Transcript FEATS PROJECT - Trade in services

Agricultural Productivity Rural
Livelihood and Trade in Agriculture
Presented to the
NRG
FEATS PROJECT
Outline
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Introduction
Agriculture policy and structure
Contribution of agriculture to economy
Agriculture productivity
Poverty and agriculture
Agriculture and trade facilitation
Introduction
• Economy registered positive growth since 2001
• Macroeconomic indicators stablising
• GDP per capita US$ 355 (2002) US$625 (2005) US$
1183 (2008)
• Poverty still high 64% poor PLUS ranked 165 out of
177 countries on the UNDP’s HDI
• Poverty 80% in rural areas 34$ urban
• Threatens country’s ability to achieve MDGs
• Government efforts: -
Cont’d
• PRSP , FNDP and Now SNDP
• Also emphasised in:
– The commercial, trade and industrial policy (CTI)
– diagnostic trade integrated strategies, (DTIS) and the National
Agricultural policy
• Emphasize poverty reduction through agricultural production
and trade
• Need to understand the linkage between poverty
• CUTS - through (FEATS) project seek to generate empirical
data on the linkage between poverty, agriculture and trade
Objectives:
 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;
 Development of coherent thinking and practice in the areas
under study to advance poverty reduction and development
objectives.
Methodology
• Two phased:
• Phase 1: Secondary data sources from both national and
international organizations and authorities – CSO, MACO,
FAO WB etc
• Phase 2: Primary data collection – interviews with
stakeholders Mumbwa – two areas
• Limitations
• Inconsistent data across major sources FAO, World Bank and
Government ministries
– employment, international trade and investment flows tend to be
difficult to generate, and, at times, significantly underestimated
Key Changes
• Between 1964 – 1990s state dominated marketing, input
supply and processing
• Liberalisation in 1991 - resulted in some diversification
• Private sector participation in
– Production promotion - e.g., Outgrower schemes,
– processing facilities
– Export promotion initiatives have emerged
• Structure changing
• Small-scale category - increasing, medium $ large-scale
largely unchanged over the years
• Small-scale farmers supply over 70% of the national food
requirements
Structure
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Farmer category
Land Size
(Hectares)
Total No. of
farmers in
2002
Small scale
farmers
0.5 - 9
800, 000
households
Medium Scale
farmers
10-20
119 200
Large scale
farmers
Nature of production
Mainly on substance food
crops and few cash crops plus
livestock
Food crops and cash crops,
plus livestock
commercial/subsistence
Cash and food crops and live
stock
> 20
25 230
Agricultural Policy
• Private sector driven agriculture that
• assure national and household food security
• generate income and employment to maximum feasible
levels
• contribute to sustainable industrial development
• expand the sector's contribution to the BoP - increase
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%
Key players
• Policy making –preserve of MACO & Livestock
development
• MoL, MEWD, MTENR, MFNP
• Statutory bodies- FRA and crop specific initiatives such
as TBZ, Coffee Board of Zambia, Golden Valley
Agricultural Research Trust (GART), Cotton Development
Trust (CDT), Livestock Development Trust (LDT)
ZEGA Trust
• MCTI –trade oriented
• Private sector association ACF, ZNFU etc
Cont’d
Contribution
• GDP - directly an average of 20% drives GDP
• Manufacturing – over 60% of sub-sector output such as
tobacco, processed food , textiles and leather
• Services –transportation services etc
• Employment - accounts for 15% of formal sector
• Informal sector employment - 70% countrywide
– women key players
• Livestock sector – largely neglected BUT has potential
– Good area for poverty reduction –traditionally practiced
• Food security – small scale farmers driven –
• Maize production Good in 6/15 , Bad in 8/15 years
contd
• Rice deficits, wheat oscillates
• Forex – from US$207 Mn (2001) to US$476Mn.
– Private sector, Regional integration key to increase e.g. Congo DR,
SACU and Zimbabwe
• Issues around Maize- bans – making taking advantage of
regional markets
– Price controls- benefit traders at expense of small scale farmers
– Goveren J–makes commercial sense to export even in deficit years
• Livestock –neglected for a long time but has huge potential
• FDI –pledges hang around 6% of total FDI
Contribution to export earnings
Key exports
Product
Sugar, floriculture and horticultural products,
Export Markets
South África, USA, EU
textiles, coffee, tobacco, cotton, honey, beeswax,
leather , Spices
Sugar, maize, tea,
Zimbabwe, Democratic Republic of Congo
Sugar and a limited range of processed foods
Burundi, Rwanda, Botswana, Swaziland
Beef, sugar, tea, eggs,
Angola, Kenya, Malawi, Tanzania, Namibia
Cotton lint, coffee, tobacco, spices
Asia
• Out grower schemes and PA critical in cotton, sugar, coffee,
horticultural and floricultural products ( key to access inputs,
credit and output market, technical training and coordination)
• Poor maize policy – discourage private sector initiative
e.g. bans
Agricultural productivity
• Critical to efficiency gains and export competitiveness
• Commercial farmers crops and livestock productivity
meets global level (WB, 2008)
• Small scale farmers – below regional levels for crops and
livestock (lower than all other sectors in Zambia)
• 70% of labor is inefficiently being used
• Yield metric tons per hector is very low: averaging at less
than 1.5 metric tons per hectare
Contd
6
5
Maize
Sorghum
Millet
4
Paddy rice
Sunflower
Groundnuts
3
Soya beans
Seed cotton
Mixed beans
2
Burley tobacco
Virginia tobacco
1
Cassava
Linear (Mixed beans)
0
2001
2005
2006
Jun-05
Livestock Productivity
• An estimated 42% of Zambian landmass is suitable for
agriculture/livestock activities with 21% of the total land
area suitable for rangeland grazing.
• 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.
Factors affecting productivity
• Neglect of the Sector - government policy failures - delay in
input delivery
• Dependence on rain – only 11% of irrigation potential is used
(2006)
• Weak business orientation
• Genetic Engineering
• Education- good education levels lead to high returns
• High Transactions costs problems – lack of complementary
infrastructure in rural areas plus export
• Land tenure system
• Marketing structures
• Trade and investment
Cont’d
• Agriculture finance – costly 25% and conditions of
borrowing strangulating
• Default rate highest -37% non-performing loans
• Low producer price for maize, rice etc
• HIV/AIDS –limited labour (sickness or caring for sick)
• Key institutional capacities not aligned for small scale
farmers e.g. GART, ACF etc.
Livestock productivity
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prevalence of animal diseases;
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.
Poverty and agric trade
• Improving agriculture productivity and trade could
accelerate poverty in country
• The sector accounts for over 70% of employment in the
country and is core in rural livelihood
• Commercial farmers already geared for exports
• Government – recognises importance of trade- FNDP, CTI
etc
• Engaged in regional and MTS negotiations.
REGIONAL ARRANGEMENTS
 Key RTA
◦ World trade organisation
◦ AoA - illegalises unfair trade and implementation beneficial
to LDCs
◦ EBA , Cotonou agreement (EPAs) useful to Zambia
◦ AGOA – selected products
◦ SADC
◦ Promotes regional food security, seed bank, etc
◦ COMESA – Promote food security
◦ Alliance for Commodity Trade in ESA (ACTESA) to
foster investment, development policies, regional trade and
marketing of staple agricultural commodities
Trade facilitation
• Zambia is land-locked making it harder to reach export
markets and realize economies of scale, as well as access
cheap import.
• Air transport -high value and low weight and volume
products, but also improved access to air transport
• BUT -some firms suspended horticultural exports to
Europe account of high transportation costs
• A number of Initiatives to facilitate trade –not agriculture
only
Cont’d
• WTO facilitated trade facilitation programmes such as
assessing their trade facilitation needs and priorities.
• UNCTAD, ICT, WCO, WTO programmes - Export
priority identification , ACYCUDA EIF etc
• Regional efforts – One border posts Chirundu, Nakonde??
• North South Corridor development –under Aid for trade
• ACTESA –information provision
• USAID MATEP, Southern African Global
Competitiveness Hub, technical assistance etc
Trade corridors
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Road
Copperbelt/Lusaka -Chirundu Border
1 000 000
0
1 000 000
Copperbelt/Lusaka -Livingstone Border
500 000
1 000 000
1 500 000
Copperbelt/Lusaka -Kazungula Border
200 000
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200 000
Copperbelt/Lusaka -Dar es Salam port
300 000
400 000
700 000
Others
100 000
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100 000
Total
2 100 000
1 400 000
3 500 000
Railway
Total
Cont’d
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Southern Corridor – to Durban
Maputo corridor
Tazara corridor – Dar es Salaam
Walvis bay
Beira and Nacala Corridors: via Harare by rail
Angola –lobito
Infrastructure poor
Cont’d
• Initiatives
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The Harmonized Commodity Description Coding System
COMESA Customs Declaration Document (COMESA-CD
COMESA Carrier's License
Harmonized Axle Loading, Maximum Vehicle Dimensions
and road transit charges
• Yellow Card Scheme
EXPORT BARRIERS
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Sanitary and Phytosanitary measures (SPS
Minimum Residual Level
Market Standards
Pests Risk Assessment (PRA)
Complex tariff structures and import arrangements
Restrictive rules of origin
Agriculture still regarded as sensitive sector by most
regional countries
CASE STUDY
• Mumbwa
• Over 32 000 farmers
• No direct external market BUT through PA agric business
organizations
• Outgrower schemes –cotton and paprika
• Key issues:
• Maize poor marketing arrangements, untimely and
inadequate input supply, low prices, private traders
• Cotton – outgrower scheme sponsored
• Main source of income
Cont’d
• Alternative to maize
• Outgrower scheme managers: determine input and output
prices
• Contracts are designed by scheme owners and are unclear
• Prices are usually low
• Quality determination is not clear and any losses are
transferred to farmers
Recommendations
• Government must:
 Provide complementary services – infrastructure, research
warehouses & support services necessary for private sector
 Reduce policy confusion –maize marketing
 Trade facilitation infrastructure and regional and MT negotiations
 Facilitate code of conduct in outgrower schemes
 Promote emergence of farmer organization to encourage coordinated
approach to export promotion
 Must be timely in providing inputs, purchases etc
 Donor coordination
 Government must reduce unnecessary intervention and reprioritse its
expenditure on agriculture
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Land policies must be improved upon
Recommendations to scheme owners
Provide a transparent production and marketing chain
Loan recovery must well explained through unbiased
contracting methods, risks etc must be equally taken
Civil Society organisations
 research and information dissemination network to all
stakeholders in the various provinces
 Encourage the Zambian Government to promote
infrastructure for agricultural production and exports
Cont’d
• Lobby government and donors for more resources to be
invested in the most binding constraints in agricultural
– Sponsor Produce association targeting small scale
farmers
– Buy food aid from the regional
– Coordinate closely in programme sponsorship.
Thank you for listening