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Food Crisis - Is Regional Trade the Answer: The Case of COMESA
 

Food Crisis - Is Regional Trade the Answer: The Case of COMESA

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Presentation given by Cris Muyunda (COMESA) at the 7th Brussels Development Briefing - Brussels, 16 October 2008 - http://brusselsbriefings.net/

Presentation given by Cris Muyunda (COMESA) at the 7th Brussels Development Briefing - Brussels, 16 October 2008 - http://brusselsbriefings.net/

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    Food Crisis - Is Regional Trade the Answer: The Case of COMESA Food Crisis - Is Regional Trade the Answer: The Case of COMESA Presentation Transcript

    • 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
      • 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?
    • COMESA OVERVIEW : KEY PARAMETERS
      • 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
    • 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
    • COMESA AGRICULTURAL SECTOR CHALLENGES TECHNOLOGICAL CONSTRAINTS MARKET RELATED CONSTRAINTS POLICY RELATED CONSTRAINTS Low Productivity
    • SITUATION ON THE GROUND IN COMESA
      • Low Yields characterize COMESA agriculture
      • Biggest Customer of the WFP
      • Low Value, Uncompetitive Agriculture
    • (1) PER CAPITA AGRICULTURAL PRODUCTION IS FALLING
    • (2) TRADE VALUE AS % OF GDP HIGH (62%) BUT WORLD SHARE OF TRADE LOW (2%)
    • (3) NET RESULT: HUNGER MAP
    • 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
    • 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
    • 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
    • MAJOR FOOD SECURITY SUCCES STORY : MALAWI
      • 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
    • 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)
    • 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
    • KEY ELEMENTS OF ACTESA – THE REGIONAL MEDIUM TO LONG TERM PLAN FOR STAPLE CROPS DEVELOPMENT:
      • POLICIES
      • SERVICES
      • COMMERCIALIZATION
    • CAADP PILLARS
      • LAND AND WATER MANAGEMENT
      • TRADE AND MARKETING INFRASTRUCTURE
      • FOOD AND NUTRITION SECURITY
      • AGRICULTURAL RESEARCH AND TECHNOLOGY ADOPTION
    • 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
    • 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
    • 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.
    • 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
    • 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 de al with the suppy-side constraint.
      • THANK YOU