ROA_Mali_Synthèse

SOCIO-ECONOMIC ROLES OF AGRICULTURE AND POLICY

IMPLICATIONS (ROA)

MALI CASE STUDY NATIONAL SYNTHESIS by

Demba KEBE

ROA_Mali_Synthèse

Context : Strong grip of agricultural sector

• The economy of Mali strongly depends on the agricultural sector which

• Utilizes more than 80% of the population– Accounts for around 45% of the GDP– Accounts for 75% of the country’s export revenues – Food crops account for 52% of the total added value of the

agricultural sector – Cotton contributes for 30% of total added value of he

agricultural sector

ROA_Mali_Synthèse

Liberalization policy strongly displayed

Agricultural policy marked by two important phases of the last two decades: First structural adjustment phase of early 80’s

through 1994 Second phase : Structural adjustment of the

agricultural sector reinforced by macro- economic policies (I.e .devaluation)

ROA_Mali_Synthèse

Liberalization policy strongly displayed (Continued)

• Liberalization of input market (the cotton zone was not concerned by this policy)

• Liberalization of output market (PRMC) ; the cotton zone was not concerned

• Improvement of the fiscal environment• Implementation of common external tariff policy (TEC) which

penalize agricultural inputs • Export Tariff suppression but implementation of the TVA (18%)• Suspension of conjecture tariff on rice • The FCFA devaluation seems to reactivate the competitiveness

of some sub sector (rice, cereals, livestock)

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An ongoing decentralization policy

• Creation of more than 700 local territories• Empowerment of collective authorities in areas

development and management of natural resources

• Ongoing Transfer of competencies and resources

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Positive result in general, However,• The average rate of increase of cereals was ( 5,6% ) higher than

the rate of increase of the population (2,2%) for the country. The rate of increase of cotton production was 9%.

• Agricultural growth is more dependent on the increase of cultivated land areas rather than on productivity improvement (rice and maize in the south are not concerned here) – Some progress made for maize and rice productions with a rate 13,6%

and 11,1%, respectively– Perceptible Soils degradation in both zones (CMDT, ON)– The liberalization of input markets did not drove down input prices (State

monopoly transfer to private sector)

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Research objectives• To inform and make available to decision makers some

tools which can help them analyze the diverse roles of agriculture,

• To identify positive and negative externalities of agriculture,

• to assess the impact of these externalities on the national economy and well-being

• to identify policies for strengthening or correcting these externalities

• to make available to malian decision makers the main results from this study

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Methodology• The malian team decided to work on all the modules.• Use of secondary data on the agricultural sector in Mali • Selection of two production systems:

– cotton based system (cotton, coarse grains, sedentary livestock raising system

– rice based system(rice, vegetable crops production, sedentary and semi-sedentary livestock raising systems)

• Formal survey of farm households (module 2)• Informal survey of farm households in both systems

(modules 3, 4,6 et 7) and in Bamako (module 7).

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Some limiting factors in undertaking the different tasks

• Lack of database on the malian economy• Non access to the database household

consumption (in construction on the EMEP)• Analytical tool (MEG) not fully handled• Rather descriptive approach than quantitative • However, some modeling temptation with limited

database (reduced size of sample)

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Some results• Some major contraints facing malian agriculture are :

– low level of modern infrastructures for processing, handling, and keeping agricultural products ;

– lack of sustainable financing mechanism of sub sectors ;– lack of contact and coordination among the different actors of the sub

sectors ; – low number of structures in charge of collecting, analyzing and

spreading statistical information on behalf of the different actors of sub sectors

– the non functionning state of professionnel organizations regarding foods production ;

– the low level of knowledge of some sub sectors.

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Environment and externalities• Diversity of production systems :

• Cotton based (cotton-coarse grains, livestock, low land rice, fruits and vegetables in the south and west of the southern part of Mali

• Rice based (fully irrigated rice , coarse grains, livestock, vegetables) center of Mali (“Office du Niger”, “Office riz”, low lands)

• Millet/Sorghum based (coarse grains, livestock) in western and center parts of Mali

• City belts(intensive livestock management, ) around cities • Pastoral system(extensive livestock raising system, irrigated rice) North

Mali• Lake /water recession areas (coarse grains, leguminous ), North and West

Mali• Oasis (date palm) farther North of Mali

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Environmental impact on the “Office du Niger”

• The assessment covered four elements (water, soil, air and bio diversity)

• Preservation of environment and bio diversity by agriculture

At the water level– Tree replanting in the villages– Introduction fruit trees replanting– Management of areas and browsing land for animals– Sanitation through lands redevelopment – Income generating activities (mostly fishing)– Water fetching alleviation through the rising of water surface

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Environmental impact on the “Office du Niger” (continued)

– Increasing development of areas planted with trees for services and for fruits production

– The tree specie called Eucalyptus constitutes an important source of energy (for SUKALA)

– Water quality degradation observed mostly around the houses and other places.

At the soil level– Risks of salinization and alkalization – Decreasing trend of the fertility of soils– Erosion phenomenon caused by wind and water in upland

areas

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Environmental impact on the “Office du Niger” (continued)

– 7% of soils were degraded in 1989 and 20% of farm households were aware of soils degradation

Air and Bio Diversity– Rice cultivation in ON zone allegedly favors gas production

with greenhouse effect– Reduction of bio diversity by the introduction of the Asian

rice varieties but new ways to increase bio diversity by re-introduction of (NERICA’s).

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Environmental impact on cotton based system

• The assessment covered four elements (water, soil, air and bio diversity) :

Air and Bio Diversity Pollution from :– Nitrogen fertilizers, not confirmed– Fertilizer with phosphorus content, observed in

general everywhere at a constant basis– Insecticides, observed but not at a constant basis

(old “bassin” for cotton production)

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Environmental impact on the cotton based system

Soil– Serious degradation in some areas (old “bassin” for cotton

production)– Negative mineral balance for coarse grains production– Soil fertility maintenance strategy developed by farmers

through the integration of agriculture and livestock activities Bio diversity

– Wild life and landscape resources better here than in the other parts of the country

– High risk of disappearance of some animals because of the high pressure on natural resources.

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Economic assessment of environ-mental degradation

• The estimated losses due to degradation can reach 21 to 26 % of the total GDP

• Positive externalities brought about by good area management in order to prevent environment degradation had not been assessed

• Micro-economic level : the economic value of soils degradation and mining was estimated to vary between 1 600 and 32 000 FCFA/ha/year (1 à 12% of he income of less equipped farmers)

• The economic value of soil enrichment was estimated to vary between 2 250 and 25 000 FCFA/ha/year ( 1 to 8% of the income of producers more equipped)

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Agricultural growth and poverty reduction

• Evolution of the effect of poverty– Despite all the efforts, the population of Mali still remains poor (64% in 1999).– Poverty remains essentially rural.

Table : Effect of poverty (%) per area

Year 1994 1996 1998 1999

Rural 75,6 78,3 76,0 71,3

Urban 36,6 40,6 36,3 31,2

Total 68,8 71,6 69,0 64,2

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Considerable Agricultural supply • High diversity of production systems in Mali • Rate of increase of agricultural production (5,6%) of the

90’s higher than the rate of increase of the population (2,2%)

• Rate of increase of agricultural production strongly dependant upon an increase in of the area cultivated and rainfall ( Fully irrigated rice in the ON and the relative intensification of maize cultivation in the south are some exceptions.

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Evolution cultivated areas and cotton production (1990-1999)

0

100 000

200 000

300 000

400 000

500 000

600 000

90 91 92 93 94 95 96 97 98 99

0

100 000

200 000

300 000

400 000

500 000

600 000

superficie

production

Ha Tonnes

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Peasants points of view on the role of agriculture in poverty reduction

• Concept of poverty defined by farmers as a lack or low level of availability of : Food,income and equipments (90%)Health problems,lack of animals, land, labor

force and transportation means are cited as the main characteristics of a poor.

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Peasants points of view (continued)

Plus de pauvres aujourd hui qu'il y a dix ans dans votre village en %

87,5

50

12,5

50

0

20

40

60

80

100

Base coton Base riz

Non

Oui

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The system of solidarity between farm families is a mechanism to fight poverty

• 70% of sampled households had relatives in the cities

• The transfer of cereals is a common thing (mostly in ON zone )

• The donations can constitute 4% to 8% of the total production of cereals

• Social redistribution unestimated

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Some results from the simulationsThe results from the simulations showed that :

A 1% increase income would reduce the poverty level down to 0,19%, the depth of the poverty down to 0,66% and the severity down to 0,11,0%

In urban area, a 1% increase in income would reduce poverty effect down to 0,17%, the depth down to 0,81% and the severity down to 1,46%

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Impact on indices from the reduction of the demand price

Simulations based on the rate of 25% and 50% (depicting the situation which may prevail during a good year)A 25% reduction of demand price will bring about in rural

area a reduction of 16% of the effect of poverty, a reduction of 11% of the depth poverty (P1).

In urban area, a price reduction of 25% will reduce the impact the effect of poverty down to the rate of 10% in rural area and a reduction of 50% will reduce poverty situation down to more than 52%.

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Agriculture ad food security Food security had been treated in the light of 4

determinants : availability, access, stability and nutritional qualityThe availability was important in both study regions:

248kg/head/year and 298 kg/head/year, respectively at Sikasso and Segou, contrasting with a national average of 167kg/head/year.

The access to food is more difficult because of the low buying power of consumers, poor system for moving products from place to place, consumption habit.

Stability : Strong impact of the vagaries of climate, low level of infrastructures (roads, storage schemes, etc.) bringing about transaction costs to increase.

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Food insecurity profile Vulnerable zones and groups

Urban zone : • Farmers and livestock raisers hidden in urban

areas • Divorced women and early children holders; • Civil servants in C category and other workers

with low income ;• Different households found vulnerable because

of diverse causes.

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Food insecurity profile In rural area

Populated families with less resources ;Fishermen and livestock raisers with no

resources practicing different activities not fully handled,

Farmers adopting production systems which performances are in jeopardy

Farmers facing land problems.

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Nutritional status

The demographic and health survey of Mali (EDSM), undertaken in1995-96 on a sample of 4678 children of less than 3 years old had shown a high rate of malnutrition : 30% of these children were experiencing a slow

development , 23% were emaciated, 40% of these children were presenting lower weigh

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Buffer role of agriculture : devaluation impact reduction

The devaluation in 1994 in the UEMOA’s countries was aimed at restoring macro-economic equilibrium.

Increasing prices of imported goods without any compensatory at the salaries level s

Reduction of buying power or in other word reduction of the income of population (Mostly in urban area)

Increasing prices of local products two years after the devaluation (substitution effect) and relative

Likely positive impact of the steady increase of agricultural supply of the last decade.

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Buffer role of agriculture (continued)

Steady increase of the GDP after the currency (FCFA) The primary sector play a major role than the other sectors in

the making of the GDP Restoration of the competitiveness of the traditional sub sectors

(cotton, rice, livestock) Strong reduction in cereals importation exception the wheat 75% of export revenues are from the agricultural sector (cotton,

livestock, cereals) Reduction of the value of importation and increase of the values

of export since devaluation of the FCFA currency had taken place

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Buffer role of agriculture (continued)Non tradable commodities are now tradable (millet,

sorghum, maize) on the sub regional market placesNew jobs creation through diversification of revenue

sources Changes of the structure of spending with more

important part allocated to health, cloth and transportation purposes

Reduction of food bills brought about by the effect of substitution of imported stuffs for local stuffs.

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Social viability : impact of the transformation of agriculture on the migratory movements

Four types of migratory movement in Mali : temporary internal movements, definitive internal movements movements linked to the systems of nomadism and

transhumance international movements

The rate of migration (the balance) observed in Mali is negative ( –0,88 %) implying that Mali is a country bound to emigration phenomenon.

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Social viability : impact of the transformation of agriculture on the migratory movements (continued)

Migration towards agricultural zones involved the ON and the CMDT zones having more potentials

These migratory movements towards the areas with relatively high potentials are not assessed let alone let alone their impact on natural resources.

The proportion of households which migrated in the ON and which had no land varies between 10 to 20% of the total farm households at the ON.

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Social viability : impact of the transformation of agriculture on the migratory movements (continued)

Long term or permanent migration concerns 38 % of farm households in CMDT zone CMDT contrasting with 27 % in ON

The migration phenomenon lost pace because of the improvement of the revenues of farmers

The costs /benefits assessment of migration is yet to be undertaken

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Agriculture, culture et perception A high diversity of perception linked to many factors (Group

relationship with agricultural resources, political frustrations, etc.) Existence of multiple and strong forms of inter and intra among

ethnic and social groups Strong tendency for these groups to be autonomous resulting to

a survival and maintenance of local institutional l values in rural areas

Agriculture is perceived not only as a profession but also as a way of life

The contribution of the rural world to the social stability is perceived by rural dwellers a crucial factor.

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Agriculture, culture et perception (continued)

The country’s identity is based on the network of old social customs and practices which are shared by all the citizens : solidarity, help, kinship and teasing

The notion of "national culture” is rather perceived differently : urban culture, rural culture or sum of cultures.

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Agriculture, culture and perception (continued)

Agriculture and poverty reductionMere political slogan based on the disengagement of the

State Random activities ( climatic and et economic risks)Less tapped potential

Agriculture and environmentMajor and minor degradations of the environment

Environment restoration Agriculture et migration

Absorption of the rural/rural type of migration

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Agriculture, culture and perception (continued)

Diversity of opinions on agriculture and the rural world :Food provider to people, mean for promotion and

concurrence for actors (producers)Neglected on the socio- economic and political

grounds (urban and leaders of peasant organizations) but important for social cohesion

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Policies and externalitiesEnviron-

mentPoverty

Food security

Buffer role

Scial viability sociale

Culture

High investmnts + + + + + + + +

Taxes (UEMOA's common external tarrifs ) 0 + + + 0 0

Elimination of subventions from inputs price - - - - - - - - -

Interest rate reduction policy du taux by the BCAO + + + + + +

Currency (FCFA) devaluation - - + + + -

Taxation policy through le price (Water tax) + - + + + +

Land + - + + + -

Financial policy - + + + + +

Research and Extension + + + + + +

Training + + + + + + +

Development(Value enhancement) + + + + + +

Technology + + + + + +

Infrastructure policy + + + + + +

Decentralization ++ + + + + ++

Credit andprocurement of inputs and et equipment - ° + 0 0 0

Development (Value enhancement) + + + + + +

Total 8 8 14 13 12 9

Roles of Agriculture

Politiques

Macro-econom

ic policies

SEC

TO

RA

L P

OL

ICIE

S

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Policy implications Development of water irrigation schemes in order to facilitate the

settlement of immigrants in ON zone Development policy geared towards the development of local

know-how in the cotton zone Orientation policy of immigrants towards zones more opened or

having potentialities Management policy for the type of migration with high magnitude

(Better evaluate and develop the transfer of resources) Decentralization policy more geared towards the development of

inter-communal initiatives Decentralization texts (laws and regulations) re-reading in order

to give more power to local institutions and social organizations Strengthening socio-professional organizations

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Policy implication (continued) Environment

Strengthening the capacity of local actors in the management of natural resources in order to reduce negative externalities

Supporting or fostering positive externalities (hidden benefit of land development activities) in ON zone

Poverty Input and output markets development through good

infrastructures (roads, storage schemes) Credit system specifically for the poorDevelopment of social mechanism of solidarity and wealth

sharing

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Implication for policy (continued)Food security

Investment in processing and storage schemes for cereals in order to reduce the effects of the vagaries of climate

Identification of vulnerable groups in order to find the right strategies to fight food insecurity

Buffer effectFurther implementing Sub-regional and regional

integration policies

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Suggestions for further analysis Implementing econometric analyses planned for modules 4

and 5Re-do the econometric analyses of module 3 with EMEP’s

databaseQuantify environmental externalities (hidden benefits in ON

zone )Estimate the transfer of resources of the migratory

movement with high magnitudeFurther research on the cultural aspect (role of the cultural

dimension on the functioning of production systems)