title of the presentation - un escap session 9...export import meat and edible meat dairy fish and...
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Asia‐Pacific Research and Training Network on Trade
www.artnetontrade.org
Trade‐led Growth in Times of CrisisAsia‐Pacific Trade Economists’ Conference
2‐3 November 2009, Bangkok
Session 9
Adapting Trade Policies to Promote Food Security and Sustainable Agriculture
Parakrama Samaratunga
Adapting Trade Policies to Promote Food Security
and Sustainable Agriculture
Parakrama Samaratunga
Institute of Policy Studies of Sri Lanka
Introduction
• Agricultural GDP - 13.4% (2008)
• Agricultural labour force – 32.7% of total employments (2008)
• Agricultural land use – approx. 45% of total land area (1990)
• Heavily concentrated on few major crops
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Introduction (contd.)• Low agricultural productivity partly explain rural poverty
– 11% ave. monthly HH income
• Failed to grow in to a vibrant commercial industry
• Failed to provide employment to the growing no. of youths
• A sustainable increase in agricultural production – poverty alleviation– reduction in unemployment– improvement in rural income and – improving income distribution
Enhance food security
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Food Security and Agriculture
• Availability at all times of adequate world food supplies of basic food stuff to offset fluctuations in production and prices
• Original macro-biased definition has evolved over time to include micro level dimensions of food availability, accessibility and utilization.
• Trade policy has strong implications on the present food security situation in the country via all three parameters.
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Food Availability –Sufficient availability of food with the nation through domestic production, net imports and carry-over of stocks
Food Accessibility –Individual’s capability to purchase food and to be able to procure food through safety nets
Food Utilization– Consumption of food by the household in a proper form. It also takes into account food preparation, storage and utilization, food safety, nutritional safety and dietary balance
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Food Security and Agriculture (contd.)
• Sri Lanka has been a net food importer since the time of the British colonial rule prior to 1948
• Lower productivity and competitiveness along with import surge resulted from speedy liberalization were partly responsible
• Increases in nonessential and “luxury” food items that do not contribute to improved food security.
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Table 1: Annual average food availability in Sri Lanka by major food commodity groups, 2000-2007 Production Exports Imports
Qty (000Mt)
% of the availabilit
y
Qty (000Mt)
% of the availabilit
y
Qty (000Mt)
% of the availabilit
y
Rice 3,079.82 2,979.11 96.73 3.94 0.13 104.65 3.40
Wheat flour 703.09 0.00 0.00 703.09 100.00
Other Cereals 163.81 42.51 25.95 121.30 74.05
Roots & Tubers 403.99 346.65 85.81 57.34 14.19
Sugar 559.39 52.71 9.42 506.68 90.58
Pulses & Nuts 144.60 33.39 23.09 111.21 76.91
Vegetable 960.53 841.78 87.64 6.07 0.63 124.82 12.99
Fruits 320.70 282.77 88.17 4.31 1.35 42.25 13.17
Meat 119.75 117.72 98.30 0.07 0.06 2.10 1.75
Eggs 51.35 51.35 100.00
Fish 356.38 294.95 82.76 15.24 4.28 76.66 21.51
Milk 272.37 215.21 79.01 57.16 20.99
Oil & Fats 977.58 1,022.59 104.60 61.93 6.33 16.93 1.73
Total 8,113.37 6,280.74 77.41 91.55 1.13 1,924.19 23.72
Commodity groups
Gross availabilit
y(000Mt)
Source: Department of Census and statistics, Food Balance Sheets (various years)
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0% 20% 40% 60% 80% 100%
% share
Export
Import
Meat and Edible MeatDairyFish and CrustaceansEdible vegetablesEdible fruits and nutsCoffee, tea, spicesCerealsOil seedsFats and oilsSugarsBeveragesTobaccoOthers
Figure 1: Export and import concentration of agricultural product groups
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Agricultural Trade Liberalization in Sri Lanka
• Level of intervention is deeper and the range of instruments much wider
• Trade interventions are increasingly focused on fewer and fewer products
• The bulk of the domestic support to farmers has been granted through non-trade-distorting measures
Table 2: Distribution of Agricultural Tariff Bands ‐ 2009
Rate % Free 2.5 6 15 28 specificad valorem/ specific
Number of items* (HS codes)
13 53 31 244 548 48 12
Percentage of total 1 6 3 26 58 5 1
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• With the increased support from increased MA and various forms of subsidies, – agricultural export earnings have grown– domestic food crops-no much improvement
• Real prices of food in Sri Lanka have declined faster relative to the world food price index
0
50
100
150
200
250
300
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Food
Pri
ce In
dex
0
0.005
0.01
0.015
0.02
0.025
0.03
0.035
Ret
ail P
rice
(Rs.
/kg)
FPI Rice (Nadu) Green Gram Cowpea Maize
Figure 2: Relative movements
of real annual average food prices
in the world and Sri Lanka
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00.0020.0040.0060.0080.010.0120.0140.0160.0180.02
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Rice Potato Green gram Cowpea Maize Groundnut
Figure 3: Annual averages of real farm gate prices of selected commodities
Liberalization from the Import Side
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-8000.00
-6000.00
-4000.00
-2000.00
0.00
2000.00
4000.00
6000.00
8000.0019
80
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Paddy Chilli Maize
Figure 4: Profitability of selected domestic food commodities: 1980‐2004
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0
20000
40000
60000
80000
100000
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
Prod
uction
(Mt)
Green Gram Cowpea Potato
Figure 5: Production of a few selected crops from 1970 to 2007
Therefore, liberalization of agricultural trade has had mixed results for the food security of the people and the sustainable development of the agricultural sector.
Institute of Policy Studies of Sri Lanka
050000
100000150000200000250000
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Rs.
mill
ion
0
2
4
6
8
% o
f GDP
Agricultural exports % of GDP
Figure 6: Value of agricultural exports for the last decade
• Sri Lankan agricultural exports rose to a modest one fourth of total exports in the year 2008.
Liberalization from the Export Side
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0 20 40 60 80 100
Bangladesh
India
Maldives
Nepal
Pakistan
Sri Lanka
Imports
Exports
Figure 7: Agricultural Trade Concentration: The Hirschmann-Herfindahl Index
• Limited export drive was not sufficient to improve income levels of the majority rural poor substantially and therefore could not result in any improvement in the food security situation of the country
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• Trade liberalization unstable food security
• Sri Lanka should have promoted exportable agricultural enterprises through diversification and thereby increasing income in the rural sector
• concern was more on imports of agricultural products and adjusting their tariff rates, removing barriers etc mainly to benefit the consumers and some times to protect farmers
faults in methods
Sri Lankan Stagnation
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0
0.05
0.1
0.15
0.2
0.25
0.3
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009R
&E
as a
% o
f Agr
icul
tura
l G
DP
0
1000
2000
3000
4000
5000
Ave
rage
yie
ld (K
g/ha
)
R&E Paddy Cow pea Maize Green Gram
Figure 8: Investment in Agricultural Research and Extension in Sri Lanka and Productivity Growth
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Self Sufficiency Model Self Reliance Model
Non competitive/ not economical/ less productivity/ no diversification
Food insecurity/less farmer income
competitive/ economical/
high productivity/ export diversification
Food security/enhanced
farmer income
An Alternative View
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An Alternative View (contd.)
• National level food security has to be handled with a combination of domestic food production and trade.
• Trade policy has a role to play in stimulating agricultural productivity growth, particularly in the earlier stages of economic development
• Such productivity growth is critical for achieving wider development objectives
• It is essential to adjust trade policies in line with production and agricultural policies in the country.
• Trade negotiations– give priority to development objectives/set policy goals – trade instruments that would be conducive to pursuing this objective
(e.g. sensitive and special products, SSM, maintaining preferences etc)
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Investment as a Solution
• investments required to shift resources out of subsistence, basic food or traditional export crop agricultural activities into higher-value alternative export activities
• Highest returns are for investment in R&D followed by infrastructure (roads) and institutions
• Investment traditionally in area expansion and yield expansion
• Even under most favourable conditions in economic and natural environments only a 20 percent increase in area cultivated can be expected in Sri Lanka
• Under the present yield levels, therefore, the production can not reach the national requirements - Area expansion will not be a solution
• Agricultural research and technological improvements is the onlyviable options for meeting future food needs and demands at reasonable prices
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CONCLUSION AND POLICY IMPLICATIONS
• The “sensible balance” between domestic production and trade should be found considering– Non level playing field situation in global trade
and technology– Transparency of trade policy – Stability in domestic food markets-price policy
and infrastructure– Continuous investment in technology
development/acquisition– Regional cooperation in the above– Maintaining growth in food production-with or
without protection
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THANK YOU