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Africa Can Help Feed Africa Removing barriers to regional trade in food staples
Paul Brenton, Trade Practice Leader, Africa Region, World Bank September 11th 2012
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Africa’s food trade balance has worsened
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ECA SAR SSA EAP LAC MENA
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Figure 4: Aggregate food staple trade by world regions, 1990 and 2010 (millions, US$)
1990 2010
ECA – Eastern Europe and Central Asia, SAR – South Asia, SSA – Sub Saharan Africa EAP – East Asia and Pacific, LAC – Latin America and Caribbean, MENA – Middle East and North Africa
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The Challenge: Regional demand increasingly met by imports.
• Only 5% of grain is sourced regionally
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Message 1: Potential for regional trade in staples to contribute to food security and growth not being exploited
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The solution is within Africa - enormous potential from regional trade
• The production of food staples for growing urban markets represents the largest growth opportunity for Africa’s farmers. • The market value of Africa’s food staple production is a least US$50 billion
• Demand expected to double by 2020 – primarily in cities
• Closing yield gaps would increase output of staples two to three fold
• Just 10% of agricultural land in the Guinea Savannah zone is being cultivated
• Increased cross-border trade plays a key role in linking food production areas to growing urban demand • If West Africa achieves potential yields and opens regional markets a $2 billion
trade deficit in staples could turn into a $12 billion surplus
• Global warming will demand better linkages from producing to consuming areas • Existing policies stances may undermine response to changing
weather patterns – eg export restrictions in Tanzania
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Key Message 2: Need to remove regulatory barriers to trade and competition along the whole value chain
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Trade barriers and lack of competition affect food security along the whole value chain
• Trade barriers limit access to seeds and fertilisers
• Transport costs high compared to other regions
• Crossing borders is dangerous and costly
• Trade policies are opaque and unpredictable
• Inappropriate quality standards and SPS rules can block trade
• Distribution services are not linking poor producers to poor consumers
Most of these barriers act to increase the gap between producer and consumer prices – reducing this gap would help counter current food price inflationary pressures and potentially benefit both producers and consumers
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Key Message 3: Support institutions that make markets work better
and help manage risks
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Institutions Matter
•Effective enforcement of regulations is essential for regional trade
• If regulatory agencies have to find own resources they will tend to over-regulate • Broad participation in regulatory design is essential
•Institutions that can support regional trade need a stable and predictable policy environment • Investment in acquiring market information — on cross-border
trade — is less likely in a risky policy environment. • Institutions that can help address the risks inherent in agricultural
markets will only flourish with clear even-handed regional trade policies
–Commodity exchanges, futures and options markets, Warehouse receipt systems and weather-indexed insurance need large markets to build volumes and exploit scale economies
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Key Message 4: Political economy issues seriously constrain implementation of open regional trade
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Political economy constraints have prevented successful implementation of reforms
• Limited impact of agreements to free up regional trade
• Lack of constituency for reform within countries – Most of the leverage affecting food trade policy emerges from
inside not from outside government.
• Two key factors to drive process forward – inclusive dialogue on food trade reform informed by timely and
accurate data on global, regional, and national markets
– A reform strategy that provides a clear transitional path to integrated regional markets rather than a single jump.
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Recommendations
• Two broad action areas – 1. implement a set of measures that will remove barriers to
regional food trade along the value chain. • Improve conditions for cross-border traders -Traders charter, STRs • Streamline documentary requirements – Review permits and licences • ……..
– 2. a program of enhanced dialogue on regional food trade that leads to a set of rules and disciplines on government interventions into regional agricultural trade
• Provide a More Transparent and Predictable Food Trade Policy Regime • Clear notification procedures of changes in policy • Define criteria under which governments will not intervene
• Need monitorable outcomes for key policy issues • Knowledge Platforms can support an inclusive dialogue
around regulatory reform and food trade policies
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Thank you
www.worldbank.org/afr/trade