Economic Impact of Missing MRLs: The Case of Eastern Africa

Economic Impact of Missing MRLs: The Case of Eastern Africa

Economic Impact of Missing MRLs: The Case of Eastern Africa By Kimwaga Mhando Trade Policy Analyst, Eastern Africa Grain Council Presentation at the Government-industry Workshop on Missing MRLs February 26, 2018 World Trade Organizations Centre William Rappard, Geneva, Switzerland 1 Outline of Presentation 1. 2.

3. 4. Introducing EAGC Eastern Africas grain trade with RoW Policy framework for MRLs in ESA Why MRLs are important for EA grain sector 5. Recommendations 2 1. Introducing EAGC Regional, non-profit, membership based organization for the

Grain value chain in the Eastern and Southern Africa Established in 2006 Objective: To facilitate efficient, structured, inclusive &profitable grain trade in the Eastern Africa region 3 EAGC Service Pillars 4

2. Eastern Africas grain trade with RoW Key food grains are maize, wheat and rice Minimal exports of these commodities outside ESA. Significant net imports of wheat and rice despite local production capacity Pulses are important export commodities, with key market being India 5 Intra & extra-regional maize trade 800000 700000

Metric Tonnes 600000 500000 Intra-reg trade Extra-reg trade 400000 300000 200000 100000 0

Kenya (2013) Tanzania (2016) 6 Zambia (2015) Rice trade with Row Trade volume (MT) Americas; 0.37% Europe; 0.02% Africa; 15.55%

Asia; 84.05% Sample of Ethiopia, Kenya, Tanzania, Uganda and Zambia. Source: UNCOMTRADE 7 Chickpea trade with RoW 70,000 60,000 Metric tonnes 50,000 40,000

Intra-reg trade 30,000 Extra-reg trade 20,000 10,000 0 Tanzania (2016)

Ethiopia (2016) 8 Source: UNCOMTRADE Chickpea trade distribution Total Vol of trade (MT) 0.97% 0.03% 12.87% Africa Asia Europe Americas 86.13%

Source: UNCOMTRADE 9 Factors impeding stronger grain trade with RoW Production systems in ESA not very competitive Structural issues (smallholder-dominated production, low mechanisation, limited use of good inputs) Barriers to trade, dominance of informal trade Agricultural policies outside ESA Export subsidies e.g. Thailand rice EU Common Agricultural Policy

International trade policies (SPS/TBT matters) 10 3. Policy framework for MRLs in ESA 1. EAC SPS Protocol and Bill 2. EAC Harmonised Staple Foods Standards 3. COMESA Mutual Recognition Framework 11 MRL-related challenges in ESA Tropical environment highly conducive for pests Region prone to pest outbreaks annually

Pests prevalent at all levels from farm to storage Recent introduction of new pests, e.g. the fall armyworm from South America New pests may require new pesticideshave they been registered and their MRLs established in export markets? These necessitate increased pesticide use but: Testing capabilities for MRLs are limited High cost of testing Movement towards hermetic storage and certified warehouse 12 4. Why MRLs are important for EA grain sector

1. To guide good agricultural practice w.r.t. correct use of agro-chemicals Grain-producing plants pass through a vegetable state, and some consumption takes place at this level. E.g. green maize, baby corn, sweet corn, fresh beans, etc. MRL risks higher at this stage 2. To improve competitiveness and market access Missing and/or stringent MRLs mean that only few companies are able to export, essentially creating an export cartel which undermines the domestic farmers. 13 3. To support market diversification E.g. Opportunities to diversify exports of pulses

4. Increased consumer awareness of food safety MRLs help to define what is safe, and will guide farmers to produce safe food for market 5. Going organic may be uneconomical for grain commodities and sub-products 14 5. Recommendations in setting missing MRLs i. African voice in MRL-setting

Adequate representation at all levels of negotiation and decision-making Wide stakeholder consultative process from country level to regional, continental and international levels ii. Business-friendly MRLs to be established 15

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