The potential for agricultural trade among Eastern and Southern African countries

Food Policy,Vol. 23, No. 1, pp. 73–88, 1998 1998 Elsevier Science Ltd. All rights reservedPergamon

Printed in Great Britain0306-9192/98 $19.00+ 0.00

PII: S0306-9192(98)00016-5

The potential for agricultural tradeamong Eastern and Southern Africancountries

John Weeks* and Turan SubasatCentre for Development Policy and Research, School of Oriental and African Studies,The University of London, London, U.K.

This study investigates the potential for expanding trade in grains and cereals amongthe countries of Eastern and Southern Africa. In the absence of measures of compara-tive costs and disaggregated bilateral data, the method was to determine whether theconsumption and production characteristics of the countries imply that trade is belowits potential. The countries demonstrate characteristics consistent with greater tradein grains and cereals than occurs. The region isnot a chronic importer of grains, exceptin years of severe drought. Greater intra-regional trade in grains is implied by thesignificantly different structures of consumption and production across countries.These differences suggest that greater grain self-sufficiency for each country takenseparately might not be efficient, but it could be for the region as a whole. Along withthe evidence for differences in consumption and production patterns goes statisticalsupport for the likelihood that the countries could absorb each other’s surpluses andfill each other’s shortages over time. 1998 Elsevier Science Ltd. All rights reserved

Introduction 1

This article investigates the prospects for agricultural trade among the countries of Eastern andSouthern Africa.2 As Lipton has argued persuasively, the goals of food security and regionalintegration should not be confused (Lipton, 1988); nor should trade integration be consideredthe principal component of a development strategy, either for the region or individual countries.But, increased agricultural trade in itself would bring important benefits to the region, as is

*Author to whom correspondence should be addressed.1The research for this paper was funded by the Economic and Social Committee for Research of the Overseas Develop-ment Administration of the United Kingdom (Grant R5932). The authors wish to thank Ben Fine for his valuablecomments, and to an anonymous referee, whose suggestions promoted substantial changes.2A sub-regional grouping was initially established under the name, Preferential Trade Agreement for Eastern andSouthern Africa. The name was changed in December 1994. The original name represented the trade integrationstrategy of the initial stage of integration, preferential reductions across existing national tariff structures for themembers of the PTA, rather than a common external tariff. This study covers the COMESA countries, but does notpresume that it would necessarily be the vehicle for greater agricultural trade.

73

74 The potential trade among Eastern and Southern African countries: J. Weeks and T. Subasat

increasing recognised by bilateral and multilateral donors. Regional trade need not be defendedon the basis of increasing food security or redesigning development strategy, though it mayfacilitate these goals.

Data do not permit direct measures of comparative costs across countries nor are therebilateral trade data except in the aggregate. In light of the data limitations, other measuresimplied by trade theory are employed, especially indicators of complementarity in consumptionand production. The analysis restricts itself to ‘official’ trade; that is, imports and exports asrecorded in national and United Nations databases. It is quite likely that unrecorded trade,especially cross-border trade in agricultural products, is substantial between some of the coun-tries. While it is a limitation to treat only formal trade, such statistics cover the vast majorityof imports and exports. In any case, the purpose of the analysis is to identify policies to fosterofficial trade. To the extent that this is achieved by cross-country specialisation (potentiallytrade creating), or drawing more trade into formal channels (‘trade revealing’) is a secondary,though important, consideration.

Pattern of cereal trade in Eastern and Southern Africa

There are compelling analytical reasons for fostering regional agricultural trade in Eastern andSouthern Africa,3 and in recent years donors have shown increased interest in such a project.4

This makes the the issue of the potential for trade both relevant and current. As is well-known,orthodox trade theory predicts that the potential for trade is greater, the greater the differencesbetween countries in terms of economic characteristics. Before turning to a detailed specifi-cation and analysis of characteristics specifically relevant to trade, it is useful to describe thecountries at a more general level. As we shall see, one finds in the literature a tendency forsome authors to suggest that the countries of Eastern and Southern Africa are quite similar.

While many of the countries are extremely underdeveloped, this is not true for all. Table 1provides a range of indicators, with the countries listed in descending order by population.For the twenty-one countries, per capita income varied from a low of US$ 113 (Mozambique)to a high of over 2504 (Mauritius). Even if one excludes the islands and South Africa, percapita income varies by a factor of sixteen between Mozambique and Botswana. If one dividesthe countries into two groups, those with relatively large populations and those with relativelysmall ones, the differences within each group remain great. The consequence of the largedifferences in per capita income for regional trade is not obvious. On the one hand, differencesin levels of development may be associated with trade-creating differences in relative prices;on the other, large variations in level of development within trade groupings can stimulatepolitical conflicts over the distribution of the gains from integration (Takirambudde, 1993).

The countries are also quite different in degree of urbanisation, from the highly urban SouthAfrica, Namibia and Zambia, to the virtually rural Burundi and Rwanda. Urbanisation has atleast two important implications for trade. First, it tends to be positively correlated with thedegree of monetisation of food production. Second, numerous studies have shown that it affectsthe composition of the demand for food (Jamal, 1988; Jaeger, 1992), shifting it toward wheatand rice. The final column of the table gives the ratio of the rural labour force to arable landmeasured in hectares. Again, the variation is enormous, from less than 0.2 persons per hectare

3A review of the theoretical and political aspects of regional integraton is found in Weeks (1996) and Gore (1992).4For the position of donors, see Foroutan (1992), Japanese International Development Agency (1994); Rajaram andCarvalho (1994).

75The potential trade among Eastern and Southern African countries: J. Weeks and T. Subasat

Table 1 Population and gross domestic product of the Eastern and Southern African countries, 1995

Country Population Cumulative Total GDP Per capita Percentage Ratio (1989):(millions) population (mns. 1987$) GDP Urban AgricLabour

(percent) Force/land

Ethiopia 56.4 19.7 8601 152 13.4 1.10South Africa 41.5 34.1 88119 2126 50.8 0.13Tanzania 29.6 44.4 4405 149 24.4 0.39Sudan 26.7 53.7 9300 348 25.9 1.92Kenya 26.7 63.0 9604 360 27.7 3.06Uganda 19.2 69.7 10582 552 12.5 0.96Mozambique 16.2 75.3 1832 113 37.9 2.12Angola 10.8 79.1 5415 503 32.2 0.78Zimbabwe 11.0 82.9 6307 573 32.1 0.91Malawi 9.8 86.3 1384 142 13.5 1.10Zambia 9.0 89.4 2194 244 45.2 0.35Rwanda 6.4 91.7 1266 198 7.6 2.71Somalia 9.5 95.0 1022 108 24.3 2.01Burundi 6.3 97.2 1128 180 7.5 1.90Lesotho 2.0 97.9 1049 530 23.1 2.01Namibia 1.5 98.4 2469 1598 37.6 0.28Botswana 1.5 98.9 2678 1847 30.8 0.19Mauritius 1.1 99.3 2824 2504 40.7 0.91Swaziland 0.9 99.6 702 780 32.7 1.24Comoros 0.5 99.8 208 416 27.8 1.86Djibouti 0.6 100.0 377 595 82.80 naTotal 287.0 161,466 563 26.7

Notes: The last column is the ratio of the agricultural labour force to arable land (persons per hectare).Source: Columns 1–5, World Bank, World Development Indicators; Column 6, FAO, AGROSTAT.

(five hectares per person) for South Africa and Botswana, to approximately three people perhectare for Kenya and Madagascar. These person-land ratios should not be taken as measuresof the potential for expanding cultivated area, at least under existing methods of production.Rather, they tend to reflect differences in ecological conditions, though potential exists forexpansion of land use in several countries (African Development Bank, 1994a, Vol. 3, p. 85).5

The imports of food must play a central role in an analysis of regional integration, since itsraison d’etre is that supply from within the region could replace rest of the world imports.Such a shift in food trade raises the questions of whethercommercialimports of regionalorigin would be justified by comparative costs. Prior to this question is another: does the‘normal’ pattern of food trade suggest that a substantial shift from extra-regional to intra-

5Referring to Central Africa, Koester writes:

Malawi, Zambia and Zimbabwe differ significantly in their factor endowments and in their ecological environ-ments...In general, rainfall in Malawi and Zambia is higher and more reliable than it is in Zimbabwe. Zambia hasconsiderably more unexploited land than Zimbabwe, whilst Malawi, with the highest population density, is expectedto have virtually all its cultivable land in production by 2010. (Koester 1993, p. 355)

More generally, the African Development Bank foresees the possibility of an expansion of production in the wetterzones of the region:

It follows that a substantial augmentation of existing regional production should come from the higher rainfallzone...which stretches from Angola to southern Tanzania....The basic constraint on an expansion of production inthis area is the uneven and generally poor quality of the soil...[T]he adoption of more intensive production systemsby small farmers will be necessary. (African Development Bank 1994a, vol. 3, p. 83)


regional trade would be possible?6 Table 2 attempts a first answer to this question. In the tablenet imports of cereals, with and without wheat, are reported in thousands of metric tons overthirty-two years, 1961-1992. On the assumption that all cereals are perfect substitutes, one cansum down the table to obtain the ‘Total’ row, net cereal imports for the countries as a whole.The last row omits South Africa from this sum. To reduce annual fluctuations, net imports areaveraged over five year periods (fewer years for the first and last period).

If wheat is included, with South Africa, the region was a netexporter in the 1960s and1970s, and subsequently a net importer. However, little wheat is produced in the region,7 andwould be imported under any likely trade regime. Without wheat, net exports were the ruleuntil the drought-affected 1990s. If one takes the 1980s as ‘normal’, annual net imports wereabout 1.7 million tons per time period. If one excludes South Africa, the ‘normal’ net importlevel with wheat might be estimated at one million tons, and without wheat near zero. Therelatively low level of net cereal imports is demonstrated at the bottom of the table, wherenet imports are expressed as a proportion of national production. For all countries includingSouth Africa, net cereal imports including wheat represented only five percent of nationalproduction in the 1980s.

Inclusion of wheat imports in the aggregate conceals the potential of intra-regional trade inother grains. This is especially the case, because a substantial amount of wheat enters the regionas food aid, perhaps more on the basis of donor country production patterns and surpluses thanconsumer preference within Eastern and Southern Africa. Should food aid be reduced, or donorsupply replaced in part by local purchases or ‘triangular’ arrangements,8 potential would arisefor wheat to be replaced by other grains. Related to food aid, in several countries white maizeis the grain preferred by consumers.9 Because there is no world market for white maize, short-ages within the countries of Eastern and Southern Africa must be met by suppliers within theregion if at all.

The pattern of net imports and exports is extremely unbalanced. Inspection of the tableshows that South Africa and Zimbabwe generate the virtually all of the net exports. Thus, itappears that were the countries to limit their cereal trade to wheat, and all other cereals wereperfect substitutes, the region could achieve near self-sufficiency in the latter in normal years,with two of the countries as exporters and nineteen as importers. This conclusion, based onimport and export performance over thirty years, understates the number of countries thatcould, under suitable policy regimes, be net exporters. In the 1990s two important develop-ments occurred. First, most countries shifted their trade policies, to provide more incentivesfor agriculture. As a result, one might anticipate that Zambia, a country with considerableunder-utilised land, would generate substantial surpluses (African Development Bank, 1994a;Koester, 1993). Second, the civil war in Mozambique ended in 1992, and in 1996 and 1997the country exported small quantities of maize (World Bank, 1997b, p. 9). In addition to thesecountries, non-wheat surpluses could also be anticipated from Kenya, Malawi, and Uganda.In the discussion below, seven countries will be treated as net exporters: Kenya, Malawi,Mozambique, South Africa, Uganda, Zambia and Zimbabwe; and the other fourteen as netimporters. On the basis of land endowment and net exports over thirty years, Sudan mightalso be included as an exporter. However, the war in that country makes such a judgement

6‘Normal’ refers to trade and production in the absence of drought. On drought and food shortages, see FAO 1992-94).7Countries producing wheat are Ethiopia, Kenya, Lesotho, South Africa, Sudan, Tanzania, Zambia, and Zimbabwe.8In 1993 local purchases accounted for about ten percent of cereal food aid in sub-Saharan Africa as a whole (WorldFood Programme, food aid data sheets 1992 and 1995).9A persistent problem in the delivery of food aid in the region has been resistance by local consumers to yellow maize.


Tab

le2

Net

impo

rts

ofce

real

s(t

hous

ands

ofm

etric

tons

)

A.

Incl

udin

gw

heat

B.

Exc

ludi

ngw

heat

Cou

ntrie

s19

61–6

419

65–6

919

70–7

419

75–7

919

80–8

419

85–8

919

90–9

219

61–6

419

65–6

919

70–7

419

75–7

919

80–8

419

85–8

919

90–9

2

Ang

ola

−83.

2−6

8.2

−2.9

220.

431

5.0

247.

632

8.1

−120

.2−1

23.4

−104

.610

0.8

159.

613

0.4

185.

5B

otsw

ana

38.8

53.6

41.3

35.7

94.1

118.

096

.633

.047

.029

.414

.364

.772

.851

.1B

urun

di4.

07.

19.

812

.118

.112

.522

.51.

71.

71.

01.

40.

9-0

.10.

7C

omor

os8.

712

.017

.315

.726

.227

.735

.77.

810

.515

.113

.923

.624

.031

.1D

jibou

ti12

.712

.722

.920

.429

.447

.273

.5na

nana

nana

nana

Eth

iopi

a5.

234

.647

.116

2.9

295.

871

1.6

844.

4−1

.33.

8−1

.412

.922

.061

.538

.9K

enya

−28.

3−1

07.7

−61.

5−2

9.7

267.

426

.136

9.7

−23.

9−7

3.8

−65.

8−7

4.7

168.

4−1

10.4

120.

2Le

soth

o4.

525

.246

.682

.911

0.7

94.5

132.

02.

95.

25.

119

.936

.045

.352

.1M

alaw

i-5

.4-4

0.9

12.0

19.4

-19.

253

.522

6.6

-13.

1-5

4.7

-11.

92.

1-4

0.2

31.8

220.

5M

autir

ius

110.

111

9.1

134.

614

7.2

177.

717

9.4

198.

4na

nana

nana

nana

Moz

ambi

que

65.2

39.4

62.1

225.

033

7.5

470.

772

1.5

25.7

−24.

5−2

4.7

125.

919

1.0

355.

158

3.6

Nam

ibia

32.5

31.8

39.0

47.6

62.2

90.3

123.

024

.018

.821

.427

.036

.663

.895

.1R

wan

da−0

.53.

47.

312

.018

.818

.116

.8−0

.50.

30.

93.

75.

68.

16.

7S

omal

ia40

.843

.768

.614

1.2

312.

322

7.8

234.

627

.924

.337

.565

.117

4.5

105.

510

4.3

Sou

thA

fric

a−1

620.

6−9

41.7

−199

7.0

−261

0.7

−163

7.6

−144

3.3

1214

.6−1

779.

2−1

169.

9−1

892.

7−2

525.

2−1

729.

6−1

258.

761

1.0

Sud

an31

.511

4.2

134.

148

.714

9.3

639.

581

5.4

−77.

6−4

6.0

−52.

8−1

04.4

−218

.9−6

4.1

177.

7S

waz

iland

4.9

8.0

9.5

15.0

48.9

56.7

81.0

4.9

8.0

9.5

15.0

23.2

18.2

23.8

Tan

zani

a81

.545

.913

6.2

141.

029

7.5

172.

713

4.9

43.3

8.9

93.3

72.5

240.

011

4.0

56.1

Uga

nda

18.9

35.3

37.7

6.6

24.8

18.5

−9.2

−5.0

6.1

7.8

3.4

12.8

6.4

−25.

3Z

ambi

a34

.3−9

.213

8.1

117.

428

0.8

151.

128

0.6

13.7

−55.

342

.78.

315

8.5

98.6

254.

6Z

imba

bwe

−102

.9−1

00.0

−258

.5−4

47.6

−107

.6−2

55.0

133.

8−1

78.8

−181

.2−3

10.5

−456

.2−1

38.3

−321

.155

.9T

otal

−134

7.5

−681

.7−1

355.

9−1

616.

811

03.0

1665

.160

74.3

−200

9.4

−155

0.2

−220

3.8

−269

0.3

−793

.0−6

74.8

2392

.0E

xclu

ding

273.

126

0.1

641.

199

3.9

2740

.631

08.5

4859

.7−23

0.2

−380

.3−3

11.1

−165

.193

6.6

583.

917

81.1

Sou

thA

fric

a%

dom

estic

prod

uctio

n:

Tot

al-6

.3−2

.5−4

.6−4

.85.

14.

519

.4−9

.0−6

.1−7

.3−7

.7−0

.7−1

.39.

5E

xclu

ding

1.9

1.8

3.5

4.6

13.3

11.9

19.5

−1.1

−2.1

−1.2

−0.3

5.1

2.9

8.7

Sou

thA

fric

a


problematical, and in the 1990s there was no immediate prospect of conflict resolution. WereSudan included, the evidence presented below would be stronger; but, for the reason given, itis not.

This section has provided several insights into the potential for cereal trade among theEastern and Southern African countries, some of which go against conventional wisdom. First,the countries of the region are quite diverse in levels of development, urbanisation, and inten-sity of land use. Second, the distribution of net imports of cereals across countries suggestsconsiderable scope for grain trade within the region. These points are pursued in the follow-ing section.

Potential for cereal trade

That the net imports of grains of the Eastern and Southern African countries were relativelylow and that the region has a division between net importers and exporters is not in itselfevidence for increased trade in cereals among the countries. Trade results from gains betweenpartners. The purpose of this section is to investigate the possibility of such gains. InHeckscher-Ohlin trade theory, specialisation results from differences in relative factor endow-ments among countries. The ratios of agricultural labour to arable land provided aprima faciecase for differences in factor endowments among the countries. Specialisation can also resultfrom other differences among countries which are usually ignored by orthodox trade theory.The first of these that we investigate is differences in consumption patterns.10

Two countries with the same relative factor endowments would gain from trade if the struc-ture of consumption in each country were different. Beginning from a position of autarky, thetwo countries would have different relative prices of outputs as the result of the differentpreferences of consumers. One of the arguments against the likelihood of increased agriculturaltrade among the Eastern and Southern African countries is the hypothesis that the consumptionpatterns across countries are much the same. If this hypothesis is sustained, the case forexpending effort to foster such trade is weakened.

Table 3 summarises the statistical test of the hypothesis. Using FAO food balance sheets,for each country in the table a percentage distribution of consumption was calculated, measuredin calories, for forty-three items of consumption.11 Each cell in the table pairs countries andreports the outcome of the Chi-square test for the null hypothesis that the consumption distri-butions for the pair are not significantly different. If the cell is blank, the consumption structuresof the two countries are significantly different; an entry ‘NSD’ reports that the null hypothesisis accepted. The fourteen ‘deficit’ countries are listed first, followed by the seven ‘surplus’countries. For the twenty-one countries there are 210 pairs, and for 184 of these the nullhypothesis is rejected at the five percent level of probability. The important non-significantpairs are those between potential surplus and deficit countries, of which there are thirteen outof ninety-eight. One might give greater weight to pairs for contiguous countries because thereare move likely to be trading partners (discussed in greater detail below). On this basis, thepotential for trade on the consumption criterion, there is limited scope for Botswana and Leso-tho to import from the region, because of the non-significant consumption differences with

10Heckscher-Ohlin theory assumes that all trading partners are characterised by the same set of consumer preferences.The theory does not assert this as fact, but makes the assumption in order to focus upon the theoretical relationshipbetween trade and factor endowments.11‘Consumption’ includes final and intermediate demand, but not inventory accumulation.


Tab

le3

Chi

-squ

are

test

ofsi

mila

rity

ofst

ruct

ure

ofco

nsum

ptio

n.P

air-

wis

eby

coun

try,

1984

–86


South Africa. All the other deficit countries have significant consumption differences withcontiguous surplus countries.

The implication of the table can be summarised in a counter-factual scenario. Assume thatcountries can be treated as individual consumers, and that the distribution of consumption inthe food balance sheets represents the autarky pattern for each country. Further, assume thatat the start of a market period each country is endowed with the same set of commodities inthe same proportion (with the absolute amount determined by population and per capitaincome), and there are no transport costs. On these assumptions,Table 3 implies that theopening of trade would result in exchange between the deficit and surplus countries.

A similar exercise can be carried out on production, and Table 4 reports the results of thetest of the null hypothesis that the distribution of food outputs does not vary significantlyacross countries. In this case there are 190 country-pairs, and for only fifteen is the null hypoth-esis sustained. Of the deficit countries, only Tanzania has no significant differences with severalcontiguous surplus countries, though the differences are significant with Kenya. Again, a coun-ter-factual illustrates the implications of the table. From a position of autarky in which eachcountry has the same pattern of consumption, let trade open. As a result of differences inproduction structures, the countries in the table would become enmeshed in a matrix of foodtrade.12 Therefore, differences in production patterns and differences in consumption patternswould appear to create considerable potential for intra-regional trade in food. This conclusionsupports the findings of Koester, who tested similar hypotheses in his seminal work on Easternand Southern African trade (Koester, 1986).

If we overlay the consumption and production criteria (Table 5), there are only three cases inwhich both are non-significant between a deficit and surplus country: Angola and Mozambique,Rwanda and Uganda, and Tanzania and Mozambique. The first can be considered of littleimportance, given that the countries are not contiguous. For the second and third, there are othersurplus countries with which the deficit country in question might trade on the consumption andproduction criteria.

Statistical evidence suggests that in consumption and production the Eastern and SouthernAfrican countries are significantly different. These are necessary but not a sufficient conditionsfor trade. In addition to the cross-country differences in Tables 3 and 4, trade requires thatcountries can respond to changes in demand by trading partners. Just as it has been argued thattrade in the region would be restricted by similarity of consumption and production structures, itis also argued that variations in agricultural output are positively correlated across countries.13

To put the position in extreme form, it is alleged that the countries consume the same things,produce the same things, and have surpluses or shortages at the same time.14 Having rejectedconsumption and production similarity, we now investigate changes in output across countries.Before presenting the empirical evidence, it should be noted that the potential for trade is

12It can be noted that there are seven pairs for which both consumption and production patterns are not significantlydifferent. Three of the seven involve the members of the former federation of central Africa, Malawi, Zambia, and Zim-babwe.13Hay and Rukuni write:

[Climate similarity] reduces the opportunities for countries which hold surpluses in any one year to supply fooddeficit neighbouring countries. The extent to which regional cooperation would aid supply stability in individualcountries is therefore limited by the synchronous nature of year on year fluctuations in most SADCC [later, SADC]countries (1988, p. 1015)

14Referring to the SADC countries, Lipton asserts: ‘...the region-wide droughts of 1983-84, which turned Zimbabweand even [South Africa] into net grain importers, point up the high covariance among regional sources of grainsupply...’ (Lipton 1988, p. 97).


Tab

le4

Chi

-squ

are

test

sof

sim

ilarit

yof

prod

uctio

nst

ruct

ures

.P

air-

wis

eby

coun

try,

1984

–198

6


Tab

le5

Chi

-squ

are

test

sof

sim

ilarit

yof

cons

umpt

ion

and

prod

uctio

nst

ruct

ures

.P

air-

wis

eby

coun

try,

1984

–198

6


supported by confirming the null hypothesis that output variations are not significantly andpositively correlated; i.e., randomness is sufficient to demonstrate potential for trade.

For cereal production, Table 6 tests the hypothesis that changes in the production of cerealsare positively correlated across countries. As before, the deficit countries come first, followedby the surplus countries. The word ‘positive’ in a cell indicates that the changes are positivelycorrelated, at the one percent level of probability in bold, and at the five percent level if notin bold. Negative correlations, which support the potential for trade, are also noted. Also inthis table, we indicate contiguous trading partners between deficit and surplus countries, withthe notation ‘CTP’. This is omitted from the cells if a correlation is positive and significant(which indicates limited potential for trade). The number of positively correlated and significantpairs is thirteen, six of which are between deficit and surplus countries.15 However, none ofthese involve strictly contiguous countries, though the pairings between Lesotho and Zim-babwe, and Swaziland with Malawi and Zimbabwe might be taken as involving potential trad-ing partners. Overall, the table prompts a rejection of the hypothesis that changes in outputare positively correlated across countries over time;to no substantial extent do the countriesgenerate agricultural surpluses and shortages in concert.16 Further, for all deficit countries(except the islands, obviously), there is at least one contiguous surplus country with a non-significant correlation for production changes. Due to lack of strictly comparable data, SouthAfrica is not included in the table, though it is given in parenthesis next to the countries withwhich it is contiguous.

Even at this very general level of analysis, the relationships are more complex than thepairings between surplus and deficit countries suggest. Inspection of the table shows a concen-tration of positive correlations within the group of surplus countries (cells to the right of thedark vertical border between Tanzania and Kenya). Of the fifteen surplus country pairs, fiveare positively correlated. This suggests a tendency for the production of cereals in the surpluscountries to rise and fall together. Thus, in a year of low production in one of the surpluscountries is likely to be associated with low production in several others, reducing the potentialfor exports to deficit countries. Even given this, the table suggests considerable potential intrade among contiguous countries.

A sceptic might question the results of Table 6 on grounds that national production dataare too unreliable to support the reported tests. While the reliability of production data doesvary across countries, their method of estimation would suggest a bias toward positive corre-lations. For most countries of the region and most crops, output is estimated on the basis ofsample surveys, with total production calculated by using estimates of land applied to thatproduct and the rural labour force. Because labour force growth rates are much the same across

15There are also three significant andnegativepairs. The obvious explanation for a negative correlation is trade betweenthe partners in question, in which the surpluses of one country respond to the shortages in the other. While the tradedata are not sufficiently disaggregated to verify this explanation directly, it would seem credible in some cases, thoughnot in others.16These empirical results are in contrast to those presented by Hay and Rukuni (1988)p. 1015) in their definitive workon food security policies of the SADCC (subsequently SADC) countries:

....[P]ossibly [the] most important point...is the high degree of correlation between national [cereal] output varia-bility; Lesotho and Tanzania are the only two countries in the region where annual changes in output are inverselycorrelated with those of their neighbours...

The difference in empirical results may arise from the shorter time period covered by the Hay and Rukuni study. Ourconclusion is similar to that of Koester: ’Trade could bridge the gap between national demand and national supplyin years of normal harvest through the redirection of present trade flows’ (Koester 1993, p. 356).


Tab

le6

Ann

ualv

aria

tions

ince

real

prod

uctio

n,19

71–1

990,

F-s

tatis

tics,

pair-

wis

eby

coun

trie

s


countries, one would expect a spurious tendency towards positive correlations. Since relativelyfew such correlations appear, the conclusion that changes in output across countries is notpositively correlated is strengthened. This conclusion could be challenged by arguing that thedata, both for agriculture as a whole and particular crops, are so unreliable that the absenceof correlations merely reflects the randomness of estimation errors.

As a check on the possibility that the calculations are spurious, Table 7 tests for the corre-lation across countries for imports of cereals. If one assumes that cereal imports compensatefor shortfalls in national production,17 then positive correlations between countries for changesin imports can be interpreted as indirect evidence that the two countries tend to suffer shortagesand enjoy surpluses in concert, which were not revealed in Table 6. The sceptical view ofEastern and Southern African agricultural trade would predict that the net import matricesshould display a large number of positively and significantly correlated cells. Table 7 showsthe tests for cereal imports excluding wheat. The first relative differences are positively andsignificantly correlated in 46 of 210 pairs, just over twenty percent. For the other 164 cells,eight (four percent) show significant and negative correlations, which, of course, support thepotential for trade. While the number and proportion of significantly and positively correlatedpairs is much greater for net imports than national production, for the vast majority of thecountries the relationship is negative or random. The net import correlations could be inter-preted as suggesting that the national production data understate the extent to which changesin output are positively correlated across countries.

Whether the import correlations sustain the view that for the vast majority of the countriesthere exists the potential for compensating trade in cereals in part depends, as before, on whichcountries display positive correlations. As in Table 6, ‘contiguous trade partners’ are identified,now for all fourteen ‘deficit’ countries and all seven ‘surplus’ countries. If we exclude theislands (Comoros and Mauritius), there are only two deficit countries with no potential tradingpartner which is contiguous, Djibouti and Somalia. The latter’s potential trade with Kenya isruled out on the basis of a positive correlation in changes in imports. A marginal case isEthiopia, which has the largest population of the twenty-one countries, and the largest persistentcereal deficit of the group (see Table 2). Its only contiguous surplus country is Kenya, whichin most years would make a relatively small contribution to Ethiopia’s cereal imports.

It would be absurd to suggest that the Eastern and Southern African countries could be selfsufficient in cereals and grains. The demand for wheat alone precludes this. However, on thebasis of consumption and production structures, and non-simultaneity of production changes,evidence indicates considerable scope for increased trade.

Conclusion

This study set itself a narrow task: to determine the potential for expanding trade in grainsamong the Eastern and Southern African countries. In the absence of measures of comparativecosts, the method has been to determine whether the consumption and production character-istics of the countries imply that trade is below its potential. Some of the Eastern and SouthernAfrican countries have suffered drought simultaneously, but this does not imply that changesin agricultural production are positively correlated over time. Further, fostering more regionaltrade in agriculture need not reduce access to extra-regional sources in drought years, eitheras commercial purchases or food aid.

17This may not be the case for all food aid, some of which is provided (and solicited) as budgetary support.


Tab

le7

Ann

ual

varia

tions

inne

tim

port

sof

cere

als

(exc

ludi

ngw

heat

),F

-sta

tistic

s,19

71–1

990


The potential for trade in cereals and grains among the Eastern and Southern African coun-tries has been under-estimated. On the basis of relevant measures, the countries demonstratecharacteristics consistent with greater trade than occurs. Taken as a whole, the region is nota chronic importer, except in years of severe drought. While the major grain exporters in theforeseeable future would be Kenya, South Africa, and Zimbabwe, under the emerging regionalpolicy framework, several other countries could and have emerged as net exporters. Greatergrain self-sufficiency for each country taken separately is probably not efficient in most cases,but it could be for the region as a whole.

There remains much that the countries can do to facilitate regional agricultural trade withoutexternal assistance. Tariffs on agricultural products among the countries are frequently highand complicated (see Weeks and Subasat, 1995 for detials). A quick movement toward acommon external tariff on cereals and grains and a near-zero internal tariff could have substan-tial trade-inducing effects. However, the shortage of storage facilities represents an importantobstacle to increased regional trade in grains (Pinckney, 1993). Until investments are made instorage, much of the increased trade between countries will be short-haul cross-border. Trans-port facilities, especially roads, also limit regional grain trade. Lowering transport costs byimproving roads and other infrastructure will be a long-term task, to which aid donors can con-tribute.

In the shorter term, donor governments can contribute to increased regional trade in grainsin several ways. First, they can support and encourage the shift in position of the multilateraldonors on regional integration in Eastern and Southern Africa.18 This would involve not onlyencouraging integration moves as such, but also coordinating structural adjustment programmesrather than treating each as an isolated national policy exercise (Muir-Leresche, 1993a, b).19

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18A shift in the position of the World Bank occurred in the mid-1990s, from strong scepticism to conditional supportfor integration moves in Eastern Africa (Foroutan 1992, Rajaram and Carvalho 1994).19The African Development Bank comments:

...[S]ub-regional groupings should play a role in implementing SAPs; but this has not occurred in any systematicway. Indeed, there has been little discussion as to what aspects of structural adjustment should interact with whichcomponents of economic integration... (African Development Bank 1993, p. 154)


Lipton, Michael (1988) Regional Trade and Food Security in Southern Africa,Poverty, Policy and Food Security inSouthern Africa, ed. Corale Bryant, Mansell Publishing, London.

Muir-Leresche, Kay (1993a) Agricultural and Macroeconomic Policy Reforms in Southern Africa: Current Status,Proposals and Constraints,Food Policy.

Muir-Leresche, Kay (1993b) Liberalization and Regional Agricultural Trade in Southern Africa,Food Policy.Overseas Development Institute (1995) Developing Countries in the WTO,Briefing Paper3. ODI, London.Pinckney, T. C. (1993) Is market Liberalization Compatible with Food Security? Storage, Trade and Price Policies

for Maize in Southern Africa.Food Policy18, 4.Rajaram, Anand and Marcelo Carvalho (1994)Implementing the Cross Border Initiative in East Africa. World

Bank, Washington.Takirambudde, Peter Nanyenya (1993) Rethinking Regional Integration Structures and Strategies in Eastern and South-

ern Africa, Africa Insight.author please supply detailsWeeks, John and Turan Subasat (1995) Agricultural Trade Integration for Eastern and Southern Africa, Final Report

to the Overseas Development Administration. Centre for Development Studies, SOAS, London.Weeks, J. and Subasat, T. (1996) Regional Cooperation and Southern African Development.Journal of Southern

African Studies22, 1.World Bank (1989)Sub-Saharan Africa from Crisis to Sustainable Growth. World Bank, Washington.World Bank (1997a)World Development Indicators. World Bank, CD ROM, Washington.World Bank (1997b)Mozambique: Policy Framework Paper, 1997-1999. World Bank, Washington.World Food Programme (1992)Food Aid in Figures 1992. WFP, Rome.World Food Programme (1995) Unpublished food aid data sheets.

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The potential for agricultural trade among Eastern and Southern African countries