SOCIO-ECONOMIC ROLES OF AGRICULTURE AND POLICY IMPLICATIONS (ROA)

SOCIO-ECONOMIC ROLES OF AGRICULTURE AND POLICY IMPLICATIONS (ROA) MALI CASE STUDY NATIONAL SYNTHESIS by Demba KEBE ROA_Mali_Synthèse

Context : Strong grip of agricultural sector • The economy of Mali strongly depends on the agricultural sector which • Utilizes more than 80% of the population • Accounts for around 45% of the GDP • Accounts for 75% of the country’s export revenues • Food crops account for 52% of the total added value of the agricultural sector • Cotton contributes for 30% of total added value of he agricultural sector ROA_Mali_Synthèse

Liberalization policy strongly displayed • Agricultural policy marked by two important phases of the last two decades: • First structural adjustment phase of early 80’s through 1994 • Second phase : Structural adjustment of the agricultural sector reinforced by macro- economic policies (I.e .devaluation) ROA_Mali_Synthèse

Liberalization policy strongly displayed (Continued) • Liberalization of input market (the cotton zone was not concerned by this policy) • Liberalization of output market (PRMC) ; the cotton zone was not concerned • Improvement of the fiscal environment • Implementation of common external tariff policy (TEC) which penalize agricultural inputs • Export Tariff suppression but implementation of the TVA (18%) • Suspension of conjecture tariff on rice • The FCFA devaluation seems to reactivate the competitiveness of some sub sector (rice, cereals, livestock) ROA_Mali_Synthèse

An ongoing decentralization policy • Creation of more than 700 local territories • Empowerment of collective authorities in areas development and management of natural resources • Ongoing Transfer of competencies and resources ROA_Mali_Synthèse

Positive result in general, However, • The average rate of increase of cereals was ( 5,6% ) higher than the rate of increase of the population (2,2%) for the country. The rate of increase of cotton production was 9%. • Agricultural growth is more dependent on the increase of cultivated land areas rather than on productivity improvement (rice and maize in the south are not concerned here) • Some progress made for maize and rice productions with a rate 13,6% and 11,1%, respectively • Perceptible Soils degradation in both zones (CMDT, ON) • The liberalization of input markets did not drove down input prices (State monopoly transfer to private sector) ROA_Mali_Synthèse

Research objectives • To inform and make available to decision makers some tools which can help them analyze the diverse roles of agriculture, • To identify positive and negative externalities of agriculture, • to assess the impact of these externalities on the national economy and well-being • to identify policies for strengthening or correcting these externalities • to make available to malian decision makers the main results from this study ROA_Mali_Synthèse

Methodology • The malian team decided to work on all the modules. • Use of secondary data on the agricultural sector in Mali • Selection of two production systems: • cotton based system (cotton, coarse grains, sedentary livestock raising system • rice based system(rice, vegetable crops production, sedentary and semi-sedentary livestock raising systems) • Formal survey of farm households (module 2) • Informal survey of farm households in both systems (modules 3, 4,6 et 7) and in Bamako (module 7). ROA_Mali_Synthèse

Some limiting factors in undertaking the different tasks • Lack of database on the malian economy • Non access to the database household consumption (in construction on the EMEP) • Analytical tool (MEG) not fully handled • Rather descriptive approach than quantitative • However, some modeling temptation with limited database (reduced size of sample) ROA_Mali_Synthèse

Some results • Some major contraints facing malian agriculture are : • low level of modern infrastructures for processing, handling, and keeping agricultural products ; • lack of sustainable financing mechanism of sub sectors; • lack of contact and coordination among the different actors of the sub sectors; • low number of structures in charge of collecting, analyzing and spreading statistical information on behalf of the different actors of sub sectors • the non functionning state of professionnel organizations regarding foods production ; • the low level of knowledge of some sub sectors. ROA_Mali_Synthèse

Environment and externalities • Diversity of production systems : • Cotton based (cotton-coarse grains, livestock, low land rice, fruits and vegetables in the south and west of the southern part of Mali • Rice based (fully irrigated rice , coarse grains, livestock, vegetables) center of Mali (“Office du Niger”, “Office riz”, low lands) • Millet/Sorghum based (coarse grains, livestock) in western and center parts of Mali • City belts(intensive livestock management, ) around cities • Pastoral system(extensive livestock raising system, irrigated rice) North Mali • Lake /water recession areas (coarse grains, leguminous ), North and West Mali • Oasis (date palm) farther North of Mali ROA_Mali_Synthèse

Environmental impact on the “Office du Niger” • The assessment covered four elements (water, soil, air and bio diversity) • Preservation of environment and bio diversity by agriculture • At the water level • Tree replanting in the villages • Introduction fruit trees replanting • Management of areas and browsing land for animals • Sanitation through lands redevelopment • Income generating activities (mostly fishing) • Water fetching alleviation through the rising of water surface ROA_Mali_Synthèse

Environmental impact on the “Office du Niger” (continued) • Increasing development of areas planted with trees for services and for fruits production • The tree specie called Eucalyptus constitutes an important source of energy (for SUKALA) • Water quality degradation observed mostly around the houses and other places. • At the soil level • Risks of salinization and alkalization • Decreasing trend of the fertility of soils • Erosion phenomenon caused by wind and water in upland areas ROA_Mali_Synthèse

Environmental impact on the “Office du Niger” (continued) • 7% of soils were degraded in 1989 and 20% of farm households were aware of soils degradation • Air and Bio Diversity • Rice cultivation in ON zone allegedly favors gas production with greenhouse effect • Reduction of bio diversity by the introduction of the Asian rice varieties but new ways to increase bio diversity by re-introduction of (NERICA’s). ROA_Mali_Synthèse

Environmental impact on cotton based system • The assessment covered four elements (water, soil, air and bio diversity) : • Air and Bio Diversity Pollution from : • Nitrogen fertilizers, not confirmed • Fertilizer with phosphorus content, observed in general everywhere at a constant basis • Insecticides, observed but not at a constant basis (old “bassin” for cotton production) ROA_Mali_Synthèse

Environmental impact on the cotton based system • Soil • Serious degradation in some areas (old “bassin” for cotton production) • Negative mineral balance for coarse grains production • Soil fertility maintenance strategy developed by farmers through the integration of agriculture and livestock activities • Bio diversity • Wild life and landscape resources better here than in the other parts of the country • High risk of disappearance of some animals because of the high pressure on natural resources. ROA_Mali_Synthèse

Economic assessment of environ-mental degradation • The estimated losses due to degradation can reach 21 to 26 % of the total GDP • Positive externalities brought about by good area management in order to prevent environment degradation had not been assessed • Micro-economic level : the economic value of soils degradation and mining was estimated to vary between 1 600 and 32 000 FCFA/ha/year (1 à 12% of he income of less equipped farmers) • The economic value of soil enrichment was estimated to vary between 2 250 and 25 000 FCFA/ha/year ( 1 to 8% of the income of producers more equipped) ROA_Mali_Synthèse

Agricultural growth and poverty reduction • Evolution of the effect of poverty • Despite all the efforts, the population of Mali still remains poor (64% in 1999). • Poverty remains essentially rural. Table : Effect of poverty (%) per area ROA_Mali_Synthèse

Considerable Agricultural supply • High diversity of production systems in Mali • Rate of increase of agricultural production (5,6%) of the 90’s higher than the rate of increase of the population (2,2%) • Rate of increase of agricultural production strongly dependant upon an increase in of the area cultivated and rainfall ( Fully irrigated rice in the ON and the relative intensification of maize cultivation in the south are some exceptions. ROA_Mali_Synthèse

Evolution cultivated areas and cotton production (1990-1999) ROA_Mali_Synthèse

Peasants points of view on the role of agriculture in poverty reduction • Concept of poverty defined by farmers as a lack or low level of availability of : • Food,income and equipments (90%) • Health problems,lack of animals, land, labor force and transportation means are cited as the main characteristics of a poor. ROA_Mali_Synthèse

Peasants points of view (continued) ROA_Mali_Synthèse

The system of solidarity between farm families is a mechanism to fight poverty • 70% of sampled households had relatives in the cities • The transfer of cereals is a common thing (mostly in ON zone ) • The donations can constitute 4% to 8% of the total production of cereals • Social redistribution unestimated ROA_Mali_Synthèse

Some results from the simulations • The results from the simulations showed that : • A 1% increase income would reduce the poverty level down to 0,19%, the depth of the poverty down to 0,66% and the severity down to 0,11,0% • In urban area, a 1% increase in income would reduce poverty effect down to 0,17%, the depth down to 0,81% and the severity down to 1,46% ROA_Mali_Synthèse

Impact on indices from the reduction of the demand price • Simulations based on the rate of 25% and 50% (depicting the situation which may prevail during a good year) • A 25% reduction of demand price will bring about in rural area a reduction of 16% of the effect of poverty, a reduction of 11% of the depth poverty (P1). • In urban area, a price reduction of 25% will reduce the impact the effect of poverty down to the rate of 10% in rural area and a reduction of 50% will reduce poverty situation down to more than 52%. ROA_Mali_Synthèse

Agriculture ad food security • Food security had been treated in the light of 4 determinants : availability, access, stability and nutritional quality • The availability was important in both study regions: 248kg/head/year and 298 kg/head/year, respectively at Sikasso and Segou, contrasting with a national average of 167kg/head/year. • The access to food is more difficult because of the low buying power of consumers, poor system for moving products from place to place, consumption habit. • Stability : Strong impact of the vagaries of climate, low level of infrastructures (roads, storage schemes, etc.) bringing about transaction costs to increase. ROA_Mali_Synthèse

Food insecurity profile • Vulnerable zones and groups • Urban zone : • Farmers and livestock raisers hidden in urban areas • Divorced women and early children holders; • Civil servants in C category and other workers with low income ; • Different households found vulnerable because of diverse causes. ROA_Mali_Synthèse

Food insecurity profile • In rural area • Populated families with less resources ; • Fishermen and livestock raisers with no resources practicing different activities not fully handled, • Farmers adopting production systems which performances are in jeopardy • Farmers facing land problems. ROA_Mali_Synthèse

Nutritional status • The demographic and health survey of Mali (EDSM), undertaken in1995-96 on a sample of 4678 children of less than 3 years old had shown a high rate of malnutrition : • 30% of these children were experiencing a slow development , • 23% were emaciated, • 40% of these children were presenting lower weigh ROA_Mali_Synthèse

Buffer role of agriculture : devaluation impact reduction • The devaluation in 1994 in the UEMOA’s countries was aimed at restoring macro-economic equilibrium. • Increasing prices of imported goods without any compensatory at the salaries level s • Reduction of buying power or in other word reduction of the income of population (Mostly in urban area) • Increasing prices of local products two years after the devaluation (substitution effect) and relative • Likely positive impact of the steady increase of agricultural supply of the last decade. ROA_Mali_Synthèse

Buffer role of agriculture (continued) • Steady increase of the GDP after the currency (FCFA) • The primary sector play a major role than the other sectors in the making of the GDP • Restoration of the competitiveness of the traditional sub sectors (cotton, rice, livestock) • Strong reduction in cereals importation exception the wheat • 75% of export revenues are from the agricultural sector (cotton, livestock, cereals) • Reduction of the value of importation and increase of the values of export since devaluation of the FCFA currency had taken place ROA_Mali_Synthèse

Buffer role of agriculture (continued) • Non tradable commodities are now tradable (millet, sorghum, maize) on the sub regional market places • New jobs creation through diversification of revenue sources • Changes of the structure of spending with more important part allocated to health, cloth and transportation purposes • Reduction of food bills brought about by the effect of substitution of imported stuffs for local stuffs. ROA_Mali_Synthèse

Social viability : impact of the transformation of agriculture on the migratory movements • Four types of migratory movement in Mali : • temporary internal movements, • definitive internal movements • movements linked to the systems of nomadism and transhumance • international movements • The rate of migration (the balance) observed in Mali is negative ( –0,88 %) implying that Mali is a country bound to emigration phenomenon. ROA_Mali_Synthèse

Social viability : impact of the transformation of agriculture on the migratory movements (continued) • Migration towards agricultural zones involved the ON and the CMDT zones having more potentials • These migratory movements towards the areas with relatively high potentials are not assessed let alone let alone their impact on natural resources. • The proportion of households which migrated in the ON and which had no land varies between 10 to 20% of the total farm households at the ON. ROA_Mali_Synthèse

Social viability : impact of the transformation of agriculture on the migratory movements (continued) • Long term or permanent migration concerns 38 % of farm households in CMDT zone CMDT contrasting with 27 % in ON • The migration phenomenon lost pace because of the improvement of the revenues of farmers • The costs /benefits assessment of migration is yet to be undertaken ROA_Mali_Synthèse

Agriculture, culture et perception • A high diversity of perception linked to many factors (Group relationship with agricultural resources, political frustrations, etc.) • Existence of multiple and strong forms of inter and intra among ethnic and social groups • Strong tendency for these groups to be autonomous resulting to a survival and maintenance of local institutional l values in rural areas • Agriculture is perceived not only as a profession but also as a way of life • The contribution of the rural world to the social stability is perceived by rural dwellers a crucial factor. ROA_Mali_Synthèse

Agriculture, culture et perception (continued) • The country’s identity is based on the network of old social customs and practices which are shared by all the citizens : solidarity, help, kinship and teasing • The notion of "national culture” is rather perceived differently : urban culture, rural culture or sum of cultures. ROA_Mali_Synthèse

Agriculture, culture and perception (continued) • Agriculture and poverty reduction • Mere political slogan based on the disengagement of the State • Random activities ( climatic and et economic risks) • Less tapped potential • Agriculture and environment • Major and minor degradations of the environment Environment restoration • Agriculture et migration • Absorption of the rural/rural type of migration ROA_Mali_Synthèse

Agriculture, culture and perception (continued) • Diversity of opinions on agriculture and the rural world : • Food provider to people, mean for promotion and concurrence for actors (producers) • Neglected on the socio- economic and political grounds (urban and leaders of peasant organizations) but important for social cohesion ROA_Mali_Synthèse

Policies and externalities ROA_Mali_Synthèse

Policy implications • Development of water irrigation schemes in order to facilitate the settlement of immigrants in ON zone • Development policy geared towards the development of local know-how in the cotton zone • Orientation policy of immigrants towards zones more opened or having potentialities • Management policy for the type of migration with high magnitude (Better evaluate and develop the transfer of resources) • Decentralization policy more geared towards the development of inter-communal initiatives • Decentralization texts (laws and regulations) re-reading in order to give more power to local institutions and social organizations • Strengthening socio-professional organizations ROA_Mali_Synthèse

Policy implication (continued) • Environment • Strengthening the capacity of local actors in the management of natural resources in order to reduce negative externalities • Supporting or fostering positive externalities (hidden benefit of land development activities) in ON zone • Poverty • Input and output markets development through good infrastructures (roads, storage schemes) • Credit system specifically for the poor • Development of social mechanism of solidarity and wealth sharing ROA_Mali_Synthèse

Implication for policy (continued) • Food security • Investment in processing and storage schemes for cereals in order to reduce the effects of the vagaries of climate • Identification of vulnerable groups in order to find the right strategies to fight food insecurity • Buffer effect • Further implementing Sub-regional and regional integration policies ROA_Mali_Synthèse

Suggestions for further analysis • Implementing econometric analyses planned for modules 4 and 5 • Re-do the econometric analyses of module 3 with EMEP’s database • Quantify environmental externalities (hidden benefits in ON zone ) • Estimate the transfer of resources of the migratory movement with high magnitude • Further research on the cultural aspect (role of the cultural dimension on the functioning of production systems) ROA_Mali_Synthèse

SOCIO-ECONOMIC ROLES OF AGRICULTURE AND POLICY IMPLICATIONS (ROA)