Kenya nd2010 ppt-otieno

GLORIA OTIENO

Regional Trade and Rural Livelihoods: Implications on

Kenya’s Food Security

Structure of PresentationBackground

Context and Study Objectives and MethodologyExploring Agritrade-Rural Livelihoods-Food

Security LinkagesRegional Trade and Implications on Rural

Livelihoods and Food Security In Kenya Rural Livelihoods, poverty and Food Security in Kenya Trade and its linkages with Rural Livelihoods in Kenya Implications of regional trade and livelihoods and food

securityPolicy, Institutional Frameworks and Interplay of

Stakeholders

Conclusions and Recommendations

Background World’s malnourished increased from over

800 million in 2008 to 923 million in 2009 (FAO, 2009)

Kenya ranks 29 among the countries with worlds poorest food security

Effects partly due to recent droughts and rising food prices as well as rising poverty

70 percent Kenyans -net buyers of food dependence on rain fed agriculture -

output from maize fell from a surplus of 9 million bags in 2006 to a deficit of 35 million bags at present

Background contd’

Kenya thus relies on imports and Trade is important for stabilizing the national food supplies and food prices.

 However trade is affected by tariffs, NTBs and subsidies.

Regional trade important for food security

Kenya : Stylized Facts

Variable 2000 2002 2003

2005

2006 2007

Economic growth 5.8 1.3

Agric as % of GDP 24

Exports value (mn)

69,285 244.5bn

412.4bn

Imports Value 314.9bn

605.1bn

Export as % of GDP

23.6 27.4 25.1

Import as % of GDP

30.4 29.8 37.5

Some Stylized Facts about Kenya Agritrade, Poverty and Food

Security

Trade deficit has been wideningValue of exports increased by 14% in last 2yrs but that of imports grew faster and at a higher rate (16%)Poverty still remains high and overlaps largely with rural areas Where 67% of pop lives, affecting largely small-scale farmers

Kenya : Stylized Facts cont’d

Region 1992 1994 1997 2000 2007

Rural 42.o 46.8 52.9 59.6 49.1

Urban 29.3 28.9 49.3 51.5 33.7

National 46.3 46.8 52.3 56.8 46

Source: Kenya Economic Surveys (Various Issues), KNBS 2007

Poverty Rates Selected Years (1992-2007)

Study Objectives1. Identify linkages between trade, rural

livelihoods and food security more specifically within the Kenyan context.

2. Determine magnitude and composition of regional trade in Agriculture (both formal and informal) and inherent effects on rural livelihoods and food security in Kenya.

3. Carry out a review of national policies related to agriculture – food security, trade, and regional integration

Methodology

Literature review to establish the Linkages between Trade, Livelihoods and food security.

Secondary data used for trend analysis Primary data – FGDs with farmer

organizations.› Key Informants

Review of Policies, Legal and Regulatory Frameworks

Agritrade-Rural Livelihoods-Food Security Linkages

Agricultural trade and Rural Livelihoods Incomes – farmers are able to sell or export their produce

-processing and distribution agricultural produce- incomes from labour in large and medium farms

Thus if incomes from agric trade are rewarding then we expect:

› Rural households’ incomes to increase hence increased demand for food and other consumer goods,

› creation of non-farm jobs and employment diversification, especially in small towns close to agricultural production areas

› surplus rural labor is absorbed, raises demand for agricultural produce and again boosts agricultural productivity and rural incomes

Agritrade-Rural Livelihoods-Food Security Linkages

Thus, impact on rural livelihood comes through › falling real food prices,

› creation of employment,

› higher real wages, and

› rising incomes from small farm households

Trade, Rural Livelihoods and Food Security contd’ - Positive Linkages

Linkages between agricultural trade and rural livelihoods therefore occur in three phases according to Evans 1990:

1. rural households earn higher incomes from production of agricultural goods for non-local markets, and increase their demand for consumer goods

2. this leads to the creation of non-farm jobs and employment diversification, especially in small towns close to agricultural production areas

3. which in turn absorbs surplus rural labor, raises demand for agricultural produce and again boosts agricultural productivity and rural incomes (Evans, 1990).

Trade, Rural Livelihoods and Food Security –Negative Linkages

Trade Liberalization such as SAPs – many sectors became uncompetitive.

International trade policies such as 1. Subsidies -dampened world prices, leading to

collapse of many agricultural sectors in developing countries

2. NTBs – such as standards have also acted as barriers for developing country exporters.

Consequently, production declined and this led to a drop in employment for farmers and dependency on imported food leading to major changes in food prices and worsening the food security and livelihoods situation.

Rural Livelihoods, Poverty and Food Security: The Kenyan Situation

Poverty rates in Kenya are 46.1 percent. Rural poverty is higher than the national average and stands at 49.1%.

Rural poverty mostly associated with agriculture and land› Highest in ASALs in Eastern and North-eastern – due to

poor climatic conditions› High potential areas e.g Central are over exploited due

to population pressure Poverty is highly correlated with food security

i.e high poverty areas are the most food insecure – Asals and Coast

Food security worsened since 1990s and by 2003 imports were 14 percent of total value of imports and 25 percent of agricultural imports.Trends In National Food Security Indicators

Food Security Situation contd’

Statistics show that only 47 percent of the entire Kenyan population is food secure.

Hence Kenya’s dependency on food Aid has continued to rise over the years and is observed to have high peaks in 1993, 2001 and in 2007

Currently WFP is feeding a total of 3.6 million people in 25 districts and 535,000 children are given school meals through the school feeding program

Food imports especially cereals have also increased – deficits last year was 95,000MT met through imports

Most imports come from the region Uganda and Tanzania 108,155 MT and 56,900 respectively

Rural livelihoods and Implications on food Security in

Kenya

More than 70 percent of Kenya’s Population live in rural areas

Agriculture and pastoralism the mainstay of the Kenyan Rural economy

An average of 68% rural household income is derived from off-farm incomes, and around 32% comes from own production (crops and livestock products), with maize and wheat being the leading sources of crop income.

Incomes from Agriculture alone are not sufficient to meet food needs especially in ASALs hence purchase of food is very common.

Magnitude, Composition and Direction of Trade-Kenya

Exports dominated by the agricultural sector- horticulture

22%; tea 17.9%, others eg petroleum and manufactured exports about 45 percent of exports.

Main destinations EU – 22 %; and Africa – 60 Percent Exports to the COMESA and EAC region consist of

manufactured products such as Fermented tea (35%), Cement (4.5%), Cigarettes (4.2%) amongst others

Exports to Africa increased 26% in the past 10 years Exports to Africa facilitated by EAC and COMESA

customs union - Main barriers to Exports include NTBs, poor

infrastructure and delays at various border points

Magnitude, Composition and Direction of Trade

Imports – Kenya’s imports mainly consist of petroleum products

(14 percent of total imports); crude petroleum (9 percent); industrial machinery (11 percent); and motor vehicles (6.4 percent).

Main source of Kenya’s imports include Middle and Far East – China and India, UAE and EU countries including South Africa.

Kenya also imports food specifically maize from EAC and COMESA countries to meet shortages

Informal Trade and Food Security contd’

Goods entering Kenya included, maize, beans, bananas, fresh fruits and vegetables-tomatoes, onions avocados, pineapples and Textiles

Goods leaving Kenya included counterfeit batteries, cigarettes, detergents, beverages, sugar, mattresses and other household goods

1. Reasons for illicit trade:› delays at the border which in some cases along Busia-Malaba

border was up to 7 hours› High Administrative costs -numerous requirements such as trade

licenses – business and road license, phyto-sanitary certificates› Corruption and bribery at police checkpoints

2. Magnitude is hard to measure3. Positive aspects#

› Improve access to food#› drives down prices of goods# - a plus for consumers but not

producers› Provides incomes and improves livelihoods for traders#

Implications of Trade on Food Security

Continued high prices of food due to:a) sustained high level of effective demand in the country,

especially in main urban centers, b) accelerated appreciation of the Kenyan currency in

recent yearsc) the impacts of increased internal production costs,

given the general cost of inputs and other production outlays, and

d) the overall rise in inflation, - rising to 31.5 percent in May and 29.4 percent in June 2008,

e) Overwhelming dependence on maize as the key staple for the majority of the population.

f) drought and poor weather conditions; g) rising food prices which is a global phenomenon as

well as h) The post-election violence which occurred in 2008

January

Implications of Trade on Food Security contd’

Increased imports – cheap food imports acting as a dis-incentive for producers although this has improved access to food Slide 26 Slide 27

On one hand –loss of incomes for producers and labourers but on the other hand creation of employment and incomes for traders Slide 25

Dependency on food aid has also acted as a dis-incentive for production although it has provided much needed food for millions of people in extreme food insecurity trends in foodaid.doc

Policy, Institutional frameworks and the interplay of

Stakeholders

Trade liberalization under SAPs and various trade agreements such as EAC and COMESA have led to openness and reduction of tariffs

Even after the trade regime was liberalized cheap food imports have suppressed domestic food prices and therefore food production

Food security policy has laid much emphasis on Maize sector ignoring other sectors which could raise incomes of rural folk#

Food Security policy not coherent with trade policy

Agricultural Policies and recent Developments in the Sector

Strategy for Revitalization of Agriculture 2003- wide spread stakeholder consultations sector based approach- implementation by different

ministries National food security policy Parliamentary committees – SUPA, COTEPA Advocacy groups –Civil society – SUCAM Programs to help farmers –

fertilizer subsidy program National Accelerated Agricultural Input Access ProjectKilimo plus- voucher system for seeds and fertilizer Kilimo biashara – Low costcost credit to purchase inputs (Ksh 605

million for 121,000 farmers Njaa Marufuku - Ksh 327.6 million to assist 1,866 groups, 40

schools and 35organizations to undertake food security projects.

Agricultural Policies and recent Developments in the Sector

contd’ Agricultural Sector Development Strategy –

2010-2020 Part of Comprehensive African Agricultural

Development Programme (CAADP) launched in Kenya in 2005.

Agriculture positioned as the key driver for delivering 10 percent annual economic growth rate envisaged in the vision 2030

Recognises food security as an integral part of agriculture

Emphasis also placed on other enabling factors such as infrastructure, NTBs etc

Implementation through ASCU- Agricultural Sector coordination unit

Conclusions and Policy Recommendations

1. Need for an equitable global environment for trade; removal of subsidies.

2. Taking care of regional NTBs to enhance regional trade

3. Most of what needs to be done is mainly at National level

1. Need for a clear and comprehensive trade policy that takes into account food security issues

2. Addressing infrastructural bottlenecks and redistributive mechanisms from surplus to deficit areas.

3. Need for a comprehensive institutional framework to enable private sector participation in the process as well as consolidation of information for future referencing.

Institutional Frameworks

The integrated approach- KFSMG, KFSSG National Food Security committee-

consisting of key gov’t ministries, donors , civil society and private sector

Institutions dealing more and more with emergency situations

The NCPB

Trends In National Food Security Indicators

Year Per Capita

Food

Production

(Kg/yr)

Food self-

Sufficiency

ratio

Cereal Self

Sufficiency

ratio

Ratio of

food

import to

agricultura

l exports

Ratio of

food

imports to

total

exports

1992 626.42 0.98 0.91 0.21 0.16

1994 615.45 1.00 1.00 0.29 0.19

1996 602.93 0.94 o.71 0.14 0.09

1998 612.41 0.95 0.76 0.22 0.15

2000 561.69 0.91 0.65 0.18 0.15

2002 569.88 0.91 0.71 0.20 0.11

2004 581.98 0.93 0.79 0.37 0.21

2006 560.76 0.90 0.67 0.33 0.19

2008 554.78 0.87 0.60 0.42 0.29

Table 3.6: Wage employment by sector by region(numbers)2007

Region Agriculture Trade Services* Services**

Nairobi 10229 67038 45709 178761

Central 7059 7495 4176 15185

Coast 1150 3120 15817 60459

Eastern 115 1045 737 1640

Nyanza 539 7535 4038 34035

Western 643 3281 385 5931

Rift Valley 11580 20841 9054 43663

North Eastern - No data available

Services* Finance, Insurance, real estate and business services  ** Community, social and personal services