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 : 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

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

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

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

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

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

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

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)

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

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

POLICIES

SERVICES

COMMERCIALIZATION

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

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

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

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.

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

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.

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

THANK YOU