Exploiting opportunities in intra-regional trade

in food staples in COMESA region

Presentation at the 28th triennial conference of the International

Association of Agricultural Economists (IAAE) Foz do Iguacu, Brazil,

18-24 August 2012

by

Julliet Wanjiku, Maurice Ogada, Paul Guthiga, Joseph Karugia,

Stella Massawe and Jonesmus Wambua

ILRI-ReSAKSS-ECA

Presentation Outline

Introduction

COMESA poverty levels

Food insecurity

Food price indices

Regional Trade patterns

Basis of intra-regional trade

Challenges of intra-regional trade

Suggested policy interventions

Poverty levels are high in COMESA region Poverty

survey year

Rural poverty

rate (%)

Urban poverty

rate (%)

National poverty

rate (%)

Burundi 2002 68.7 66.0 68.0

DRC 2004–2005 75.7 61.5 71.3

Egypt 2004–2005 ... ... 20.0

Eritrea 1993–1994 ... ... 53.0

Ethiopia 2004–2005 39.3 35.1 38.7

Kenya 2005–2006 49.1 33.7 45.9

Madagascar 2001 70.1 48.1 76.5

Malawi 2009 43.0 14.0 39.0

Mauritius 1992 ... ... 10.6

Rwanda 2005–2006 ... ... 56.9

Swaziland 2000–2001 75.0 49.0 69.2

Tanzania 2007 38.0 24.0 33.6

Uganda 2005–2006 34.2 13.7 31.7

Zambia 2006 64.0

Zimbabwe 1995–1996 48.0 7.9 34.9

Sources: IMF (2004); NSO (2009); UNCTAD (2005); URP (2007); UBOS (2006); NSO (2007); NISR (2007a);

World Bank (2008); AfDB (2009); World Development indicators http://data.worldbank.org/indicator.

Food insecurity in COMESA region

Proportion of children under 5 with moderate and severe malnutrition 1996-2005

Maize production (Tones) in COMESA region

Source: FAOSTAT

Production maize has been quite erratic in most of the countries; maize

yields in a majority of countries are very low and in most cases have been

less than 2 tons/ha

Food Price Indices 2007=100

The food price index has been increasing

Severity of high food prices varies by countries & seasons

This offers opportunity for increased regional food trade

0

50

100

150

200

250

300

350

400

Ethiopia- Food Total FAO GLOBAL- Food

Kenya- Food & Non-Alcoholic Drink Malawi- Food

MauritiusFood And Non Alcoholic Beverages Rwanda- Food And Non-Alcoholic Beverages

Tanzania- Food and Non alcoholic beverages Uganda- Food

Zambia- Food Djibouti - Food

Data source: FAO Global: FAOSTAT; Kenya: Central bank of Kenya; Ethiopia: Ethiopia central statistical agency; Rwanda: National institute of statistics of Rwanda; Tanzania: Tanzania

national bureau of statistics; Uganda: Uganda bureau of statistics; Malawi: Malawi national statistical office; Madagascar: Madagascar national institute of statistics; Mauritius: Mauritius

government website; Zambia: Zambia central statistical office.

Maize price volatility

Data source: Tanzania: Bank of Tanzania; Kenya: Ministry of Agriculture; Uganda: Uganda bureau of

statistics; Global: FAOSTAT

Maize prices are more volatile in Kenya than in Tanzania and Uganda. The domestic

maize prices in Kenya, Tanzania and Uganda are more volatile than the global maize

prices.

Regional Trade Patterns: Intra-COMESA trade flows

-

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

2006 2007 2008 2009 2010

COMESA Aggregation

Libyan Arab Jamahiriya

Egypt

Sudan

Zambia

Kenya

Democratic Republic of the Congo

Ethiopia

Mauritius

Uganda

Zimbabwe

Madagascar

Malawi

Swaziland

Seychelles

Burundi

Rwanda

Djibouti

Comoros

Eritrea

Value of COMESA exports in US dollar

Maize imports (Tonnes) for selected COMESA

countries

0

100000

200000

300000

400000

500000

600000

700000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Burundi Ethiopia Kenya Malawi

Mauritius Mozambique Rwanda Uganda

Tanzania Zambia Zimbabwe

Rising in some countries, falling in others

Increased informal trade ( about 40% of total trade)

Basis of Regional Trade

Larger regional market base Domestic markets are

smaller and fragmented

Regional approach provides expanded market-about 420 million people in COMESA

•

Basis of regional trade…

Length of growing period (LGP)

Agro-ecological and political

boundaries do not coincide

This offers potential to

scale up improved

production techniques and

land management

practices across the

boarders

Basis of regional trade…

Source: Data: FEWS NET,2008

Diversity in agro-ecological zones/spatial climatic variability implying:

diversified agricultural production

even where countries produce similar agricultural products, supplies are available

at different times in a year due to staggered harvesting in the region

Maize Surplus and Deficit status in

East Africa

Basis of regional trade…

Production spots and market flows for maize and Livestock in the Greater Horn of Africa (GHA)

Maize Livestock

Border markets for food staples in ESA

Border markets

enhance movement

of food staples

across countries,

dictated by supply

& relative prices

Source: ReSAKSS-ECA, 2011

Other factors promoting intra-regional trade in food

staples

Regional production volatility- Areas with low food supply are able

to receive food from areas with increased supply

Substitution among food staples- countries facing shortages of their

main food staples could secure substitutes from other countries e.g.

Maize vs cassava

Varying tastes and preferences- what a country produces is not

necessarily what is preferred locally. Such products could be sold to

where they are needed most.

Challenges of intra-regional trade

0

10

20

30

40

50

60

70

80

90

NTBs (%) Transport costs

(%)

NTBs (%) Transport costs

(%)

Beef transfer costs Maize transfer costs

pe

rce

nta

ge

Kenya

Tanzania

Uganda

Source: Karugia et al., 2009

High transport costs

Challenges of intra-regional trade....

Regional barriers to trade: Common NTBs

Administrative requirements mainly licenses, municipal and council permits

Security

Taxes/duties mainly excise and cess duty

Road blocks

Custom barriers

Weighbridges

Corruption e.g. through bribes

NB: There is need to implement the commitment to eliminate NTBs and

prevent entry of new NTBs so as to reap maximum gains from intra-

regional trade

Other challenges....

Lack of information

Export-import bans

Non predictability: Impact of climate change

High cost of production and low intensity in input use

Suggested interventions

An integrated regional approach to food security and agricultural

growth rather than national isolated approaches, joint regional food

policies;

Clear follow up and monitoring of implementation of commitments to

eliminating NTBs and prevention of entry of new NTBs at regional

level;

Increased investment in early warning system through joint regional

efforts;

Investment in market information at regional level; and

Investment in improved regional and within country infrastructure:

Through joint government actions.

Exploit opportunities in regional

diversity

to increase food security

Thank you!