Monitoring and Analysing Food and Agricultural Policies (MAFAP) Agricultural Public Expenditure Analysis

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1 Monitoring and Analysing Food and Agricultural Policies (MAFAP) Agricultural Public Expenditure Analysis Ms. Megan Witwer, Policy Analyst, FAO-Rome Ms. Happy Pascal, Economist, MAFC

2 What is MAFAP? A system to monitor policies and their effects on producers, consumers and other value chain agents Implemented by FAO in collaboration with national partners to develop institutional capacity and ensure sustainability Provides evidence to support more effective policymaking and investment decisions

3 Where is MAFAP implemented?

4 What does MAFAP monitor? 1. The level and composition of public expenditure in support of the food and agriculture sector; 2. The effects of policy on price incentives for agents in key agricultural value chains; and 3. The degree of coherence between national policy objectives, measures adopted to achieve these objectives and the effects they generate.

5 Overview Methodology developed with the Organisation of Economic Co-operation and Development (OECD) Comparable across countries and years Combinable with price incentives analysis for a comprehensive analysis of support to the agriculture sector Continuously updated each year Highly disaggregated to the activity level under projects and programmes

6 Scope Broad scope; includes all public expenditures in support of the agriculture sector Crops, livestock, forestry, fisheries and rural development Expenditures are categorized by their economic characteristics: Direct payments to agents (private goods) vs. general sector support (public goods) Captures budgeted vs. actuals, donor vs. government, recurrent vs. development, etc.

7 MAFAP classification Two broad categories: 1. Agriculture-specific: a. Payments to agents in the food and agriculture sector b. General support to the food and agriculture sector 2. Agriculture-supportive: a. Payments to the rural sector, which implicitly favour agricultural development

8 MAFAP classification: agriculturespecific expenditure Consumers Payments to agents Private goods Producers Other agents Research General sector support Public goods Technical assistance Inspection Marketing

9 MAFAP classification: agriculturesupportive expenditure Rural infrastructure Payments to the rural sector Rural education Rural health

10 M A F A P C L A S S I F I C A T I O N

11 M&A PEA against CAADP commitments M&A PEA to improve aid effectiveness BOOST, AgPERs Re SAKS S ASTI GEA M&A PEA to better inform policy-making IDS/ CRS MAFAP SPEED

12 Area MAFAP AgPER ReSAKSS Objectives Approach System of Classification To establish a sustainable countrybased monitoring system to inform policy-makers Develops the capacities of national institutions to carry out and update the analysis each year OECD classification, which is more disaggregated than COFOG To promote more efficient budgetary processes, and formulate evidence-based recommendations to improve the efficiency of public expenditure for agriculture One-off reviews done by World Bank staff, in collaboration with local consultants COFOG, which corresponds to agriculture-specific measures only To follow the implementation of the CAADP commitments through public expenditure in member countries of the African Union. One-off reviews done by IFPRI staff, in collaboration with local consultants COFOG, which corresponds to agriculture-specific measures only Methodology Classifies programs and project according to the economic characteristics of their activities rather than to their reported objectives Classifies public expenditure according to the policy objectives Classifies public expenditure according to the policy objectives

13 MAFAP Agricultural Public Expenditure Analysis: Results Study Period 2006/ /13

14 Share of total expenditure allocated to the food and agriculture sector % / / / / / / /13 Budgeted expenditure Actual expenditure Maputo declaration target

15 Share of total expenditure allocated to the food and agriculture sector (actuals only) % % 11% 7% 3% 3% 4% 3% 0 3% 4% 4% 5% 4% 4% 4% 2006/ / / / / / /13 Agriculture-supportive expenditure Agriculture-specific expenditure Maputo declaration target

16 Billions of TZS Public expenditure in support of the food and agriculture sector / / / / / / /13 Agriculture-supportive expenditure General support to the food and agriculture sector Payments to agents in the food and agriculture sector

17 Composition of payments to agents in the food and agriculture sector 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2006/ / / / / / /13 Payments to processors Payments to producers, other Payments to producers, input subsidies, on-farm services Payments to producers, input subsidies, capital Payments to producers, input subsidies, variable inputs

18 Composition of general support to the food and agriculture sector 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2006/ / / / / / /13 Other Marketing Storage/public stockholding Agricultural infrastructure Inspection Extension/technolo gy transfer Training Agricultural research

19 Composition of agriculturesupportive expenditure 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2006/ / / / / / /13 Other Rural infrastructure, other Rural infrastructure, energy Rural infrastructure, water and sanitation Rural infrastructure, roads Rural health Rural education

20 Billions of TZS Total support to agricultural commodities support to all commodities support to groups of commodities / / / / / / /2013 support to single commodities

21 Composition of support to individual commodities Tobacco 10% Cashew nuts 11% Tea 27% Coffee 32% Sugar 5% Sisal 3% Pyrethrum 3% Cotton 9%

22 Share of agriculture-specific expenditure allocated to top 3 commodities Other 98% Cashew nuts 0.3% Tea 1% Coffee 1%

23 Composition of support to groups of commodities Apiculture 0.1% Cereals 3% Maize & Rice 31% Crops 44% Livestock 11% Forestry 2% Fish 2% Forestry & Apiculture 7% Dairy 0.1%

24 Share of agriculture-specific expenditure allocated to top 3 groups of commodities Livestock 6% Other 54% Crops 23% Maize & Rice 16%

25 Appraisal of public spending against the goals and objectives of the TAFSIP

26 PA1: Irrigation development, sustainable water and land use mgt. Annual goal = TSh 120 Billion

27 PA2: Agricultural productivity and rural commercialization Annual goal = TSh 622 Billion

28 PA3: Rural infrastructure, market access and trade Annual goal = TSh 36 Billion

29 Policy recommendations 1. Increase the overall share of total public expenditure allocated to the food and agriculture sector to ensure that Tanzania is meeting the Maputo Target of 10% 2. To meet investment goals, allocate more spending towards: - Irrigation and water management - Areas that improve market access, trade and commercialization (e.g. marketing, branding, storage, inspection, processing, etc.) 3. Maintain the high level of investment in rural infrastructure to improve market access and trade.

30 For more information on MAFAP and this analysis (full report available in Jan. 2015) For a more details on the different agricultural public expenditure methodologies, please contact Megan.Witwer@fao.org