CLIMATE AND NERGY

Farm trade policies in major economies: effects on EAC food security and agriculture

Fabien TONDEL, Policy Officer, Food Security Programme, ECDPM

8 JULY 2015 | Nairobi, Kenya

AGRICULTURE

CLIMATE AND NERGY

How do international market distortions affect agricultural incentives and food security conditions in Eastern Africa?

• Which international commodity markets are distorted?

• Which agricultural subsectors in Eastern African countries are affected?

• What are the implications of related regional/local market impacts for food security?

Key questions

CLIMATE AND NERGYDeclining farm support in OECD countries…

Source: OECD, 2012

UR Base period

CLIMATE AND NERGYBut increasing farm support in emerging economies

Source: OECD, 2013

CLIMATE AND NERGYFarm policies both in OECD & EEs still distort some markets

Source: OECD, 2013

CLIMATE AND NERGYTransfers to specific commodities in OECD and EEs, 2008-10

Source: OECD, 2011

EU Brazil

CLIMATE AND NERGYTransfers to specific commodities in OECD and EEs, 2008-10

Source: OECD, 2011

China South Africa

CLIMATE AND NERGYHigher international food commodity prices…

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201500

50

100

150

200

250

300

350

400

Food Price Index Meat Price Index Dairy Price IndexCereals Price Index Oils Price Index Sugar Price Index

Source: FAO, 2015(Nominal prices)

CLIMATE AND NERGY

Domestic availability(1000 mt, 2014/15)

Utilisation(1000 mt, 2014/15)

Burundi 262 398Kenya 3.994 6.554Rwanda 762 902Tanzania 7.961 8.796Uganda 3.457 3900

Cereal trade balances in Eastern Africa

Source: IFPRI, 2014

CLIMATE AND NERGYAnd rising food prices in Eastern Africa

Food prices in EA

Source: FEWS NET, 2015(Nominal prices)

CLIMATE AND NERGYExample: sugar sector in Tanzania

Left axis, sugar cane production in tonnes; right axis, sugar production and trade in tonnes

Import surges

Source: TSB & UNCTAD, 2015

CLIMATE AND NERGYImproving food security in EA but some variability across & within countries

Source: IFPRI, 2014

CLIMATE AND NERGY

• Increasingly competitive global markets for agricultural commodities (traditional OECD exporters, newer EE exporters)…

• In the Americas, expected growth in exports of oilseeds, sugar, meat, cotton and ethanol• In Asia, increasing agro-food imports, but continued exports of rice, vegetable oils and fish will remain strong; India’s

cotton exports will increase• In Africa, increasing intra-African trade

• Preference erosion and increasing price and quality competition in OECD markets for tropical agricultural products (product regulations (SPS, TBT) and private standards); increasing demand for reciprocity (EPAs)…

• South-South trade prospects improving (RTAs)…

• And rising competitiveness and quality requirements in South-South and regional markets too

• Inadequate domestic policy environment often a major cause of low performance in agro-food sectors (productivity, quality, value chain efficiency, value addition, etc.)

Take-away messages

CLIMATE AND NERGY

• Besides cotton, sectors to pay attention to in the negotiations are rice, dairy products, meat products and sugar, both in OECD countries and emerging economies

• Need to better enforce trade policies in the EAC (common external tariff for sensitive products)

• Need for a better business environment for farmers and other value chain operators, and for inclusive, private-sector-led approaches to agricultural development; need to seize regional market opportunities and the potential benefits from foreign trade and investment

• CAADP remains a central policy framework (political support, inclusiveness, public investments, private-sector driven agricultural development, alignment and coordination of development partners and mutual accountability)

• Mobilization of resources: innovative finance and trade facilitation for regional integration

Take-away messages