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OUTLINE OF PRESENTATION

FOOD CRISIS – IS REGIONAL TRADE THE ANSWER: THE CASE OF COMESA Cris MUYUNDA, PhD Senior Agricultural Advisor, COMESA. OUTLINE OF PRESENTATION. COMESA OVERVIEW : MARKET PARAMETERS STATE OF AGRICULTURE & FOOD SECURITY SITUATION MAJOR ISSUES OF CONCERN OVER FOOD PRICES

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OUTLINE OF PRESENTATION

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  1. FOOD CRISIS – IS REGIONAL TRADE THE ANSWER: THE CASE OF COMESACris MUYUNDA, PhDSenior Agricultural Advisor, COMESA

  2. OUTLINE OF PRESENTATION • COMESA OVERVIEW : MARKET PARAMETERS • STATE OF AGRICULTURE & FOOD SECURITY SITUATION • MAJOR ISSUES OF CONCERN OVER FOOD PRICES • RESPONSE FROM COMESA and NEPAD • MALAWI FOOD SECURITY SUCCESS STORY • A CASE FOR EXPANDING REGIONAL TRADE • KEY TRANSPORTATION AND RELATED ISSUES • CONCLUSIONS-IS REGIONAL TRADE THE ANSWER?

  3. FORMED IN 1994 FROM PTA, itself est. 1982 POPULATION : 400 million – big potential market 19 Member States: 9 Landlocked; 4 are Island (3 very small) Intra-COMESA trade: US$7.5 billion (2007); Extra-COMESA exports: US$90 billion ; total trade US$160 billion US$3.4 billion (about 40%) of intra COMESA-trade is food and agricultural raw materials COMESA OVERVIEW : KEY PARAMETERS

  4. AGRICULTURE IN COMESA • 32% of COMESA GDP • 65% of Raw Materials for Industry: Agricultural commodities are major drivers for growth in intra-COMESA trade. • 80% of employment

  5. COMESA AGRICULTURAL SECTOR CHALLENGES Low Productivity TECHNOLOGICAL CONSTRAINTS MARKET RELATED CONSTRAINTS POLICY RELATED CONSTRAINTS

  6. SITUATION ON THE GROUND IN COMESA • Low Yields characterize COMESA agriculture • Biggest Customer of the WFP • Low Value, Uncompetitive Agriculture

  7. (1) PER CAPITA AGRICULTURAL PRODUCTION IS FALLING

  8. (2) TRADE VALUE AS % OF GDP HIGH (62%) BUT WORLD SHARE OF TRADE LOW (2%)

  9. (3) NET RESULT: HUNGER MAP

  10. FOOD SECURITY SITUATION IN COMESA DISCOUNTING EMEGENCY FOOD AID DUE TO UNFORESEEN ISSUES: • 2004/2005: 11 MEMBER STATES WERE IN FOOD DEFICITS AND REQUIRED EXTERNAL FOOD • 2005/2006: 5 MEMBER STATES EXPERIENCED FOOD DEFICITS, BUT THE WHOLE REGION HAD A SURPLUS OF 550,000 MT. • 2006/2007: 2 MEMBER STATES EXPERIENCED FOOD DEFICITS, BUT WHOLE REGION HAD A SURPLUS OF 1,500,000 MT. • 2007/2008: …….(assessments ongoing, about 5 will need external support) • OVERALL: MAJOR INFRASTRUCTURE / DISTRIBUTION CHALLENGE

  11. NEGATIVE IMPACT OF HIGH PRICES • AFFECTS POVERTY LEVELS (Studies indicate 10% increase in food prices leads to 2.3% increase in poverty in COMESA) • HAS IMPACT ON NUTRITIONAL STATUS OF THE CONTINENT WHERE ALREADY SOME 200 MILLION PEOPLE ARE CHRONICALLY MALNOURISHED • HAS IMPACT ON POLITICAL SITUATION NATIONALLY, REGIONALLY • COULD AFFECT PEACE AND SECURITY SITUATION

  12. POSITIVE IMPACT OF HIGH PRICES • HIGH FOOD PRICES BRING ECONOMIC GROWTH IN AGRICULTURAL LED ECONOMIES: AGRICULTURE is 32% of COMESA GDP • GROWTH REDUCES POVERTY: 1% INCREASE IN OVERALL GROWTH ELIMINATES 6 MILLION PEOPLE OUT OF POVERTY

  13. 2004/2005: SERIOUS FOOD DEFICIT: 800,000 MT; INTERNATIONAL FOOD APPEAL 2005/2006: 400,000 MT FOOD SURPLUS 2006/2007: 1,200,000 MT FOOD SURPLUS MAJOR FOOD SECURITY SUCCES STORY : MALAWI

  14. MALAWI: MAJOR CONTRIBUTING FACTORS TO LAND LOCKED COUNTRY “SUCCESS” • FERTILISER SUBSIDY PROGRAM • POLICY FOCUS: BUDGET IS ON THE INCREASE • COMPREHENSIVE FOCUS: IRRIGATION, FERTILIZER, MARKETING (ACTIVE COMMODITY EXCHANGE)

  15. COMESA RESPONSES • HASTEN REGIONAL INTEGRATION: FREE TRADE AREA; CUSTOMS UNION (2008) • CAADP: FOUR PILLAR FOCUS TO COMPREHENSIVELY DEVELOP AGRICULTURE (Land/water, Markets/Infr, Tech) • SPECIFIC FOOD PRICE CRISIS ACTIONS: • JOINT REGIONAL PLAN: (i) Inputs supply to accelerate food commodity production – similar to NEPAD response (ii) Improved risk management and vulnerability analysis, and (iii) Enhanced regional market access and easing of modalities for doing business in staple crops. • ACTESA (Independent Institution: Main Medium to Long Term Action): Staple Crops: MAIZE, RICE, CASSAVA, BANANA, BEANS: POLICIES, SERVICES, COMMERCIALIZATION • Development Corridors; NOT JUST TRANSPORT CORRIDORS

  16. KEY ELEMENTS OF ACTESA – THE REGIONAL MEDIUM TO LONG TERM PLAN FOR STAPLE CROPS DEVELOPMENT: • POLICIES • SERVICES • COMMERCIALIZATION

  17. CAADP PILLARS • LAND AND WATER MANAGEMENT • TRADE AND MARKETING INFRASTRUCTURE • FOOD AND NUTRITION SECURITY • AGRICULTURAL RESEARCH AND TECHNOLOGY ADOPTION

  18. THE CASE FOR ENHANCED REGIONAL TRADE IN COMESA ANNUAL COMESA MAIZE IMPORTS OVER THE PERIOD 2004 – 2007: TOTAL: $500 - $850 million AMOUNT SOURCED FROM WITHIN COMESA: $30 - $40 million HENCE BIG OPPORTUNITY AND SCOPE TO EXPAND REGIONAL TRADE CURRENT COMMERCIAL FOOD DEMAND IN AFRICA’s URBAN MARKETS: $50 billion By 2025, this is expected to be: $150 billion WILL NEED COMPETITIVENESS IN MOVING FOOD WITHIN THE REGION FOR REGIONAL STABILITY REGIONAL TRADE ALSO KEY FOR PROVIDING MARKET OUTLET FOR RURAL PRODUCERS

  19. KEY TRANSPORTATION/RELATED ISSUES ISSUES • LANDLOCKED COUNTRIES, 9 out of 19 countries (up to 55% of commodity costs) • TRANSPORT DELAYS, World Bank Study (each delayed day at the border is equivalent to 600 -1,000 km of covered distance) • ISLAND NATIONS, Net Importers of Food – food prices affecting them • POOR INTEGRATION FOCUS: EXPORT BANS

  20. Additional Transport Challenges • Lack of diversified transport systems based on inter and multi modal transport corridors comprising road, rail, water and air transport. • Poor physical connectivity: number of kilometers of paved road per million people is about 60. • Compare with Brazil and India: over 1,000 km per million. • Developed World, the kilometers of paved road per million people is about 20,000. • Additional cross cutting challenge: Sources of energy: need to aggressively explore hydro-power, bio-fuels and nuclear energy given the abundant resources in the region.

  21. POTENTIAL SOLUTIONS/CONCLUSIONS • HARMONIZED ROAD TRANSIT SYSTEMS, COMESA CARRIER’S LICENCE, AXLE LOADING AND MAXIMUM LOADING DIMENSIONS, COMESA YELLOW CARD INSURANCE • COMMON INVESTMENT AREA, RECOGNISES COMESA INVESTOR – REDUCED COST OF DOING BUSINESS • DEVELOPMENT CORRIDORS, not just transport corridors • CAADP: INCREASED INVESTMENT: 10% by Govt: development of LAND AND WATER, MARKETS/INFRASTRUCTURE, FOOD/NUTRITION SECURITY, TECHNOLOGY/EDUCATION • PPPs are key: In COMESA good examples are Alliance for Commodity Trade (ACTESA), Livestock (RELPA), Policy for Markets (AAMP). We need to forge more real impact PPPs

  22. IS REGIONAL TRADE THE ANSWER? PARTLY YES, BUT COMPREHENSIVE RESPONSES MUST GO BEYOND CREATING INSTRUMENTS FOR TRADE AND ENSURE: GOOD POLICIES (Trade, Investment, Specific Sectors) SERVICES TO FARMERS (Financial services, Contract/Arbitration Services, Grading/Standards, Market Information, etc) COMMERCIAL INTEGRATION OF PRODUCERS (STRENGTHEN PRODUCER ASSOCIATIONS, TRADERS); Education/Training in marketing, new technologies uptake In Short CAADP implementation, as part and parcel of trade promotion, to deal with the suppy-side constraint.

  23. THANK YOU

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