Version of 03/03/2010 09:31
MAFAP Project
Draft detailed Outline
Synthesis covering existing work on policy monitoring, review of public expenditures in agriculture and use of socio-economic development indicators for policy analysis in Africa
1. Introduction
• Brief description of the situation in SSA regarding poverty, food security, agriculture, based on existing indicators
• Brief information on the MAFAP countries and some basic indicators comparing MAFAP countries with the continent on population, GDP/cap, place of agriculture, food security etc.
• Purpose and scope of this synthesis; link and complementarities between the synthesis and the methodology paper. Presentation of the structure of the document explaining why it follows the main domains covered by the methodology
• Project relevance: A brief summary analysis of the countries’ needs particularly in the 5 to10 MAFAP countries could be included here. Some additional indications on the specific country expectations and requests already gathered regarding the MAFAP implementation and therefore conditions for full country level relevance. The case of specific issues and specific country needs and requests will be addressed at a later stahe of project implementation.
• Introduce and explain that the synthesis included three levels of information as a result of the project structure. General information of particular relevance to the project is sought at continent level and for any African countries. Additional detailed information is collected for a subset of 10 MAFAP countries including Burkina Faso, Kenya, Mali, Tanzania, Uganda, Cameroon, Ethiopia, Ghana, Malawi, Nigeria. There is a more accurate and more systematic collection done for the group of 5 intensive countries.
• Main issues and concerns about the monitoring functions across countries including a brief discussion on data availability, data quality, data comparability across countries, capacities in data treatment and data and information analysis for policy analysis purpose.
2. Past trends regarding Food and Agricultural Policies
2.1. Brief review of the main historical periods and their policy paradigms
• Without going too far, this section could briefly explain the extent to which current agricultural policies in SSA have been influenced by at least three ideological waves that have successively determined the role of government in the sector and the scope of policies. It could include a brief discussion on the inheritance of the colonial period based on export oriented African economies driven by demand for raw tropical commodities manufactured in Europe, the post colonial era with state control over the economy and particularly the agricultural and the impact of the import substitution paradigm on agriculture and the era of structural adjustment in the 1990’s and its consequences on the agricultural sector.
• Explain that as a result of these years the agenda in agriculture has been dominated by a shift away from state-led development - involving pervasive state intervention in agricultural production and marketing - towards the adoption of market-led approaches (Akroyd 2004).
• Mention and show that few if not none of these reforms have delivered the results hoped for, in terms of agricultural growth, food insecurity reduction or rural poverty alleviation.
• Show that the problem is acute in SSA with government facing major budget constraints combined with very low levels and impacts of public spending as well as aid flows in the recent years in the agricultural sector.
• Remind evidence that public spending in certain public goods is recognized as being an effective way to reduce poverty and incentive agricultural production
• What is the current political context prevailing in the countries which affects agricultural policies and agricultural public expenditures?
• What are important political-economy considerations (including key institutional actors and officials) which influence the level, composition, and governance of agricultural public expenditures?
2.2. Important current and emerging policy issues
• This section could address a number of critical issues in the context of MAFAP
• CAADP implementation and regional or continental integration where agriculture plays a major role
2.3. Lessons learned and implications for the MAFAP project
• Lessons from past policy failure in agriculture and implications for the requirements for public interventions and policy formulation both in terms of content (measures, scope, context specificities including traditions and customary systems over land tenure for example) and process (participation, organizational issues, institutional arrangements, time,...).
• Consequences on the respective role of governments and markets and complementarities between private and public sector.
3. Previous monitoring attempts for agriculture and food policies in Africa and
This chapter will present the major players in F&A policy analysis and identify their most MAFAP relevant experiences in monitoring F&A policies in Africa. The main players already identified include the World Bank IFPRI, FAO, NEPAD,... discussion is geared towards highlighting what they have done, for which policy with which scope, for how many countries and within which time frame.
To the extent possible the methodology adopted for carrying the analysis will also be described and commented to underline the main limitations and lessons to be learned for the future work with MAFAP.
3.1. Analytical summary of the findings
This section summarizes the findings of 3.2 with the key analytical messages
3.2. Main findings
So far little information has been gathered on that but more findings should complement this section soon. The findings are likely to be organized according to the institutions having performed previous attempt to monitor policies. Some information is already available for FAO, the World Bank and IFPRI. The following is available as example of what could be synthesized.
1. IFPRI and WB - Several papers/ documents prepared for the COMESA policy seminar on “Variation in staple food prices: Causes, consequence, and policy options” (2010) This includes information and analysis for Tanzania, Malawi, Kenya, Ethiopia and Uganda.
2. FAO- “The State of Agricultural Commodity Markets 2009”. Includes national policy responses to high food prices.
3. EC - Monitoring Agri-trade Policy (MAP) http://ec.europa.eu/agriculture/publi/map/index_en.htm
4. UNECA. Africa Review Report on Agriculture and Rural Development. - 2007..
3.3. Lessons learnt and implications for the MAFAP project
This part will collect the main lessons derived from past experience presented above and elaborate on the major contribution that the MAFAP could bring to the existing work based on the analysis of success, constraints, opportunities, gaps and needs to provide a more comprehensive support to the establishment of sustainable policy monitoring functions in Africa.
4. Existing work on measurement of incentives/disincentives for agricultural producers
• This chapter will review existing work to provide detailed information on previous attempts to analyze the effect of policy and non policy incentives/disincentives on agricultural performances. This chapter will also include a number of research questions covered in the literature in relation to constraints to agricultural performances
• What types of analysis has been conducted regarding the conditions that prevent markets from functioning effectively?
• What have been the methods and tools used and data availability including results.
• How have the incentives/disincentives been measured and computed? What were the major challenges in computing indicators?
• If and when possible, indications of the existing analysis of main policy instruments adopted (input subsidies, marketing board, etc. ), mainly in the 5 intensive MAFAP countries and estimated effects on agricultural sector performances for selected African countries could provide additional insights for the work to be performed later at country level. If possible the synthesis could provide a narrative (in boxes) of examples of governments’ interventions to get agriculture moving through a certain type of incentives with an assessment of effects? The idea here would for example to explore whether the traditional thinking on the role of technology and getting ‘prices right’ holds?
• Beyond the effect of incentives and disincentives resulting from the policies, analysis of the disincentives generated by other sources such as lack of infrastructure and others. Attempts in measuring or weighting these constraints or disincentives vs policy induced disincentives. Attempts to estimate the effects of the failure of one actor to invest in goods that are essentials for another agent in the same value chain
• How have transaction costs or costs associated with participation in the market been measured and analyzed? The CCAA project (WB 2009) provides useful information for three African countries Zambia, Mozambique and Nigeria on official and unofficial charges and extra costs. This information is available in spreadsheets. Moreover, the Country Reports of the Anderson’s Project also provide annexes with detailed explanation of data sources and assumptions for transaction costs. In general, country reports have relied on existing estimates of transport costs and marketing costs. Although they were not always particularly accurate using some assumptions they formed the basis for the credible estimates which are country- specific (and even commodity-specific sometimes).It should be possible to get adjusted transaction costs estimates for the 5 or 10 MAFAP countries of the project by refining what was compiled by the Anderson team with what has been collected in Kenya and Burkina already and the value chain work envisioned in all 5-10 countries.
4.1. Analytical summary of the findings
• Summarize the key messages coming from the findings and propose lessons
Example of lesson:
Lesson X: Once agricultural competitiveness has been achieved, maintaining it can be challenging for reasons that lie beyond the agricultural sector itself (World Bank, 2009)
4.2. Main findings
• The findings will highlight most relevant insights to take into consideration in the MAFAP methodology
• These findings will be mainly based on the work done for the World Bank by the Kim Anderson’s team.
• Other approaches found in the literature will also be mentioned particularly when they explore the various sources of incentives and disincentives and when they propose alternative ways of measuring policy induced distortions or distortions generated by other elements of the economy.
• The methods for measuring or estimating transaction costs will be given particular attention as will the effectiveness of price transmission (pass-through)
• Findings regarding specific policy issues that are of particular relevance for the measurement of incentives and disincentives could be also reported and discussed such as
· The rippling effects of non farm sector growth
· Price transmission (pass through)
· Labor policies and cost including the discussion on low production costs often observed in SSA as a result of low family labor costs which are discussed for the limitations on pro poor growth and sustainability although they provide a competitive advantage
· Exchange rate misalignment
· Macroeconomic policies (fiscal, interest rate,...). For example, Ndula (2007) shows that most SSA countries have now fiscal surpluses and inflation rates are generally below 10 percent. According to Schuh (1976) exchange rate policies have probably had the biggest impact on incentives in the agricultural sector and particularly in Nigeria where the parallel exchange rate sometimes exceeded the official rate by five times or more (Walkenhorst 2009; Robinson, Govereh and Ndlela, 2009). Additional information could be digested and inserted here particularly on previous research regarding the effects of macroeconomic policy issues on the agricultural sectors and how they can be addressed taking mostly the perspective of developing countries. For example most of that is included In the Chapter 61 of the Handbook of Agricultural Economics.
• In case some specific issues at country level emerge out of the literature review or out of the current interactions with Government or country level institution, they could be included in this section. This type of indication could guide future MAFAP work at country level as what are the likely questions the governments will be interested in and to which MAFAP work will need to contribute if we want it to be relevant. Information will be presented following a country by country structure: Burkina Faso, Cameroon, Ethiopia, Ghana, Kenya, Malawi, Mali, Nigeria, Tanzania, Uganda. For example, Olomola (2009) found that in Nigeria production costs (like in Zambia) are still significantly inflated by the cost of fertilizer and other inputs.
NOTE:
This part will highlight the specific findings on data availability and quality at country level coming from work done in the past on measurement of policy distortions in particular and globally on major constraints for general policy analysis.
Example of possible content for this section:
Both quantitative and qualitative analysis has been conducted regarding the effect of policy incentives/disincentives on agricultural performances in Africa.
Quantitative attempts have been carried out mainly by the World Bank and IFPRI. Major works include:
- Distortions to Agricultural Incentives, World Bank research project, 2006-2010. This project features analytical narratives of the evolution over the past half-century of policy-imposed distortions (mainly price policy) to farmer incentives and food prices in 80 countries. During the first phase, distortions to agricultural incentives caused by agricultural and non-agricultural policies were measured/estimated. The second phase uses econometricsto estimate the political economy reasons behind the pattern of distortions across countries, commodities and over time, and the inequality, poverty and other economic effects of current versus alternative policy regimes for individual countries. On Africa, the project has produced a report “Distortions to agricultural incentives in Africa” (Anderson and Masters 2009) composed of country studies for 21 African countries, including nine MAFAP countries (only Malawi is missing).
- A comparative study of the political economy of agricultural pricing policies, World Bank's research project, 1988-1992. The project estimates the effect of policies that discriminate against agricultural prices within 18 developing countries and shows how such discrimination changes over time and affects economic growth. Political and economic conditions that shape pricing policies in each country were surveyed by region (Latin America, Asia, Africa and the Mediterranean). On Africa, the project published “The Political Economy of Agricultural Pricing Policy. Volume 3: Africa and the Mediterranean” (Krueger, Schiff et al. 1991) covering six countries, including Ghana.
- Incentive policies and export performance in sub-Saharan Africa (Balassa 1990), World Bank.
- General equilibrium measures of agricultural policy bias in fifteen developing countries (Jensen, Robinson et al. 2002), IFPRI research. It conducted comparative analysis of the extent to which indirect taxes, tariffs, and exchange rates affected relative price incentives for agricultural production in a representative sample of 15 developing countries in the 1990s. The report covers two MAFAP countries (Malawi and Tanzania).