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Borderless food security

2018-09-02

Enabling smallholders to trade across regions and borders promotes food security and economic growth. Although everyone is calling for exactly that, implementation is still difficult

Ich bin ein Alternativtext — A fisherman is fishing on Lake Tumba, a shallow lake in northwestern part of the Democratic Republic of the Congo © Christoph Püschner/Brot für die Welt

Christine Wieck

Prof. Dr. Christine Wieck has been teaching and researching at the University of Hohenheim since February 2018, where she heads the Department of Agricultural and Nutrition Policy. She is a member of the Task Force Rural Africa, an independent expert group of the European Union. Previously, she spent two and a half years working as a political consultant for the German Society for International Cooperation (GIZ).

Not just since the Malabo declaration has regional agricultural trade been high on the agenda of African countries. In the declaration, African states declared their intention to triple intra-African agricultural trade by 2025. The recent political agreement on establishing a free trade zone across the continent is cause for hope for regional integration in Africa.

After all, trade in agricultural products is an important source of income generation for most small farmers and the agri-food industry.

Regional trade in agricultural products - i.e. between neighbouring countries or within a region such as West Africa - helps to balance seasonal production fluctuations and regional bottlenecks caused by extreme weather and climate change.

This increases food availability and variety, and helps to reduce price volatility, keeping food prices affordable.

This in turn helps to achieve global sustainable development goals, to eliminate hunger and malnutrition and to strengthen the livelihoods and income prospects of people in rural areas.

Trade in agricultural products generally takes place when buyers and sellers agree on the quantity, price and quality of a product. In the field of staple foods in particular, there are still many opportunities for development, but also great challenges.

Along with the perishable nature of many products, a lack of packaging options and of cooling equipment means that potentially attractive trading opportunities often fail.

Unlike "cash-crops”, which are mostly destined for export, regional agricultural trade in basic foodstuffs is mostly small-scale, often informal and often challenging with regard to transportation and border crossing. Along with the perishable nature of many products, a lack of packaging options and of cooling equipment means that potentially attractive trading opportunities often fail, with losses occurring during transport. This often makes it cheaper to import agricultural products, especially in coastal regions.

This is also reflected in the fact that regional agricultural trade in Africa has not achieved the growth rates that could be expected in comparison to other regions of the world.

For instance, according to a study of the International Food Policy Research Institute (IFPRI), only six percent of regionally traded agricultural products were also regionally produced in the Western African ECOWAS region, measured by the value of the products. The remaining regionally traded agricultural products were imported from other African and non-African countries. The figures look slightly better for the COMESA trade zone in Central and Southern Africa, with regional produce accounting for 20 percent of regional trade, and 42 percent for the Southern African SADC. But even here, that is less than half of the traded products.

In terms of product value averaged across Africa, 15 percent of agricultural products are traded regionally in Africa, the remainder being exported mainly to Europe and other emerging and developed nations. A World Bank study from 2011 comes to a similar conclusion: it states that only about five percent of the grain imported by African countries is also produced in Africa.

These very small trade volumes are closely linked to the still very high trading costs for agricultural goods. For example, a joint OECD and WTO study shows that trading costs for agricultural goods in developing countries are on average twice as high as for processed goods.

Togo's capital Lomé, advertisement for imported food. © Christoph Püschner/Brot für die Welt

However, not only the cost of cross-border trading is high: the cost of domestic trade - including for producers - can often be extreme. 50 percent of non-tariff measures often associated with (trading) costs are enforced by one of the countries. For example, the World Bank report shows that for trucks carrying staple foods, crossing the border between Chad and Niger costs the same as an additional 600-kilometre trip. However, the report also emphasises that the "first mile" - from the smallholder to the nearest market - is often the most costly.

Infrastructure in rural areas, i.e. agricultural production areas - is often poorly developed, which increases transport costs and losses, and prevents the connection of agricultural production areas to the urban regions and cities where demand is rising. These do not need to be the often cited “megacities”: the demand for food is also growing steadily in small and medium-sized cities.

The cost of domestic trade - including for producers - can often be extreme.

Recent estimates by the IFPRI, the OECD and other research institutions show that households in African countries now buy about half of their food in stores. That’s why the market connection and a functioning infrastructure are so important.

Not only transport within a country needs attention: there are still many obstacles to cross-border trade between neighbouring regions. In this context, the regulatory and administrative framework is of particular importance. Trade facilitation measures, customs clearance, veterinary checks at borders and the harmonisation of rules for trade in food are important to support regional agricultural trade.

The World Food Programme is one of the most important staple food retailers in Western Africa. In practice, however, there are great problems in obtaining the often necessary export licenses or quality certificates, leading to delays and high transaction costs.

In Zambia, each vehicle carrying agricultural products requires a permit that costs six US dollars. To obtain the permit, traders must also provide other valid documentation, for example phytosanitary certificates, which are often arbitrarily issued. Corruption and bribery therefore generate massive transaction costs for traders.

This problem is illustrated by an anecdotal example from the Congolese border. Here, an egg trader had to pay 1500 Congolese francs and four eggs in bribes to obtain all the certificates and permits necessary to export his goods.

Regional agricultural trade faces many problems that reduce the competitiveness of regional products and limit their availability.

Small traders usually account for the majority of informal trade. There are good reasons for that: In the border area between Zambia and DR Congo, informal small traders pay 40 percent more bribes per tonne of traded goods than wholesalers. A World Bank study found that these retailers would pay 76 percent more customs fees than the wholesalers if they participated in formal trading. This shows that there is virtually no economic incentive for small traders to enter into formal trade. Another case study analysed which costs are incurred by the lack of harmonisation in SPS rules. According to estimates, this increases the cost of staple foods in Africa by 13 to 15 percent.

All these examples show that regional agricultural trade faces many problems that reduce the competitiveness of regional products and limit their availability.

Political declarations promoting regional and intra-African trade are therefore to be welcomed, while much remains to be done in practice and at the African border crossings.

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(c) Christof Krackhardt/Brot für die Welt

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By Jan Rübel

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School Feeding: A unique platform to address gender inequalities

A contribution by Carmen Burbano de Lara (WFP)

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Freed from trade? Towards a fairer EU Trade Agenda

A contribution by Dr. Jan Orbie (University Gent)

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By Pedro Morazán

Small farmers in developing countries must modernise their farming methods, but poorly understood reforms could exacerbate poverty instead of alleviating it.

Enough of being poor

By Marcellin Boguy

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Slaves do not produce quality

By Tilman Wörtz

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Controversy: Do supply chains need liability rules?

Discussion about the potential supply chain law

The German government is struggling to pass a supply chain law. It is intended to address violations of human rights, social and environmental standards. What would the consequences be for business? A double interview with Veselina Vasileva from GEPA and economics professor Andreas Freytag.

Reference values: A building block on the road to social equality

A contribution by Friederieke Martin (GIZ)

A quick and cost-effective method calculates living wages and incomes for many different countries. The GIZ together with Fairtrade International and Richard and Martha Anker have developed a tool that companies can use to easily analyse income and wage gaps.

Quinoa could have a huge potential in Central Asia, where the Aral Sea Basin has been especially hard-hit by salinisation.

Supermarket Scorecard on Human Rights

A contribution by Dr. Franziska Humbert (Oxfam)

Oxfam’s supermarket scorecard, which is in its third year, shows one thing in particular - it works! Supermarkets can change their business policies and focus more on the rights of those people around the world who plant and harvest food. However, this does not happen without pressure.

From start to finish: a vision of interconnectivity

A contribution by Tanja Reith

At the moment, the agricultural industries of African countries exist in relative isolation. Imagine peasant farmers digitally connected to the value chains of the global food industry. How could this happen? A guidebook.

Wanted: German investment in African agriculture

Interview with Stefan Liebing

Stefan Liebing is chairman of the Africa Association of German Business. The manager calls for a better structure of African farms. Jan Rübel asked him about small farmers, the opportunities for German start-ups and a new fund.

Bitter fruit

A contribution by Frank Brunner

Why aren’t bars of chocolate made where cocoa is grown? Author Frank Brunner analyses the industry’s fragile value chain from the plantation to the supermarket

Can this end world hunger?

A report by Stig Tanzmann

Time to dig deeper: We can only benefit from technical progress if we have a solid legal framework for everybody. But so far, none is in sight - in many countries. Instead, international corporations grow ever more powerful.

The communicator

A contribution by Jan Rübel

What do electrical engineering, telecommunications and agriculture have in common? They arouse the passion of Strive Masiyiwa: Thirty years ago, he started an electrical installation company with $75, later riding the telecommunications wave as a pioneer. Today he is committed to transforming African agriculture.

The 'Grey Gold'

A contribution by Maria Schmidt (GIZ)

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“They said: You can do it”

A contribution by Bread for the World

As President of the IABM cooperative in Muhanga, Alphonsine Mukankusi is not simply focused on the figures. She has learned how to deal with people and how to take on responsibility. At the same time, her work helps her to come to terms with the past

Read more “They said: You can do it”

No rainforest for our consumption

A contribution by Jenny Walther-Thoß (WWF)

In the tropics rainforests are still being felled for the production of palm oil, meat and furniture. It is high time to act. Proposals are on the table.

The fight against illegal fishing

A Report

The oceans are important for our food supply, but they are overfished. To halt this trend the global community is now taking action against illegal fishing. Journalist Jan Rübel spoke with Francesco Marí, a specialist for world food, agricultural trade and maritime policy at "Brot für die Welt," and others.

"The virus does not need visa"

Interview by Dr. Ahmed Ouma (CDC)

Countries across Africa coordinate their efforts in the fight against corona by the Centre for Disease Control (CDC) of the African Union in Addis Abeba. Until now, the curve of new infections has been successfully flattened – why? Dr. Ahmed Ouma, Deputy Director, explains the work of CDC in an interview with Tilman Wörtz.

“We have to prepare for the unexpected”

Interview with Dr Maria Flachsbarth (BMZ)

In August, Germany’s development ministry set up a division concentrating on One Health topics. Parliamentary State Secretary Maria Flachsbarth on knowledge gaps at the human-animal-environmental interface, the link between One Health and food security, and lessons learnt from previous pandemics.

Revolutionising Humanitarian Aid

A contribution by Ralf Südhoff

Financial innovations can prevent a crisis turning into a catastrophe. The livelihoods of people in affected areas may well depend on intervention before a crisis – and on risk funds.

Doing More With Less

A contribution by Jochen Moninger

Innovation is the only way to end hunger worldwide by the deadline we have set ourselves. The secret lies in networking and sharing ideas – and several initiatives are already leading by example.

A new U.S. Africa policy?

An article by Jan Rübel

After four years of Donald Trump in the White House, it is time to take stock: What policies did the Republican government pursue in African regions? And what will change in favor of Joe Biden after the election decision? Here is an evaluation.

Innovations for a secure food supply

A contribution by German Agribusiness Alliance

The COVID 19 pandemic is hitting developing and emerging countries and their poorest populations particularly hard. It is important to take countermeasures at an early stage. Companies in the German agricultural sector want to make their contribution to ensuring the availability of urgently needed operating resources.

Good health is impossible without healthy food

A contribution by Heino von Meyer

Corona makes it even more difficult to achieve a world without hunger by 2030. So that this perspective does not get out of sight, Germany must play a stronger role internationally - a summary of the Strategic Advisory Group of SEWOH.

"Without peace, there will be no development"

Interview with Karina Mroß (DIE)

What contribution does development cooperation make to conflict prevention? What can it do for sustainable peace? Political scientist Karina Mroß talks to Raphael Thelen about post-conflict societies and their chances for peaceful development.

Small Farms, big money

A contribution by Agnes Kalibata

Agnes Kalibata, AGRA president since 2014 and former minister of agriculture and wildlife in Rwanda, is convinced that Africa's economy will only grow sustainably if small-scale agriculture is also seen as an opportunity.

How can the private sector prevent food loss and waste?

An interview with David Brand (GIZ)

From a circular food system in Rwanda to functioning cooled transports in Kenya: The lab of tomorrow addresses development challenges such as preventing food loss and waste

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Borderless food security

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