agriculture in development of select african countries
DESCRIPTION
CUTS Geneva Resource Centre. Agriculture in Development of Select African Countries. Key Findings of Five Country Studies. Structure of the presentation. INTRODUCTION BRIEF SYNTHESIS OF FIVE COUNTRY STUDIES Agriculture Trade THEMES AND MAIN RECOMMENDATIONS. Introduction. - PowerPoint PPT PresentationTRANSCRIPT
Key Findings of Five Country Studies
CUTS Geneva Resource CentreCUTS Geneva Resource Centre
INTRODUCTION
BRIEF SYNTHESIS OF FIVE COUNTRY STUDIES
Agriculture
Trade
THEMES AND MAIN RECOMMENDATIONS
Structure of the presentationStructure of the presentation
CUTS GENEVA RESOURCE CENTRE
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Introduction
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)” .
THE FEATS PROJECTTHE FEATS PROJECT
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Introduction
Fostering Equity & Accountability in the Trading System
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.
Introduction THE FEATS PROJECT
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 today’s presentation is based on the findings from these studies
Introduction THE FEATS PROJECT (Cont’d)
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
IntroductionKEY MESSAGES
LINKING TRADE & AGRICULTURE IN SELECT AFRICAN COUNTRIES
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Introduction
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 the1990’s, these countries implemented trade liberalization measures, with mixed success.
LINKING TRADE & AGRICULTURE IN SELECT AFRICAN COUNTRIES
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Introduction
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.
Research Findings from the Five Country Studies
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nsBrief Country AnalysisMAIN ECONOMIC INDICATORS
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nsBrief Country AnalysisMAIN 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.
Agriculture
PRODUCTIVITY
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nsAgriculture in LLCs
In landlocked Zambia, Malawi and Uganda, the study focused on agricultural productivity, livelihoods, and trade.
Zambia, Malawi and Uganda
PRODUCTIVITY (Con’d)
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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.
Zambia, Malawi and Uganda
PRODUCTIVITY (Con’d)
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nsAgriculture in LLCs
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
Zambia, Malawi and Uganda
FOOD SECURITY
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nsAgriculture in Non-LLCs
In non-landlocked Kenya and Tanzania the study focused on regional trade and food security
Kenya and Tanzania
FOOD SECURITY (cont’d)
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nsAgriculture in Non-LLCsKenya and Tanzania
Both countries face the challenge of Food Insecurity.
(Data indicates that Food Insecurity in these countries is linked to poverty.)
FOOD SECURITY (Cont’d)
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nsAgriculture in Non-LLCs
Three key elements widely agreed as necessary for food security:
Availability of enough food
Access to the available food
Stability of availability and access
Kenya and Tanzania
FOOD SECURITY (cont’d)
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nsAgriculture in Non-LLCsKenya and Tanzania
A number of factors responsible for this situation, that can be categorized as follows:
Economic
Environmental
Political and Institutional
FOOD SECURITY (cont’d)
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nsAgriculture in Non-LLCsKenya and Tanzania
FACTORS REASONS IMPACTSLow 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
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
ECONOMIC
FOOD SECURITY (cont’d)
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nsAgriculture in Non-LLCsKenya and Tanzania
FACTORS REASONS IMPACTSRepeated 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
Small proportion of rainfall appropriately used
• High run off and poor water storage
Droughts and Floods • Increased frequency and severity
ENVIRONMENTAL
FOOD SECURITY (cont’d)
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nsAgriculture in Non-LLCsA case study of Kenya and Tanzania
FACTORS REASONS IMPACTSWeak Public and Private institutions
• Limited resources• Limited investment in agriculture and few
safety nets to protect farmers from natural and man-made disastersShortcomings in
Policy Framework
• Wrong prioritisation • Abrupt changes• Lack of full implementation
POLITICAL AND INSTITUTIONAL
FOOD SECURITY (Con’d)
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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
Kenya and Tanzania
Trade
INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES
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Trade
INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES (Cont’d)
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Trade
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)
INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES (Cont’d)
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Trade
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.
PROFILE OF PROJECT COUNTRIES
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Agricultural Trade
PROFILE OF PROJECT COUNTRIES (Cont’d)
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Agricultural Trade
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)
PROFILE OF PROJECT COUNTRIES (Cont’d)
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Agricultural Trade
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.
REGIONAL TRADE IN AGRICULTURE
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Agricultural Trade
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
REGIONAL TRADE IN AGRICULTURE (Cont’d)
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Agricultural Trade
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 Africa’s imports face NTBs, higher than OECD and Fast Growing Economies.
REGIONAL TRADE IN AGRICULTURE (Cont’d)
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Agricultural Trade
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
REGIONAL TRADE IN AGRICULTURE (Cont’d)
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Agricultural Trade
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
REGIONAL TRADE IN AGRICULTURE (Cont’d)
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Agricultural Trade
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
LANDLOCKEDNESS AND TRADE FACILITATION
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Trade for LLCs
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
LANDLOCKEDNESS AND TRADE FACILITATION (cont’d)
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Trade for LLCs
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.
Recommendations
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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
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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.
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3. Promote formal regional trade
Government should encourage formal trade by reducing tariff and non-tariff barriersclamping down illegal paymentsharmonizing 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
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4. Urgently address trade facilitation issues in landlocked countries
Strengthen border transit efficiencyUpgrade facilities, e.g. customs infrastructure, transportation systems, etc.Facilitate interconnections between countries at the regional level
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ns5. 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
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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
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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
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ns8. 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
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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
Thank You !
Questions ?