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Workshop on Food Security, Economic Growth and Poverty Reduction

Workshop on Food Security, Economic Growth and Poverty Reduction. Presentation to Agr . Donor Working Group June 21, 2012. by Don Mitchell USAID Feed the Future Sera Project Implemented by Booz Allen Hamilton. USAID Feed the Future SERA Project.

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Workshop on Food Security, Economic Growth and Poverty Reduction

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  1. Workshop on Food Security, Economic Growth and Poverty Reduction • Presentation to Agr. Donor Working Group • June 21, 2012 by Don Mitchell USAID Feed the Future Sera Project Implemented by Booz Allen Hamilton

  2. USAID Feed the Future SERA Project • SERA is the Policy Component of Feed the Future • Focused on improving the agricultural policies through research to better understanding policy tradeoffs and options • This activity looks at food security and the export ban • Presented to Government in Dodoma on June 16th and all stakeholders at Kunduchi Beach on June 19th

  3. Background on activity • Concept Note to Government in October 2011 proposing three studies on Tanzania food security, economic growth and poverty reduction • Process: Teams brought together in March • Regional Export Potential to 2025 (AIRD) • Economy-wide Impacts of Export Bans (IFPRI) • Food Security and Policy Options (USDA) • Impacts of Climate Change on Exports (World Bank)

  4. G8 Summit in Washington in May • Launched a New Alliance for Food and Nutrition Security between African nations, international donors and private firms • The Government of Tanzania committed to pursuing policy goals to build investor confidence and investments in order to reduce poverty and end hunger • Tanzania also committed to finding an alternative to the export ban on staple commodities used during food emergencies

  5. Main Messages of Research • Regional markets offers good export opportunities for maize and rice through at least 2025 • Tanzania will need to increase production and productivity to take advantage • The export ban is not very effective and discourages investments • Diets are changing and maize is no longer the only important food security crop

  6. Main Messages continued • Poor data is hampering analysis and decision making • New approaches to food security should be considered • NFRA could be more effective if more focused on providing food aid

  7. Maize and Rice Regional Export Potential • The East Africa Region is expected to face growing deficits of maize and rice through at least 2020 2009 2020 • Maize Deficit (mil tons) 1.3 7.8 • Rice Deficit (mil tons) 1.2 2.8 • Tanzanian Export Potential to 2020 • Maize at 4% production growth net exports of .6 mil tons at 5% production growth net exports of 1.6 mil tons • Rice at 7.3% production growth net exports of .17 mil tons at 10.% production growth, net exports of 1.03 mil tons

  8. Climate Change Could Benefit Maize Exports • World Bank study examines climate change models and concludes that Tanzania will likely have increased rainfall in the future. • Key African trading partners, including Mozambique, South Africa and Zimbabwe, will have lower rainfall. • In addition, climate change will reduce the similarity of weather patterns between Tanzania and key trading partners.

  9. Export Bans • Discourage investments and reduce production • Not very effective in controlling inflation • Not very effective at limiting exports • Harm poorest farmers while benefiting weathiest consumers • Have significant regional impacts • Institutionalized Export Permits which impede exports

  10. Export bans have a modest effect on food prices • Maize and maize flours account for 16% of consumer food spending. • Banning cross border maize exports lowers the national food price index by only 2.0-2.4 percent.

  11. Trend of Annual Inflation Rate 2011

  12. Tanzania Maize and Rice Reported Exports vs. Partner Reported Imports, 2011 (tons) Exports are reported by Tanzania. Imports are reported by trade partner.

  13. Export bans hurt rural poor and benefit urban rich Note: Income quintiles (q1-q5) are defined according to per capita income at the national level. q1 represents the poorest 20% of households while q5 the richest 20% of households • Export bans benefit urban consumers at a cost to rural households

  14. Rural poverty population rises due to export bans (2017) Note: A positive number indicates increased poverty in 2017, while a negative number means a fall in poverty.

  15. The effect of export bans on maize producer prices differs across regions • In the surplus regions maize producer prices are about 20-26% lower than the free export scenario • In the maize deficit regions, the price effect is modest. Maize producer prices decline by a modest 10-12%

  16. Maize Prices in Arusha, Mbeyaand Nairobi March 2011

  17. Requiring Export Permits discourages legal exports • Exporters must travel to both regional and national capitals to obtain permits to export food • Required even when no export ban because authorities expect it • Leads to bribes and corruption • Severely constrains exporter’s business activities according to recent TANEXA survey* *TANEX 2012, Problems of Official Export Permits to EAC and SADAC: The case of Tanzania

  18. Food Security – the focus on maize • Maize is still the staple food crop and accounts for 40% of total calories and 16% of household expenditures • However, there are large regional differences in calorie shares and household expenditures • Rice and wheat account for 26% of calories in urban areas and 12% in rural areas

  19. Calorie share of maize declines with income…

  20. Maize and Rice Production • Method of estimation not rigorous and possibly biased • Comparisons with Other Data: • Agricultural Census-Survey of 2002/03 and 2007/08 • Household Budget and Consumption Survey of 2000/01 • Simulate consumption growth based on population and income • Conclusion - maize production is much higher than MAFC’s estimates and rice is lower

  21. NFRA not very effective • NFRA bought only 121,000 tons of maize in 2011/12 – about 6% of marketed maize production • Buying price was well above market price which limited quantities that could be purchased and disrupted markets • Lack of transparency disrupted private sector marketing • Small farmers not able to benefit from NFRA higher prices

  22. New approaches to dealing with food security • Conditional Cash Transfers • Government to launch a Productive Social Safety Net Program that will provide cash and conditional cash transfers to low-income households • Financed by World Bank Loan • If successful this could become the main way to deliver food aid assistance • Currently used in Rwanda, Ethiopia and Malawi

  23. Conclusions • Government committed to building investor confidence and finding alternatives to export ban • Regional export opportunities are attractive • The export ban is not very effective • Broader definition of food is needed • Better data is essential • New approaches to food security are promising • NFRA could play a more important role in food security

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