The Case & Action for Regional Structured Trading Systems

Transcription

1 The Case & Action for Regional Structured Trading Systems A presentation by Trade Policy Team EAGC/EQUITY BANK/COMPETE 29 th September 2009 Lusaka, Zambia

2 About EAGC Established (2006) as an USAID-funded RATES program initiative with the active encouragement and participation of key stakeholders, including service providers, in the grain value chain. Promotes free trade in grain within a harmonized regional trade regime - providing small farmers with improved market access. Membership has grown to 55 organizations from across Eastern Africa. Promoting Orderly Grain Marketing

3 Donors and Partnerships USAID- COMPETE program support enables EAGC to facilitate smallholder farmers: access support services to enable upgrading develop & maintain direct linkages with buyers increase access to market intelligence. USAID RATES programme was instrumental in establishment and development. Five year core funding agreement signed with SIDA.

4 Donors and Partnerships cont... USAID-funded Kenya Maize Development Programme (KMDP) serves as an operational link between the Council and small scale maize producers, directly and through their associations. The Warehouse Receipt System (WRS) program is supported by the DFID-led Financial Sector Deepening (FSD) program based in Kenya. MoU signed with DANIDA (ASPS) Uganda in September 2008, who will be a key partner in furthering the Council s activities in Uganda. MoU s signed with EAC and COMESA Promoting Orderly Grain Marketing

5 Mission Statement Our mission is to bring order to the regional grain trade, practicing and promoting approaches to trade that help farmers, suppliers, processors, traders and consumers transform their businesses and lives

6 EAGC Membership Eligible Membership All stakeholders along the grain value chain Producers, Processors, Traders --ACTIVE Service Providers (Warehouse Keepers, inspection, input suppliers)-affiliate Financial sector (Banks, Insurance) ASSOCIATE Current Members are from UG, KE, TZ, Zambia, RSA & USA Promoting Orderly Grain Marketing

7 EAGC Strategy on STS Causes of reduced STS growth in the region; Lack of adequate Storage facilitates Uneconomical volume from small holder farmers Lack of awareness of required standards and grading Lack of contract enforcement system Lack of Financial institutions willing to finance small scale farmers Effects; Post harvest losses Reduced income Reduced selling prices (low quality) Reduced productivity

8 EAGC Activities; Training on post-harvest handling Warehouse receipting system Training on grades and standards quality specifications Provide and create awareness on the rules of grain trade use of contract dispute settlement system Link traders to potential buyers Link Financial institutions to farmer groups Results; EAGC Strategy on STS Post Harvest losses reduced Small scale farmers income increased Quality product produced and sold Small scale farmers linked to market Financial institutions provide loans to farmers

9 EAGC Role in WRS Program Enforce Rules of Trade and coordinate arbitration Provide Warehouse Receipts Protocols Commodity Care rules Appoint Inspectors Issue Warehouse Certificate Print Warehouse Receipt Register Warehouse Receipt

10 Benefits of using WRS Farmer: Access to cash while waiting for price increases Better sale margins Access to a larger more formal market Better storage conditions Government Alternative way of managing / financing Strategic Grain Reserves Trader/Miller Access to wider sources of commodity Ability to finance stock or trading positions

11 Warehouse Receipt financing process Deposits Produce at the Warehouse Issues Warehouse Receipt Warehouse Keeper EAGC Appoints Inspector EAGC Issues Certificate Warehouse Keeper Applies for Inspection Farmer/Trader presents WR to his Bank Bank Issues loan Banks contact EAGC to verify the WR BANK

12 Structured trade financing: Experience in Kenya (Equity) Motivation Responding to client commodity financing needs Recognition of agribusiness sector requirements Focus on the value chain Farmer, trader, processor, retailer and consumer Regional aspect of trade financing Support to clients in the region through appropriate financing instruments Policy issues that banks are concerned with in effective commodity financing

13 Training of farmers and small scale Awareness creation on use of trade contracts. Use of Warehouse Receipts. Training on grades and standards. traders

14 Market Information Services Prices (maize, rice and beans): o Nairobi, Kampala, Dar es Salaam, Mombasa among others To get daily prices on your cell phone send a text message by typing; maize, beans, or rice and send to 8000.Crop production update (KE,UG,TZ) Trade projections Supply and demand analysis Cross border trade flow

15 EAGC Trade Link Trade linkage between small grain traders and large enterprises, such as processors, government institutions and food aid agencies can be a channel of enhancing competitiveness while enabling small-scale traders access markets and increase trade.

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17 Towards a Regional Trade Policy Platform In support of Structured Trading System

18 The Grain dream of COMESA, EAC and SADC Region Free Trade in grain - partially realized through elimination of import duties on intra-regional trade Regional policy space for production and intra-regional trade of grain Realized through definition of Common External Tariff (COMESA, EAC and SACU Customs Unions ) Regional policies supportive of free market of grain still a dream because of: Partial liberalization in pricing and marketing of grain not sufficient to support thriving of free commodity markets Export/Import restrictions Lack of enabling legal & regulatory framework Lack of regional quality standards and SPS regulatory framework

19 Requirements for Regional Trade Policy Platform in support of Structured Trading System Full market liberalization pricing marketing Regional grain quality standards Regional Sanitary and Phytosanitary framework A region devoid of Export/Import restrictions (regional mechanism for management of food security concerns needed). Effective regulatory framework that supports functioning of the market Legal framework supportive of WH (functioning law of contract or WR Act) and Commodities Exchanges and appropriate institutional structures. Agricultural Information Act to facilitate collection of market information Effective private sector self regulatory framework that resonates government regulatory framework

20 Time for Action is now! Baselines VCA to establish where each of the countries are in respect of the policy platform underway through COMPETE/EAGC/COMESA (ACTESA) and EAC/ VCAs covering grain and other staple foods (maize, wheat, rice, beans and pulses and root tubers) and covering key producing and consuming Regional policy reform program targeting moving each country s policy regime to the optimal regional trade policy platform that is supportive of structured trading system

21 Action Plan Towards Establishment of Regional Food Balance Sheet Regional Task MIS Force Was set up at the Regional MIS Workshop held between 9 th and 10 th Sept. in Nairobi. National Grain Consultative Forums/Committees Each country in COMESA and EAC to establish/revamp such committees in order to respond to the regional grain trade and food security agenda Baseline on survey institutional framework and current practice in assembling food balance sheet (Sept/Oct 2009) Establish, through a stakeholder process National Grain Consultative Forum (Nov/Dec 2009) National Stakeholder Grain consultative forum to prepare 1 st All Stakeholder owned food balance sheet (Nov/Dec) Consolidation of National Food Balance Sheets (NFBS) into Regional Food Balance Sheet (RFBS) using data/information submitted by NGCFs and posting the RFBS in RATIN Monthly starting December 2009 Regional Grain Consultative Forum to Consider RFBS(February 2010) Action EAGC and Partners

22 Thank you

23 Contact: The Secretariat Eastern Africa Grain Council P.O. Box Nairobi Tel: Fax: Promoting Orderly Grain Marketing