Agricultural Productivity Rural Livelihood and Trade in Agriculture

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Agricultural Productivity Rural Livelihood and
Trade in Agriculture

• Presented to the
• NRG
• FEATS PROJECT

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Outline

• Introduction
• Agriculture policy and structure
• Contribution of agriculture to economy
• Agriculture productivity
• Poverty and agriculture
• Agriculture and trade facilitation

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Introduction

• Economy registered positive growth since 2001
• Macroeconomic indicators stablising
• GDP per capita US 355 (2002) US625 (2005)
  US 1183 (2008)
• Poverty still high 64 poor PLUS ranked 165
  out of 177 countries on the UNDPs HDI
• Poverty 80 in rural areas 34 urban
• Threatens countrys ability to achieve MDGs
• Government efforts -

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Contd

• 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

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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.

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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

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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

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  Structure

• .

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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 sectors growth to 10 after 2006 and
  increasing its contribution to GDP from 18-20 to
  25

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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

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Contd
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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
  

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contd

• Rice deficits, wheat oscillates
• Forex from US207 Mn (2001) to US476Mn.
• 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 Jmakes 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

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Contribution to export earnings
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Key exports

• 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

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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

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Contd
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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.

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 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

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Contd

• 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.

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Livestock productivity

• 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.

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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.

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 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

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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

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Contd

• 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

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Trade corridors

• .

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Contd

• 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

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Contd

• Initiatives
• 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

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Export Barriers

• 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

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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

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Contd

• 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

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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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cont

• 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

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Contd

• 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.

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Thank you for listening