Agricultural Productivity Rural Livelihood and Trade in Agriculture

1. Agricultural Productivity Rural Livelihood and Trade in Agriculture Presented to the NRG FEATS PROJECT

2. Outline • Introduction • Agriculture policy and structure • Contribution of agriculture to economy • Agriculture productivity • Poverty and agriculture • Agriculture and trade facilitation

3. Introduction • Economy registered positive growth since 2001 • Macroeconomic indicators stablising • GDP per capita US$ 355 (2002) US$625 (2005) US$ 1183 (2008) • Poverty still high 64% poor PLUS ranked 165 out of 177 countries on the UNDP’s HDI • Poverty 80% in rural areas 34$ urban • Threatens country’s ability to achieve MDGs • Government efforts: -

4. Cont’d • PRSP , FNDP and Now SNDP • Also emphasised in: • The commercial, trade and industrial policy (CTI) • diagnostic trade integrated strategies, (DTIS) and the National Agricultural policy • Emphasize poverty reduction through agricultural production and trade • Need to understand the linkage between poverty • CUTS - through (FEATS) project seek to generate empirical data on the linkage between poverty, agriculture and trade

5. Objectives:  • Role of and constraints faced by the agricultural sector with focus on rural livelihoods, productivity, and trade; • Trade facilitation needs and measures with focus on those directly related to landlockedness; • Development of coherent thinking and practice in the areas under study to advance poverty reduction and development objectives.

6. Methodology • Two phased: • Phase 1: Secondary data sources from both national and international organizations and authorities – CSO, MACO, FAO WB etc • Phase 2: Primary data collection – interviews with stakeholders Mumbwa – two areas • Limitations • Inconsistent data across major sources FAO, World Bank and Government ministries • employment, international trade and investment flows tend to be difficult to generate, and, at times, significantly underestimated

7. Key Changes • Between 1964 – 1990s state dominated marketing, input supply and processing • Liberalisation in 1991 - resulted in some diversification • Private sector participation in • Production promotion - e.g., Outgrower schemes, • processing facilities • Export promotion initiatives have emerged • Structure changing • Small-scale category - increasing, medium $ large-scale largely unchanged over the years • Small-scale farmers supply over 70% of the national food requirements

8. Structure .

9. Agricultural Policy • Private sector driven agriculture that • assure national and household food security • generate income and employment to maximum feasible levels • contribute to sustainable industrial development • expand the sector's contribution to the BoP - increase total foreign exchange earnings from 3-5% to 10-20 % • boost the sector’s growth to 10% after 2006 and increasing its contribution to GDP from 18-20% to 25%

10. Key players • Policy making –preserve of MACO & Livestock development • MoL, MEWD, MTENR, MFNP • Statutory bodies- FRA and crop specific initiatives such as TBZ, Coffee Board of Zambia, Golden Valley Agricultural Research Trust (GART), Cotton Development Trust (CDT), Livestock Development Trust (LDT) ZEGA Trust • MCTI –trade oriented • Private sector association ACF, ZNFU etc

11. Cont’d

12. Contribution • GDP - directly an average of 20% drives GDP • Manufacturing – over 60% of sub-sector output such as tobacco, processed food , textiles and leather • Services –transportation services etc • Employment - accounts for 15% of formal sector • Informal sector employment - 70% countrywide • women key players • Livestock sector – largely neglected BUT has potential • Good area for poverty reduction –traditionally practiced • Food security – small scale farmers driven – • Maize production Good in 6/15 , Bad in 8/15 years

13. contd • Rice deficits, wheat oscillates • Forex – from US$207 Mn (2001) to US$476Mn. • Private sector, Regional integration key to increase e.g. Congo DR, SACU and Zimbabwe • Issues around Maize- bans – making taking advantage of regional markets • Price controls- benefit traders at expense of small scale farmers • Goveren J–makes commercial sense to export even in deficit years • Livestock –neglected for a long time but has huge potential • FDI –pledges hang around 6% of total FDI

14. Contribution to export earnings

15. Key exports • Out grower schemes and PA critical in cotton, sugar, coffee, horticultural and floricultural products ( key to access inputs, credit and output market, technical training and coordination) • Poor maize policy – discourage private sector initiative e.g. bans

16. Agricultural productivity • Critical to efficiency gains and export competitiveness • Commercial farmers crops and livestock productivity meets global level (WB, 2008) • Small scale farmers – below regional levels for crops and livestock (lower than all other sectors in Zambia) • 70% of labor is inefficiently being used • Yield metric tons per hector is very low: averaging at less than 1.5 metric tons per hectare

17. Contd

18. Livestock Productivity • An estimated 42% of Zambian landmass is suitable for agriculture/livestock activities with 21% of the total land area suitable for rangeland grazing. • Total livestock population of Goats, cattle and pigs are far less than the human population. • This contrasts greatly with countries like Namibia and Botswana that have established export oriented beef industries.

19. Factors affecting productivity • Neglect of the Sector - government policy failures - delay in input delivery • Dependence on rain – only 11% of irrigation potential is used (2006) • Weak business orientation • Genetic Engineering • Education- good education levels lead to high returns • High Transactions costs problems – lack of complementary infrastructure in rural areas plus export • Land tenure system • Marketing structures • Trade and investment

20. Cont’d • Agriculture finance – costly 25% and conditions of borrowing strangulating • Default rate highest -37% non-performing loans • Low producer price for maize, rice etc • HIV/AIDS –limited labour (sickness or caring for sick) • Key institutional capacities not aligned for small scale farmers e.g. GART, ACF etc.

21. Livestock productivity • prevalence of animal diseases; • high cost of veterinary drugs; • inadequate livestock nutrition and water; • poor animal husbandry practices/management; • inadequate marketing infrastructure; • lack of appropriate livestock research; • inadequate livestock extension and health services; • lack of linkages between livestock research and livestock extension.

22. Poverty and agric trade • Improving agriculture productivity and trade could accelerate poverty in country • The sector accounts for over 70% of employment in the country and is core in rural livelihood • Commercial farmers already geared for exports • Government – recognises importance of trade- FNDP, CTI etc • Engaged in regional and MTS negotiations.

23. Regional Arrangements • Key RTA • World trade organisation • AoA - illegalises unfair trade and implementation beneficial to LDCs • EBA , Cotonou agreement (EPAs) useful to Zambia • AGOA – selected products • SADC • Promotes regional food security, seed bank, etc • COMESA – Promote food security • Alliance for Commodity Trade in ESA (ACTESA) to foster investment, development policies, regional trade and marketing of staple agricultural commodities

24. Trade facilitation • Zambia is land-locked making it harder to reach export markets and realize economies of scale, as well as access cheap import. • Air transport -high value and low weight and volume products, but also improved access to air transport • BUT -some firms suspended horticultural exports to Europe account of high transportation costs • A number of Initiatives to facilitate trade –not agriculture only

25. Cont’d • WTO facilitated trade facilitation programmes such as assessing their trade facilitation needs and priorities. • UNCTAD, ICT, WCO, WTO programmes - Export priority identification , ACYCUDA EIF etc • Regional efforts – One border posts Chirundu, Nakonde?? • North South Corridor development –under Aid for trade • ACTESA –information provision • USAID MATEP, Southern African Global Competitiveness Hub, technical assistance etc

26. Trade corridors .

27. Cont’d • Southern Corridor – to Durban • Maputo corridor • Tazara corridor – Dar es Salaam • Walvis bay • Beira and Nacala Corridors: via Harare by rail • Angola –lobito • Infrastructure poor

28. Cont’d • Initiatives • The Harmonized Commodity Description Coding System • COMESA Customs Declaration Document (COMESA-CD • COMESA Carrier's License • Harmonized Axle Loading, Maximum Vehicle Dimensions and road transit charges • Yellow Card Scheme

29. Export Barriers • Sanitary and Phytosanitary measures (SPS • Minimum Residual Level • Market Standards • Pests Risk Assessment (PRA) • Complex tariff structures and import arrangements • Restrictive rules of origin • Agriculture still regarded as sensitive sector by most regional countries

30. CASE STUDY • Mumbwa • Over 32 000 farmers • No direct external market BUT through PA agric business organizations • Outgrower schemes –cotton and paprika • Key issues: • Maize poor marketing arrangements, untimely and inadequate input supply, low prices, private traders • Cotton – outgrower scheme sponsored • Main source of income

31. Cont’d • Alternative to maize • Outgrower scheme managers: determine input and output prices • Contracts are designed by scheme owners and are unclear • Prices are usually low • Quality determination is not clear and any losses are transferred to farmers

32. Recommendations • Government must: • Provide complementary services – infrastructure, research warehouses & support services necessary for private sector • Reduce policy confusion –maize marketing • Trade facilitation infrastructure and regional and MT negotiations • Facilitate code of conduct in outgrower schemes • Promote emergence of farmer organization to encourage coordinated approach to export promotion • Must be timely in providing inputs, purchases etc • Donor coordination • Government must reduce unnecessary intervention and reprioritse its expenditure on agriculture

33. cont • Land policies must be improved upon • Recommendations to scheme owners • Provide a transparent production and marketing chain • Loan recovery must well explained through unbiased contracting methods, risks etc must be equally taken Civil Society organisations • research and information dissemination network to all stakeholders in the various provinces • Encourage the Zambian Government to promote infrastructure for agricultural production and exports

34. Cont’d • Lobby government and donors for more resources to be invested in the most binding constraints in agricultural • Sponsor Produce association targeting small scale farmers • Buy food aid from the regional • Coordinate closely in programme sponsorship.

35. Thank you for listening