Food Security in Africa Market and Trade Policy for Staple Foods in Eastern and Southern Africa Edited by Alexander Sarris and Jamie Morrison Food and Agriculture Organization of the United Nations, Rome, Italy Published by the Food and Agriculture Organization of the United Nations and Edward Elgar Cheltenham, UK Northampton, MA, USA' FAO, 2010 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing, Inc. 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A catalogue record for this book is available from the British Library Library of Congress Control Number: 2009937927 ISBN: 978 1 84844 851 3 FAO ISBN: 978 92 5 106220 3 (Hardback) FAO ISBN: 978 92 5 106221 0 (Paperback) Printed and bound by MPG Books Group, UK v Contents List of contributors vii Preface x1 Introduction 1Jamie Morrison and Alexander Sarris2 Trade, agriculture and optimal commercial policy in Eastern and Southern Africa 8Edward F. Bu e3 Smallholder market participation: concepts and evidence from Eastern and Southern Africa 41Christopher B. Barrett4 Governance and surplus distribution in commodity value chains in Africa 77Johan F.M. Swinnen, Anneleen Vandeplas and Miet Maertens5 Liberalizing trade under structural constraints in developing countries: a general equilibrium analysis of Tanzania 99Piero Conforti and Alexander Sarris6 Grain marketing policy at the crossroads: challenges for Eastern and Southern Africa 115T.S. Jayne, Antony Chapoto and Jones Govereh7 Uno cial cross-border trade in Eastern Africa 158Peter D. Little8 Regional trade and food security: recent evidence from Zambia 182Paul A. Dorosh, Simon Dradri and Steven Haggblade9 Maize trade and marketing policy interventions in Kenya 221Joshua Ariga and T.S. Jayne 10 Assessment of maize trade and market policy interventions in Malawi 252Ephraim W. Chirwa 11 Alternative staple food trade and market policy interventions: country-level assessment of South Africa 284Lulama Ndibongo Traub and Ferdinand Meyer 12 Maize trade and marketing policy interventions in Tanzania 317Andrew E. Temu, Appolinary Manyama and Anna A. Temuvi Food security in Africa 13 Assessment of alternative maize trade and market policy interventions in Zambia 354Jones Govereh, Antony Chapoto and T.S. Jayne 14 Trade and market policy interventions: a synthesis of insights from research on Eastern and Southern African grain markets 390Jamie Morrison and Alexander Sarris Index 413 vii Contributors Joshua Ariga Senior Research Fellow, Tegemeo Institute of Agricultural Policy and Development, Egerton University, Nairobi, Kenya, and Research Specialist, Michigan State University, East Lansing, MI, USA. Christopher B. Barrett Stephen B. and Janice G. Ashley Professor of Applied Economics and Management and International Professor of Agriculture at Cornell University, Ithaca, NY, USA, where he also serves at the Cornell Center for a Sustainable Future as Associate Director for Economic Development Programs and the Director of the Cornell Institute for International Food, Agriculture and Developments Initiative on Stimulating Agricultural and Rural Transformation. Edward F. Bu e Professor of Economics, Department of Economics, Indiana University, Bloomington, IN, USA. Antony Chapoto Assistant Professor, Department of Agricultural Economics, Michigan State University, East Lansing, MI, USA; and Ministry of Agriculture/Agricultural Consultative Forum/MATEP Food Security Research Project, Lusaka, Zambia. Ephraim W. Chirwa Professor of Economics, Department of Economics, University of Malawi, Zomba, Malawi. Piero Conforti Economist, Trade and Markets Division, Food and Agriculture Organization of the United Nations (FAO), Rome, Italy. Paul A. Dorosh Senior Research Fellow and Program Leader Ethiopia Strategy Support Program, International Food Policy Research Institute, Addis Ababa, Ethiopia. Simon Dradri Regional Food Security Assessment O cer, World Food Programme, Bangkok, Thailand. Jones Govereh Associate Professor, Department of Agricultural Economics, Michigan State University, East Lansing, MI, USA.viii Food security in Africa Steven Haggblade Professor of International Development, Department of Agricultural Economics, Michigan State University, East Lansing, MI, USA. T.S. Jayne Professor of International Development, Department of Agricultural Economics, Michigan State University, East Lansing, MI, USA. Peter D. Little Professor and Director of Emory Program in Development Studies, Department of Anthropoplogy, Emory University, Atlanta, GA, USA. Miet Maertens Assistant Professor, Centre for Agricultural and Food Economics at the Department of Earth and Environmental Sciences, University of Leuven (KUL), Belgium. Appolinary Manyama Lecturer, Agricultural Economics and Agribusiness, Sokoine University of Agriculture, Morogoro, Tanzania. Ferdinand Meyer Head, Bureau for Food and Agricultural Policy (BFAP), Department of Agricultural Economics, Extension and Rural Development, University of Pretoria, South Africa. Jamie Morrison Economist, Trade and Markets Division, Food and Agriculture Organization of the United Nations (FAO), Rome, Italy. Alexander Sarris Director, Trade and Markets Division, Food and Agriculture Organization of the United Nations (FAO), Rome, Italy. Johan F.M. Swinnen Professor of Development Economics and Director, LICOS Centre for Institutions and Economic Performance and Department of Economics, University of Leuven (KUL), Belgium. Andrew E. Temu Associate Professor, Agricultural Economics and Agribusiness, Sokoine University of Agriculture, Morogoro, Tanzania. Anna A. Temu Senior Lecturer, Agricultural Economics and Agribusiness, Sokoine University of Agriculture, Morogoro, Tanzania. Lulama Ndibongo Traub Research Specialist, Bureau for Food and Agricultural Policy (BFAP), Department of Agricultural Economics, Contributors ix Extension and Rural Development, University of Pretoria, South Africa. Anneleen Vandeplas PhD fellow of the Research FoundationFlanders and researcher, LICOS Centre for Institutions and Economic Performance and Department of Economics, University of Leuven (KUL), Belgium. x Preface The origins of this volume stem from interactions with developing country government o cials and policy makers on trade-related issues, where it became apparent that there was a need to supplement the debates related to multilateral trade negotiations, and associated trade capacity-building activities, with a clearer understanding and re ection among policy makers and those seeking to provide policy advice, on the type of agricul- ture sector trade policy that would be desirable for di erent developing countries, in boosting their growth and enhancing their food security situation. The perception is that many developing countries are not in a strong position to articulate their strategy for trade negotiations and end up being passive recipients of various modalities and rules, largely formulated by, and based on strategies and interests of, other countries, the purpose of which is not necessarily compatible with promoting their own develop- ment. At the same time, this weakness may have led to the defensive strate- gies of many developing countries who seek to maintain high bound levels of agricultural protection, despite the perceived large margins of conces- sions they could o er in light of the large tari overhangs. One of the regions where this need is felt very strongly is Eastern and Southern Africa. The region has considerable potential for producing basic food products, such as cereal staples, but has experienced growing imports of these and related food products over the last decade. In response to such observations, the FAO Trade and Markets Division convened at the end of 2007 a meeting of 40 experts from African univer- sities and research institutes, regional organizations, grain trading com- panies, donor agencies and international organizations. Selected papers presented at the meeting, after appropriate revisions, form the rst set of chapters in this volume. Subsequent to the meeting, a series of country case studies were undertaken by the participants representing the African universities and research institutes. A selection of these case studies form the basis of the second set of chapters in this volume. The editors would like to acknowledge the active participation of all workshop participants and authors of the various chapters in this volume. In particular, they would like to thank Thom Jayne of Michigan State University for his assistance in organizing the meeting, identifying Preface xi suitable case studies, as well as with the editing of these case studies into their current versions. The editors would also like to thank Emily Carroll and Katherine Clyne of the FAO Trade and Markets Division for their assistance in formatting the manuscript. 1 1. Introduction Jamie Morrison and Alexander Sarris Trade policy instruments have been used by governments in Eastern and Southern Africa (ESA) in pursuit of a range of policy objectives. Import tari s and export taxes have been used for revenue-raising purposes, and in conjunction with import licensing and export restrictions, to modify trade in an attempt to stabilize domestic staple food availability and food prices for food security reasons. Trade policy remains key in the narrow range of instruments that are feasibly available to many poorer developing countries due to their limited budgetary resources and administrative capacity. Although tari s have generally been applied at relatively low levels across the region, coun- tries recognize the importance of maintaining bound (allowable) tari s at higher rates to provide exibility in their use in support of sectoral development, and as safeguard measures to allow short-term increases in applied tari s to o set potential damage to domestic sectors as a result of surges in competitive or subsidized imports. Trade policy debates in recent times have been coloured by the fact that the domestic market impacts of freer trade in individual countries have not necessarily been the primary focus of attention. The fora of debate relating to the use of trade policy have generally been in the context of trade negotiations, with often con icting results of analytical studies used to put pressure on trading partners to encourage further reduction of bar- riers to trade and to minimize the potential use of safeguard measures. The divisive debates surrounding the potential World Trade Organization (WTO) Special Product provisions and on the potential use of a Special Safeguard Mechanism are a case in point. As a result, trade negotiations are in danger of inadvertently constraining countries ability to use trade policy as a component of policy interventions in support of increased pro- ductivity levels in their agriculture sectors. However, the use of trade policy instruments in pursuit of multi- ple objectives has often had unintended e ects, increasing rather than reducing levels of uncertainty facing producers, traders and consumers, and thereby undermining domestic policy interventions implemented in support of agriculture sector development.2 Food security in Africa The use of trade policy in pursuit of food security objectives has been particularly prominent in the context of the recent wide swings in food prices to which some importing countries initially responded by further reducing already low levels of applied tari s, while some exporting coun- tries applied export restrictions in an attempt to exert downward pressure on domestic prices. The combination of limited substantive evidence on appropriate trade and domestic policy interventions, the misuse of existing evidence in trade negotiations and the unpredictable nature of trade policy use in practice, has therefore made it di cult to create an objective debate as to exactly what roles trade and domestic policy should play in speci c country and sector contexts. There is, therefore, a felt need in many developing countries to promote an improved understanding of how agricultural trade policies are related to overall growth, food security and poverty alleviation objectives and strategies, and what types of agricultural and food sector trade policies would be more conducive to the various development objectives. Not only is this a prerequisite to successfully negotiating appropriate trade rules in the multilateral, regional and bilateral trade agreements, but it is critical to the design of trade policy supportive of such objectives. One of the regions where this need is felt strongly is ESA. The region has considerable potential for producing basic food products, such as cereal staples, but has experienced growing food imports of those, and other related products, over the last decade. Data suggest that of the very large and growing imports of cereals into Eastern and Southern African countries, only a small share originates in those countries or in other African