2013 IPFRI Global Food Policy

ReportAFRICA

OUSMANE BADIANE

Director for Africa | International Food Policy Research Institute

Progress in CAADP implementation

01

Food Policy Development and

IssuesIn Africa in 2013

Resilience agenda in West Africa

02

Input subsidy policies03

Progress in CAADP implementation

01

Food Policy Development and

IssuesIn Africa in 2013

Resilience agenda in West Africa

02

Input subsidy policies03

CAADP in 2013…•Launched in 46 countries•39 signed Compacts•28 country investment plans•2 regional compacts •Ecowas Regional Agency for Agriculture and Food

•Ecowas Regional Fund in 2012

CAADP in 2013…•Benin, Malawi, Nigeria, and Senegal Joined New Alliance

•Progress in implementation by first six countries: BF CIV ETH GH MoZ TZ

•Bulk of donor commitment honored•Grow Africa Investment commitments on track

CAADP in 2013…•Advancing Mutual Accountability•Two major training events in Dakar• IFPRI/ReSAKSS TA for improved JSRs

•Methodology, tools, inclusivity• Ghana, Rwanda, Moz launched JSRs•Burkina, Senegal, Tanzania, Malawi, Ethiopia next

PROGRESS TOWARDS GROWTH TARGET – BY RECs

Agriculture GDP growth, 1980 – 2010 COMESA Agriculture GDP growth, 1980 – 2010 ECCAS

Agriculture GDP growth, 1980 – 2010 ECOWAS Agriculture GDP growth, 1980 – 2010 SADC

PROGRESS TOWARDS GROWTH TARGET BY COUNTRY - COMESA

Agriculture GDP growth by country, 1980 – 2010 COMESA

PROGRESS TOWARDS GROWTH TARGET BY COUNTRY - ECCAS

Agriculture GDP growth by country, 1980 – 2010 ECCAS

PROGRESS TOWARDS GROWTH TARGET BY COUNTRY - ECOWAS

Agriculture GDP growth by country, 1980 – 2010 ECOWAS

PROGRESS TOWARDS GROWTH TARGET BY COUNTRY - SADCAgriculture GDP growth by country, 1980 – 2010 SADC

PROGRESS TOWARDS MAPUTO TARGET BY RECsAgriculture expenditure share, 1980 – 2010 COMESA Agriculture expenditure share, 1980 – 2010 ECCAS

Agriculture expenditure share, 1980 – 2010 ECOWAS Agriculture expenditure share, 1980 – 2010 SADC

PROGRESS TOWARDS MAPUTO TARGET BY COUNTRY - COMESAAgriculture expenditure share by country - COMESA

PROGRESS TOWARDS MAPUTO TARGET BY COUNTRY - ECCASAgriculture expenditure share by country - ECCAS

PROGRESS TOWARDS MAPUTO TARGET BY COUNTRY - ECOWAS

Agriculture expenditure share by country - ECOWAS

PROGRESS TOWARDS MAPUTO TARGET BY COUNTRY - SADCAgriculture expenditure share by country - SADC

ANNUAL GROWTH RATE OF PUBLIC AG. EXPENDITURE – 2003 - 2010

Source: Benin and Yu. ATOR 2012.

Progress in CAADP implementation

01

Food Policy Development and

IssuesIn Africa in 2013

Resilience agenda in West Africa

02

Input subsidy policies03

Resilience Key events in 2013…

•AU, Lula Inst., FAO Partnership to End Hunger by 2025

•NPCA Nutrition Capacity Initiative• Integration of nutrition into NAIPs•Regional AGIR roadmap•Ecowas Food Reserve

THE NATURE OF THE RECENT CRISIS IN THE SAHEL: NOT A PRODUCTION CRISIS

REGIONAL TRADE AND RESILIENCE: THE SUPPLY STABILIZATION CHANNELC

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Nig

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Nig

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Sen

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Mal

i

Gam

bia

Libe

ria

0

10

20

30

40

50

ECOWAS Cereal Production Instability, 1980--2010

CO

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SA

Com

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Egypt

Uganda

Buru

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Kenya

Madagascar

Angola

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Mala

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Sudan

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Zam

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Rw

anda

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20

40

60

80

100

120

COMESA Cereal Production Instability, 1980--2010

SA

DC

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Ang

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Nam

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Mal

awi

Moz

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1

1.2

SADC cereal production instability, 1980--2010

The difference between the average regional production volatility levels and individual country volatility indicates scope of domestic market stabilization through regional trade

0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90 90-1000

50

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COMESAECOWASSADC

Production Similarity Index

Num

ber o

f cou

ntry

Pai

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Similarity of production patterns within RECs, 2007-2011

SPECIALIZATION AND TRADE EXPANSION POTENTIAL

More scope for trade Less scope for trade

0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90 90-1000

100

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COMESAECOWASSADC

Export Similarity Index

Num

ber o

f Cou

ntry

Pai

rs

Similarity of export patterns within RECs, 2007-2011

SPECIALIZATION AND TRADE EXPANSION POTENTIAL

More scope for trade Less scope for trade

Baseline = 2000-2007

SIM1 = 0.5% reduction in trade cost annually 2013 – 2020

SIM2 = 50% increase in yields by 2020

SIM3 = Combine SIM1 and SIM2

ALTERNATIVE POLICY OPTIONS TO EXPAND REGIONAL TRADE

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Mal

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Mau

ritan

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Nig

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5

10

15

20

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BASE SIM1 SIM2 SIM3

Perc

enta

geCHANGE IN REGIONAL IMPORTS SAHELIAN COUNTRIES BY 2020 UNDER ALTERNATIVE SCENARIOS

Burk

inaF

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Verd

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Gam

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Mal

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Mau

ritan

ia

Nig

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Sene

gal-15

-10

-5

0

5

10

15

20

25

30

BASE SIM1 SIM2 SIM3

Perc

enta

ge

CHANGE IN REGIONAL EXPORTS SAHELIAN COUNTRIES BY 2020 UNDER ALTERNATIVE SCENARIOS

Baseline SIM1 SIM2 SIM30

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10

15

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Perc

enta

geCHANGE IN TOTAL WEST AFRICAN INTRA-REGIONAL EXPORTS BY 2020 UNDER ALTERNATIVE SCENARIOS

Progress in CAADP implementation

01

Food Policy Development and

IssuesIn Africa in 2013

Resilience agenda in West Africa

02

Input subsidy policies03

THEY CAN BOOST PRODUCTDION IN SHORT RUN

THEY ARE NOT CERTAIN TO RAISE INPUTS USE AND YIELDS ONCE REMOVED (BROOKS 2012)

THEY DISTORT COSTS OF FACTORS, LEADING TO INEFFICIENT ALLOCATION OF INPUTS

THEY MAY BYPASS NASCENT LOCAL INPUT DEALERS (BANFUL 2009, BUMB ET AL., 2011; TAKESHIMA ET AL, FORTHCOMING)

THEY HAVE BEEN PRONE TO BAD TARGETING AND LEAKAGES (MASON AND RICKER-GILBERT, 2012)

EXCESSIVE LEAKAGE BENEFITS LARGER FARMERSFAILURE TO REACH THE POOREST AND MOST VULNERABLE HH

1

WHAT DOES THE EVIDENCE TELLS US?

3

2

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5

THEY ARE VERY COSTLY FISCALLY:GHANA: FERTILIZER SUBSIDIES: 17 % OF MOFA BUDGETCOSTS TRIPLED FROM GHS 29 TO GHS 90 MILL. OVER LAST 3 YEARSCOULD REACH 35% OF BUDGET IN 2020. (BENIN ET AL., 2012)

MALAWI: FERTILIZER SUBSIDIES: 74% OF AG BUDGET IN 2008/09 AND 6.6% OF COUNTRY’S GDP (DORWARD AND CHIRA, 2011).

ZAMBIA: FERTILIZER AND SEED SUBSIDIES: 40% OF AG BUDGET BETWEEN 2004 AND 2011 (MASON AND RICKER-GILBERT, 2012)

THEY LEAD TO SERIOUS MACRO IMPLICATIONS IN THE LONG RUNSERIOUS FISCAL DEFICIT / FOREIGN EXCHANGE SHORTAGESCURRENCY OVERVALUATIONDECREASED COMPETITIVENESSSLOWER ECONOMIC GROWTH

WHAT DOES THE EVIDENCE TELL US?

5

6

WHAT IS THE PROBLEM?

PRINCIPLES OF EFFECTIVE INPUT POLICIES

IT IS THE ABSENCE OF A CRITICAL MASS OF:

OPERATORS NETWORKS INFRASTRUCTURE, AND SERVICES

IN ORDER TO ENSURE THAT INPUTS ARE AVAILABLE AT TIMES AND PLACES NEEDED AT REASONABLE COST

WHAT IS THE SOLUTION?

PRINCIPLES OF EFFECTIVE INPUT POLICIES

IT IS THE PROMOTION OF:

COST COMPETITIVE PRIVATE SECTOR BASED SMALL-HOLDER FRIENDLY

INPUT PROCUREMENT AND DISTRIBUTION SYSTEMS

UNDERSTANDING THE COST OF SUPPLYING FERTILIZERS

Source: Bumb, Johnson and Fuentes, 2012 *Averaged across Ghana, Mali, Senegal, and Nigeria

1 ADOPT POLICIES THAT SUPPORT EXPANSION OF FERTILIZER MARKET BY:

REMOVING TARIFF AND NON-TARIFF BARRIERS RATIONALIZING FERTILIZER REGULATIONS AND INSTITUTIONAL

ARRANGEMENTSo PRODUCT HARMONIZATION o TECHNICAL RECOMMENDATIONS

AVOID DIRECT GOVERNMENT PROCUREMENT WHICH INVARIABLY

BECOMES FISCALLY UNSUSTAINABLE DELAYS DEVELOPMENT OF FERTILIZER MARKETS

CONCENTRATE GOVERNMENT EFFORTS ON: STRENGTHENING HUMAN AND INSTITUTIONAL CAPACITY FOR

POLICY AND REGULATION IMPROVING ACCESS TO FINANCE AND MARKETING SERVICES, INCLUDING TARGETED, COST EFFECTIVE, PRIVATE SECTOR BASED

SUBSIDIES

HOW TO REDUCE POLICY BOTTLENECKS AND LOWER COST

2

3

ETHIOPIA: LOWERING DELIVERY COST

Source: Guo et al., 2009

SUCCESSFUL POLICIES TO RAISE FERTILIZER USE

THANK YOU