title of the presentation - un escap session 9...export import meat and edible meat dairy fish and...

Asia‐Pacific Research and Training Network on Trade

www.artnetontrade.org

Trade‐led Growth in Times of CrisisAsia‐Pacific Trade Economists’ Conference

2‐3 November 2009, Bangkok

Session 9

Adapting Trade Policies to Promote Food Security and Sustainable Agriculture

Parakrama Samaratunga

Adapting Trade Policies to Promote Food Security

and Sustainable Agriculture

Parakrama Samaratunga

Institute of Policy Studies of Sri Lanka

Introduction

• Agricultural GDP - 13.4% (2008)

• Agricultural labour force – 32.7% of total employments (2008)

• Agricultural land use – approx. 45% of total land area (1990)

• Heavily concentrated on few major crops


Introduction (contd.)• Low agricultural productivity partly explain rural poverty

– 11% ave. monthly HH income

• Failed to grow in to a vibrant commercial industry

• Failed to provide employment to the growing no. of youths

• A sustainable increase in agricultural production – poverty alleviation– reduction in unemployment– improvement in rural income and – improving income distribution

Enhance food security


Food Security and Agriculture

• Availability at all times of adequate world food supplies of basic food stuff to offset fluctuations in production and prices

• Original macro-biased definition has evolved over time to include micro level dimensions of food availability, accessibility and utilization.

• Trade policy has strong implications on the present food security situation in the country via all three parameters.


Food Availability –Sufficient availability of food with the nation through domestic production, net imports and carry-over of stocks

Food Accessibility –Individual’s capability to purchase food and to be able to procure food through safety nets

Food Utilization– Consumption of food by the household in a proper form. It also takes into account food preparation, storage and utilization, food safety, nutritional safety and dietary balance


Food Security and Agriculture (contd.)

• Sri Lanka has been a net food importer since the time of the British colonial rule prior to 1948

• Lower productivity and competitiveness along with import surge resulted from speedy liberalization were partly responsible

• Increases in nonessential and “luxury” food items that do not contribute to improved food security.


Table 1: Annual average food availability in Sri Lanka by major food commodity groups, 2000-2007 Production Exports Imports

Qty (000Mt)

% of the availabilit

y

Qty (000Mt)


y

Qty (000Mt)


y

Rice 3,079.82 2,979.11 96.73 3.94 0.13 104.65 3.40

Wheat flour 703.09 0.00 0.00 703.09 100.00

Other Cereals 163.81 42.51 25.95 121.30 74.05

Roots & Tubers 403.99 346.65 85.81 57.34 14.19

Sugar 559.39 52.71 9.42 506.68 90.58

Pulses & Nuts 144.60 33.39 23.09 111.21 76.91

Vegetable 960.53 841.78 87.64 6.07 0.63 124.82 12.99

Fruits 320.70 282.77 88.17 4.31 1.35 42.25 13.17

Meat 119.75 117.72 98.30 0.07 0.06 2.10 1.75

Eggs 51.35 51.35 100.00

Fish 356.38 294.95 82.76 15.24 4.28 76.66 21.51

Milk 272.37 215.21 79.01 57.16 20.99

Oil & Fats 977.58 1,022.59 104.60 61.93 6.33 16.93 1.73

Total 8,113.37 6,280.74 77.41 91.55 1.13 1,924.19 23.72

Commodity groups

Gross availabilit

y(000Mt)

Source: Department of Census and statistics, Food Balance Sheets (various years)


0% 20% 40% 60% 80% 100%

% share

Export

Import

Meat and Edible MeatDairyFish and CrustaceansEdible vegetablesEdible fruits and nutsCoffee, tea, spicesCerealsOil seedsFats and oilsSugarsBeveragesTobaccoOthers

Figure 1: Export and import concentration of agricultural product groups


Agricultural Trade Liberalization in Sri Lanka

• Level of intervention is deeper and the range of instruments much wider

• Trade interventions are increasingly focused on fewer and fewer products

• The bulk of the domestic support to farmers has been granted through non-trade-distorting measures

Table 2: Distribution of Agricultural Tariff Bands ‐ 2009

Rate % Free 2.5 6 15 28 specificad valorem/ specific

Number of items* (HS codes)

13 53 31 244 548 48 12

Percentage of total 1 6 3 26 58 5 1


• With the increased support from increased MA and various forms of subsidies, – agricultural export earnings have grown– domestic food crops-no much improvement

• Real prices of food in Sri Lanka have declined faster relative to the world food price index

0

50

100

150

200

250

300

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Food

Pri

ce In

dex

0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

Ret

ail P

rice

(Rs.

/kg)

FPI Rice (Nadu) Green Gram Cowpea Maize

Figure 2: Relative movements

of real annual average food prices

in the world and Sri Lanka


00.0020.0040.0060.0080.010.0120.0140.0160.0180.02

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Rice Potato Green gram Cowpea Maize Groundnut

Figure 3: Annual averages of real farm gate prices of selected commodities

Liberalization from the Import Side


-8000.00

-6000.00

-4000.00

-2000.00

0.00

2000.00

4000.00

6000.00

8000.0019

80

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Paddy Chilli Maize

Figure 4: Profitability of selected domestic food commodities: 1980‐2004


0

20000

40000

60000

80000

100000

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

Prod

uction

(Mt)

Green Gram Cowpea Potato

Figure 5: Production of a few selected crops from 1970 to 2007

Therefore, liberalization of agricultural trade has had mixed results for the food security of the people and the sustainable development of the agricultural sector.


050000

100000150000200000250000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Rs.

mill

ion

0

2

4

6

8

% o

f GDP

Agricultural exports % of GDP

Figure 6: Value of agricultural exports for the last decade

• Sri Lankan agricultural exports rose to a modest one fourth of total exports in the year 2008.

Liberalization from the Export Side


0 20 40 60 80 100

Bangladesh

India

Maldives

Nepal

Pakistan

Sri Lanka

Imports

Exports

Figure 7: Agricultural Trade Concentration: The Hirschmann-Herfindahl Index

• Limited export drive was not sufficient to improve income levels of the majority rural poor substantially and therefore could not result in any improvement in the food security situation of the country


• Trade liberalization unstable food security

• Sri Lanka should have promoted exportable agricultural enterprises through diversification and thereby increasing income in the rural sector

• concern was more on imports of agricultural products and adjusting their tariff rates, removing barriers etc mainly to benefit the consumers and some times to protect farmers

faults in methods

Sri Lankan Stagnation


0

0.05

0.1

0.15

0.2

0.25

0.3

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009R

&E

as a

% o

f Agr

icul

tura

l G

DP

0

1000

2000

3000

4000

5000

Ave

rage

yie

ld (K

g/ha

)

R&E Paddy Cow pea Maize Green Gram

Figure 8: Investment in Agricultural Research and Extension in Sri Lanka and Productivity Growth


Self Sufficiency Model Self Reliance Model

Non competitive/ not economical/ less productivity/ no diversification

Food insecurity/less farmer income

competitive/ economical/

high productivity/ export diversification

Food security/enhanced

farmer income

An Alternative View


An Alternative View (contd.)

• National level food security has to be handled with a combination of domestic food production and trade.

• Trade policy has a role to play in stimulating agricultural productivity growth, particularly in the earlier stages of economic development

• Such productivity growth is critical for achieving wider development objectives

• It is essential to adjust trade policies in line with production and agricultural policies in the country.

• Trade negotiations– give priority to development objectives/set policy goals – trade instruments that would be conducive to pursuing this objective

(e.g. sensitive and special products, SSM, maintaining preferences etc)


Investment as a Solution

• investments required to shift resources out of subsistence, basic food or traditional export crop agricultural activities into higher-value alternative export activities

• Highest returns are for investment in R&D followed by infrastructure (roads) and institutions

• Investment traditionally in area expansion and yield expansion

• Even under most favourable conditions in economic and natural environments only a 20 percent increase in area cultivated can be expected in Sri Lanka

• Under the present yield levels, therefore, the production can not reach the national requirements - Area expansion will not be a solution

• Agricultural research and technological improvements is the onlyviable options for meeting future food needs and demands at reasonable prices


CONCLUSION AND POLICY IMPLICATIONS

• The “sensible balance” between domestic production and trade should be found considering– Non level playing field situation in global trade

and technology– Transparency of trade policy – Stability in domestic food markets-price policy

and infrastructure– Continuous investment in technology

development/acquisition– Regional cooperation in the above– Maintaining growth in food production-with or

without protection


THANK YOU

title of the presentation - un escap session 9...export import meat and edible meat dairy fish and...

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