GLOBAL AGRICULTURE AND TRANSPORTATION PRICE TRENDS AND FOOD SECURITY - THE CASE OF COMESA Cris MUYUNDA, PhD Senior Agricultural Advisor, COMESA USDA/USAID.

GLOBAL AGRICULTURE AND GLOBAL AGRICULTURE AND TRANSPORTATION PRICE TRENDS TRANSPORTATION PRICE TRENDS

AND FOOD SECURITYAND FOOD SECURITY- THE CASE OF COMESA- THE CASE OF COMESA

Cris MUYUNDA, PhDCris MUYUNDA, PhDSenior Agricultural Advisor, COMESA Senior Agricultural Advisor, COMESA USDA/USAID FOOD AID CONFERENCEUSDA/USAID FOOD AID CONFERENCE

April 14-16, 2008, KANSAS CITY, MISSOURI, USAApril 14-16, 2008, KANSAS CITY, MISSOURI, USA

OUTLINE OF PRESENTATIONOUTLINE OF PRESENTATION COMESA OVERVIEW : MARKET PARAMETERS COMESA OVERVIEW : MARKET PARAMETERS

FOOD SECURITY SITUATIONFOOD SECURITY SITUATION

MAJOR ISSUES OF CONCERN OVER FOOD MAJOR ISSUES OF CONCERN OVER FOOD PRICESPRICES

MALAWI FOOD SECURITY SUCCESS STORYMALAWI FOOD SECURITY SUCCESS STORY

KEY TRANSPORTATION ISSUESKEY TRANSPORTATION ISSUES CONCLUSIONCONCLUSION

COMESA OVERVIEW : KEY COMESA OVERVIEW : KEY PARAMETERSPARAMETERS

FORMED IN 1994 FROM PTA, itself est. 1982FORMED IN 1994 FROM PTA, itself est. 1982 19 member states19 member states POPULATION : POPULATION : 400 million – big potential 400 million – big potential

marketmarket Intra-COMESA trade: US$9 billion (2007 Intra-COMESA trade: US$9 billion (2007

est.); Extra-COMESA trade: US$90 billionest.); Extra-COMESA trade: US$90 billion US$3.0 billion (about 40%) of intra US$3.0 billion (about 40%) of intra

COMESA-trade is food and agricultural raw COMESA-trade is food and agricultural raw materialsmaterials

AGRICULTURE IN COMESAAGRICULTURE IN COMESA

32% of COMESA GDP32% of COMESA GDP

65% of Raw Materials for Industry: 65% of Raw Materials for Industry: Agricultural commodities are major Agricultural commodities are major drivers for growth in intra-COMESA drivers for growth in intra-COMESA trade. trade.

80% of employment 80% of employment

FOOD SECURITY SITUATION IN FOOD SECURITY SITUATION IN COMESACOMESA

IN IN ADDITION TO EMEGENCY FOOD AID:ADDITION TO EMEGENCY FOOD AID:

2004/2005: 2004/2005: 11 MEMBER STATES11 MEMBER STATES WERE IN FOOD DEFICITS WERE IN FOOD DEFICITS AND REQUIRED EXTERNAL FOODAND REQUIRED EXTERNAL FOOD

2005/2006: 2005/2006: 5 MEMBER STATES5 MEMBER STATES EXPERIENCED FOOD EXPERIENCED FOOD DEFICITS, BUT THE WHOLE REGION HAD A SURPLUS OF DEFICITS, BUT THE WHOLE REGION HAD A SURPLUS OF 550,000 MT.550,000 MT.

2006/2007: 2006/2007: 2 MEMBER STATES2 MEMBER STATES EXPERIENCED FOOD DEFICITS, EXPERIENCED FOOD DEFICITS, BUT WHOLE REGION HAD A SURPLUS OF 1,500,000 MT.BUT WHOLE REGION HAD A SURPLUS OF 1,500,000 MT.

2007/2008: …….2007/2008: …….

OVERALL: MAJOR OVERALL: MAJOR INFRASTRUCTURE / DISTRIBUTION CHALLENGEINFRASTRUCTURE / DISTRIBUTION CHALLENGE

NEGATIVE IMPACT OF HIGH NEGATIVE IMPACT OF HIGH PRICESPRICES

AFFECTS AFFECTS POVERTY LEVELSPOVERTY LEVELS (Studies indicate (Studies indicate 10% 10% increase in prices leads to 2.3% increase in increase in prices leads to 2.3% increase in poverty in Africa)poverty in Africa)

HAS IMPACT ON HAS IMPACT ON NUTRITIONAL STATUSNUTRITIONAL STATUS OF THE OF THE CONTINENT WHERE ALREADY CONTINENT WHERE ALREADY SOME 200 MILLION SOME 200 MILLION PEOPLE ARE CHRONICALLY MALNOURISHEDPEOPLE ARE CHRONICALLY MALNOURISHED

HAS IMPACT ON HAS IMPACT ON POLITICAL SITUATIONPOLITICAL SITUATION NATIONALLY, REGIONALLYNATIONALLY, REGIONALLY

COULD AFFECT COULD AFFECT PEACE AND SECURITYPEACE AND SECURITY SITUATION SITUATION

POSITIVE IMPACT OF HIGH POSITIVE IMPACT OF HIGH PRICESPRICES

HIGH FOOD PRICES BRING HIGH FOOD PRICES BRING ECONOMIC GROWTH IN ECONOMIC GROWTH IN AGRICULTURAL LED ECONOMIES: AGRICULTURAL LED ECONOMIES: AGRICULTURE is 32% of COMESA AGRICULTURE is 32% of COMESA GDP GDP

GROWTH REDUCES POVERTY: GROWTH REDUCES POVERTY: 1% 1% INCREASE IN GROWTH ELIMINATES INCREASE IN GROWTH ELIMINATES 6 MILLION PEOPLE OUT OF POVERTY6 MILLION PEOPLE OUT OF POVERTY

MAJOR FOOD SECURITY MAJOR FOOD SECURITY SUCCES STORY : MALAWISUCCES STORY : MALAWI

2004/2005: 2004/2005: SERIOUS FOOD SERIOUS FOOD DEFICIT: 800,000 MT; DEFICIT: 800,000 MT; INTERNATIONAL FOOD APPEALINTERNATIONAL FOOD APPEAL

2005/2006: 2005/2006: 400,000 MT400,000 MT FOOD FOOD SURPLUSSURPLUS

2006/2007: 2006/2007: 1,200,000 MT1,200,000 MT FOOD SURPLUSFOOD SURPLUS

MALAWI: MAJOR MALAWI: MAJOR CONTRIBUTING FACTORS TO CONTRIBUTING FACTORS TO

LAND LOCKED COUNTRY LAND LOCKED COUNTRY “SUCCESS”“SUCCESS”

FERTILISER SUBSIDY PROGRAMFERTILISER SUBSIDY PROGRAM

POLICY FOCUS: BUDGET IS ON THE POLICY FOCUS: BUDGET IS ON THE INCREASEINCREASE

COMPREHENSIVE FOCUS: IRRIGATION, COMPREHENSIVE FOCUS: IRRIGATION, FERTILIZER, MARKETING (COMMODITY FERTILIZER, MARKETING (COMMODITY EXCHANGE)EXCHANGE)

KEY KEY TRANSPORTATION/RELATED TRANSPORTATION/RELATED

ISSUES ISSUESISSUES ISSUES LANDLOCKED COUNTRIES, 9 out of 19 countries LANDLOCKED COUNTRIES, 9 out of 19 countries (up to (up to

55% of commodity costs)55% of commodity costs)

TRANSPORT DELAYS, World Bank Study TRANSPORT DELAYS, World Bank Study (each day is (each day is equivalent to 400 km)equivalent to 400 km)

ISLAND NATIONS, Net Importers of Food – food prices affecting ISLAND NATIONS, Net Importers of Food – food prices affecting themthem

AIR TRANSPORT AS A SOLUTION FOR LANDLOCKED COUNTRIES TO AIR TRANSPORT AS A SOLUTION FOR LANDLOCKED COUNTRIES TO RAISE INCOMESRAISE INCOMES

COMPREHENSIVE APPROACH – CAADP.COMPREHENSIVE APPROACH – CAADP.

POOR INTEGRATION: EXPORT BANSPOOR INTEGRATION: EXPORT BANS

Additional Transport ChallengesAdditional Transport Challenges Lack of diversified transport systems based on inter Lack of diversified transport systems based on inter

and multi modal transport corridors comprising road, and multi modal transport corridors comprising road, rail, water and air transport. rail, water and air transport.

Poor physical connectivity: number of Poor physical connectivity: number of kilometers of kilometers of paved road per million people is about 60.paved road per million people is about 60.

Brazil and India: Brazil and India: over 1,000over 1,000. .

Developed World, the kilometers of paved road per Developed World, the kilometers of paved road per million people is million people is about 20,000about 20,000. .

Sources of energy: need to aggressively explore Sources of energy: need to aggressively explore hydro-power, bio-fuels and nuclear energy given the hydro-power, bio-fuels and nuclear energy given the abundant resources in the region. abundant resources in the region.

REAL CHALLENGE: LOW CEREAL REAL CHALLENGE: LOW CEREAL YIELDS – empty back tripsYIELDS – empty back trips

POTENTIAL POTENTIAL SOLUTIONS/CONCLUSIONSSOLUTIONS/CONCLUSIONS

HARMONIZED ROAD TRANSITHARMONIZED ROAD TRANSIT SYSTEMS, COMESA SYSTEMS, COMESA CARRIER’S LICENCE, AXLE LOADING AND MAXIMUM CARRIER’S LICENCE, AXLE LOADING AND MAXIMUM LOADING DIMENSIONS, COMESA YELLOW CARD LOADING DIMENSIONS, COMESA YELLOW CARD INSURANCEINSURANCE

COMMON INVESTMENT AREACOMMON INVESTMENT AREA, RECOGNISES , RECOGNISES COMESA INVESTOR – REDUCED COST OF COMESA INVESTOR – REDUCED COST OF DOING BUSINESSDOING BUSINESS

DEVELOPMENT CORRIDORS, not just transport corridorsDEVELOPMENT CORRIDORS, not just transport corridors

CAADP: LAND AND WATER, CAADP: LAND AND WATER, MARKETS/INFRASTRUCTURE, FOOD/NUTRITION MARKETS/INFRASTRUCTURE, FOOD/NUTRITION SECURITY, TECHNOLOGY/EDUCATION SECURITY, TECHNOLOGY/EDUCATION

PPPs: ACTESA, RELPA, AAMPPPPs: ACTESA, RELPA, AAMP

THANK YOUTHANK YOU