FEATS Project National Inception Meeting Panafric Hotel, Nairobi, Kenya, 14 th October, 2008. ROLE OF THE MINISTRY OF AGRICULTURE IN THE TRADE POLICY MAKING PROCESS PRESENTED AT THE NATIONAL INCEPTION MEETING ON “ FOSTERING EQUITY AND ACCOUNTABILITY IN THE TRADING SYSTEM (FEATS) PROJECT 14TH OCTOBER, 2008, PANAFRIC HOTEL, NAIROBI KENYA BY ELIAZAR B. MUGA ECONOMIST – MINISTRY OF AGRICULTURE OCTOBER, 2008
1.1 The Agriculture, Livestock, Fisheries and Rural Development Sector comprises the Ministries of Agriculture, Livestock Development, Fisheries Development, Forestry and Wildlife, Water and Irrigation, Lands, Regional Development Authorities, State for Development of Northern Kenya and Other Arid Lands, Environment and Mineral Resources, State for Special Programmes, Co-operative Development and Marketing and State for Planning, National development and Vision 2030.
1.2 The agricultural sector dominance in the economy has remained strong as reflected by its share in the national economy, job creation, food security, and linkages with other sectors including industrial development. In 2006, the sector directly contributed 23.6% to the Gross Domestic Product (GDP); slightly lower than 25.2% recorded in 2003; attributed to a gradual shift in the country’s economic mix towards other sectors including a buoyant services sector. This is the scenario envisaged where focus shifts towards commercialization of agriculture as expected in a modernizing economy.
1.3 A further 27% of GDP is realized through linkages with manufacturing, distribution and other service related sectors. Moreover, it is estimated that 45% of government revenue is derived from agriculture, while the sector contributes over 75% of industrial raw materials and 60.0% of the export earnings apart from being the largest employer in the economy, accounting for over 60% of the total employment.
1.4 In the past five years, the Government has embraced broad-based growth and development strategies in the agricultural sector to address food security and hunger, unemployment, poverty and enhance national equity through the Economic Recovery Strategy for Wealth and Employment Creation (ERS 2003-2007). Accordingly the sector recovery thrust has centered on the Strategy for Revitalizing Agriculture (SRA)
SRA was launched in March 2004 and which provides the necessary policies needed to transform the sector to effectively provide food and nutritional security, increased incomes and gainful employment, promotion of farmers’ productivity and lowering of the cost of agricultural inputs.
1.5 Agricultural crop production is undertaken by over 5 million smallholders subsisting on an average of 2-3 hectares and engaged in different types of agricultural activities in the country. Out of these, 2.9 million are resource poor who subsist on less than 1 ha and are usually entrapped in a poverty cycle, lack capacity and resources to enable them produce and up-scale current efforts. Horticulture and food crops make up to 65% of agricultural GDP, while horticulture and industrial crops account for 90% of agricultural exports.
1.6 Livestock production is one of the major activities in the sector. It is practiced in all parts of the country either under the pastoral extensive system in the Arid and Semi Arid Lands (ASALs) or under intensive, ranching and smallholder systems. The pastoral and commercial ranch systems traditionally contribute to the supply of beef and small stock meat. Livestock production in the ASAL accounts for nearly 90% of the employment opportunities and nearly 95% of the family incomes. It also accounts for about 40% of the Agricultural GDP and about 30% of the farm gate value for agricultural commodities. In the high rainfall areas of the country, dairy production is a key source of income to over 600,000 households.
1.7 Fisheries production is a major source of livelihood for communities living around Lake Victoria and the coastal regions of Kenya. It employs over 60,000 fishermen directly while over 600,000 people depend on the sub sector indirectly for their livelihood through linkages in fish processing and trade. Kenya currently earns an average of Kshs. 4 billion annually through fish exports.
1.8 Despite the great potential of the livestock and fisheries sub-sectors, the majority of livestock farmers and the fisher folk have remained poor and food insecure mainly due to low productivity, high cost of inputs, poor market access and stringent quality requirements in international markets. Therefore, there is need to revitalize the sub sectors and increase their productivity through improving marketing systems and infrastructure, enhancing livestock disease control and extension services and encouraging private-public partnerships in the provision of extension and veterinary services for both the sedentary and pastoral animal production systems.
2.6 The subsequent sections in this paper will discuss among others:- the extent to which the Ministry of Agriculture has been Consulted during the Trade Policy Making Process; actual experience of the Ministry in Trade Policy Making process; the Ministry involvement in developing the country’s position for the WTO and the ongoing EPA negotiations; the Ministry’s linkage with the Ministry of Trade on Trade Policy issues; challenges in Trade Policy Making Process and a conclusion.
3. Extent of Consultation with the Ministry of Agriculture during the Trade Policy Making Process:
3.1 The World Trade Organization (WTO) is the umbrella international organization responsible for the administration of global rules of trade between nations. WTO provides the principal contractual obligations determining how governments frame and implement domestic trade laws and regulations. It also provides a platform for negotiations amongst members on trade matters on a continuous basis through periodic rounds.
3.4 The Ministry of Agriculture is a member of the National Committee on World Trade Organization (NCWTO). The Ministry of Agriculture has not only effectively participated in Trade Policy Making Process but also chairs the National World Trade Organization (WTO) Sub-Committee on Agriculture.
4.2 The Ministry’s experience is firstly , the over reliance on agricultural commodity trade in the world market by Kenya in competition with the Developed Economies agricultural products which are heavily subsidized, in itself make the trade policy making process very challenging.
4.7 Regarding the Economic Partnership Agreements (EPAs) negotiations, the Ministry of Agriculture chairs the cluster on Agriculture under the Kenya Post Lome Trade Programme (KEPLOTRADE) which coordinates the EPA negotiations process in Kenya.
5. Ministry of Agriculture Initiative on Trade Policy issues and Linkage with Ministry of Trade
5.1 The Ministry of Agriculture through the respective National WTO Sub- Committees develop and prepare comments and views on trade policy issues for submission to the Ministry of Trade.
5.4 Currently, the Ministry of Agriculture together with the Ministry of Trade are participating on EAC-EC EPA negotiations which is discussing Market Access, Economic and Development Cooperation, Trade and Sustainable Development and Trade in Services.
5.5 The Market Access Issues under this negotiations is concentrating on Customs and Trade Facilitation, Sanitary and Phyto-sanitary Measures, EAC-EC Market Access offer Schedule and Technical Barriers to Trade.
6.1 National Committee on WTO lacks the legal mandate to effectively execute it's mandate and it strongly recommended that the NCWTO be given legal status in order to make it effective in it’s operations.
6.4 There is need to enhance the role of parliamentary Committee on Trade, Finance, Planning and Tourism as well as the Parliamentary Committee on Agriculture, Water and Irrigation, Natural Resource, Lands, and Co operative Development to be regularly involved and briefed at all stages of the negotiations. The parliament has a very critical role to play and in particular oversighting the process of the negotiations by the Executive Arm as well as Enacting and Ratifying Appropriate Policy and Legislative Framework to implement the results of the negotiated commitments and obligations.
6.5 The is need to strengthen collaboration between the key Government Ministries e.g Ministries of Finance, Agriculture, Livestock Development, Fisheries Development, Transport, Information, Trade and Industry etc and in particular with respect to Trade Policy issues.