AFMESA Workshop, Harare, 18-21 November, 1997

Regional Market Integration and Cross-Border Trade for Improved Food Marketing and Food Security

Conclusions and Recommendations

1. The Workshop was attended by representatives of the Association of Food Marketing Enterprises in East and Southern Africa ( AFMESA) members in Ethiopia, Kenya, Malawi, Zambia, and Zimbabwe as well as invited speakers and observers from Kenya, Mozambique, South Africa, Zambia and Zimbabwe. Participants thanked the Grain Marketing Board of Zimbabwe for hosting the Workshop at short notice and acknowledged the assistance provided by the FAO Sub-Regional Office for Eastern and Southern Africa.

2. Participants reaffirmed the importance of developing legal, sub-regional food trade in maize and other foodstuffs. While noting that the countries of the AFMESA area had always traded with each other, both legally and illegally, the Workshop felt that recent changes in domestic food marketing policies of several countries provided the scope for significant further development of sub-regional trade. Participants felt that increased trade, by enabling farmers to produce on the basis of comparative advantage and exploit the region’s natural production potential, would promote food security and increase rural incomes and employment. While sub-regional trade would not be able to fully meet the probable shortfall as a result of El Nino, participants felt that there was likely to be significant scope for countries in the southern part of the region to secure supplies from those further north.

3. There was considerable unanimity in the Workshop regarding measures to be taken to promote trade. However, participants noted that these views were not always shared by policymakers and that there was need for improved dialogue between governments and the trading sector. FAO was requested to identify ways of facilitating such improved dialogue and to make available to Ministries of Agriculture, Commerce and Trade in the sub region the Conclusions and Recommendations of the Workshop and, subsequently, the full Workshop report. It was noted with some regret that no AFMESA members had apparently been invited to a meeting being held in Gabarone, Botswana during the same week in order to discuss a sub-regional response to the El Nino situation

4. Participants stressed the important role that good information plays in facilitating trade development. They appreciated the ongoing USAID-funded work on cross-border trade and hoped that such research would continue to be supported. The Workshop considered that every effort should be made to legalise cross-border trade, although participants did not agree on whether this also implied a full removal of tariffs on foodstuffs. Inconsistent pricing and subsidy policies in neighbouring countries were a major cause of informal cross-border trade and governments were urged to bear this in mind when formulating national policies. It was recognised that, given the nature of borders between most countries, attempts to control illegal trade were largely futile and that the problem was best addressed by removing the reasons for such trade to be carried out illegally.

5. The Workshop was informed about a Canadian International Development Agency study on sub-regional food trade, carried out in 1996, and about a planned study to be carried out with Dutch funding in early 1998. The latter study is designed to identify intra-regional trade opportunities during the 1998-99 marketing season and would identify the potential for a trade-based response to El Nino by the private sector. Participants expressed great interest in the proposed study and requested that they be kept informed of the outcome.

6. Workshop participants emphasised the food security benefits of trade, in that trade offers the possibility to even out annual, climate-induced variations in production in a sub-regional context. The Workshop further noted that increased sub-regional trade, facilitated by a harmonisation of market policies, would ensure the most efficient utilisation of sub-regional transport services, thus reducing transport costs and foreign exchange expenditure on vehicles and fuel. It noted that reducing the costs of transporting food to particular areas would represent an additional contribution to improving sub-regional food security.

7. In emphasising the importance of food trade development, the Workshop nevertheless noted that there were many problems to be overcome if sub-regional trade were to be a success. Trade is constrained by poor road and rail infrastructure in much of the sub-region. Government policies, and their implementation by officials such as customs officers, were often confused and contradictory, with the result that the private sector was sometimes reluctant to trade. As food marketing was until recently largely carried out by government agencies, such as most AFMESA members, the private sector had had little time to develop necessary trading skills. Lack of finance also represented a major problem.

8. In order for some of these constraints to be addressed, the Workshop identified a number of measures which should be taken by governments, sub-regional and international organizations and AFMESA members themselves. Recognising the legitimate concern of all governments to guarantee the food security of their populations, participants nevertheless felt that this would be best achieved through free trade, combined with production increases, rather than through continued government involvement in food imports, the arbitrary imposition of export controls and other restrictive measures. Participants felt that commercial trade should make a major contribution to overcoming the likely negative El Nino effect in the southern part of the region.

9. Participants noted that countries of the sub region had reached different stages in the liberalisation of domestic food markets. In order for sub-regional trade to function effectively it was important that domestic marketing policies be harmonised and that all possible efforts be taken to maximise the efficiency of domestic marketing systems. Sub-regional policy dialogue should be started immediately. Ideally, imports and exports of food should be decontrolled, unnecessary regulatory impediments to trade should be abolished and grain prices should be market determined. Trade would be greatly facilitated if currencies were harmonised at market rates.

10. The need to develop trading and documentation skills was highlighted. Services offered by, in particular, the Grain and Feed Trades Association (GAFTA) in areas such as standard contract provision and arbitration services were noted. Given the complexity of international transactions proper contracts are of the utmost importance and national legal services must be capable of rapid resolution of disputes. Traders require a thorough knowledge of terminology and logistical arrangements. The necessity for clearly understood quality standards for sub-regional trade was also stressed, as was the requirement for harmonisation of phytosanitary regulations and their effective enforcement.

11. The role of international grain trading houses was highlighted. The Workshop noted that such companies were presently playing an important role by financing trade at a time when local traders find it difficult to obtain finance. They could also contribute to improving quality and addressing logistical inefficiencies. Their willingness to hold stocks was noted as was the fact that their presence in the sub-region should facilitate a rapid trade-based response to El Nino. However, care needed to be taken to ensure that such companies did not monopolise markets.

12. It was noted that one strength of international grain traders was their access to information. Considerable attention was paid by the Workshop to the role of information and to the need for its supply in the sub region to both private and government sectors to be improved. It was noted that not all countries have functioning domestic market information services and participants felt that such services should be established as a matter of priority. The important role that agricultural commodity exchanges could play in providing market information was noted. A sub-regional market information service would also be essential, both to provide information of an immediate nature, such as market prices and stocks, and to provide background information about the structure of national markets, the main importers and exporters and national policies. FAO was asked to investigate the feasibility of establishing such a service.

13. The important role which AFMESA members could play in facilitating sub-regional trade was stressed. Recent support provided by the Food Reserve Agency of Zambia to the private sector to facilitate maize imports from Zimbabwe was noted with interest. Others are offering quality control and storage management services. The considerable expertise which AFMESA members have in international trading could also be made available to the private sector.

To download the full report of the Workshop