FOOD CRISIS – IS REGIONAL TRADE THE ANSWER: THE CASE OF COMESA Cris MUYUNDA, PhD Senior...
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Transcript of FOOD CRISIS – IS REGIONAL TRADE THE ANSWER: THE CASE OF COMESA Cris MUYUNDA, PhD Senior...
FOOD CRISIS – IS FOOD CRISIS – IS REGIONAL TRADE THE REGIONAL TRADE THE ANSWER: THE CASE OF ANSWER: THE CASE OF
COMESACOMESACris MUYUNDA, PhDCris MUYUNDA, PhD
Senior Agricultural Advisor, COMESA Senior Agricultural Advisor, COMESA
OUTLINE OF PRESENTATIONOUTLINE OF PRESENTATION COMESA OVERVIEW : MARKET COMESA OVERVIEW : MARKET
PARAMETERS PARAMETERS
STATE OF AGRICULTURE & FOOD STATE OF AGRICULTURE & FOOD SECURITY SITUATIONSECURITY SITUATION
MAJOR ISSUES OF CONCERN OVER FOOD MAJOR ISSUES OF CONCERN OVER FOOD PRICESPRICES
RESPONSE FROM COMESA and NEPADRESPONSE FROM COMESA and NEPAD MALAWI FOOD SECURITY SUCCESS STORYMALAWI FOOD SECURITY SUCCESS STORY A CASE FOR EXPANDING REGIONAL TRADE A CASE FOR EXPANDING REGIONAL TRADE KEY TRANSPORTATION AND RELATED KEY TRANSPORTATION AND RELATED
ISSUESISSUES CONCLUSIONS-IS REGIONAL TRADE THE CONCLUSIONS-IS REGIONAL TRADE THE
ANSWER?ANSWER?
COMESA OVERVIEW : KEY COMESA OVERVIEW : KEY PARAMETERSPARAMETERS
FORMED IN 1994 FROM PTA, itself est. 1982FORMED IN 1994 FROM PTA, itself est. 1982 POPULATION : POPULATION : 400 million – big potential 400 million – big potential
marketmarket 19 Member States: 9 Landlocked; 4 are Island 19 Member States: 9 Landlocked; 4 are Island
(3 very small)(3 very small) Intra-COMESA trade: US$7.5 billion (2007); Intra-COMESA trade: US$7.5 billion (2007);
Extra-COMESA exports: US$90 billion ; total Extra-COMESA exports: US$90 billion ; total trade US$160 billiontrade US$160 billion
US$3.4 billion (about 40%) of intra COMESA-US$3.4 billion (about 40%) of intra COMESA-trade is food and agricultural raw materialstrade is food and agricultural raw materials
AGRICULTURE IN COMESAAGRICULTURE IN COMESA
32% of COMESA GDP32% of COMESA GDP
65% of Raw Materials for Industry: 65% of Raw Materials for Industry: Agricultural commodities are major Agricultural commodities are major drivers for growth in intra-COMESA drivers for growth in intra-COMESA trade. trade.
80% of employment 80% of employment
COMESA AGRICULTURAL SECTOR COMESA AGRICULTURAL SECTOR CHALLENGESCHALLENGES
TECHNOLOGICAL CONSTRAINTS MARKET RELATED
CONSTRAINTS
POLICY RELATED CONSTRAINTS
Low Productivity
SITUATION ON THE GROUND IN SITUATION ON THE GROUND IN COMESACOMESA
Low Yields characterize Low Yields characterize COMESA agricultureCOMESA agriculture
Biggest Customer of the Biggest Customer of the WFPWFP
Low Value, Uncompetitive Low Value, Uncompetitive AgricultureAgriculture
(1) PER CAPITA AGRICULTURAL (1) PER CAPITA AGRICULTURAL PRODUCTION IS PRODUCTION IS FALLINGFALLING
75
100
125
150
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Inde
x (b
ase:
196
1=10
0)
World
Africa South of Sahara
Latin Amer & Caribbean
South Asia
(2) TRADE VALUE AS % OF GDP (2) TRADE VALUE AS % OF GDP HIGH (62%) BUT WORLD SHARE HIGH (62%) BUT WORLD SHARE
OF TRADE LOW (2%)OF TRADE LOW (2%)
0
10
20
30
40
50
60
70
TRADE AS % OF GDP
AFRICA SOUTHAMERICA
ASIA
CONTINENT
(3) NET RESULT: HUNGER (3) NET RESULT: HUNGER MAPMAP
FOOD SECURITY SITUATION IN FOOD SECURITY SITUATION IN COMESACOMESA
DISCOUNTING EMEGENCY FOOD AID DUE TO UNFORESEEN ISSUES:DISCOUNTING EMEGENCY FOOD AID DUE TO UNFORESEEN ISSUES:
2004/2005: 2004/2005: 11 MEMBER STATES11 MEMBER STATES WERE IN FOOD DEFICITS WERE IN FOOD DEFICITS AND REQUIRED EXTERNAL FOODAND REQUIRED EXTERNAL FOOD
2005/2006: 2005/2006: 5 MEMBER STATES5 MEMBER STATES EXPERIENCED FOOD EXPERIENCED FOOD DEFICITS, BUT THE WHOLE REGION HAD A SURPLUS OF DEFICITS, BUT THE WHOLE REGION HAD A SURPLUS OF 550,000 MT.550,000 MT.
2006/2007: 2006/2007: 2 MEMBER STATES2 MEMBER STATES EXPERIENCED FOOD DEFICITS, EXPERIENCED FOOD DEFICITS, BUT WHOLE REGION HAD A SURPLUS OF 1,500,000 MT.BUT WHOLE REGION HAD A SURPLUS OF 1,500,000 MT.
2007/2008: …….(assessments ongoing, about 5 will need external 2007/2008: …….(assessments ongoing, about 5 will need external support)support)
OVERALL: MAJOR OVERALL: MAJOR INFRASTRUCTURE / DISTRIBUTION CHALLENGEINFRASTRUCTURE / DISTRIBUTION CHALLENGE
NEGATIVE IMPACT OF HIGH NEGATIVE IMPACT OF HIGH PRICESPRICES
AFFECTS AFFECTS POVERTY LEVELSPOVERTY LEVELS (Studies indicate (Studies indicate 10% 10% increase in food prices leads to 2.3% increase increase in food prices leads to 2.3% increase in poverty in COMESA)in poverty in COMESA)
HAS IMPACT ON HAS IMPACT ON NUTRITIONAL STATUSNUTRITIONAL STATUS OF THE OF THE CONTINENT WHERE ALREADY CONTINENT WHERE ALREADY SOME 200 MILLION SOME 200 MILLION PEOPLE ARE CHRONICALLY MALNOURISHEDPEOPLE ARE CHRONICALLY MALNOURISHED
HAS IMPACT ON HAS IMPACT ON POLITICAL SITUATIONPOLITICAL SITUATION NATIONALLY, REGIONALLYNATIONALLY, REGIONALLY
COULD AFFECT COULD AFFECT PEACE AND SECURITYPEACE AND SECURITY SITUATION SITUATION
POSITIVE IMPACT OF HIGH POSITIVE IMPACT OF HIGH PRICESPRICES
HIGH FOOD PRICES BRING ECONOMIC HIGH FOOD PRICES BRING ECONOMIC GROWTH IN AGRICULTURAL LED GROWTH IN AGRICULTURAL LED ECONOMIES: ECONOMIES: AGRICULTURE is 32% of AGRICULTURE is 32% of COMESA GDP COMESA GDP
GROWTH REDUCES POVERTY: GROWTH REDUCES POVERTY: 1% 1% INCREASE IN OVERALL GROWTH INCREASE IN OVERALL GROWTH ELIMINATES 6 MILLION PEOPLE OUT ELIMINATES 6 MILLION PEOPLE OUT OF POVERTYOF POVERTY
MAJOR FOOD SECURITY MAJOR FOOD SECURITY SUCCES STORY : MALAWISUCCES STORY : MALAWI
2004/2005: 2004/2005: SERIOUS FOOD SERIOUS FOOD DEFICIT: 800,000 MT; DEFICIT: 800,000 MT; INTERNATIONAL FOOD APPEALINTERNATIONAL FOOD APPEAL
2005/2006: 2005/2006: 400,000 MT400,000 MT FOOD FOOD SURPLUSSURPLUS
2006/2007: 2006/2007: 1,200,000 MT1,200,000 MT FOOD SURPLUSFOOD SURPLUS
MALAWI: MAJOR MALAWI: MAJOR CONTRIBUTING FACTORS TO CONTRIBUTING FACTORS TO
LAND LOCKED COUNTRY LAND LOCKED COUNTRY “SUCCESS”“SUCCESS”
FERTILISER SUBSIDY PROGRAMFERTILISER SUBSIDY PROGRAM
POLICY FOCUS: BUDGET IS ON THE POLICY FOCUS: BUDGET IS ON THE INCREASEINCREASE
COMPREHENSIVE FOCUS: IRRIGATION, COMPREHENSIVE FOCUS: IRRIGATION, FERTILIZER, MARKETING (ACTIVE FERTILIZER, MARKETING (ACTIVE COMMODITY EXCHANGE)COMMODITY EXCHANGE)
COMESA RESPONSESCOMESA RESPONSES HASTEN HASTEN REGIONAL INTEGRATIONREGIONAL INTEGRATION: : FREE TRADE AREA; FREE TRADE AREA;
CUSTOMS UNION (2008)CUSTOMS UNION (2008)
CAADP: FOUR PILLAR FOCUS TO CAADP: FOUR PILLAR FOCUS TO COMPREHENSIVELY COMPREHENSIVELY DEVELOP AGRICULTURE (Land/water, Markets/Infr, DEVELOP AGRICULTURE (Land/water, Markets/Infr, Tech)Tech)
SPECIFIC FOOD PRICE CRISIS ACTIONS: SPECIFIC FOOD PRICE CRISIS ACTIONS: (i)(i) JOINT REGIONAL PLAN: JOINT REGIONAL PLAN: (i) Inputs supply to (i) Inputs supply to
accelerate food commodity production – similar accelerate food commodity production – similar to NEPAD response (ii) Improved risk to NEPAD response (ii) Improved risk management and vulnerability analysis, and (iii) management and vulnerability analysis, and (iii) Enhanced regional market access and easing of Enhanced regional market access and easing of modalities for doing business in staple crops.modalities for doing business in staple crops.
(ii)(ii) ACTESA (Independent Institution: Main Medium to Long ACTESA (Independent Institution: Main Medium to Long Term Action): Staple Crops: MAIZE, RICE, CASSAVA, Term Action): Staple Crops: MAIZE, RICE, CASSAVA, BANANA, BEANS: POLICIES, SERVICES, BANANA, BEANS: POLICIES, SERVICES, COMMERCIALIZATIONCOMMERCIALIZATION
(iii)(iii) Development Corridors; NOT JUST TRANSPORT Development Corridors; NOT JUST TRANSPORT CORRIDORSCORRIDORS
KEY ELEMENTS OF ACTESA – KEY ELEMENTS OF ACTESA – THE REGIONAL MEDIUM TO THE REGIONAL MEDIUM TO
LONG TERM PLAN FOR STAPLE LONG TERM PLAN FOR STAPLE CROPS DEVELOPMENT:CROPS DEVELOPMENT:
POLICIESPOLICIES
SERVICESSERVICES
COMMERCIALIZATIONCOMMERCIALIZATION
CAADP PILLARSCAADP PILLARS
LAND AND WATER MANAGEMENTLAND AND WATER MANAGEMENT
TRADE AND MARKETING TRADE AND MARKETING INFRASTRUCTUREINFRASTRUCTURE
FOOD AND NUTRITION SECURITYFOOD AND NUTRITION SECURITY
AGRICULTURAL RESEARCH AND AGRICULTURAL RESEARCH AND TECHNOLOGY ADOPTIONTECHNOLOGY ADOPTION
THE CASE FOR ENHANCED THE CASE FOR ENHANCED REGIONAL TRADE IN COMESAREGIONAL TRADE IN COMESA
ANNUAL COMESA MAIZE IMPORTS OVER THE PERIOD 2004 – 2007:ANNUAL COMESA MAIZE IMPORTS OVER THE PERIOD 2004 – 2007:TOTAL: $500 - $850 millionTOTAL: $500 - $850 millionAMOUNT AMOUNT SOURCED FROM WITHIN COMESA: $30 - $40 millionSOURCED FROM WITHIN COMESA: $30 - $40 million
HENCE BIG OPPORTUNITY AND SCOPE TO EXPAND HENCE BIG OPPORTUNITY AND SCOPE TO EXPAND REGIONAL TRADEREGIONAL TRADE
CURRENT COMMERCIAL FOOD DEMAND IN AFRICA’s URBAN CURRENT COMMERCIAL FOOD DEMAND IN AFRICA’s URBAN MARKETS: $50 billionMARKETS: $50 billionBy 2025, this is expected to be: $150 billionBy 2025, this is expected to be: $150 billion
WILL NEED COMPETITIVENESS IN MOVING FOOD WITHIN WILL NEED COMPETITIVENESS IN MOVING FOOD WITHIN THE THE
REGION FOR REGIONAL STABILITYREGION FOR REGIONAL STABILITY
REGIONAL TRADE ALSO KEY FOR PROVIDING MARKET REGIONAL TRADE ALSO KEY FOR PROVIDING MARKET OUTLET OUTLET
FOR RURAL PRODUCERSFOR RURAL PRODUCERS
KEY KEY TRANSPORTATION/RELATED TRANSPORTATION/RELATED
ISSUES ISSUESISSUES ISSUES LANDLOCKED COUNTRIES, 9 out of 19 countries LANDLOCKED COUNTRIES, 9 out of 19 countries
(up to 55% of commodity costs)(up to 55% of commodity costs)
TRANSPORT DELAYS, World Bank Study TRANSPORT DELAYS, World Bank Study (each (each delayed day at the border is equivalent to 600 -delayed day at the border is equivalent to 600 -1,000 km of covered distance)1,000 km of covered distance)
ISLAND NATIONS, Net Importers of Food – food ISLAND NATIONS, Net Importers of Food – food prices affecting themprices affecting them
POOR INTEGRATION FOCUS: EXPORT BANSPOOR INTEGRATION FOCUS: EXPORT BANS
Additional Transport ChallengesAdditional Transport Challenges Lack of diversified transport systems based on inter and Lack of diversified transport systems based on inter and
multi modal transport corridors comprising road, rail, multi modal transport corridors comprising road, rail, water and air transport. water and air transport.
Poor physical connectivity: number of Poor physical connectivity: number of kilometers of kilometers of paved road per million people is about 60.paved road per million people is about 60.
Compare with Brazil and India: Compare with Brazil and India: over 1,000 km per over 1,000 km per millionmillion. .
Developed World, the kilometers of paved road per Developed World, the kilometers of paved road per million people is million people is about 20,000about 20,000. .
Additional cross cutting challengeAdditional cross cutting challenge: Sources of : Sources of energy:energy: need to aggressively explore hydro-power, bio- need to aggressively explore hydro-power, bio-fuels and nuclear energy given the abundant resources fuels and nuclear energy given the abundant resources in the region. in the region.
POTENTIAL POTENTIAL SOLUTIONS/CONCLUSIONSSOLUTIONS/CONCLUSIONS
HARMONIZED ROAD TRANSITHARMONIZED ROAD TRANSIT SYSTEMS, COMESA CARRIER’S SYSTEMS, COMESA CARRIER’S LICENCE, AXLE LOADING AND MAXIMUM LOADING LICENCE, AXLE LOADING AND MAXIMUM LOADING DIMENSIONS, COMESA YELLOW CARD INSURANCEDIMENSIONS, COMESA YELLOW CARD INSURANCE
COMMON INVESTMENT AREACOMMON INVESTMENT AREA, RECOGNISES , RECOGNISES COMESA INVESTOR – REDUCED COST OF COMESA INVESTOR – REDUCED COST OF DOING BUSINESSDOING BUSINESS
DEVELOPMENT CORRIDORS, not just transport corridorsDEVELOPMENT CORRIDORS, not just transport corridors
CAADP: INCREASED INVESTMENT: 10% by Govt: development CAADP: INCREASED INVESTMENT: 10% by Govt: development of LAND AND WATER, MARKETS/INFRASTRUCTURE, of LAND AND WATER, MARKETS/INFRASTRUCTURE, FOOD/NUTRITION SECURITY, TECHNOLOGY/EDUCATION FOOD/NUTRITION SECURITY, TECHNOLOGY/EDUCATION
PPPs are key: In COMESA good examples are Alliance for PPPs are key: In COMESA good examples are Alliance for Commodity Trade (ACTESA), Livestock (RELPA), Policy for Commodity Trade (ACTESA), Livestock (RELPA), Policy for Markets (AAMP). We need to forge more real impact PPPsMarkets (AAMP). We need to forge more real impact PPPs
IS REGIONAL TRADE THE IS REGIONAL TRADE THE ANSWER? ANSWER?
PARTLY YES, BUT PARTLY YES, BUT COMPREHENSIVE RESPONSESCOMPREHENSIVE RESPONSES MUST GO MUST GO BEYOND CREATING INSTRUMENTS FOR TRADE AND ENSURE:BEYOND CREATING INSTRUMENTS FOR TRADE AND ENSURE:
GOOD POLICIESGOOD POLICIES (Trade, Investment, Specific Sectors) (Trade, Investment, Specific Sectors)
SERVICES TO FARMERSSERVICES TO FARMERS (Financial services, (Financial services, Contract/Arbitration Services, Grading/Standards, Market Contract/Arbitration Services, Grading/Standards, Market Information, etc)Information, etc)
COMMERCIAL INTEGRATION OF PRODUCERSCOMMERCIAL INTEGRATION OF PRODUCERS (STRENGTHEN PRODUCER ASSOCIATIONS, TRADERS); (STRENGTHEN PRODUCER ASSOCIATIONS, TRADERS); Education/Training in marketing, new technologies uptakeEducation/Training in marketing, new technologies uptake
In Short In Short CAADP implementation, as part and parcel of CAADP implementation, as part and parcel of trade promotion, to detrade promotion, to deal with the suppy-side al with the suppy-side
constraint.constraint.
THANK YOUTHANK YOU