EASTERN AFRICA GRAIN COUNCIL (EAGC) Grain Value Chain in EA. Gerald Makau MASILA, Executive Director, EAGC Presented to the E.A Agric Value Chain Investment.

EASTERN AFRICA GRAIN COUNCIL (EAGC)

Grain Value Chain in EA.

Gerald Makau MASILA,Executive Director, EAGC

Presented to theE.A Agric Value Chain Investment SUMMIT4th – 6th Dec 2012, Kampala, UGANDA

Contents

• Grain Sector in EASTERN AFRICA

• Intro to EAGC Who, Why & What

• Grains Investment Opportunities

Grain Sector in E. AfricaMAIN GRAINS/CEREALS

•MAIZE•WHEAT•RICE•BEANS•TEFF•SORGHUM•MILLET•FINGER MILLET•SOYA BEANS•SIMSIM..etc...

GRAIN VALUE CHAIN.....PR

OD

UC

TIO

N

/FAR

MER

S

POST

HA

RVE

ST

MG

T/ST

OR

AGE

TRAD

E N

ATIO

NAL

/IMPO

RT/

EXPO

RT

PR

OC

ES

SIN

G/

MIL

LIN

G/M

AN

UFA

CTU

RE

CO

NS

UM

ER

/

DIS

TRIB

UTI

ON

/

MA

RK

ETI

NG

•PRODUCTION ( SMALLHOLDERS 70-80%)•INPUTS(SEEDS, AGRO-INPUTS, FERTS

• HIGH POST HARVEST LOSSES• FEW STORAGE SYSTEM/SOLUTIONS• LOW FINANCE & MARKET ACCESS• LACK MKT INFORMATION• RISK MANAGEMENT

•PRICE VOLATILITY, PESTS & DISEASES•DROUGHTS & FLOODS

•COMPETITION (INTERNATIONAL/REGIONAL

•POLICY – MACROECON•FISCAL •MONETARY

•NATIONAL POLICIES•IMPORT/EXPORT

•REGIONAL POLICIES(RECS)•AFRICAN UNION(AUC)•IGAD,COMESA,EAC•SADC, ECOWAS etc

Grain Sector CHALLENGES... .......& OPPORTUNITIES• PRODUCTION ISSUES

– QUANTITY & QUALITY– SAFETY & NUTRITION

• TRADE IN FOOD – LOW– MARKET ACCESS– CROSS BORDER TRADE

• HIGH TRANSACTION COSTS• FARMER INCOMES – LOW• FINANCE COSTS - HIGH

• INVESTING IN AGRIC– CAADP - AUC– MDGs

• STRUCTURED TRADE– STDS & GRADES– PHH& M, WRS– COMMODITY EXCHANGE

• ENABLING POLICIES• HARMONIZATION• REG. INTEGRATION

EAGC –Who we are….Grain Value Chain Actors..GETTING TOGETHERInclusive…◦Farmers/Producers – small holder and large◦Traders, Handlers, Warehouses◦Processors/Milling/Manufacture

As Members of EAGC…Active, Affiliate, Associate

EAGC is a Regional Council for Grain Value Chain, Not for Profit Company, Ltd by Guarantee

Object – develop and promote regional structured grain TRADE and advocate for an enabling environment, reduce transaction costs trade barriers, increase incomes/reduce poverty, improve food security

Why EAGC.Grain Sector Issues – Global/Regional/National

Cross Border Trade Barriers◦ Frequent Bans on Cross Border Maize◦Tariff and Non Tariff Barrier◦ Informal Cross Border Trade

Access to Markets & Price Risks/Volatility

Standards/Quality/Grading/Safety/Aflatoxins

Post Harvest – Storage, Preservation, losses

Market mechanisms (ss/dd) vs State regulations

EAGC Scope and Relevance• Apex regional organisation for the grain industry providing a voice for farmers, processors and traders.

• Influencing regional integration of the grain trade through harmonisation, trade facilitation and market development.

• Development and provision of a Market Intelligence System on the grain industry

• A unique forum for food value chain policy advocacy

• Development of a national and regional Structured Trading System for grains

Key EAGC InitiativesStructured Trading Systems (STS)

Grades and Standards

Storage and warehousing

•Warehouse Receipt System,•Grades and Standards• Standard grain trading contracts• Arbitration mechanism•Financing Systems –Inventory Credits -Collateral Management •Commodity Exchange

Market Information Systems (MIS)

• Regional Agricultural Trade Intelligence Network (RATIN)•Electronic Grain Trade (EGT Africa)

Capacity Building

• Training on WRS, Grades and Standards, market information sourcing and disseminate ,trade contracts, rules trade and the process of arbitration

Trade Policy •Policy Dialogue•Regional harmonization of Trade Policies•Regional Food Balance Sheet•Removal of Trade barriers

Structured TRADING System

SILOSSTORES

WRS

SILOSSTORES

WRS

FARMERS/ TRADERS

FARMERS/ TRADERS

PROCESS/MILLING

PROCESS/MILLING

STANDARDS & GRADINGSTANDARDS & GRADING

RULES OF TRADE/CONTRACTS/ARBITRATIONRULES OF TRADE/CONTRACTS/ARBITRATION

MARKET INFO. SYSTEMMARKET INFO. SYSTEM

TRADING PLATFORM/COMMODITY EXCHANGE

TRADING PLATFORM/COMMODITY EXCHANGE

BANKSBANKS

ENABLING POLICY ENVIRONMENT/LEGAL & REGULATORY FOR STSENABLING POLICY ENVIRONMENT/LEGAL & REGULATORY FOR STS

Grain Sector Investment Opportunities• Level 1 - PRODUCTION

– Farmer Services – Seed, Inputs, Mech, Tech Trans

• Level 2 – POST HARVEST– Drying, Cleaning, Grading, Storage, WRS Services– Bulk Grain Handling, sea port/inland,

• Level 3 – PROCESSING/MANUFACTURING– Milling, Cereals, Animal Feeds, Distillation, Brewing

• Level 4 – TRADE, MARKETING, SUPPLY CHAIN– Logistics – in/out bound, Branding,

• Level 5 – FINANCE, ICT, INSURANCE

1. Kenya - Regional Head Office• Est 2006, 50+ members• STS program, WRS, MIS(RATIN)• Draft WRS bill, ABE 2010/11/12

2. Tanzania• Est 2008, Dar & Arusha office• 20+ members, TWLB, COPA,ABE

20123. Uganda

• Est 2008, Kampala office, • 30+ members, UCE , ABE 2010/12

4. Rwanda/Burundi Kigali office, Est Aug. 2012

5. South Sudan – Est 2012, Juba office6. Ethiopia – Est 2012, Addis office7. DR Congo, Zambia, Malawi ,8. AGT Summit , 2005, 2007,2009,2011

EAGC IN ESA REGION..........

FOO

D SECU

RITYEAGC & FOOD SECURITY

QUANTITY QUALITYVARIETY

AFFORDABLEMKT ACCESS

MKT INFO.

NUTRITIONACCEPTABLESOC-CULTURAL

EAGC Benefits• A unique FORUM for Grain Stakeholders

– TO ADDRESS COMMON ISSUES & CREATE PARTNERSHIPS– SET OWN PRIORITIES AND DESTINY FOR THE SECTOR– HAVE A VOICE/SAY IN THE POLICY DIALOGUE AFFECTING YOUR

BUSINESS– ACQUIRE SKILLS/TRAINING IN STS, REGIONAL TRADE– BUSINESS TO BUSINESS (B2B)LINKAGES – SUPPLY CHAIN & SERVICES

• A link to the REGIONAL GRAIN value chain– Larger Regional Market – More Sales/Profits– Regional Integration & Harmonization (Trade Policies, Standards etc– Regional & Continental Trade SUMMITS– Share best practice in the region – COMMODITY EXCHANGE!

• A link to the REGIONAL Market Information System (RATIN)– Access market and Trade info for ESA region, RFBS

EAGC Benefits.........Benefits Farmer Trade

rProcessorMillers

Financial Inst

Consumer

Market Information (RATIN) √ √ √ √ √

Grain Bulking, Market AccessBetter PricesPrice Risk Mgt (WRS/Commodity Exchange)

√√√

√√√

√√√ √

Finance Access (WRS, Inventory Credit)

√ √ √

Storage, Handling, SafetyQuality, Supply Guarantee

√ √ √ √

Policy/Enabling Environment √ √ √ √ √

Transaction Costs Reduced(Working Capital, Multi -Transact

√ √ √ √

Increased Incomes √ √ √ √

More Organised Clients √ √ √

EAGC - Vision

“To be the leading voice for the grain industry in Africa”

Mission.....“To advocate for an enabling environment and promote structured grain trade for optimum stakeholder benefits”

• SIDA ( Sweden)• USAID

– USAID/Compete– USAID/MLI – USAID/Lead

• FSD • AGRA

FAOWFP

CGA/UCEUNCTADRESAKSSASARECAICRISAT

CTAACDI/VOCA/KMPDNile Basin Initiative

EACCOMESA

African Union

Donor Support Partners

Asante Sana...

E.A AGRIC VALUE CHAINS STAKEHOLDERS....

“IT ALWAYS SEEMS IMPOSSIBLE, UNTIL IT IS DONE” Nelson Mandela