizes adverse effects on beneficial organisms, humans, and the environment."

OP 4.09 states that "The Bank supports a strategy that promotes the use of biological or environmental control methods and reduces reliance on synthetic chemical pesticides." On Bank-financed agricultural operations, OP 4.09 continues, "Pest populations are normally controlled through IPM approaches, such as biological control, cultural practices, and the development and use of crop varieties that are resistant or tolerant to the pest." Furthermore, a condition for pesticide purchases is that "Their use is justified under an IPM approach."

The policy also contains criteria for pesticide selection and use, namely that any pesticides used in Bank projects must have negligible adverse human health effects and minimal effects on non target species and the natural environment.

OP 4.09 prohibits the purchase of pesticide products categorized as WHO Classes Ia, Ib, or II if (a) the country lacks restrictions on distribution and use or (b) the pesticides are likely to be used by or accessible to individuals lacking appropriate training, equipment and storage facilities.

From "Community Monitoring of IPM vs. Pesticide Use in a World Bank Project in Indonesia"

While the Policy looks good on paper, in reality few Bank-funded projects have been in full compliance with this policy. A review conducted by PANNA of World Bank documents describing over 100 projects approved between 1997 and 2000, found that only a small number mentioned IPM. The majority supported increased access for farmers to agrochemicals, with little or no attempt to acknowledge or mention the hazards of pesticide use.

PANNA found two underlying problems hampering compliance with OP 4.09 in most World Bank-funded projects. First, World Bank project managers have limited capacity and time to investigate and propose pest management systems. They are also discouraged from ensuring policy compliance by the internal project management system in which they must pay for the cost of obtaining in-house assistance from their own budgets. Furthermore, staff promotion and performance evaluation are not based on how they have or have not complied with Bank's policies but on the size and number of loans they administer and get approved.

A more fundamental problem that makes it difficult for the Bank to comply with OP 4.09 lies in the agricultural and economic development model it promotes. The World Bank supports industrial agriculture activities that promote farming dependent on the use of extensive inputs such as hybrid seeds, chemical fertilizers and pesticides, and irrigation. The World Bank's promotion of industrial agriculture is often in the context of a larger set of conditions under structural adjustment programs which also promote trade liberalization in the agricultural sector, increased production of export-oriented cash crops to generate foreign exchange earnings, and removal of subsidies on staple foods.

World Bank Supported High Levels of Pesticide Use in Indonesia:
The Case of Integrated Swamp Development Project (ISDP)

The World Bank funded a multi-million dollar project in Sumatra and Kalimantan in the 1990s to alleviate poverty by improving water control structures, increasing food and tree-crop production, and building or rehabilitating roads and drinking water facilities in swamp areas. The agriculture component of the project aimed to increase rice and coconut production through the provision of hybrid seeds, fertilizer, pesticides, and training in agricultural practices.

Monitoring by the Solo-based NGO, Yayasan Duta Awam (YDA), and PANNA uncovered expensive problems in the increased use of and dependence on chemical pesticides. The farmers using the chemical pesticides were not trained about the negative health effects of pesticides, the use of alternatives, decreased crop diversity, or illegal sale of the project pesticides in local markets.

The Bank's policy on Integrated Pest Management (IPM) requires its projects to help reduce reliance on chemical pesticides. The monitoring showed contrary situations where farmers' use and dependence on chemical pesticides increased significantly during their participation in the Bank project. Prior to their involvement in ISDP, some farmers used traditional methods of pest control. After joining ISDP, they began applying on average 8-10 tankfuls/hectare of insecticides and 40 tankfuls/hectare of herbicides per annum provided by the project. ISDP farmers reported that the hybrid coconut seeds they received from the project were more susceptible to plant and insect diseases than traditional seeds. Many of them applied more pesticides than their fellow farmers who did not join ISDP.

Health effects on farmers were also significant. 92% of ISDP farmers reported experiencing dizziness, nausea, vomiting, blurred vision, rashes, itchy skin, burning sensations in the throat, chest pains, shaking, and difficulty breathing after using pesticides. ISDP officials did warn farmers that pesticides were dangerous. Yet, the project continued to supply chemical pesticides to farmers without providing proper education on the acute and chronic health effects of the pesticides or providing protective equipment. Incidences of pesticide poisoning and even death continued to increase during the ISDP.

World Bank Partnership with Multilateral Corporations

The World Bank has recently entered into partnerships with some of the most notorious and aggressive producers of pesticides, such as Rhone-Poulenc Agro (now Aventis), AgrEvo (now Aventis), Novartis (now Syngenta) and DowAgro-Sciences. These companies have bad reputations due to their actions in shipping illegal toxins, dumping chemicals, involvement in chemical-related accidents, chemical testing on humans, false advertising, histories of unethical manipulation of pesticide registration decisions, corruption, etc.

The Bank's rationale behind these partnerships is that it can use its loans to leverage bigger and better private financial flow which are of greater benefit to the poor. The Bank has developed guidelines to ensure that its private sector partnerships are compatible with its mission. According to these guidelines, the core principles of World Bank Group operations, including the policy on IPM, apply to private sector partnerships wherever relevant. The Bank should also evaluate each proposed partnership against the following key areas:

Reputation:	Does the company have a good reputation, especially in areas of corporate responsibilities?
Conflict of interest:	Is the company only or primarily looking for procurement opportunities or money from the World Bank Group?
Unfair advantage:	Would the relationship allow special advantages to accrue to the partner, such as access to information, market advantage, or procurement under projects financed by the World Bank Group?
Governance:	Is the partnership aligned with priorities in relevant World Bank Group country and/or sector strategies?

According to the guidelines, the Bank should not engage in partnerships that carry high risks and hamper the Bank's ability to maintain its neutrality/impartiality, act independently, or become honest-broker in decision-making and providing advice to its clients.

Despite these guidelines, World Bank President Wolfensohn initiated the first phase of a new partnership cycle by inviting CEOs of major pesticide and biotechnology industries to a roundtable discussion in December 2000. Wolfensohn stated that the discussion sought possible areas of collaboration between the Bank and the industries. The partnership raises questions about:

whether the Bank's partnerships with these pesticide industries are in line with the guidelines and Bank's policy on IPM which seeks to reduce the use of and reliance on chemical pesticides. Even Bank partnerships with pesticide companies that seek to promote safe-use training are unlikely to result in less pesticide use);
the underlying argument that genetic modification technology indeed means reduced pesticide use as claimed by biotech companies.

Under the Bank's Staff Exchange Program, personnel exchange between the Bank and major pesticide companies occurs on a regular basis. For example, the Bank placed one of its staff, Alassane Sow ,with Rhone-Poulenc Agro under the exchange program. Sow's assignment was to manage partnership programs between Rhone-Poulenc Agro and rural development institutions in several African countries. During Sow's tenure at Rhone-Poulenc Agro, Three countries in Africa, Cameroon, Cote d'Ivoire, and Ghana, all submitted project proposals to the World Bank with a major agricultural extension component that would likely involve companies like Rhone-Poulenc Agro. The cozy relationship with the Bank developed by Rhone-Poulenc Agro through the Staff Exchange Program has provided the company with access to Bank's staff and information as well as to decision-makers in the Bank's borrowing countries.

Urgent Call for Change in Bank Practices

Pesticide Action Network and its partners around the world have called on the World Bank to make major changes in its practices in the agricultural sector towards stronger environmental sustainability and poverty reduction:

Reject projects that finance and/or are likely to include or increase use of highly hazardous pesticides, including not only WHO Class Ia, Ib and II pesticides but also persistent organic pollutant (POP) pesticides and those known to cause long term adverse health or environmental effects;
Approve only projects with ecologically based IPM plans that show commitment to reducing pesticide dependence;
Ensure that all Bank projects, programs, and partnerships are in full compliance with the Bank's pest management policy, OP 4.09;
Adopt a precautionary approach towards agricultural biotechnology; e.g. halt all current financing of agricultural biotechnology in project loans and declare a moratorium on future funding until independent safety testing demonstrates that transgenic crops have no harmful effects on human health or the environment;
Eliminate staff exchanges with pesticide/agricultural biotechnology companies and require closer review of informal partnerships to determine whether they are at risk of violating Bank business guidelines on conflict of interest and unfair advantage;
Encourage the establishment of national IPM programs that utilize farmer or community-based learning and ecological field studies;

The Bank has yet to respond to the call. Without significant change in its practices in agricultural areas, the Bank's commitment to poverty reduction and environmental sustainability is at stake.

This Factsheet is summarized from the following Pesticide Action Network North America (PANNA)s articles:

Ishii-Eiteman, Marcia and Jessica Hamburger. "Pesticide and Biotech Companies: The Wrong Partners fro the World Bank."

Ishii-Eiteman, Marcia and Jessica Hamburger. "Pesticide and the World Bank: Agricultural Development Projects Fail to Promote Sound Pest Management."

Ishii-Eiteman, Marcia and Nila Adhrianie. "Community Monitoring of IPM vs. Pesticide Use in a World Bank Project in Indonesia."

Ishii-Eiteman, Marcia. "Pesticides and the World Bank: How World Bank Agricultural Projects and Policies Exacerbate Pesticide Problems and Undermine Ecologically Sound Pest Management" (draft)

Pesticide Action Network North America. The World Bank's Failure to Curb Pesticide Use: Why It Matters.

Most PANNA publications on the World Bank are available at www.panna.org/campaigns/worldBank.html

Contact: Marcia Ishii-Eiteman, Staff Scientist, PANNA mie@panna.org

This IFI factsheet is published by Down to Earth, the International Campaign for Ecological Justice in Indonesia.
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