Ideas & Debate

Opening markets will remove barriers to EA food security

Middlemen buying maize from farmers in Eldoret. FILE PHOTO | NMG
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.