FEATS Project National Inception Meeting Panafric Hotel, Nairobi, Kenya, 14 th October, 2008.

1. FEATS Project National Inception Meeting Panafric Hotel, Nairobi, Kenya, 14th October, 2008. ROLE OF THE MINISTRY OF AGRICULTURE IN THE TRADE POLICY MAKING PROCESS PRESENTED AT THE NATIONAL INCEPTION MEETING ON “ FOSTERING EQUITY AND ACCOUNTABILITY IN THE TRADING SYSTEM (FEATS) PROJECT 14TH OCTOBER, 2008, PANAFRIC HOTEL, NAIROBI KENYA BY ELIAZAR B. MUGA ECONOMIST – MINISTRY OF AGRICULTURE OCTOBER, 2008

2. The presentation in this paper is divided into seven sections: • Overview of the Agricultural Sector; • Introduction; • Extent of Consultation with the Ministry of Agriculture during the Trade Policy Making Process; • Ministry of Agriculture’s actual experience in Trade Policy Making process; • Ministry of Agriculture Initiative on Trade Policy issues and Linkage with Ministry of Trade; • Challenges in Trade Policy Making Process; • Conclusions;

3. 1. Overview of the Agricultural Sector: 1.1 The Agriculture, Livestock, Fisheries and Rural Development Sector comprises the Ministries of Agriculture, Livestock Development, Fisheries Development, Forestry and Wildlife, Water and Irrigation, Lands, Regional Development Authorities, State for Development of Northern Kenya and Other Arid Lands, Environment and Mineral Resources, State for Special Programmes, Co-operative Development and Marketing and State for Planning, National development and Vision 2030.

4. 1.2 The agricultural sector dominance in the economy has remained strong as reflected by its share in the national economy, job creation, food security, and linkages with other sectors including industrial development. In 2006, the sector directly contributed 23.6% to the Gross Domestic Product (GDP); slightly lower than 25.2% recorded in 2003; attributed to a gradual shift in the country’s economic mix towards other sectors including a buoyant services sector. This is the scenario envisaged where focus shifts towards commercialization of agriculture as expected in a modernizing economy.

5. 1.3 A further 27% of GDP is realized through linkages with manufacturing, distribution and other service related sectors. Moreover, it is estimated that 45% of government revenue is derived from agriculture, while the sector contributes over 75% of industrial raw materials and 60.0% of the export earnings apart from being the largest employer in the economy, accounting for over 60% of the total employment.

6. 1.4 In the past five years, the Government has embraced broad-based growth and development strategies in the agricultural sector to address food security and hunger, unemployment, poverty and enhance national equity through the Economic Recovery Strategy for Wealth and Employment Creation (ERS 2003-2007). Accordingly the sector recovery thrust has centered on the Strategy for Revitalizing Agriculture (SRA)

7. SRA was launched in March 2004 and which provides the necessary policies needed to transform the sector to effectively provide food and nutritional security, increased incomes and gainful employment, promotion of farmers’ productivity and lowering of the cost of agricultural inputs.

8. 1.5 Agricultural crop production is undertaken by over 5 million smallholders subsisting on an average of 2-3 hectares and engaged in different types of agricultural activities in the country. Out of these, 2.9 million are resource poor who subsist on less than 1 ha and are usually entrapped in a poverty cycle, lack capacity and resources to enable them produce and up-scale current efforts. Horticulture and food crops make up to 65% of agricultural GDP, while horticulture and industrial crops account for 90% of agricultural exports.

9. 1.6 Livestock production is one of the major activities in the sector. It is practiced in all parts of the country either under the pastoral extensive system in the Arid and Semi Arid Lands (ASALs) or under intensive, ranching and smallholder systems. The pastoral and commercial ranch systems traditionally contribute to the supply of beef and small stock meat. Livestock production in the ASAL accounts for nearly 90% of the employment opportunities and nearly 95% of the family incomes. It also accounts for about 40% of the Agricultural GDP and about 30% of the farm gate value for agricultural commodities. In the high rainfall areas of the country, dairy production is a key source of income to over 600,000 households.

10. 1.7 Fisheries production is a major source of livelihood for communities living around Lake Victoria and the coastal regions of Kenya. It employs over 60,000 fishermen directly while over 600,000 people depend on the sub sector indirectly for their livelihood through linkages in fish processing and trade. Kenya currently earns an average of Kshs. 4 billion annually through fish exports.

11. 1.8 Despite the great potential of the livestock and fisheries sub-sectors, the majority of livestock farmers and the fisher folk have remained poor and food insecure mainly due to low productivity, high cost of inputs, poor market access and stringent quality requirements in international markets. Therefore, there is need to revitalize the sub sectors and increase their productivity through improving marketing systems and infrastructure, enhancing livestock disease control and extension services and encouraging private-public partnerships in the provision of extension and veterinary services for both the sedentary and pastoral animal production systems.

12. 2. Introduction: 2.1 The mandate of the Ministry of Agriculture is to: • promote and facilitate production of food and agricultural raw materials for food security and incomes; • advance agro-based industries and agricultural exports and • enhance sustainable use of land resources as a basis for agricultural enterprises;

13. 2.2 The vision of the Ministry is to be the leading agent towards: • the achievement of food security for all; • employment creation; • income generation and poverty reduction;

14. 2.3 The Mission is to improve the livelihood of Kenyans by promotion of competitive agriculture through: • creation of enabling environment; • provision of support services; and • ensuring sustainable natural resources management;

15. 2.4 According to the First Medium Term Plan 2008-2012 of Vision 2030 under the Economic Pillar, six priority sectors have been targeted to raise the national GDP growth rate to 10 % by 2012. These sectors include: • Agriculture and Livestock; • Tourism; • Wholesale and Retail Trade; • Manufacturing; • Business Process Outsourcing and • Financial Services;

16. 2.5 The trade in Agriculture and Livestock products is therefore key to the achievement of the targeted 10% national GDP Growth rate by 2012.

17. 2.6 The subsequent sections in this paper will discuss among others:- the extent to which the Ministry of Agriculture has been Consulted during the Trade Policy Making Process; actual experience of the Ministry in Trade Policy Making process; the Ministry involvement in developing the country’s position for the WTO and the ongoing EPA negotiations; the Ministry’s linkage with the Ministry of Trade on Trade Policy issues; challenges in Trade Policy Making Process and a conclusion.

18. 3. Extent of Consultation with the Ministry of Agriculture during the Trade Policy Making Process: 3.1 The World Trade Organization (WTO) is the umbrella international organization responsible for the administration of global rules of trade between nations. WTO provides the principal contractual obligations determining how governments frame and implement domestic trade laws and regulations. It also provides a platform for negotiations amongst members on trade matters on a continuous basis through periodic rounds.

19. 3.2 The WTO is a product of the Uruguay Round of Multilateral Trade Negotiations and a successor to the GATT.

20. 3.3 The main objectives of the WTO Agreement on Agriculture are:- • Country Schedules; • Market Access; • Domestic Support; and • Export Subsidies;

21. 3.4 The Ministry of Agriculture is a member of the National Committee on World Trade Organization (NCWTO). The Ministry of Agriculture has not only effectively participated in Trade Policy Making Process but also chairs the National World Trade Organization (WTO) Sub-Committee on Agriculture.

22. 3.5 The National WTO sub-committee on Agriculture co-ordinates a wide consultation with the stakeholders while revising or making any relevant change in the country’s position in WTO.

23. 3.6 Furthermore, the Ministry of Agriculture plays a major responsibility in the WTO notifications on Agriculture.

24. 4. Ministry of Agriculture’s actual experience in Trade Policy Making process 4.1 The WTO Agreement on Agriculture is central to Kenya’s economic development as Agriculture is the backbone of Kenya’s economy.

25. 4.2 The Ministry’s experience is firstly, the over reliance on agricultural commodity trade in the world market by Kenya in competition with the Developed Economies agricultural products which are heavily subsidized, in itself make the trade policy making process very challenging.

26. 4.3 Secondly, the terms of trade is unfavorable towards agriculture, thus making trade policy negotiations process very difficult.

27. 4.4 Thirdly, the existence of a large amount of surplus production in the Developed Economies markets leading to depressed World Market Prices often delay the agreement in policy making process.

28. 4.5 The Ministry as chair to the National Sub-Committee on Agriculture co- ordinates the development of the National Position on Agriculture in the WTO.

29. 4.6 The National WTO sub-committee on Agriculture chaired by the Ministry also identify and develop position on the Special and Differential Treatment (S&DT) component of the domestic support pillar.

30. 4.7 Regarding the Economic Partnership Agreements (EPAs) negotiations, the Ministry of Agriculture chairs the cluster on Agriculture under the Kenya Post Lome Trade Programme (KEPLOTRADE) which coordinates the EPA negotiations process in Kenya.

31. 5. Ministry of Agriculture Initiative on Trade Policy issues and Linkage with Ministry of Trade 5.1 The Ministry of Agriculture through the respective National WTO Sub- Committees develop and prepare comments and views on trade policy issues for submission to the Ministry of Trade.

32. 5.2 The Ministry of Trade formulates trade policies while the Ministry of Agriculture participate effectively at certain levels during the formulation process.

33. 5.3 At the Regional level, the Ministry of Agriculture regularly participate in the Trade Policy under the WTO after every two years.

34. 5.4 Currently, the Ministry of Agriculture together with the Ministry of Trade are participating on EAC-EC EPA negotiations which is discussing Market Access, Economic and Development Cooperation, Trade and Sustainable Development and Trade in Services.

35. 5.5 The Market Access Issues under this negotiations is concentrating on Customs and Trade Facilitation, Sanitary and Phyto-sanitary Measures, EAC-EC Market Access offer Schedule and Technical Barriers to Trade.

36. 5.6 The Economic Development Cooperation include Agriculture and Livestock, Fisheries, Natural Resource and Environment as well as capacity building and EPA institutional development among others.

37. 6. Challenges in Trade Policy Making Process: 6.1 National Committee on WTO lacks the legal mandate to effectively execute it's mandate and it strongly recommended that the NCWTO be given legal status in order to make it effective in it’s operations.

38. 6.2 There seem to be a number of negotiating groups on various trade issues within the ministry of trade and industry and therefore recommended that the groups be harmonized in their operations.

39. 6.3 The Ministry of Trade should work towards strengthening linkages between the negotiating frontiers for better information sharing between various negotiating teams.

40. 6.4 There is need to enhance the role of parliamentary Committee on Trade, Finance, Planning and Tourism as well as the Parliamentary Committee on Agriculture, Water and Irrigation, Natural Resource, Lands, and Co operative Development to be regularly involved and briefed at all stages of the negotiations. The parliament has a very critical role to play and in particular oversighting the process of the negotiations by the Executive Arm as well as Enacting and Ratifying Appropriate Policy and Legislative Framework to implement the results of the negotiated commitments and obligations.

41. 6.5 The is need to strengthen collaboration between the key Government Ministries e.g Ministries of Finance, Agriculture, Livestock Development, Fisheries Development, Transport, Information, Trade and Industry etc and in particular with respect to Trade Policy issues.

42. 7. Conclusion: In conclusion, the Ministry of Agriculture has been and will continue playing an active role in Trade Policy Making Process in a more enhanced and a participatory manner at all levels.

43. 8. REFERENCES: • Kenya Vision 2030 of 2008, A Globally Competitive and Prosperous Kenya • Dr. Otieno – Odek, The World Trade Organization (WTO) Agreements: Their Impact on Kenya. • Friedrich Elbert Stiftung publications1999, World Trade Organization (WTO), Agreement on Agriculture. • Ministry of Agriculture, Strategic Plan of 2006 –2010 • A. Nhara, 2002, What is the World Trade Organization (WTO) • First Medium Term Plan (2008), 2008-2012 of Vision 2030 • Ministry of Agriculture, Livestock and Fisheries Development (2004), Strategy for Revitalizing Agriculture 2004-2014

44. THANK YOU