Transcript competition issues in the agricultural sector: the gambia

COMPETITION ISSUES IN THE
AGRICULTURAL SECTOR:
THE GAMBIA
Basic Country Data (2006)
• 1. Land Area:
Approximately
12,000 sq. km
• 2. Population:
1.5 million
• 3. GDP per Capita:
U.S.$ 310
• 4. Inflation %( CP)
2.0
• 5. Current Account balances US$ (72.5m)
• 6. Export of goods
US$ 0.1bn.
• 7. Import of Goods
US $0.3bn
Economy:
• The Gambia commenced its economic liberalization in 1985-6
when the country agreed a structural adjustment programme
(ERP) with the world Bank, IMF and donor community.
• Gains realized during the ERP were quickly followed by a
programme for sustained development (PSD) launched in 1989.
• With the Change of government in 1994 vision 2020 was
launched detailing the main development policy thrust of the
government. The main economic objectives of the policy
include:
• To achieve significant reduction in poverty level by diversifying
and broadening of the agricultural production base,
• Attain the twin goals of food self-sufficiency and food security,
• To strengthen and diversify the manufacturing base and,
• To develop an export oriented industrial sector.
The policy objectives are to be attained
through increased economic
liberalization to allow the private sector
to play a lead role in the anticipated
economic transformation of all sectors
including agriculture which is the main
stay of the national economy.
Characteristics of Agriculture
• The agricultural sector dominates the national
economy by
• Providing productive employment for 75 % of the
population
• Generating 35 -40 % of GDP and up to
• Providing 40 % of export earnings
• However, of the 300,000 hectares of land under
arable farming some 54% is used for the production
of groundnuts, the country’s main cash and export
crop.
• While agricultural production is totally liberalized
and competitive, agricultural product and input
markets are still far less than competitive.
Product Markets
• Groundnut marketing (buying) continues to be dominated by
licensed buying agents and the Federation of Agricultural
cooperative Societies.
• Farm gate prices are determined by a committee using a
complex formula based on the cost structure of the operators,
the processor and exporter and; the projected world market
prices attainable.
• Farmers (producers) often have little or no influence on the
price set at farm gate level. In border areas, groundnut produce
may be sold to buyers in Senegal at higher prices
• Other Crops mainly cereals and vegetables are completely
competitive as there is no state involvement.
• In the livestock sector, recent government attempts to regulate
meat prices particularly in the urban areas, has often lead to
intermittent shortages in meat supplies with much higher
prices
Farm Input markets:
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The most important inputs are seeds, feed, fertilizers, pesticides and farm
implements and farm machinery
Attempts made since the ERP to attract private participation in the marketing of
agricultural production inputs have not been wholly successful:
Government intervention in the import and distribution of seeds, fertilizers and
animal traction equipment has stunted initial private sector efforts to be
involved in this area.
The relatively few operators still in business are basically limited to infrequent
imports of quantities too small to satisfy demand and are generally
concentrated on the needs of the horticultural sector and small scale poultry
producers.
Entry barriers in the form of high initial outlay on imports have precluded the
participation of a large number of private operators
Licensing requirements by EPA authorities for import of pesticides tend to
preclude large number of operators.
A few Private Veterinarians carry small stocks of vaccines and other requisites
but are often faced with stiff competition from government through receipt of
vet. Supplies from FAO and other donors. These tend to under cut price
structures of private operators.
Competition issues:
• Government involvement tends to stifle rather than stimulate
competition as it often results in non competitive pricing in
both input and product markets. Operators, who see their
margins wiped out, either go out of business or cease to import
or deal in the items affected.
• GGC has virtual monopoly over groundnut processing
facilities. These are old and not very efficient. The current
pricing structure for groundnut at farm gate reflects the
processing cost of the only processor/exporter.
• The policy of Licensing of produce buyers need to be revisited
in order to open the industry to all who may wish to participate
rather than a few who may not have the required capital to
operate profitably.
• More processors need to enter the field so that processing cost
can be further reduced and farm gate prices made more
attractive
• Political will is needed to let go the
agricultural sector. Where inputs are
obtained through BOP support, products
may be auctioned off to established
operators for onward sale to end users.
• Government resources may be better
deployed to provision of support services in
research, extension and market information
collection and dissemination for improved
decision making at farm level.