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