Agricultural Productivity, Rural Livelihoods and Trade in Agriculture

PresenterMaximilian Mainza

Introduction Role of and constraints faced by the agricultural sector Poverty and agriculture landlockedness and Trade facilitation Conclusions and Recommendations

The Zambian economy represent an extraordinary case of an undiversified and landlocked economy.

The economy has since 2001 steadily grown at an average of 4.5% moving it from stagnation and dependence on aid toward greater prosperity, and easier access to domestic and foreign direct investment.

One of the challenges faced by the Zambian government is to diversify the economy and ensure that the growth process also includes the poor people.

In its Fifth National Development Plan (2006- 2011), the Government recognised agriculture as a rich sector that can contribute to inclusive and sustained accelerated economic growth in Zambia

In spite of the acknowledged potential and global interest that the sector has drawn, very little systematic empirical work has been undertaken to inform policy makers on rural poverty and livelihoods, landlockedness and under-developed trade facilitation measures, and sub-optimal agricultural productivity especially among small scale farmers.

The Consumer Unit Trust Society (CUTS) Geneva under equity and Accountability in the Trading System” (FEATS) project launched this study in five developing countries in order to generate empirical data on the linkage between poverty, agriculture and trade

This study relied on secondary data sources from both national and international organizations and authorities.

However, the social and economic data showing trends in the Zambian agriculture sector are mainly inconsistent across the major sources such as the Food and Agriculture organization (FAO), the World Bank and Government ministries.

Moreover, most agriculture data is made available with a huge time lag of at times up to two years making it difficult to provide up-to-date data.

Other contributions of the agricultural sector such as employment, international trade and investment flows are sometimes immeasurable, very difficult to generate, and, at times, significantly underestimated.

Despite these limitations, the report still provides useful trends and indicators that inform the social and economic impact of agriculture in addition to the trade dimension.

Specifically the research study attempted to address a number of issues in several areas including:

Role of and constraints faced by the agricultural sector with focus on rural livelihoods, productivity, and trade;

Trade facilitation needs and measures with focus on those directly related to landlockedness;

Linkages and relationships among various issues with focus on identifying areas for synergetic action;

Policy frameworks related to agriculture, trade, and trade facilitation; and

Development of coherent thinking and practice in the areas under study to advance poverty reduction and development objectives.

   

Nature of production

Farmer category Land Size (Hectares) Total No. of farmers in 2002

 

Small scale farmers 0.5 - 9 459 000

Mainly on substance food crops and few cash crops plus livestock

Medium Scale farmers 10-20 119 200

Food crops and cash crops, plus livestock

commercial/subsistence

Large scale farmers[1] > 20 25 230

Food and Mainly cash crops and live stock

Small-scale farmers produce over 70% of the national food requirements.

Large scale farmers on the other hand produce most of the cash crops for export.

The adoption market oriented economic policies in the 1990s, have led to the entailed a shift of institutional and functions and responsibilities to both Government and private actors

With the advent of the poverty reduction strategies, agriculture was in 1999/2002 recognised as an engine for poverty reduction as it formed the livelihoods of the majority of the Zambian population.

To assure national and household food security by guaranteeing sufficient food for at least 90% of the population

To ensure that the existing agricultural resource base is maintained and improved upon

To generate income and employment to maximum feasible levels

To contribute to sustainable industrial development To expand significantly the sector's contribution to the national

balance of payments. The policy sets a target of increasing the total foreign exchange earnings from 3-5% to 10-20

Boost the sector’s growth to 10% after 2006 and increasing its contribution to GDP from 18-20% to 25% while raising incomes for the agricultural household.

The direct contribution of agriculture to GDP may be somewhat misleading because many of the agricultural products are used by other sectors of the economy.

For example, a good part of the services sector such as transport and trade is related to agricultures.

Further, GDP data reveals that agro-processing industries which depend directly on agriculture constitute 60% of Zambia’s manufacturing.

Its overall average effect marginally declined from 6.2% between 1995 and 2000 to 4.8% between 2003 and 2008.

This is depicted in figure 3.

  Maize Sorghum/ Rice Wheat Cassava Other tubers Total

Millet

A. Opening stocks (1st May 2002)

100,156 - 0 2,000 - - 92,493

B. Production (2002/2003)

1,157,861 55,632 10,744 135,968 958,113, 132,026 2,120,854

C. Urban Production (2002/2003)

49,341           44,407

1.1.1  C. Total Availability (A+B)

1,307,358 55,632 10,744 137,968 958,113   2,257,753

D. Staple food requirements

             

1. Human consumption

981,298 52,850 16,707 131,702 589,359 125,425 1,616,699

2. Food reserve stocks (net)

55,700 - - - - - 51,058

3. Stock feed 50,000 - - - - - 45,000

4. Breweries 35,000 - - - - - 27,000

5. Seed 10,000 1,000 - 1,500 - - 10,983

7. Losses 60,360 2,782 537 6,798 19,162 6,601 81,602

Total requirements 1,187,358 56,632 17,244 140,000 609,521 132,026 1,832,341

E. Surplus/deficit 120,000 0 -6,500 -2,032 348,592 0 425,412

F. Food relief requirements

0 - - 0 - - 0

G. Commercial import requirements

0 0 -6,500 -2,032 0 0 0

    Maize Paddy rice Wheat Sorghum & millet Sweet and Irish potatoes

Cassava flourTotal (Maize mealie-meal equivalent) 12

A. Availability:              

  (i) Opening stocks (1st May 2008)

390,350 2,799 25,848 2,273 0 2,176 376,327

  (ii) Total production (2007/08)

1,211,566 24,023 180,000 43,926 116,719 1,160,853 2,384,674

                 

  Total availability 1,601,916 26,822 205,848 46,199 116,719 1,163,029 2,761,001

B. Requirements:              

  (i) Staple food requirements:

             

  Human consumption

1,140,560 36,048 189,600 42,975 110,883 670,917 1,879,285

  Food Reserve Stocks (net)

157,000 0 0 0 0 0 141,300

  (ii) Industrial requirements:

            0

  Stockfeed 66,843 0 0 0 0 0 60,159

  Breweries 15,425 0 0 0 0 0 13,883

  Seed 18,510 0 0 1,028 0 0 17,557

  (iii) Losses 60,578 1,201 5,400 2,196 5,836 23,217 84,270

                 

  Total requirements 1,458,916 37,249 195,000 46,199 116,719 694,134 2,196,454

                 

C. Surplus/deficit (A-B) 143,000 -10,427 10,848 0 0 468,895 564,548

                 

D. Commercial import requirements

  10,427 -10,848        

                 

E. Food aid import requirements

             

There is a huge potential for significant domestic and regional market development if productivity and efficiency gains can be achieved.

See table below

           

  2001 2002 2003 2004 2005

Cattle: Stock (# Heads) 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000

Beef and Buffalo Meat: Slaughtered/Prod Animal (# Heads)

255,000 255,000 255,000 255,000 255,000

Beef and Buffalo Meat: Carcass Weight/Yield

1,600 1,600 1,600 1,600 1,600

Beef and Buffalo Meat: Production (MT)

40,800 40,800 40,800 40,800 40,800

Beef and Veal:          

Export Value ($1,000) 27 44 44 44 na

Exports Quantity (MT) 11 55 55 55 na

Imports Value ($1,000) 0 0 8 12 na

Imports Quantity (MT) 5 0 2 17 na

Beef and Veal, Boneless:          

Exports - Value ($1,000) 0 15 15 15 na

Exports Quantity (MT) 0 10 10 10 na

Imports Value ($1,000) 1 0 39 0 na

Imports Quantity (MT) 0 0 26 0 na

The huge gap between farm and non-farm labor productivity implies that Zambia, which has 70 percent of its labor force employed in agriculture uses its labor extremely inefficiently.

An estimated 42% of Zambian landmass is suitable for agriculture/livestock activities with 21% of the total land area suitable for rangeland grazing.

However, the total livestock population of Goats, cattle and pigs are far less than the human population.

This contrasts greatly with countries like Namibia and Botswana that have established export oriented beef industries.

Neglect of the Sector Dependence on rain Genetic Engineering Education High Transactions costs problems Land tenure system Trade and investment

prevalence of animal diseases; non availability of veterinary drugs; high cost of veterinary drugs; inadequate livestock nutrition and water; poor animal husbandry practices/management; inadequate marketing infrastructure; lack of appropriate livestock research; inadequate livestock extension and health services; lack of linkages between livestock research and

livestock extension.

The promotion of agriculture productivity and trade could accelerate poverty reduction in the country.

The sector is already the main source of employment. It accounts for over 70% of employment in the country

The contribution of the sector to growth and poverty reduction has been limited mainly because of its dual nature subsistence farming subsector coexists with emerging and large-scale commercial farming sub-systems systems.

Zambia's land-locked status makes it potentially harder to reach export markets and realize economies of scale, as well as access cheap import.

One of the main concerns posed by this status is Zambia’s ability to export bulky low-value especially some agricultural products.

Increasingly more of Zambia’s agricultural products are exported by air

There is evidence that as some firms have suspended horticultural exports to Europe account of high transportation costs

Given this status facilitating trade is a major challenge for the country.

Zambia's technical assistance needs in this area range from alleviating high transportation costs to improving customs administrations.

Priority needs include: risk assessment methods; improvements in transparency; better use of IT; improving efficiency in customs administration through upgrading the customs infrastructure; reducing border clearance procedures; upgrading road and rail networks and reducing transport costs; integrating border agencies and developing a single processing and payment window; and training for officials.

The agricultural sector employs the largest number of people in the country mainly as small scale farmers.

The sector is the second largest contributor to GDP. The huge gap between farm and non-farm labor

productivity implies that Zambia, which has 70 percent of its labor force employed in agriculture uses its labor extremely inefficiently.

A combination of poor crop and animal husbandry, low access to farm power and mechanization, decreasing soil fertility, especially in traditional farming areas have led to low average yields and reduced incomes to especially smallholder farmers

The main destinations of Zambia’s agricultural exports are those that Zambia has preferential market access with.

Considering the smallness of the Zambian markets, exports must be the focus for generating future growth in Zambia.

However, increased exports of agricultural products being constrained by both domestic factors and border-out factors.

Most of the problems that affect the competitiveness and productivity of the agricultural sector in Zambia arise mainly from market failures associated with inadequate public and merit goods. Thus Government must arise to provide these services which include among others:◦ Infrastructure◦ Extension services for various crops and animals as part of farmers

education◦ Research – to generate appropriate technologies◦ Credit facilities for inputs◦ Ensure appropriated lad rights◦ Ensure donor coordination ◦ Create a conducive environment for public provate participation in

outgrower schemes◦ Continue to participate actively in global and regional trade

negotiations to ensure that its longer term interests are adequately reflected in the outcome.

Civil Society organisations◦ Continue strengthening the research and information

dissemination network to all stakeholders in the various provinces

◦ Encourage the Zambian Government to promote infrastructure for agricultural production and exports

◦ Lobby government and donors for more resources to be invested in the most binding constraints to agricultural growth and small scale farmer productivity