COMPETITION ISSUES IN THE AGRICULTURAL SECTOR: THE GAMBIA

1. COMPETITION ISSUES IN THE AGRICULTURAL SECTOR:THE GAMBIA

2. Basic Country Data (2006) • 1. Land Area: Approximately 12,000 sq. km • 2. Population: 1.5 million • 3. GDP per Capita: U.S.$ 310 • 4. Inflation %( CP) 2.0 • 5. Current Account balances US$ (72.5m) • 6. Export of goods US$ 0.1bn. • 7. Import of Goods US $0.3bn

3. Economy: • The Gambia commenced its economic liberalization in 1985-6 when the country agreed a structural adjustment programme (ERP) with the world Bank, IMF and donor community. • Gains realized during the ERP were quickly followed by a programme for sustained development (PSD) launched in 1989. • With the Change of government in 1994 vision 2020 was launched detailing the main development policy thrust of the government. The main economic objectives of the policy include: • To achieve significant reduction in poverty level by diversifying and broadening of the agricultural production base, • Attain the twin goals of food self-sufficiency and food security, • To strengthen and diversify the manufacturing base and, • To develop an export oriented industrial sector.

4. The policy objectives are to be attained through increased economic liberalization to allow the private sector to play a lead role in the anticipated economic transformation of all sectors including agriculture which is the main stay of the national economy.

5. Characteristics of Agriculture • The agricultural sector dominates the national economy by • Providing productive employment for 75 % of the population • Generating 35 -40 % of GDP and up to • Providing 40 % of export earnings • However, of the 300,000 hectares of land under arable farming some 54% is used for the production of groundnuts, the country’s main cash and export crop. • While agricultural production is totally liberalized and competitive, agricultural product and input markets are still far less than competitive.

6. Product Markets • Groundnut marketing (buying) continues to be dominated by licensed buying agents and the Federation of Agricultural cooperative Societies. • Farm gate prices are determined by a committee using a complex formula based on the cost structure of the operators, the processor and exporter and; the projected world market prices attainable. • Farmers (producers) often have little or no influence on the price set at farm gate level. In border areas, groundnut produce may be sold to buyers in Senegal at higher prices • Other Crops mainly cereals and vegetables are completely competitive as there is no state involvement. • In the livestock sector, recent government attempts to regulate meat prices particularly in the urban areas, has often lead to intermittent shortages in meat supplies with much higher prices

7. Farm Input markets: • The most important inputs are seeds, feed, fertilizers, pesticides and farm implements and farm machinery • Attempts made since the ERP to attract private participation in the marketing of agricultural production inputs have not been wholly successful: • Government intervention in the import and distribution of seeds, fertilizers and animal traction equipment has stunted initial private sector efforts to be involved in this area. • The relatively few operators still in business are basically limited to infrequent imports of quantities too small to satisfy demand and are generally concentrated on the needs of the horticultural sector and small scale poultry producers. • Entry barriers in the form of high initial outlay on imports have precluded the participation of a large number of private operators • Licensing requirements by EPA authorities for import of pesticides tend to preclude large number of operators. • A few Private Veterinarians carry small stocks of vaccines and other requisites but are often faced with stiff competition from government through receipt of vet. Supplies from FAO and other donors. These tend to under cut price structures of private operators.

8. Competition issues: • Government involvement tends to stifle rather than stimulate competition as it often results in non competitive pricing in both input and product markets. Operators, who see their margins wiped out, either go out of business or cease to import or deal in the items affected. • GGC has virtual monopoly over groundnut processing facilities. These are old and not very efficient. The current pricing structure for groundnut at farm gate reflects the processing cost of the only processor/exporter. • The policy of Licensing of produce buyers need to be revisited in order to open the industry to all who may wish to participate rather than a few who may not have the required capital to operate profitably. • More processors need to enter the field so that processing cost can be further reduced and farm gate prices made more attractive

9. Political will is needed to let go the agricultural sector. Where inputs are obtained through BOP support, products may be auctioned off to established operators for onward sale to end users. • Government resources may be better deployed to provision of support services in research, extension and market information collection and dissemination for improved decision making at farm level.