Presented by Johns Govereh Presented at 2015 Research Symposium Malawi Institute of Management

1. Agricultural Merchandise
Trade Outcomes
The Case of Malawi’s Maize, Soybeans and
Groundnut Product Trade (1999 – 2013)
J. Govereh, G. Matchaya & P. Chilonda

2. Outline
• Trade targets
• Product classification and Malawi’s tradeables
• Orientation, growth and openness of trade
• Product and geographic diversity
• Partners and survival of trade relationships
• Summary and limitations
• Conclusions

3. Malawi/SADC RISDP targets
• SADC Target is
– diversification of industrial structure & exports
• Sophisticated higher value products (growth in tech)
– more emphasis on value addition
• Increase intra-industry trade (fragmented production)
• Under RISDP targets are:
– Export diversification
• increase of non-traditional exports
– Sustain export growth rate of at least 5% annually
– Increasing intra-regional trade to at least 35%

4. UN General Trade System
• UN COMTRADE (http://comtrade.un.org).
• Primary products
– raw materials & resources used in productive processes
• Intermediate products
– semi-finished goods used in production of other goods
• Consumer products
– goods traded for final consumption
• Capital goods
– manufacturing goods used in production of other
goods.

5. Malawi Tradeable Products
Product classes
Sub-sectors
Maize Groundnuts Soybean
Primary Grain Shelled/unshelled Bean
Intermediate Bran Crude oil
Final Flour Refined oil
Capital Seed

6. Orientation and Growth of Trade
-90.0
-70.0
-50.0
-30.0
-10.0
10.0
30.0
50.0
70.0
90.0
110.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
USDMillions
Size of Maize Trade Flows in Malawi
Imports Exports Balance
-35.0
-30.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
USDMillions
Size of Soybean Trade Flows in Malawi
Imports Exports Balance
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
USDMillions
Size of Groundnut Trade Flows in Malawi
Imports Exports Balance
(10) (5) - 5 10 15 20
Maize
Soybean
Groundnuts
Maize
Soybean
Groundnuts
SADCMalawi
Growth (%/yr)
Averageannualgrowth in TradeMalawi vs SADC
Exports Imports

7. Growth in value vs growth in weight
-10
-5
0
5
10
15
20
25
Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports
Maize Seed Maize Grain Soybean Refined Soybean Crude Groundnut Shelled
Growth(%/yr)
Weight Value

8. Sub-sector Trade Openness

9. HS6 Product Concentration Index
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Imports Exports Imports Exports Imports Exports
Maize Groundnuts Soybean
ConcentrationIndex

10. Diversification by stage of production
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Import Export Import Export Import Export
Groundnut Soybean Maize
PerCent(%)
Primary Intermediate Final Capital

11. Diversity of Trading Partners
0
2
4
6
8
10
12
No.ofPartners
Diversity of Import Trading Partners
Maize seed Maize Grain Maize Flour
0
2
4
6
8
10
12
No.OfPartners
Diversity of Import Trading Partners
Groundnuts shelled Soybean Crude Oil
Soybean Refined Oil
0
5
10
15
No.ofPartners
Diversity of Export Trading Partners
Maize seed Maize Grain
Maize Flour Groundnuts shelled

12. Maize Trade Partners & Survival of
Partnerships
Maize Grain Imports
Partner Market Share (%) Survival (yrs)
Mozambique 31 14
South Africa 28 13
Zambia 12 9
USA 11 10
Others 18
Maize Grain Exports
Partner Market Share (%) Survival (yrs)
Zimbabwe 62 11
Kenya 20 5
Others 18

13. Partners for groundnut exports
Partner Market Share (%) Survival (yrs)
Tanzania 29 11
South Africa 26 12
Kenya 20 8
Zambia 15 14
Others 10

14. Partners for soybean imports
Partner Market Share (%) Survival (yrs)
South Africa 45
13
Argentina 40
13
Mozambique 5
6
Others 10

15. Share of regional trade
Flow Parameter Maize Soybean Groundnuts
Imports Value (USD’million) 17.4 16.3 0.5
Intra SADC (%) 78 52 23
Exports Value (USD’million ) 17.9 2.2 10.3
Intra SADC (%) 97 98 96

16. Discussion Summary
• Deficits in general
– Net outflows considered unfavourable to BoP
– Yet imports widen consumer choice
– Competitively priced imports
• reduce threat of inflation
• Gives opportunity for low-cost production
• Jobs saved not lost
• High-tech/low-tech trade
– Deficit in primary and capital products favourable to
domestic business and economic growth
• Outward vs inward-looking trade
– Openness to competition good for growth

17. Discussion summary (2)
• Growth in value lagging behind growth in
volumes
• Malawi’s growth above regional average
– Increasing market share
– Less barriers inhibiting trade

18. Discussion summary (3)
• Malawi’s product and geographic diversification
(trade base) not improving
– Growth in intensive (regional) rather than extensive
margin
• Markets moderately concentrated & international risk less
managed
– Less economies of scope being realized
• Trading revenue and experience remains muted
• Domestic industries vulnerable to competition and global
demand and price shocks
• High survival rates of trade relations with
neighboring countries
– Potential to expand trade regionally

19. Limitations and possible future
research
• Trade in goods not services
• Formal flows only measured in current USD
– Discrepancies between imported and exported USD
figures
• No account for re-exports
• No account of actual value addition in-country
– Gross flows overstate economic contribution
• Eg., export of refined cooking oil by S. Africa require imports
of crude oil from S. America
• Better metrics needed to measure contribution of
trade to income and employment
– Value-added trade statistics

20. Conclusions
• Export growth targets being achieved
– growth in value trails growth in volume
• Trade relations with neighbours have survived
– Potential for trade expansion intra-regional
• Diversification (product and geographic) not being
achieved
– Trade growth remains vulnerable to competition and
global shocks
• Development and support of a trade diversification
strategy necessary