Middlemen buying maize from farmers in Eldoret. FILE PHOTO | NMG
Recent food shortages in Kenya brought on by fluctuations in
climate patterns resulted in the importation of tens of thousands of
tonnes of maize from the international market this past year, mainly
Mexico and southern Africa, to manage the crisis.
Tanzania
responded by imposing a ban on maize exports in order to strengthen
food security and mitigate price inflation for their citizens.
This
ban has recently been lifted due to bumper harvests and follows an
assessment on the current food stock against the National Food Reserve
Agency’s budget for maize purchase.
Meanwhile, Uganda
struggled to produce enough maize to export to Kenya, Rwanda, Burundi,
South Sudan and DRC. Arguably export bans lead to increased informal
grain trade, with most of this data going unrecorded, leaving
smallholder farmers more vulnerable to exploitation.
The
Kenyan maize deficit highlights the impact non-tariff barriers have on
the East and Southern African (ESA) region by limiting the free flow of
food.
Despite Africa having great potential to produce
sufficient and even surplus basic staple foods, it has over the last
several decades witnessed a surge in imports with the annual food import
bill in excess of $40 billion (Sh4.2 trillion).
Whenever
some countries in the ESA region have surplus, there are others in
deficit, creating opportunities for inter-regional trade.
It is notable that many governments in the region appear to favour in-country protection of food reserves for food security.
However,
since most food products are tradable on world markets, food security
is heavily dependent on the purchasing power of the poor and not only on
management of domestic supply.
These protectionist
tendencies have negative implications on the region’s food security and
shifts in government agricultural policy on regional trade and domestic
food price controls can at times be ad hoc.
For
instance, it is not uncommon for farmers who arrive at a border to find
that a government has imposed an unannounced export ban, or sometimes a
ban has been removed but customs officials have not been informed.
A
wide range of barriers to trade have resulted in the fragmentation of
markets for both agricultural products and their inputs. This has led to
a high level of price volatility and has contributed to food
insecurity.
In countries such as Kenya, Malawi,
Zambia, and Zimbabwe where governments have directly intervened to
control prices of staple food crops, prices are more volatile than in
countries with fully liberalised food markets like Uganda.
Other
policy distortions include subsidies, price or income support and
regulations that tend to discourage private sector investment in
services that smallholder farmers need. Besides protectionist government
policies, there are other factors that equally frustrate intra-African
trade.
Key among them is the lack of formal trade
channels supporting smallholder farmers who represent 80 per cent of
farms in sub-Saharan Africa (SSA) and contribute up to 90 per cent of
food production in some countries.
Smallholder farmers
in Africa are prevented from taking advantage of existing and emerging
opportunities such as rapidly rising urban populations and growth in per
capita incomes that are driving vigorous growth in domestic and
regional market demand for food.
They can only access
poorly regulated markets that often have no regard to grades and
standards, traceability and competitive pricing mechanisms, which all
depress the value farmers receive for their produce.
Ways
of opening up markets Contract farming is emerging as one way to open
up markets for smallholder farmers. The arrangements ensure that buyers
have access to more reliable, and higher quality products to meet
current and growing demands.
Farmers
on their part have a guaranteed market for their produce and an assured
price. Consequently, farmers realise increased and reliable income from
greater volume sold and higher prices due to improved quality and more
control over timing of sale.
Although there is some
controversy surrounding the exploitative nature of some market
intermediaries, this group is the most accessible market channels for
most smallholder farmers.
It is estimated that over 60
per cent of maize farmers sell their produce directly to trade
intermediaries at the farm gate. However, these market intermediaries
face a host of challenges and risks that in some instances contribute to
the low prices they offer the producers.
According to
the World Bank, the costs incurred to transport produce from the farm to
a primary market is on average four times higher than transporting the
same quantities from the primary market to the wholesale market.
By
working with grant beneficiaries, the UK-funded Food Trade East and
Southern Africa programme has demonstrated to governments that private
sector off-takers have capacity to provide markets and better prices to
thousands of farmers when there are no policy restrictions to trading.
Africa has enough food to feed itself but for that to happen we need to address these non-tariff barriers.
Steve Orr is Team Leader, FoodTrade ESA.
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