Lindiwe Presentation

8/3/2019 Lindiwe Presentation

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Lindiwe Majele Sibanda (CEO, FANRPAN)

[email protected]

Theme: From Basket Case to Bread Basket: How subsidyreform can help Southern Africa surmount the food crisis

Topic: Some successes and failures of African subsidy policies in theagricultural sector

Date: 3 November 2008
mailto:[email protected]:[email protected]


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Outline of Presentation

About FANRPAN

Level of the FOOD Insecurity Crisis

Policy Responses Subsidies

FANRPAN Studies on Input Subsidies

Recovery vs Rescue Plans


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FANRPANNetwork Topography

FANRPANRegional

Secretariat

Malawi

Namibia

Mozambique

Tanzania

Mauritius

South Africa

Swaziland

Lesotho

Angola

Botswana

Zimbabwe ZambiaNode Secretariat

GovernmentFarmers

Researchers

CSOs

Private Sector

Madagascar


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Membership and Expectations

Government/Policy Makers

Farmers Organisations

Private Sector

Policy Advice/Options/Evidenceto support policy development

Enabling policies Production to

Trade and Markets (Value Chain)

Enabling policies Production toMarkets (whole Value Chain)

Researchers/Policy AnalystsTechnical Partners

Development Partners

Platform for research,analysis and dissemination

Grant worthiness track record

Media and AdvocacyRallying point for regional

FANR news

FANRPAN

Comm

unications

Strategy


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FANRPAN Policy networking and Policy ProcessStage of policy

processObjectives Network roles

Agenda setting Convince

policymakers that theissue does indeed

require attention

Marshall evidence to enhance the credibility of the

argument Extend an advocacy campaign

Foster links among researchers, CSOs and

policymakers

Formulation Inform policymakersof the options and

build a consensus

Collate good-quality representative evidence and act as

a resource bank

Channel international resources and expertise into the

policy process Build long-term collaborative relationships with

policymakers

Bypass formal barriers to consensus

Implementation Complementgovernment capacity

Enhance the sustainability and reach of the policy

Act as dynamic platforms for action

Evaluation evidence and channelit into the policy

process

Provide good-quality representative evidence andfeedback

Link policymakers to policy end-users

Underlying Capacity building for

CSOs aiming to

influence policy

Provide a dynamic environment for communication

and collaborative action

Provide support and encouragement

Provide a means of political representation


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Highlights of Policy Dialogues

CAADP Compact dialogues

Agricultural Inputs (Seeds and Fertilizers)

Land and Water

Food Security (Vulnerability and Targeting)

Trade and Markets

HIV and AIDS

Response to burning policy issues- Biofuels,Climate Change


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Food Security Crisis: FOOD, FUEL,

FERTILIZER, FINANCIAL

The Food Crisis Threatens to destroy years of economic progress.Disproportionately affect the worlds poorest citizens As many as 100 million people will be affected by the high price of

food (World Bank, 2008) 21 countries hardest hit are in Africa (FAO, 2008).

Fuel price increases Heightened costs of agricultural inputs -FERTILIZER. Increased demand for biofuels

Increased of costs of agricultural production

FINANCIAL CRISISLess demand for commoditiesLess donor aid


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$0

$1

$2

$3

$4

$5$6

$7

$8

$9

$10

12/31

/07

Corn

USA Today, 23 October 2008


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$0

$2

$4

$6

$8

$10

$12

$14

12/31/07

Wheat

USA Today, 23 October 2008


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Goal & Purpose of Subsidies

Definition of Food Security Accessibility

Availability

Utilization

A Food Secure Africa Free From Hunger and Poverty

Profitable enterprises along the whole agric. value chain: (inputs,farming, processors, wholesalers, retailers, households, etc.)

A condusive policy environment for all Players

The case of strategic grain reserve


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Why subsidise?

To promote adoption of new technologies thus increase

agricultural productivity

Give farmers access to Fertilisers and improved seeds at lower cost=reduction in

disincentives to adoption that stem from farmers cash constraints,

risk aversion and low expectations of returns from investments ininputs.

To encourage economically and technically efficient use ofinputs.

Means for raising farm incomes, particularly where farmerswere being taxed in other ways through export tariffs and lowfixed domestic prices


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FANRPANs Work on Subsidies

In 2006 FANRPAN with the support of USAID commissioned a study onThe Potential Of Using An Input Voucher System To

Integrate The Commercial And Non-commercial InputDistribution Systems: Malawi, Mozambique Zambia Lesotho

Swaziland

The objectives of the studyTo test the potential benefits of using voucher systems to integrate the commercial

and non-commercial input distribution channels.

To demonstrate the potential impact of implementing a full cycle of policy research,analysis and engagement, using the case of seed and fertilizer input vouchers.

1. To bring about policy changes for enhancing input s to small farmers.2. To develop training materials for policy analysts to engage in complete

policy analysis cycle.


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FANRPAN Studies on Input

Subsidies in the southern Africa region

Case study programmes by country

Malawi

Emergency Cash Transfers

Input Subsidy Programme

Public Works Programmes

Mozambique

Food Assistance Programme

Food Subsidy Programme

Input Trade Fairs Education Material Fairs

Swaziland

Neighbourhood Care Points

Public Assistance Grants

Chiefs Fields

Food and Inputs for OVC

Zambia

Food Security Pack

Social Cash Transfer Pilots

Zimbabwe

Small Livestock Transfers

Rural Micro-Finance

Urban Food Programme


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Agricultural input subsidies

1960s and 70s Agriculture input subsidies a common element in agriculturaldevelopment in poor rural economies

Responsible for successful green revolutions such as the in the Asiangreen revolution.

1980s and 90s Dominant donor thinking- subsidies seen as ineffective and

inefficient policy instruments in Africa, Subsidies seen as contributing to government over- spending and

fiscal and macro- economic problems.

2000-2008 A resurgence of interest in agricultural input subsidies in Africa, emergence of innovative subsidy-delivery systems.


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MALAWI Story

Malawis economy - agro based with 85% depending and surviving onsubsistence farming.

Agriculture sector generates over 90% of the countrys export

earnings.

Contributes 40% of the GDP.

Smallholder sector with 3.2 million households less than 1 ha ofland.

Smallholder sub-sector dominates with a contribution of 75% of the

food crop production in the country. Since Malawi got independence in 1964, the agricultural sector has

undergone through several policy reforms.


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Malawi Success Story cont

Objectives of AISP

Long term

Improve national food security

Immediate

Improve accessibility and affordability of agriculturalinputs among the most vulnerable farmers in thecountry


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Malawi Success Story

Agricultural policy reforms:

2004/2005

Political commitment to implement the Input Subsidy

Programme

2005-2007

the Agricultural Input Subsidy Programme (AISP)

launched- financed by Government of Malawi, DfID,Norway, EU, WB, Irish aid, UNDP


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Main Goal for ISP

The main objective of ISP

Improve national food security

The immediate objective

Improve accessibility and affordability ofagricultural inputs among the most vulnerablefarmers in the country


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Maize production VS national

requirement

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2001 2002 2003 2004 2005 2006 2007 2008

Maize production

National Requirement


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BACKGROUNDTO ISP 2005/2006 ISP

147,000 mt of fertiliser for both maize and tobacco production A surplus of approximately 500,000 mt of maize

2006/2007 ISP 176,000 mt of fertiliser

156,000mt for maize growers

20,000 mt for tobacco growers A surplus of about approximately 1.1 million mt of maize


193,000 mt 23,500 mt

A surplus of about approximately 500,000 mt of maize has beenproduced

Current food requirement 2.4 million metric tonnes


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Malawi Success Story:

SUBSIDY OR RISK SHARING Value of the pack

Government contribution per targethousehold:

tWO 50KG bags fertilizer

2 bags seed

Expected harvest: 1-3 tons maize

Landed maize cost per ton: USD 284


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Government Subsidies: The Case of

Malawi

CROP 2004/05 YIELD(mt/ha)

2005/06 YIELD(mt/ha)

2006/07 YIELD(mt/ha)

Maize 0.83 1.61 2.04

Rice 0.91 1.75 1.95

Groundnuts 0.57 0.83 1.02

Pulses 0.42 0.62 0.69

Cotton 0.67 0.94 1.04

Cassava 14.27 17.13 18.78

Sweet potatoes 8.08 13.51 15.32

Tobacco 0.51 0.89 0.99

Wheat 0.46 1.20 2.30

Millet 0.30 0.65 0.72

sorghum 0.28 0.77 0.86

Source of data: MoAFS (Ministry of Agriculture office)


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2005/2006 ISP 147,000 mt of fertiliser for both maize and tobacco production

A surplus of approximately 500,000 mt of maize


156,000mt for maize growers 20,000 mt for tobacco growers

A surplus of about approximately 1.1 million mt of maize


193,000 mt

23,500 mt

A surplus of about approximately 500,000 mt of maize has been produced

Current food requirement 2.4 million metric tonnes


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Managing the subsidy--COUPON

DISTRIBUTION

Dates are announced in advance for the beneficiaries to gather atan open fora

Those registered receives the coupons as follows: Maize growing NPK (23:21:0 + 4S), Urea & Maize seed

coupons

Tobacco D Compound (8:18:15) & CAN

Others flexible coupons (cotton, ground nuts, commonbeans, soya beans, pigeons peas).


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Subsidy Management structure

INPUT SUBSIDY PROGRAMME SECRETARIAT

MINISTRY OF AGRICULTURE AND FOOD SECURITY

MANAGEMENT

ADMARC, SFFRFM AND PRIVATE

TRADERS

VILLAGE DEVELOPMENT

COMMITTEE

BENEFICIARIES

AGRICULTURE

DEVELOPMENT DIVISION

LOGISTICS UNIT

DISTRICT

AGRICULTURE

OFFICE

DISTRICT ASSEMBLIES

EXTENSION PLANNING AREA

AREA DEVELOPMENT

COMMITTEE

Coupon FlowCommunication and

coordination

Registration Process


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Program Expenditures

Description Actual Expenditure % OF Total

Suppliers of fertilizer 10.7 billion 64

Transporters 859 million 5

Redemption of fert.coupons

3.2 billion 19

Redemption of seedCoupon

1.05 billion 6

Operational costs 304 million 2

Other Costs 654 million 4

Total 16.7 billion 100


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YEAR NATIONALREQUIREMENTS(METRIC TONS)

PRODUCTION SURPLUS(DEFICIT)

2004 2.039.291 1.733.125 (306.166)

2005 2.115.317 1.259.332 (855,985)

2006 2.183.506 2.611.486 427.980

2007 2.255.049 3.444.655 1.189.606


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Zambias Experience Strategies for promoting increased use of improved inputs should heed

the lessons of the past.


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Zambias Experience cont

Subsidies went to relatively wealthy farmersrather than intended beneficiaries.

Program difficult to implement input subsidyextremely high costs, undesirable marketand distributional effects.


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Distributing the Subsidy

Targeting

Abuse

Political expediency

Transparency & accountability


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Unpacking the Africas Policy

Responses

The challenges we face

Subsidies to boost the performance of farmers

Subsidies to keep food costs below market prices

Entry point vs. End point

The Yoyo Policy Games


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AFRICA: 1970-90s

SCRUBBLE 70s-90s A TIME FOR war ofwords in the colonies


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AFRICA: 1990s- Structural AdjustmentPrograms (SAPS)

A TIME FOR SAPS- SNAKES AND LADDERS & Yo-Yo

games


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Policy Responses

Policy action Number ofcountries

implementing

Probable consequences

Short-termpolicies

Conditional cashtransfers, e.g. cash--for-work, food-for-

work programmes

5 Not feasible for low incomecountries, require highadministrative capacities

Self targeted food-for-work programmes

5 Less costly than administrativetargeting, physical foodtransfer may lead tosignificant leakages

Emergency food aiddistribution

4 Physical food transfer may leadto significant leakages,disincentive to producersupply response

School feeding

programmes

5 Do not address malnutrition at

infancy

How African Governments have responded to food crisis

Short Term ResponsesKnee jerk reaction / striking the match


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Policy Responses


implementing


Medium-term

Reduction in tariffs and other taxes(VAT) on key staples

8 Reduction in fiscal revenues

Food consumption subsidies for thepoor, e.g. price subsidies, rationcard systems, etc.

4 Create disincentives for domestic foodproducers if entrenched, requirehigh fiscal costs

Bans or taxes on grain exports 5 Limited impact on domestic prices,negative earnings for producersand exporters, sharp pricefluctuations for net importing

countries

Grain buffer stock policies 5 High fiscal costs management andgovernance, price effects not clear

Market based risk managementtools, market informationsystems

1 Private sector involvement, improvedmarket efficiency

How African Governments have responded to food crisisMedium Term Responses

Case of Subsidy / extinguishing the fire


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Policy Responses


implementing


Long-term Increased investment inagriculture sector R&D 2

Investments in infrastructure inland transport links

between surplus anddeficit areas

2

Support to an equitableinternational tradingsystem

1

How African Governments have responded to food crisisLong Term Responses

Making the bread basket / investment (risk sharing)Who invests in Infrastructure


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Living in Interesting Times: 2003-

2015

SUDOKU games- Business of numbers: 10% nationalbudgets to agric sector; 6% annual growth for sectorNEPAD CAADP- Africans driving an African agenda


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Leapfrogging from Subsidies to

Investment

2008 food crisis and plus 3 Fs (Fuel, Fertilizer,Financial) calls for lasting solutions and not rescueplans

Bold visionary leadership Investment in infrastructure

Institutional reforms

Credible data for policy development

Home grown solutions (optimize on local resources (humanand financial) and with AID for gap filling

Evidence Backed Advocacy (policy dialogues, radio, TV, print,online)


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Role of CSOs

Who WhatOrdinary Citizens Demilitarise and empower with evidence to strengthen advocacy and

hold GVT to account

Farmer Organisations Honest , credible leadership, set the agenda communicate issues

ResearchOrganizations

Relevance, Credibility, Consistency,North-South and South to South Partnerships

Inter disciplinary and multi-disciplinary teamsLongitudinal studies

Private Sector (inputsuppliers, processors,

wholesalers, retailers)

Contribute to policy process in a transparent manner

Media Rallying point for CSO engagement, editorial, opinion pieces,commentaries, features, profiles, hard news, photo journalism, storytelling, visual and personally, analysis

Women Empowerment, Have a voice and insist on being heard; Honestrepresentation

P li P


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Policy ProcessesIssue Where we are

now

Medium term:

2010

Long term: 2020

Participation Selected advisors,

trusted partisans,

donors

-Strengthen multi-

stakeholder policy

dialogue platforms at

local level

-Build trust between

Gvt and CSOs

Strong networks with

space and capacity to

engage

Knowledge of the

policy process

The elite, educated,

technocrats ,

economists

participate

Invest in building

capacity of ordinary

citizens to participate

CSOs participate and add

value to policy processes

Evidence and policy

options

Unreliable data,

Weak infrastructure

for data collection

Weak analytical skills

Invest in longitudinal

household surveys,

production data, use

local researchers to

collect data

Evidence is a public good

and all citizens have access

to information and voice

Long term-proactive

planning

Knee jerk reaction Aligned development

agenda

Policies and programmes

aligned to common goal

POLICY DEVELOPMENT PROCESSES


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Monitoring andEvaluation

AgendaSetting

DecisionMaking

PolicyImplementation

PolicyFormulation

POLICY DEVELOPMENT PROCESSES

Civil Society

Donors Cabinet

Parliament

Ministries

PrivateSector

Source: John Young, Networking for impact.

Experience from CTA supported regionalagricultural policy networks, 2007


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Evidence

Experience &Expertise

Judgement

Resources

Values andPolicy

Context

Habits &Tradition

Lobbyists &PressureGroups

Pragmatics &Contingencies

Factors influencing policy making

Source: Phil Davies Impact to

Insight Meeting, ODI, 2005


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What does it take-Go for RED-Networks

External InfluencesPolitical context

EvidenceLinks

Politics and

Policymaking

Media,

Advocacy,

Networking Research,

learning &thinking

Scientificinformation

exchange &

validation

Policy analysis, &

research

Campaigning,

Lobbying

Source: The Rapid Framework. Research and Policy in Development Programme Briefing Paper No1, October 2004


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Tightening the Loose Screws

TARGETTED INPUT SUBSIDIES AREINVESTMENTS-RISK SHARING

Being politically sensitive and professionally

astute

The Global Food Crisis: Brings The

Subsidy Debate to Full Circle

LEARN & BUILD ON SUCCESS CASES


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Thank You

Documents

Lindiwe Presentation