Gloria Otieno

1
Regional Trade and Rural Livelihoods
Implications on Kenyas Food Security

• Gloria Otieno

2
Structure of Presentation

• Background
• Context and Study Objectives and Methodology
• Exploring Agritrade-Rural Livelihoods-Food
  Security Linkages
• Regional Trade and Implications on Rural
  Livelihoods and Food Security In Kenya
• Rural Livelihoods, poverty and Food Security in
  Kenya
• Trade and its linkages with Rural Livelihoods in
  Kenya
• Implications of regional trade and livelihoods
  and food security
• Policy, Institutional Frameworks and Interplay of
  Stakeholders
• Conclusions and Recommendations

3
Background

• Worlds malnourished increased from over 800
  million in 2008 to 923 million in 2009 (FAO,
  2009)
• Kenya ranks 29 among the countries with worlds
  poorest food security
• Effects partly due to recent droughts and rising
  food prices as well as rising poverty
• 70 percent Kenyans -net buyers of food
• dependence on rain fed agriculture -output from
  maize fell from a surplus of 9 million bags in
  2006 to a deficit of 35 million bags at present

4
Background contd

• Kenya thus relies on imports and Trade is
  important for stabilizing the national food
  supplies and food prices.
•  However trade is affected by tariffs, NTBs and
  subsidies.
• Regional trade important for food security

5
Kenya Stylized Facts
Some Stylized Facts about Kenya Agritrade,
Poverty and Food Security
Variable 2000 2002 2003 2005 2006 2007
Economic growth 5.8 1.3
Agric as of GDP 24
Exports value (mn) 69,285 244.5bn 412.4bn
Imports Value 314.9bn 605.1bn
Export as of GDP 23.6 27.4 25.1
Import as of GDP 30.4 29.8 37.5

• Trade deficit has been widening
• Value of exports increased by 14 in last 2yrs
  but that of imports grew faster and at a higher
  rate (16)
• Poverty still remains high and overlaps largely
  with rural areas
• Where 67 of pop lives, affecting largely
  small-scale farmers

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Kenya Stylized Facts contd
Poverty Rates Selected Years (1992-2007)
Region 1992 1994 1997 2000 2007
Rural 42.o 46.8 52.9 59.6 49.1
Urban 29.3 28.9 49.3 51.5 33.7
National 46.3 46.8 52.3 56.8 46
Source Kenya Economic Surveys (Various Issues), KNBS 2007 Source Kenya Economic Surveys (Various Issues), KNBS 2007 Source Kenya Economic Surveys (Various Issues), KNBS 2007 Source Kenya Economic Surveys (Various Issues), KNBS 2007 Source Kenya Economic Surveys (Various Issues), KNBS 2007 Source Kenya Economic Surveys (Various Issues), KNBS 2007
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Study Objectives

• Identify linkages between trade, rural
  livelihoods and food security more specifically
  within the Kenyan context.
• Determine magnitude and composition of regional
  trade in Agriculture (both formal and informal)
  and inherent effects on rural livelihoods and
  food security in Kenya.
• Carry out a review of national policies related
  to agriculture food security, trade, and
  regional integration

8
Methodology

• Literature review to establish the Linkages
  between Trade, Livelihoods and food security.
• Secondary data used for trend analysis
• Primary data FGDs with farmer organizations.
• Key Informants
• Review of Policies, Legal and Regulatory
  Frameworks

9
Agritrade-Rural Livelihoods-Food Security Linkages

• Agricultural trade and Rural Livelihoods
• Incomes farmers are able to sell or export
  their produce
• -processing and distribution agricultural
  produce
• - incomes from labour in large and medium
  farms
• Thus if incomes from agric trade are rewarding
  then we expect
• Rural households incomes to increase hence
  increased demand for food and other consumer
  goods,
• creation of non-farm jobs and employment
  diversification, especially in small towns close
  to agricultural production areas
• surplus rural labor is absorbed, raises demand
  for agricultural produce and again boosts
  agricultural productivity and rural incomes

10
Agritrade-Rural Livelihoods-Food Security Linkages

• Thus, impact on rural livelihood comes through
• falling real food prices,
• creation of employment,
• higher real wages, and
• rising incomes from small farm households

11
Trade, Rural Livelihoods and Food Security contd
- Positive Linkages

• Linkages between agricultural trade and rural
  livelihoods therefore occur in three phases
  according to Evans 1990
• 1. rural households earn higher incomes from
  production of agricultural goods for non-local
  markets, and increase their demand for consumer
  goods
• 2. this leads to the creation of non-farm jobs
  and employment diversification, especially in
  small towns close to agricultural production
  areas
• 3. which in turn absorbs surplus rural labor,
  raises demand for agricultural produce and again
  boosts agricultural productivity and rural
  incomes (Evans, 1990).

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Trade, Rural Livelihoods and Food Security
Negative Linkages

• Trade Liberalization such as SAPs many sectors
  became uncompetitive.
• International trade policies such as
• Subsidies -dampened world prices, leading to
  collapse of many agricultural sectors in
  developing countries
• NTBs such as standards have also acted as
  barriers for developing country exporters.
• Consequently, production declined and this led to
  a drop in employment for farmers and dependency
  on imported food leading to major changes in food
  prices and worsening the food security and
  livelihoods situation.

13
Rural Livelihoods, Poverty and Food Security
The Kenyan Situation

• Poverty rates in Kenya are 46.1 percent. Rural
  poverty is higher than the national average and
  stands at 49.1.
• Rural poverty mostly associated with agriculture
  and land
• Highest in ASALs in Eastern and North-eastern
  due to poor climatic conditions
• High potential areas e.g Central are over
  exploited due to population pressure
• Poverty is highly correlated with food security
  i.e high poverty areas are the most food insecure
  Asals and Coast
• Food security worsened since 1990s and by 2003
  imports were 14 percent of total value of imports
  and 25 percent of agricultural imports.Trends In
  National Food Security Indicators

14
Food Security Situation contd

• Statistics show that only 47 percent of the
  entire Kenyan population is food secure.
• Hence Kenyas dependency on food Aid has
  continued to rise over the years and is observed
  to have high peaks in 1993, 2001 and in 2007
• Currently WFP is feeding a total of 3.6 million
  people in 25 districts and 535,000 children are
  given school meals through the school feeding
  program
• Food imports especially cereals have also
  increased deficits last year was 95,000MT met
  through imports
• Most imports come from the region Uganda and
  Tanzania 108,155 MT and 56,900 respectively

15
Rural livelihoods and Implications on food
Security in Kenya

• More than 70 percent of Kenyas Population live
  in rural areas
• Agriculture and pastoralism the mainstay of the
  Kenyan Rural economy
• An average of 68 rural household income is
  derived from off-farm incomes, and around 32
  comes from own production (crops and livestock
  products), with maize and wheat being the leading
  sources of crop income.
• Incomes from Agriculture alone are not sufficient
  to meet food needs especially in ASALs hence
  purchase of food is very common.

16
Magnitude, Composition and Direction of
Trade-Kenya

• Exports
• dominated by the agricultural sector-
  horticulture 22 tea 17.9, others eg petroleum
  and manufactured exports about 45 percent of
  exports.
• Main destinations EU 22 and Africa 60
  Percent
• Exports to the COMESA and EAC region consist of
  manufactured products such as Fermented tea
  (35), Cement (4.5), Cigarettes (4.2) amongst
  others
• Exports to Africa increased 26 in the past 10
  years
• Exports to Africa facilitated by EAC and COMESA
  customs union
• - Main barriers to Exports include NTBs, poor
  infrastructure and delays at various border points

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Magnitude, Composition and Direction of Trade

• Imports
• Kenyas imports mainly consist of petroleum
  products (14 percent of total imports) crude
  petroleum (9 percent) industrial machinery (11
  percent) and motor vehicles (6.4 percent).
• Main source of Kenyas imports include Middle and
  Far East China and India, UAE and EU countries
  including South Africa.
• Kenya also imports food specifically maize from
  EAC and COMESA countries to meet shortages

18
Informal Trade and Food Security contd

• Goods entering Kenya included, maize, beans,
  bananas, fresh fruits and vegetables-tomatoes,
  onions avocados, pineapples and Textiles
• Goods leaving Kenya included counterfeit
  batteries, cigarettes, detergents, beverages,
  sugar, mattresses and other household goods
• Reasons for illicit trade
• delays at the border which in some cases along
  Busia-Malaba border was up to 7 hours
• High Administrative costs -numerous requirements
  such as trade licenses business and road
  license, phyto-sanitary certificates
• Corruption and bribery at police checkpoints
• Magnitude is hard to measure
• Positive aspects
• Improve access to food
• drives down prices of goods - a plus for
  consumers but not producers
• Provides incomes and improves livelihoods for
  traders

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Implications of Trade on Food Security

• Continued high prices of food due to
• a) sustained high level of effective demand in
  the country, especially in main urban centers,
• b) accelerated appreciation of the Kenyan
  currency in recent years
• c) the impacts of increased internal production
  costs, given the general cost of inputs and other
  production outlays, and
• d) the overall rise in inflation, - rising to
  31.5 percent in May and 29.4 percent in June
  2008,
• e) Overwhelming dependence on maize as the key
  staple for the majority of the population.
• f) drought and poor weather conditions
• g) rising food prices which is a global
  phenomenon as well as
• h) The post-election violence which occurred in
  2008 January

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Implications of Trade on Food Security contd

• Increased imports cheap food imports acting as
  a dis-incentive for producers although this has
  improved access to food Slide 26 Slide 27
• On one hand loss of incomes for producers and
  labourers but on the other hand creation of
  employment and incomes for traders Slide 25
• Dependency on food aid has also acted as a
  dis-incentive for production although it has
  provided much needed food for millions of people
  in extreme food insecurity trends in foodaid.doc

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Policy, Institutional frameworks and the
interplay of Stakeholders

• Trade liberalization under SAPs and various
  trade agreements such as EAC and COMESA have led
  to openness and reduction of tariffs
• Even after the trade regime was liberalized cheap
  food imports have suppressed domestic food prices
  and therefore food production
• Food security policy has laid much emphasis on
  Maize sector ignoring other sectors which could
  raise incomes of rural folk
• Food Security policy not coherent with trade
  policy

22
Agricultural Policies and recent Developments in
the Sector

• Strategy for Revitalization of Agriculture 2003-
• wide spread stakeholder consultations
• sector based approach- implementation by
  different ministries
• National food security policy
• Parliamentary committees SUPA, COTEPA
• Advocacy groups Civil society SUCAM
• Programs to help farmers
• fertilizer subsidy program
• National Accelerated Agricultural Input Access
  Project
• Kilimo plus- voucher system for seeds and
  fertilizer
• Kilimo biashara Low costcost credit to purchase
  inputs (Ksh 605 million for 121,000 farmers
• Njaa Marufuku - Ksh 327.6 million to assist 1,866
  groups, 40 schools and 35organizations to
  undertake food security projects.

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Agricultural Policies and recent Developments in
the Sector contd

• Agricultural Sector Development Strategy
  2010-2020
• Part of Comprehensive African Agricultural
  Development Programme (CAADP) launched in Kenya
  in 2005.
• Agriculture positioned as the key driver for
  delivering 10 percent annual economic growth rate
  envisaged in the vision 2030
• Recognises food security as an integral part of
  agriculture
• Emphasis also placed on other enabling factors
  such as infrastructure, NTBs etc
• Implementation through ASCU- Agricultural Sector
  coordination unit

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Conclusions and Policy Recommendations

1. Need for an equitable global environment for
   trade removal of subsidies.
2. Taking care of regional NTBs to enhance regional
   trade
3. Most of what needs to be done is mainly at
   National level
4. Need for a clear and comprehensive trade policy
   that takes into account food security issues
5. Addressing infrastructural bottlenecks and
   redistributive mechanisms from surplus to deficit
   areas.
6. Need for a comprehensive institutional framework
   to enable private sector participation in the
   process as well as consolidation of information
   for future referencing.

25
Institutional Frameworks

• The integrated approach-
• KFSMG, KFSSG
• National Food Security committee-consisting of
  key govt ministries, donors , civil society and
  private sector
• Institutions dealing more and more with emergency
  situations
• The NCPB

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Trends In National Food Security Indicators
Year Per Capita Food Production (Kg/yr) Food self-Sufficiency ratio Cereal Self Sufficiency ratio Ratio of food import to agricultural exports Ratio of food imports to total exports
1992 626.42 0.98 0.91 0.21 0.16
1994 615.45 1.00 1.00 0.29 0.19
1996 602.93 0.94 o.71 0.14 0.09
1998 612.41 0.95 0.76 0.22 0.15
2000 561.69 0.91 0.65 0.18 0.15
2002 569.88 0.91 0.71 0.20 0.11
2004 581.98 0.93 0.79 0.37 0.21
2006 560.76 0.90 0.67 0.33 0.19
2008 554.78 0.87 0.60 0.42 0.29
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Table 3.6 Wage employment by sector by region(numbers)2007   Table 3.6 Wage employment by sector by region(numbers)2007   Table 3.6 Wage employment by sector by region(numbers)2007   Table 3.6 Wage employment by sector by region(numbers)2007   Table 3.6 Wage employment by sector by region(numbers)2007  
 Region Agriculture Trade Services Services
Nairobi 10229 67038 45709 178761
Central 7059 7495 4176 15185
Coast 1150 3120 15817 60459
Eastern 115 1045 737 1640
Nyanza 539 7535 4038 34035
Western 643 3281 385 5931
Rift Valley 11580 20841 9054 43663
North Eastern - No data available   North Eastern - No data available   North Eastern - No data available   North Eastern - No data available   North Eastern - No data available  
Services Finance, Insurance, real estate and business services     Community, social and personal services Services Finance, Insurance, real estate and business services     Community, social and personal services Services Finance, Insurance, real estate and business services     Community, social and personal services Services Finance, Insurance, real estate and business services     Community, social and personal services Services Finance, Insurance, real estate and business services     Community, social and personal services
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