Towards a seamless regional agricultural trade environment – the case of EAC Region

1. Towards a seamless regional agricultural trade environment – the case of EAC Region Isaac Tallam Regional Grain Trade Advisor USAID East Africa Trade Hub (EATH) 5th African Grain Trade Summit Sarova Whitesands Beach Resort & Spa, Mombasa 1stOctober, 2013

2. Presentation Outline • Introduction • EATH Scope of coverage • The Rationale • Regional production vs. Consumption asymmetry • Regional trade – the reality and opportunities • EAC Trade Policy achievements and prescriptions • Trade policy and regulatory environment measures • Cross border trade and transit measures • Conclusion

3. EATH Scope and coverage WHAT WE DO……. • Integrate national and regional markets • Improve policy and regulatory environment for trade • Reduce barriers to cross-border trade and transit • Develop structured trade for selected commodities • Increase trade between the US and East and Central Africa (ECA) -AGOA • Improve capacities of ECA firms and countries to access U.S. and world markets • Increase capacity of African regional partners

4. Primary Private and Public Sector Partners East African Grain Council East African Community • Federation of East African Freight Forwarders Associations • Common Market for Eastern and Southern Africa Kenya Transporters Association African Fine Coffees Association Alliance for Commodity Trade in Eastern and Southern Africa African Cotton & Textile Industries Federation

5. The Rationale The status of EAC Grain trade

6. EAC Regional trade potential in agricultural product • EAC population 150 million, a GDP of US$ 84 billion of which 75% is from Agriculture. • To tap on this is the need to create the enabling environment. • As per the EAC Food Security Action Plan (2011 -2015) EAC countries face perennial food shortages and isolated cases of hunger • The hope for the region lies in the exploitation of potential for increasing trade focusing on existing tradeable surpluses. The EAC has recorded tradeable surplus for Maize, Beans and Sorghum for the period 2008-2012 . • There are however food items that the region has virtually no revealed trade potential. The main one is wheat, which during the entire period (2008 – 2012) recorded a deficit, with regional consumption requirement growing at between 5 – 10% annually.

7. End Users Rural households Relief Markets Regional Export Markets Internal Markets Retailing Product Wholesaling Processing Transport Grain Wholesaling/Maize Trade Grain Storage Production Input supply Extension/ Policy//MIS/ Ag Research Processed Product Retailer Grain Retailers Relief Organizations Flour/Processed Product Wholesaler Large-Scale Millers Food Processors/ Oil Mills Animal Feed Processors Small-scale Posho Mills Maize Importer/Exporter Small-scale Transporters Large-scale Transporters/ Lorry Traders Grain Wholesalers National Strategic Grain Reserves Large-scale Commercial Farmers Subsistence Farmers Small-scale Commercial Farmers Commercial Seed Companies and Input Suppliers Farm Labor NGOs/ Ag Extension Fig. 1: Maize Value Chain The Reality on the ground Gov/Private Ag Research Producers

8. Production and Consumption asymmetry in EAC region

9. EAC Maize grain Figures MT FAOSTATS

10. EAC Beans grains Figures MT FAOSTATS

11. EAC Wheat grain Figures MT Regional Wheat demand growing at an average of 5% - 10% annually. Faostast

12. Market Share and business opportunities for investment in EAC region

13. Figures US$ Faostats

14. Figures US$ Faostats

15. Agricultural Trade Policy Measures Towards seamless regional agricultural trade environment www.eatradehub.org/knowledgecenter

16. Improving the policy and regulatory environment for trade in EAC region by: • Developing common regulatory standards that are consistent with global standards • Building technical capacity to implement mutually agreed upon trade facilitation measures • Introducing evidence based policies for reducing tariffs and other formal trade restrictions • Reducing unnecessary or cumbersome customs procedures

17. EATH has employed various tools to addressing the regional trade policy constraints • Policy Harmonization • Use of ICT • Trade Negotiation • To create • Foster Regional Integration • Transparency • Efficiency • interconnectivity

18. EAC Harmonized Staple Foods Standards: • Harmonized standards build a platform for intra-regional trade by creating a common language for assessing quality and grade of food products. USAID has supported the harmonization process for 22 EAC staple foods standards that were recently declared by the EAC sectoral council of ministers. The standards are now due for gazettement and subsequent implementation across the region. • Drive awareness promotion and train traders and other grain handlers on the EAC Harmonized staple foods standards

19. Standards Impact: Reduced Price Discounts Quality Improvements will Increase Farmer Revenue Current State – Poor Quality Future State – Improved Quality Market Price Market Price Reduced Loss Loss Attributed to Poor Quality • Discount Improved Price Price Increase Farmer Price Fully Discounted Price • Adopted Standards • Discount Base Case (Rwanda Insect Damage) Incremental Quality Improvements 2012B: ~$2 million discount (lost revenue) applied to farmer’s maize for insect damage Incremental quality improvements could reduce the discount by ~$260K (14%) One Country, One Crop, One Season One Parameter. Driving adoption of standards across the region will provide farmers with a guide to closing the discount gap

20. Sanitary Phytosanitary Standards Measures • EAC SPS Act and Regulation to facilitate implementation of enabling SPS measures such as Pest Risk Analysis, which allows free flow of agricultural produce that has a shared pest list. • EATH has worked closely with the Centre for Phytosanitary Excellence (COPE) to improve phytosanitary capacity among NPPOs, border inspectors, Private Sector quality inspectors and cross border traders. • EATH is supporting EAPIC to develop a functional and dynamic Pest Information Management System to facilitate the creation of pest risk assessments, aimed increasing trade and food security in the region www.eapic.org

21. EAC Simplified Certificate of Origin (SCO) • The SCO is a customs documents used to clear goods duty free, whose value is up to US$2,000.00. It contains only 8 fields which cross border traders are able to fill with minimal assistance from customs officials. • The document is easily accessible at all the EAC border points. • EATH is enhancing access, creating awareness and promoting utilization of EAC Simplified Certificate of origin (SCO).

22. EAC Regional Food Balance Sheet (RFBS) • The EAC RFBS is a policy tool to guide policy makers made informed decisions and a trade facilitation platform . It shows tradeable surplus/deficits in a snapshot including where the surplus is lying in the region. Therefore the perfect tool for managing restrictive trade policies such as export bans/import restriction. It triggers deal making among the private sector, based on the revealed tradeable surplus. For more info visit: www.rfbs.in

23. EAC Trade Helpdesk portal: • EATH has supported the East African Community (EAC) in the development of EAC Trade Helpdesk. www.tradehelpdesk.ea.int. • This website is a tool for users to query EAC trade statistics (imports and exports) by country of origin and destination, applicable tariff and trade regulatory requirements (applicable rules of origin and non tariff requirements). The time series starts 2004 and the data is updated on monthly and annual basis based on submission from EAC Partner States. East African Community Trade Helpdesk

24. Regional Digital Data Exchange (RADDEx) • This is a Software platform that enables customs connectivity among revenue authorities in East Africa to facilitate cross border customs data exchange in order to: • Provide for Customs risk assessment and management, • Enhance customs revenue collection and • Promote cross border trade facilitation • The system provides near real time transmission of customs data from the point of origin to the final destination and through all affected transit points. The system was launched on Nov 28th , 2012 and is housed in Arusha within the EAC.

25. Reducing barriers to cross border trade & transit time • Joint Border Committees • This is a multi-sectoralcollaboration comprising key Government agencies and Private Sector players responsible for clearing goods at one side of the border. Their goals are to solve issues that impede efficient border operations and the clearance of goods across the border. EATH has established 14 JBCs at ten border crossings along the three main corridors of the EAC region. (namely; Northern, Central and Southern corridors).

26. Reducing barriers to cross border trade & transit time Enhancing efficiency of cargo clearance at key EAC ports and borders: • Automating clearance processes • Reducing redundancy • Reducing Paper work • Collecting data • Changing culture • Defusing tensions • Promote best practices • Eliminating border/HQ disconnection

27. Conclusion • “The future belongs to those who believe in the beauty of their dreams” • By Eleanor Roosevelt (1884 – 1962) U.S. First Lady, Diplomat and Human Rights activist.

28. Thank you