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Strategic Analysis to inform Agricultural Policy …

Strategic Analysis to inform Agricultural Policy
ReSAKSS ECA stakeholder workshop, 11th June, 2012

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  • 1. Presented at the ReSAKSS Stakeholder Workshop onStrategic Analysis to inform Agricultural Policy 11th June, 2012 Dr. Mary Mbithi
  • 2. Overview of the presentation1.Introduction2. Study methods3. Key findings on protection and market access indicators4. Conclusions and Recommendations
  • 3. Introduction Trade openness, regional integration and food security  through regional trade integration  through cooperation in regional initiatives  which improve availability, access, utilization and safety of food The importance of regional trade integration in addressing regional food insecurity in COMESA (COMESA treaty),  Cooperation in the field of agriculture  with the region’s implementation of programmes to enhance regional cross border trade through its Cross Border Trade Reform programme. COMESA now a Common Market  Tariffs reduced as a result of the COMESA FTA (14/19 countries  Some increase in intra regional trade  However trade in staple foods remains low: -about 12% of taple food imports
  • 4. Introduction Although trade liberalization through COMESA, EAC, and SADC  Trade restrictiveness in staple foods still exists in the region. Tariff restrictiveness varies greatly from one country to another and from one product to another Ad hoc use of export and import restrictions combined with non-tariff measures restricts intra-regional trade in staple foods  Trade restrictive of staple food, diminishes the gains expected from the Regional Trading Arrangements (RTA)
  • 5. Introduction Objectives of this study  Compute protection and market access indicators for selected food staples among COMESA member countries. Staple foods analyzed: maize grain, rice grain, dry legumes, live bovine animals, milk and cream, bovine meat, fish and crustaceans, tomatoes, maize flour, wheat flour, cassava and onions (12 products). Countries analysed  COMESA member countries (19)  Burundi, Comoros, Congo D.R, Djibouti, Egypt, Ethiopia, Eritrea, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.  plus other key staple food trading partners for COMESA member countries.  Mozambique, Tanzania and South Africa  Total 22 countries (COMESA plus)
  • 6. Trade openness in COMESA ….What literature shows Analysed average tariff protection at the macro COMESA and country levels Also studies analysed NTBs Not analysed intra-COMESA protection at bilateral level, and at sector/product level limited information on existing types of tariff protection including average tariffs, tariff peaks, and tariff escalation. There is also little information on non-ad valorem tariffs of intra-COMESA trade for various products including food products, at bilateral level
  • 7. Computing protection and market access …..Three approaches
  • 8. 1. Reviewed Market Access indicators  Compares the level of market access of one country into a given economy with the level of access into a comparator economyThe key assumption  Trade is determined by “gravity” (i.e. by the size of an economy), thus exports to a given market should be proportional to the GDP of that country.Data source: COMESA Statistics (COMSTAT): year 2009 or 2008, depending on data availability
  • 9. Estimation of Revealed Market Access (RMA2) indicators Estimation equation:  i is any of the 12 staple food products  j is the food exporter (e.g. Malawi)  k (k1, k2) are the food importing countries (Ethiopia, Kenya) E.g. RMA >1  suggests that the normalized value of exports to Ethiopia of a particular food product is greater than the normalized value of exports of the same food product to Kenya,  implying a greater market access for the specific product exported by Malawi to Ethiopia than for the same food product in Kenya  Implying a likelihood of barrier for those products in the Kenya Market
  • 10. 2. Tariff-based protection measures Estimated average tariffs and weighted average tariffs for the 12 food products for the 22 countries  Ranking of average tariffs (bilateral) Analysed type of tariffs  the existence of tariff peaks, tariff escalation and other non- transparent tariffs, particularly specific tariffs  tariff data from UN TRAINS was used. Data at Hs 6-digit level from TRAINS was accessed and analyzed through WITS data access programme  Year 20093. Non tariffs measures  Descriptive analysis of Non-tariff Measures (barriers)
  • 11. Key findings
  • 12. Revealed Market Access (RMA) Generally there is limited difference in market access for food products of one country in various markets However, in a few cases, there is difference in market access
  • 13. RMA- South Africa exports to Kenya and Zambia -wheat and meslin, rice, and wheat or meslin flour, SA may be facing more barriers in Ken than in Zambia -maize and maize flour, there seem to be more barriers for SA in Zambia than in Ken SA X to Ken SA X to ZamProduct Product Name RMA (000 US$) (000 US$) Milk and cream, not0401 concentrated no 0.0 0.1 374.90402 Milk and cream, concentrated or 0.0 18.7 253.80702 Tomatoes, fresh or chilled 0.0 0.1 2.2071220 Onions 0.0 0.0 8.01001 Wheat and meslin 0.1 0.1 0.61005 Maize (corn) 763.3 64000.0 21.01006 Rice 0.2 2.4 3.11101 Wheat or meslin flour 0.1 0.1 0.3110220 Maize (corn) flour 47.9 4.2 0.0
  • 14. - RMA: South Africa exports to Malawi and Zambia -For live bovine animals and meat of bovine animals; milk and cream, dried leguminous vegetables and wheat or meslin flour, there seems to be more market access in Malawi than in Zambia: -Tomatoes, onions, maize and rice- more MA in Zambia than in Malawi SA X Mal SA x Zam ValueHs code Product name RMA ($000) Value ($000)0102 Live bovine animals 15.9 97.95 20.690201 Meat of bovine animals 114.6 60.52 1.7703 Fish& crustacean, mollusc 1.0 223.4 783.80401 Milk and cream, conc not added sugar 2.40 212.21 296.990402 Milk and cream, conc or add sugar 1.44 2920.58 6814.530702 Tomatoes, fresh or chilled 0.35 0.51 4.89071220 Onions 0.96 0.36 1.2620713 Dried leguminous vegetables, 1.23 54.43 148.06071410 Manioc (cassava) 0.00 0.893 0.01001 Wheat and meslin 0.00 0.06 113435.711005 Maize (corn) 0.71 705.40 3327.081006 Rice 0.27 54.50 675.701101 Wheat or meslin flour 16.26 303.98 62.69
  • 15. Revealed Market Access for Kenya exports to Tanzania and Uganda - Milk and cream; concentrated or containing added sugar and maize (corn) flour products, Kenya may be facing market barriers in Tanzania that she does face in Uganda. -Kenya has better market access to Tanzania than Uganda for meat of bovine animals and milk and cream not containing sugar and maize. Ken X to Tz Ken X UgProduct Product Name RMA $ ‘000 $ ‘000)0102 Live bovine animals 0.00 0.00 2.320202 Meat of bovine animals, frozen 3099.95 747.60 0.170401 Milk and cream, conc. not added sugar 2.55 3561.24 989.410402 Milk and cream, concentrated added sugar 0.25 1390.25 3925.20070200 Tomatoes, fresh or chilled 0.00 0.00 5.78071220 Onions 0.00 0.00 0.20071410 Manioc (cassava) 0.00 0.00 0.001005 Maize (corn) 2.62 2409.10 651.181006 Rice 0.00 0.18 360.52110100 Wheat or meslin flour 0.00 0.00 27.42110220 Maize (corn) flour 0.39 14.17 25.84
  • 16. 2. Tariff protection
  • 17. Intra-regional protection in agriculture and food, staple foods and non-agricultural products-protection still exists: Agri and food more protected, high tariffs exists, specific duty exists Staple foods even more protected: higher S. ave. tariff, larger prop. Dutiable-Trade description S W. Ave. Min Max No. of Dutiabl Specific Ave. Rate Rate Intl e (%) duty Peaks (%)Agri- foods intra- 7.26 10.48 0 75 2048 39.6regional 4.41Non- agricultural- intra 4.7 2.7 0 60 8984 25.1 0.03regionalIntra-regional staple 7.42 28.98 0 75 206 64.0foods 0.01
  • 18. Average tariffs charged on staple food imports from the region in 2009Rank Importer S. Ave. W. Ave. Min Max Dutiable S. Duty Rate Rate Imports (%) Imports (%)1 Tanzania 23.70 19.04 0.00 75.00 60.2 0.0002 Burundi 20.77 2.21 0.00 75.00 8.4 0.0003 Ethiopia 15.93 10.39 4.50 30.00 100.0 0.0004 Rwanda 7.87 1.96 0.00 75.00 3.7 0.0005 Kenya 6.06 46.27 0.00 75.00 93.6 0.0006 Malawi 4.25 1.07 0.00 25.00 13.5 0.0007 Madagascar 3.86 1.13 0.00 20.00 9.7 0.0008 Zambia 2.70 0.34 0.00 25.00 2.3 0.0009 Sudan 2.13 1.43 0.00 10.00 18.7 0.000
  • 19. Average tariffs charged on staple food imports from the region in 2009Rank Importer S. Ave. W. Ave. Min Max Dutiable S. Dutyy Rate Rate (%) Imports(%)10 Mozambique 1.57 2.05 0.00 20.00 32.5 0.00011 South Africa 1.28 2.95 0.00 30.00 28.4 0.00012 Comoros 1.11 1.34 0.00 5.00 26.9 2.97013 Mauritius 0.13 0.00 0.00 12.00 0.0 0.00014 Swaziland 0.00 0.00 0.00 0.00 0.0 0.000Average 7.42 28.9 0.00 75.00 64.0 0.011
  • 20. Tariff escalation - exists in meat, wheat, maize and the wheat-related productsProduct Product Name S. Ave. W. Ave. Min Max ImportsHs code Rate Rate Value (US $’000)Meat products0102 Live bovine animals 2.82 2.18 0.00 25.00 13269.40202 Meat of bovine 9.44 10.29 0.00 25.00 1113.5 animals, frozen0201 Meat of bovine 12.25 7.15 0.00 30.01 2182.8 animals, fresh or chilledWheat100110 Durum wheat 0.71 0.05 0.00 5.00 1112.6110100 Wheat or meslin flour 16.25 2.07 0.00 60.00 19368.1
  • 21. Tariff escalationProduct Product Name S. Ave. W. Ave. Min Max Value (USHs code Rate Rate $’000)Maize100590 Other (maize-other 9.77 46.15 0.00 50.00 330979.4 than seed)110220 Maize (corn) flour 10.43 14.92 0.00 50.00 2606.1Rice100610 Rice in the husk 6.54 0.00 0.00 75.00 11601.9 (paddy or rough)100620 Husked (brown) rice 13.33 0.03 0.00 75.00 2086.6100640 Broken rice 17.37 1.62 0.00 75.00 3159.9100630 Semi-milled or wholly 17.80 0.37 0.00 75.00 12898.5 milled rice,
  • 22. Intra-COMESA staple food tariffs (2009) -the most protected staple foods in intra-COMESA trade based on simple average tariffs are milk and cream, wheat or meslin flour, and meat of bovine animals while the least protected are wheat, rice and cassava S. Ave. W. Ave. Max Dutiable S.Duty ImpProduct Name Rate (%) (%)Milk and cream, not conc /added sug 13.18 8.86 60 43.4 0.00Wheat or meslin flour 12.36 7.16 60 70.7 0.76Meat of bovine animals fresh/chilled 12.25 10.29 25 79.8 0.00Milk and cream, conc or added sugar 11.03 4.13 60 42.5 0.02Meat of bovine animals, frozen 9.44 7.15 30 60.5 0.00Onions and shallots 8.88 4.04 27 80.9 0.00Tomatoes, fresh or chilled 7.06 0.71 27 50.8 0.00Maize (corn) 5.75 24.74 50 56.3 0.00Fish & crustacean, mollusc 4.99 0.77 25 6.7 0.00Live animals 4.81 1.34 30 21.0 0.00Manioc (cassava) 3.89 1.12 25 11.1 0.00Rice 3.08 2.09 15 20.9 0.29Wheat and meslin 2.57 0 35 0.0 0.00
  • 23. Some bilateral tariffs
  • 24. Intra-COMESA imports of milk and cream, not concentrated nor containing added sugar (0401), 2009Importer Exporter Simple Weighted Min Rate Max Rate Average AverageBurundi S. Africa 60.00 60.00 60.00 60.00Madagascar S. Africa 20.00 20.00 20.00 20.00MozambiqueS. Africa 5.00 4.36 0.00 10.00MozambiqueZimbabwe 5.00 5.00 0.00 10.00Rwanda Congo, DR 60.00 60.00 60.00 60.00Tanzania S. Africa 60.00 60.00 60.00 60.00Tanzania Egypt 60.00 60.00 60.00 60.00Zambia S. Africa 15.00 15.00 15.00 15.00
  • 25. Bilateral tariffs on dried legumes (2009)Importer Exporter S. Ave W. Ave. Min Max Dutiable Rate Rate (%)Burundi South Africa 25 25.0 25.0 25.0 100Kenya Ethiopia 2.5 2.5 2.5 2.5 100Kenya South Africa 25.0 25. 25.0 25.0 100Madagascar South Africa 20.0 20.0 20.0 20.0 100Rwanda Congo DR 25.0 25.0 25.0 25.0 100Rwanda South Africa 25.0 25.0 25.0 25.0 100South Africa Ethiopia 10.0 10.0 10.0 10.0 100South Africa Madagascar 11.7 12.3 0.0 30.0 100Sudan Ethiopia 6.8 8.0 2.0 8.0 100Tanzania Malawi 25.0 25.0 25.0 25.0 100Tanzania South Africa 25.0 25.0 25.0 25.0 100
  • 26. Bilateral Tariffs applied on maize grain (2009)Importer Exporter S Ave W Min Max Imports Value Dutiable Average Rate Rate ($ 000 ) (%) Comoros Tanzania 5.0 5.0 5.0 5.0 2.3 100 Kenya Ethiopia 5.0 5.0 5.0 5.0 3.1 100 Kenya South Africa 37.5 49.9 25.0 50.0 306111.7 100 Madagascar South Africa 5.0 9.99 0.0 10.0 2767.3 99.9 Rwanda Congo, D R 37.5 47.2 25.0 50.0 140.0 100 Rwanda South Africa 50.0 50.0 50.0 50.0 323.6 100 Sudan South Africa 10.0 10.0 10.0 10.0 367.2 100 Tanzania Malawi 25.0 25.0 25.0 25.0 1118.2 100
  • 27. Non Tariff barriers
  • 28. Common NTBSThe most important non-tariff measures  Pre-shipment inspection  EAC region road blocks, corruption and weigh bridges are prominent  National food security policies particularly quantitative restrictions and export/import bans, standards and SPS requirements also lead to restrictions in staple foods trade in East and Southern Africa region.
  • 29. Quality standards requirements for maize imports in the regionSpecification EAC** Malawi* Zambia* Zimbabwe Ethiopia* Grade II *Moisture content (%) 13.5 14 12.5 14 13Foreign matter (%) 1.0 2.6 1.5 2 0.5Inorganic matter (%) 0.5 -Broken Grains (% ) 4.0 11 6 6 2Pest-damaged grains (%) 3.0 - 5 - 3Rotten and diseased grains (%) 4.0 - 2 0.5 -Discoloured grains (%) 1.0 - - 3 0.5Live insect infestation Nil - - - -Immature/shrivelled grain (%) 1.0 - - - -Aflatoxin (ppb) 10 3 - - -Package if not in container (kg 50 100 100 90 100gunny bags)
  • 30. Conclusions Some staple food product exports from some regional trading partners face more market access barriers in some regional export markets than they do in other regional markets  Some of these products include:wheat and meslin, rice, and wheat or meslin flour, maize and maize flour Tariff protection measures are still prevalent in the staple food trade in the region.  Tariff peaks (tariffs above 15 percent), with the highest tariffs of 75 percent being charged by EAC countries.  Specific duty: Small quantities of imports by Comoros (about 3 percent of total staple food imports) had specific duties applied. There is protection in the form of tariff escalation in meat, wheat, maize, rice and their related products.
  • 31. Conclusions Tanzania, Burundi, Ethiopia, Rwanda and Kenya have the highest protection for their staple food markets based on average tariffs. Exports of staple food from Congo D.R., Djibouti, Sudan and South Africa face the most restrictions in terms of import tariff barriers in intra-regional trade. On average maize, rice and milk products are the most protected staple foods with high tariffs, and EAC Partner States are the most protective of these products. Non-tariff protectiveness is prevalent in the region. The common non-tariff protective measures in the region include:  Government participation in trade and restrictive practices tolerated by governments  Customs and administrative entry procedures (including licensing)  Technical barriers to trade  Sanitary and Phytosanitary measures (SPS)  Specific limitations (including export and import bans)  Charges on exports and imports (different from import or export duty charges)
  • 32. Recommendations To facilitate and increase intra-regional staple foods trade countries need to:Eliminate the existing tariffs on imports of staple food imports from all the countries in the region including South Africa, Congo D.R., Djibouti and Sudan, among others.Eliminate tariff peaks (high tariffs) on staple foods. EAC countries have the highest tariffs for some products.Eliminate specific duty especially on rice
  • 33. Recommendations Eliminate tariff escalation in meat, wheat, maize, rice and their related products. This will be crucial in increasing processing, value addition and will contribute to diversification of the staple food trade in the region. Countries need to address all the non-tariff barriers and measures which limit intra-regional staple foods trade. Key to these are:  Infrastructure-related trade inhibiting barriers  Abolishment of import and export bans, and import and export quotas  Implementation of standardized customs documentation and administrative procedures
  • 34. Recommendations Further areas of work The analysed countries are all party to the COMESA-EAC-SADC Tripartite initiative (26 countries  Tripartite FTA  Elimination of tariffs and NTBs  Negotiations commenced in December 2011  Presents an opportunity for the region to address the tariff and NTBs limiting trade already identified here.  Need for a study to analyse how the tripartite could impact on trade flows in staple foods and therefore on food security of the 26 tripartite countries
  • 35. Presented at the ReSAKSS Stakeholder Workshop onStrategic Analysis to inform Agricultural Policy 11th June, 2012 Dr. Mary Mbithi