Agriculture in Development of Select African Countries

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Agriculture in Development of Select African
Countries
CUTS Geneva Resource Centre

• Key Findings
• of Five Country Studies

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Structure of the presentation

• INTRODUCTION
• BRIEF SYNTHESIS OF FIVE COUNTRY STUDIES
• Agriculture
• Trade
• THEMES AND MAIN RECOMMENDATIONS

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Introduction Brief Analysis Agriculture
Trade Recommendations
Introduction

• CUTS GENEVA RESOURCE CENTRE

For more than 25 years, CUTS International
pursues research-based advocacy to promote
consumer sovereignty with social justice and
equality within and across borders. In 2008,
CUTS Geneva Resource Centre started functioning
to promote a pro-trade, pro-equity credible
Southern voice in the Geneva trade and
development community. CUTS GRC aims to provide
services that would bridge the gap between
capitals and Geneva on trade-related issues. At
the same time it also launched its flagship
three-year project entitled Fostering Equity and
Accountability in the Trading System (FEATS) .
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Introduction

• THE FEATS PROJECT

Introduction Brief Analysis Agriculture
Trade Recommendations
Fostering Equity Accountability in the
Trading System
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Introduction THE FEATS PROJECT

• Objectives
• Enhancing positive linkages between Trade and
  Development in Africa
• Advocacy with trade officials by establishing
  two-way linkages between activities in Geneva and
  Project Countries
• Generating a more coherent and pro-trade for
  development voice in trade policy making and
  implementation.

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Introduction THE FEATS PROJECT (Contd)

• Two-phase project
• Phase One
• research on policy making processes
• role of stakeholders at the national level
• Phase Two
• research on country-specific issues related to
  trade in agriculture in the overall context of
  development constraints and objectives
• todays presentation is based on the findings
  from these studies

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IntroductionKEY MESSAGES

• Agriculture is key to inclusive growth and
  development
• increase investment to improve productivity
• adopt and implement holistic and balanced
  policies
• Trade can play an important role for inclusive
  development through agriculture
• reform international trade in agriculture and
  promote formal regional trade
• urgently address trade facilitation constraints
• Stakeholder involvement and capacity building is
  a must
• prioritise capacity building of small farmers and
  traders
• Encourage multi-stakeholder consultations and
  coordination

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Introduction Brief Analysis Agriculture
Trade Recommendations
Introduction

• LINKING TRADE AGRICULTURE IN SELECT AFRICAN
  COUNTRIES

• The project was undertaken in LLCs Malawi, Uganda
  and Zambia, and non-LLCs Kenya and Tanzania.
• In all the five countries, agriculture
  constitutes a substantial portion of the economy.
  Its role is crucial for food security,
  livelihoods and poverty reduction.
• Therefore, strategies and policy interventions
  aimed at inclusive development should give
  precedence to the agriculture sector.
• From the1990s, these countries implemented trade
  liberalization measures, with mixed success.

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Introduction Brief Analysis Agriculture
Trade Recommendations
Introduction

• LINKING TRADE AGRICULTURE IN SELECT AFRICAN
  COUNTRIES

• However, if well managed, trade can be a powerful
  instrument for growth and poverty reduction, as
  well as a tool to correct imbalances between
  areas of surplus and areas of deficit.
• Therefore, by increasing opportunities and
  expanding markets, trade has a direct impact on
  competitiveness, productivity and livelihoods.

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Research Findings from the Five Country Studies
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Introduction Brief Analysis Agriculture
Trade Recommendations
Brief Country Analysis

• MAIN ECONOMIC INDICATORS

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Introduction Brief Analysis Agriculture
Trade Recommendations
Brief Country Analysis

• MAIN ECONOMIC INDICATORS

• Last decade witnessed good GDP growth rates with
  some variations across countries and between the
  first and second half of the decade.
• Growth attributed to higher commodity prices,
  growing exports volumes, macro-economic policies,
  FDI and debt relief among others.
• Although there are variations among them (e.g. in
  per capita GNI and population size), poverty is
  widespread in all project countries.

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Agriculture
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Agriculture in LLCs

• PRODUCTIVITY

Zambia, Malawi and Uganda
In landlocked Zambia, Malawi and Uganda, the
study focused on agricultural productivity,
livelihoods, and trade.
Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in LLCs

• PRODUCTIVITY (Cond)

Zambia, Malawi and Uganda

• Findings
• Heavily dependent on Agriculture, making the
  sector critical for overall economic development.
• Some strengths, e.g. availability of land,
  comparative advantage in many Ag. Products, and
  large scope for improving agricultural
  productivity.
• However, there are constraints such as
  infrastructure, economic policies, legal
  frameworks and cultural attributes affecting
  agricultural productivity and production.

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in LLCs

• PRODUCTIVITY (Cond)

Zambia, Malawi and Uganda

• Factors Affecting Agricultural Productivity
• Limited availability and poor quality of inputs
  used.
• Only a limited segment of Ag. production is
  carried out on commercial basis.
• Land tenure system

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in Non-LLCs

• FOOD SECURITY

Kenya and Tanzania
In non-landlocked Kenya and Tanzania the study
focused on regional trade and food security
Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in Non-LLCs

• FOOD SECURITY (contd)

Kenya and Tanzania
Both countries face the challenge of Food
Insecurity. (Data indicates that Food
Insecurity in these countries is linked to
poverty.)
Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in Non-LLCs

• FOOD SECURITY (Contd)

Kenya and Tanzania

• Three key elements widely agreed as necessary for
  food security
• Availability of enough food
• Access to the available food
• Stability of availability and access

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in Non-LLCs

• FOOD SECURITY (contd)

Kenya and Tanzania

• A number of factors responsible for this
  situation, that can be categorized as follows
• Economic
• Environmental
• Political and Institutional

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in Non-LLCs

• FOOD SECURITY (contd)

Kenya and Tanzania
ECONOMIC
FACTORS REASONS IMPACTS
Low food production small plots of land low input use plant diseases low investment Short rainfall season Insufficient market information Less band fluctuating availability and access to food
Limited availability of food at household level Sale of a great portion of what they produce to meet other needs Exacerbated by volatility in food prices Less band fluctuating availability and access to food
Fragmented and insufficient market Barriers to trade, e.g. NTBs, SPS. High transport cost and poor storage Poor infrastructure and trade links between producer areas and consumer markets Less band fluctuating availability and access to food
Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in Non-LLCs

• FOOD SECURITY (contd)

Kenya and Tanzania
ENVIRONMENTAL
FACTORS REASONS IMPACTS
Repeated crop losses Continued maize planting in Agro ecology suitable for sorghum, millets, peas etc. Chronic food insecurity in rainfall marginal areas Limited income for Ag. labourers during droughts Limited investment in flood prone areas
Limited vegetation regeneration Degradation in both pastoral and marginal agricultural areas Chronic food insecurity in rainfall marginal areas Limited income for Ag. labourers during droughts Limited investment in flood prone areas
Small proportion of rainfall appropriately used High run off and poor water storage Chronic food insecurity in rainfall marginal areas Limited income for Ag. labourers during droughts Limited investment in flood prone areas
Droughts and Floods Increased frequency and severity Chronic food insecurity in rainfall marginal areas Limited income for Ag. labourers during droughts Limited investment in flood prone areas
Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in Non-LLCs

• FOOD SECURITY (contd)

A case study of Kenya and Tanzania
POLITICAL AND INSTITUTIONAL
FACTORS REASONS IMPACTS
Weak Public and Private institutions Limited resources Limited investment in agriculture and few safety nets to protect farmers from natural and man-made disasters
Shortcomings in Policy Framework Wrong prioritisation Abrupt changes Lack of full implementation Limited investment in agriculture and few safety nets to protect farmers from natural and man-made disasters
Introduction Brief Analysis Agriculture
Trade Recommendations
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Agriculture in Non-LLCs

• FOOD SECURITY (Cond)

Kenya and Tanzania
Trade impacts on food security, either
Positively Negatively
Allows imports of staple food products at affordable prices. Increases livelihood options and hence enhances food security Heavily subsidized food production can depress international food prices, discouraging investment in food production in small countries. Additionally, trade liberalization measures adopted by small developing countries leads to immediate increase in imports, thus worsening balance of payments
Introduction Brief Analysis Agriculture
Trade Recommendations
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Trade
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Trade

• INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES

Introduction Brief Analysis Agriculture
Trade Recommendations
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Trade

• INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES
  (Contd)

• Project countries significantly integrated into
  the world economy if measured by the share of
  imports/exports in their respective GDPs.
• Hence they need to focus more on improving the
  contribution of trade to growth.
• Major exports mostly agricultural commodities
  except for Zambia (dependent on mineral commodity
  exports)

Introduction Brief Analysis Agriculture
Trade Recommendations
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Trade

• INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES
  (Contd)

• Dependence on primary commodity exports exposes
  them to declining terms of trade and price
  shocks.
• Diversification in export markets is a positive
  development because
• Traditional European partners are growing much
  slower than Asian markets
• Diversified export markets provide some cushion
  against shocks in individual markets.
• All project countries run unsustainably high
  levels of current account deficits due to imports
  being much higher than exports, which can lead to
  macro economic instability.

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agricultural Trade

• PROFILE OF PROJECT COUNTRIES

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agricultural Trade

• PROFILE OF PROJECT COUNTRIES (Contd)

• The share of agricultural exports in total
  substantially decreased between 2000 and 2006,
  but it still forms the bulk of exports in these
  countries (1/3 for Kenya, Uganda and Tanzania in
  2006)
• Similarly, share of agricultural imports in total
  has decreased in the period for four project
  countries (almost doubled in Uganda)

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agricultural Trade

• PROFILE OF PROJECT COUNTRIES (Contd)

• While Ag. Exports are mostly cash crops, Ag.
  Imports are mostly food products.
• Possible positive impact on FS if exports
  generate greater purchasing power and if imports
  reach food deficit areas.
• Possible positive impact on livelihood if returns
  on export-oriented production are higher and
  evenly distributed.

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agricultural Trade

• REGIONAL TRADE IN AGRICULTURE

• Potential of Regional Trade
• creating larger markets and reducing dependence
  on traditional export markets
• improving production and productivity
• reducing the trading costs through facilitated
  regional trade infrastructure development
• improving food security by enabling movement from
  surplus to deficit areas within the region

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agricultural Trade

• REGIONAL TRADE IN AGRICULTURE (Contd)

• Production and regulatory constraints to regional
  trade
• Over dependence on single primary commodities
• Exports mostly geared for markets outside Africa
• Production of similar Ag. outputs, not
  complementary for trade between themselves
• Poor Infrastructure a key bottleneck for
  intra-regional trade
• Lack of harmonized regulations
• Non-Tariff Barriers remain in the region 1/3 of
  Africas imports face NTBs, higher than OECD and
  Fast Growing Economies.

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agricultural Trade

• REGIONAL TRADE IN AGRICULTURE (Contd)

• Lack of an enabling agriculture business
  environment
• Virtual absence of production, financing and
  marketing channels among businesses in Africa
• Imperfect and/or asymmetric information on
  opportunities for businesses in African Markets
• Multiple currencies and convertibility problems

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agricultural Trade

• REGIONAL TRADE IN AGRICULTURE (Contd)

• 80 of regional agricultural trade in East Africa
  is informal.
• Reasons
• Restrictive policies such as import tariffs,
  quotas, exchange controls etc.
• Legal requirements for Trade in Agriculture and
  in food products, e.g. compliance with SPS and
  Livestock Clearance Certificate.
• Delays at the border and corruption

Introduction Brief Analysis Agriculture
Trade Recommendations
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Agricultural Trade

• REGIONAL TRADE IN AGRICULTURE (Contd)

• Implications of informal trade
• Positive increases business activities and
  enhances income and employment for poor
  households in the border regions, and allows
  movement of food products from surplus to deficit
  areas in the region
• Negative no incentives to invest in formal
  economy, compromises implementation of health
  safety and environmental standards, and erodes
  government revenues

Introduction Brief Analysis Agriculture
Trade Recommendations
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Trade for LLCs

• LANDLOCKEDNESS AND TRADE FACILITATION

• Constraints to trade specific to LLCs
• The major determinant for trade in the case of
  LLCs is the cost of transportation, resulting
  from distance to the sea and inadequate
  infrastructure. Landlocked LDCs spend almost
  double the percentage of their export earnings
  for transport than the average developing country
• Due to price takers in the international
  market, high transportation costs reduce
  producers incomes and discourage them from
  investing and trading.
• Ag. products are perishable, requiring faster and
  efficient transportation

Introduction Brief Analysis Agriculture
Trade Recommendations
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Trade for LLCs

• LANDLOCKEDNESS AND TRADE FACILITATION (contd)

• Constraints to trade specific to LLCs
• Neighbors are not strong enough economically to
  enable project LLCs to expand their markets
• Project countries are not rich to generate enough
  domestic demand, nor they are resource rich.

Introduction Brief Analysis Agriculture
Trade Recommendations
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Recommendations
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1
1. Recognize agriculture as key to inclusive
growth and development

• Prioritize agriculture development through
  policies at the national, regional and
  international levels, with enhanced support from
  IGOs, RECs, donors, etc.
• Increase government expenditure on agriculture
  (at least 10 of annual budget)
• CSOs should identify and promote an enabling
  environment for private sector led and farmer
  friendly agricultural development

Introduction Brief Analysis Agriculture
Trade Recommendations
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2
2. Improve agricultural productivity

• Strengthen governmental efforts in the sector,
  e.g. farm input subsidies, promotion of organic
  manure, infrastructure etc.
• Promote Farmer-Private sector collaborations
  through Out-Grower Schemes (OGS)
• Encourage small-holder participation in cash-crop
  farming
• Create collaboration networks involving
  researchers, extension services and farmers
  towards productivity improvements.

Introduction Brief Analysis Agriculture
Trade Recommendations
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3
3. Promote formal regional trade

• Government should encourage formal trade by
• reducing tariff and non-tariff barriers
• clamping down illegal payments
• harmonizing SPS and food safety standards at the
  regional level
• The secretariats of RECs should disseminate
  information and knowledge regarding the regional
  market
• Cooperation between regional farmer/trader
  organisations

Introduction Brief Analysis Agriculture
Trade Recommendations
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4
4. Urgently address trade facilitation issues in
landlocked countries

• Strengthen border transit efficiency
• Upgrade facilities, e.g. customs infrastructure,
  transportation systems, etc.
• Facilitate interconnections between countries at
  the regional level

Introduction Brief Analysis Agriculture
Trade Recommendations
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5
5. Develop and implement holistic, balanced and
specific government policies and strategies

• How to implement it
• Governments should adopt comprehensive and
  balanced trade and agriculture policies that are
  inter-linked, tackling bottlenecks of trade and
  distribution mechanisms
• Set up farm service centers to address farmers
  needs inputs, machinery, etc.
• Improve warehouse facilities to better manage
  harvests and food insecurity issues
• Ensure fair trade between farmers and sponsors of
  Out-Grower Schemes (OGS)
• Facilitate commercialization of small-scale
  farmers by building their capacities
• Establish security enabling smallholders to
  access credits
• Invest in irrigation technology
• Coordinate activities of donors to ensure
  effective and efficient use of funds

Introduction Brief Analysis Agriculture
Trade Recommendations
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6
6. Educate and build capacity of small farmers
and traders

• Strength research extension services to farmers
  in order to improve agricultural productivity
• Other stakeholders, such as REC secretariats,
  private sector, donors and CSOs should assist the
  governments educate farmers and traders and
  disseminate information widely

Introduction Brief Analysis Agriculture
Trade Recommendations
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7. Encourage multi-stakeholder consultations and
coordination

• Close collaboration between the ministries of
  agriculture and trade to bridge the gaps between
  trade, rural livelihoods, agriculture and food
  security issues
• Farmers and traders should be involved in policy
  making and implementing processes through formal
  consultative mechanisms
• Farmer/trade regional organisations (e.g., EAGC)
  should take the responsibilities of honest
  brokers at the regional level
• Establish national and regional consultative and
  coordination mechanisms

Introduction Brief Analysis Agriculture
Trade Recommendations
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8
8. Define a more positive role for donors in the
host and home countries

• Donor assistance should shift to land and labour
  productivity improvements
• Donors should collaborate in the implementation
  of agriculture-related projects, e.g. corridors
  in Africa
• Lobby their governments to reduce entry barriers
  for imports from project countries
• Encourage MNCs from their home countries to take
  on corporate social responsibilities

Introduction Brief Analysis Agriculture
Trade Recommendations
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9
9. CSOs as important partners in these endeavours

• CSOs should strengthen research and information
  dissemination to all stakeholders
• Lobby for domestic policies to promote welfare of
  small-scale farmers
• Build international networks among project
  countries
• Lobby for the creation of bodies that act as fair
  arbiters between farmers and agribusiness orgs
• Lobby for increased government spending on
  poverty reducing oriented agricultural projects
• Design programs targeted at sensitizing the
  farmers on the commercial side of agriculture
• Other stakeholders, e.g. governments, REC
  secretariats and donors should recognize the
  importance of CSOs for inclusive development of
  agriculture through trade

Introduction Brief Analysis Agriculture
Trade Recommendations
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Thank You !
Questions ?