Exploiting opportunities in intra-regional trade in food staples in COMESA region
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Exploiting opportunities in intra-regional trade
in food staples in COMESA region
Presentation at the 28th triennial conference of the International
Association of Agricultural Economists (IAAE) Foz do Iguacu, Brazil,
18-24 August 2012
by
Julliet Wanjiku, Maurice Ogada, Paul Guthiga, Joseph Karugia,
Stella Massawe and Jonesmus Wambua
ILRI-ReSAKSS-ECA
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Presentation Outline
Introduction
COMESA poverty levels
Food insecurity
Food price indices
Regional Trade patterns
Basis of intra-regional trade
Challenges of intra-regional trade
Suggested policy interventions
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Poverty levels are high in COMESA region Poverty
survey year
Rural poverty
rate (%)
Urban poverty
rate (%)
National poverty
rate (%)
Burundi 2002 68.7 66.0 68.0
DRC 2004–2005 75.7 61.5 71.3
Egypt 2004–2005 ... ... 20.0
Eritrea 1993–1994 ... ... 53.0
Ethiopia 2004–2005 39.3 35.1 38.7
Kenya 2005–2006 49.1 33.7 45.9
Madagascar 2001 70.1 48.1 76.5
Malawi 2009 43.0 14.0 39.0
Mauritius 1992 ... ... 10.6
Rwanda 2005–2006 ... ... 56.9
Swaziland 2000–2001 75.0 49.0 69.2
Tanzania 2007 38.0 24.0 33.6
Uganda 2005–2006 34.2 13.7 31.7
Zambia 2006 64.0
Zimbabwe 1995–1996 48.0 7.9 34.9
Sources: IMF (2004); NSO (2009); UNCTAD (2005); URP (2007); UBOS (2006); NSO (2007); NISR (2007a);
World Bank (2008); AfDB (2009); World Development indicators http://data.worldbank.org/indicator.
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Food insecurity in COMESA region
Proportion of children under 5 with moderate and severe malnutrition 1996-2005
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Maize production (Tones) in COMESA region
Source: FAOSTAT
Production maize has been quite erratic in most of the countries; maize
yields in a majority of countries are very low and in most cases have been
less than 2 tons/ha
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Food Price Indices 2007=100
The food price index has been increasing
Severity of high food prices varies by countries & seasons
This offers opportunity for increased regional food trade
0
50
100
150
200
250
300
350
400
Ethiopia- Food Total FAO GLOBAL- Food
Kenya- Food & Non-Alcoholic Drink Malawi- Food
MauritiusFood And Non Alcoholic Beverages Rwanda- Food And Non-Alcoholic Beverages
Tanzania- Food and Non alcoholic beverages Uganda- Food
Zambia- Food Djibouti - Food
Data source: FAO Global: FAOSTAT; Kenya: Central bank of Kenya; Ethiopia: Ethiopia central statistical agency; Rwanda: National institute of statistics of Rwanda; Tanzania: Tanzania
national bureau of statistics; Uganda: Uganda bureau of statistics; Malawi: Malawi national statistical office; Madagascar: Madagascar national institute of statistics; Mauritius: Mauritius
government website; Zambia: Zambia central statistical office.
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Maize price volatility
Data source: Tanzania: Bank of Tanzania; Kenya: Ministry of Agriculture; Uganda: Uganda bureau of
statistics; Global: FAOSTAT
Maize prices are more volatile in Kenya than in Tanzania and Uganda. The domestic
maize prices in Kenya, Tanzania and Uganda are more volatile than the global maize
prices.
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Regional Trade Patterns: Intra-COMESA trade flows
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
2006 2007 2008 2009 2010
COMESA Aggregation
Libyan Arab Jamahiriya
Egypt
Sudan
Zambia
Kenya
Democratic Republic of the Congo
Ethiopia
Mauritius
Uganda
Zimbabwe
Madagascar
Malawi
Swaziland
Seychelles
Burundi
Rwanda
Djibouti
Comoros
Eritrea
Value of COMESA exports in US dollar
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Maize imports (Tonnes) for selected COMESA
countries
0
100000
200000
300000
400000
500000
600000
700000
2000 2001 2002 2003 2004 2005 2006 2007 2008
Burundi Ethiopia Kenya Malawi
Mauritius Mozambique Rwanda Uganda
Tanzania Zambia Zimbabwe
Rising in some countries, falling in others
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Increased informal trade ( about 40% of total trade)
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Basis of Regional Trade
Larger regional market base Domestic markets are
smaller and fragmented
Regional approach provides expanded market-about 420 million people in COMESA
•
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Basis of regional trade…
Length of growing period (LGP)
Agro-ecological and political
boundaries do not coincide
This offers potential to
scale up improved
production techniques and
land management
practices across the
boarders
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Basis of regional trade…
Source: Data: FEWS NET,2008
Diversity in agro-ecological zones/spatial climatic variability implying:
diversified agricultural production
even where countries produce similar agricultural products, supplies are available
at different times in a year due to staggered harvesting in the region
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Maize Surplus and Deficit status in
East Africa
Basis of regional trade…
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Production spots and market flows for maize and Livestock in the Greater Horn of Africa (GHA)
Maize Livestock
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Border markets for food staples in ESA
Border markets
enhance movement
of food staples
across countries,
dictated by supply
& relative prices
Source: ReSAKSS-ECA, 2011
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Other factors promoting intra-regional trade in food
staples
Regional production volatility- Areas with low food supply are able
to receive food from areas with increased supply
Substitution among food staples- countries facing shortages of their
main food staples could secure substitutes from other countries e.g.
Maize vs cassava
Varying tastes and preferences- what a country produces is not
necessarily what is preferred locally. Such products could be sold to
where they are needed most.
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Challenges of intra-regional trade
0
10
20
30
40
50
60
70
80
90
NTBs (%) Transport costs
(%)
NTBs (%) Transport costs
(%)
Beef transfer costs Maize transfer costs
pe
rce
nta
ge
Kenya
Tanzania
Uganda
Source: Karugia et al., 2009
High transport costs
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Challenges of intra-regional trade....
Regional barriers to trade: Common NTBs
Administrative requirements mainly licenses, municipal and council permits
Security
Taxes/duties mainly excise and cess duty
Road blocks
Custom barriers
Weighbridges
Corruption e.g. through bribes
NB: There is need to implement the commitment to eliminate NTBs and
prevent entry of new NTBs so as to reap maximum gains from intra-
regional trade
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Other challenges....
Lack of information
Export-import bans
Non predictability: Impact of climate change
High cost of production and low intensity in input use
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Suggested interventions
An integrated regional approach to food security and agricultural
growth rather than national isolated approaches, joint regional food
policies;
Clear follow up and monitoring of implementation of commitments to
eliminating NTBs and prevention of entry of new NTBs at regional
level;
Increased investment in early warning system through joint regional
efforts;
Investment in market information at regional level; and
Investment in improved regional and within country infrastructure:
Through joint government actions.
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Exploit opportunities in regional
diversity
to increase food security
Thank you!