1 st Annual Regional Agricultural Outlook: Anticipating and responding to policy challenges in the decade ahead

Transcription

1 1 st Annual Regional Agricultural Outlook: Anticipating and responding to policy challenges in the decade ahead Presentation at 1 st Annual ReNAPRI Outlook Symposium Lusaka, Zambia November 4 th, 214

2 Outline 1. ReNAPRI: localizing agricultural policy research The Network The Modelling Framework 2. Sector Level Analysis: regional maize outlook Global outlook Regional outlook 3. Farm Level Analysis: benchmarking maize cost of production 4. Strategic Foresighting: border closing scenario

3 ReNAPRI: Localizing Agricultural Policy Research The Goal: Provide policy-makers with relevant and accurate information The Challenge: Regional agricultural policy research and outreach is largely driven by non-african institutions In terms of implementation, this external analysis has yielded very little fruit to date.

4 ReNAPRI: Localizing Agricultural Policy Research Regional Network of Agricultural Policy Research Institutes (ReNAPRI) Offers a unique solution: African-led, African-driven initiative with a ground-up approach to policy research Membership includes existing policy research institutes with a proven track-record of policy advisement within their respective countries.

5 ReNAPRI: Localizing Agricultural Policy Research Institute for Social and Economic Research, University of Kinshasa - Democratic Republic of Congo Tegemeo Institute of Agricultural Policy and Development, Egerton University Kenya Centre for Agricultural Research and Development, Lilongwe University of Agriculture & Natural Resources Malawi CEPPAG, University of Eduardo Mondlane Mozambique Bureau for Food and Agricultural Policy (BFAP). University of Pretoria & Stellenbosch - South Africa Department of Agriculture Economics and Agribusiness, Sokoine University of Agriculture - United Republic of Tanzania Indaba Agriculture Policy Research Institute (IAPRI) - Zambia

6 ReNAPRI Modeling Framework Global Models: FAPRI and OECD-FAO GDP Exchange rate Interest rate Oil prices Sector level Models: ReNAPRI Partial Equilibrium Grains and oilseeds Livestock Regional prices Weather Regional Policy Population Farm Level Models: Household Survey data agri benchmark FINSIM

7 Maize Markets: global drivers Patrick Westhoff FAPRI-MU director University of Missouri

8 Agenda Why have world maize prices declined from recent record levels? What are the main drivers of future market prices? What can we expect? How uncertain are projections? Why?

9 Dollars per tonne U.S. maize export prices What went up has come back down FOB Gulf 1 5 Jan 21 Jan 211 Jan 212 Jan 213 Jan 214 Source: USDA Economic Research Service. Last data point is September 214.

10 Maize yields and prices Higher yields usually mean lower prices 12 Maize yields (tonnes/ha) 35 U.S maize price ($/tonne) U.S. World 15 U.S. Gulf 4 Non-U.S /1 1/11 11/12 12/13 13/14 14/15 9/11/1111/1212/1313/1414/15 Source: USDA PSD Online, Oct. 214 Source: USDA ERS, FAPRI projection for 214/15

11 Million tonnes Million tonnes Maize Utilization U.S. domestic maize use China domestic maize use Feed All other (inc. ethanol) Feed All other (inc. ethanol) Source: USDA PSD Online, Oct. 214

12 Million tonnes 12 World Maize Production, Use and Carryover Stocks Production Use Stocks 2 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 21/22 23/24 Source: Unpublished FAPRI-MU baseline update, October 214

13 Million hectares World Area Harvested Wheat Maize Rice Soybeans 5 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 21/22 23/24 Source: Unpublished FAPRI-MU baseline update, October 214

14 Million hectares World Area Harvested Soybeans Rice Maize Wheat 1 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 21/22 23/24 Source: Unpublished FAPRI-MU baseline update, October 214

15 Tonnes per hectare World crop yields Maize Wheat Milled rice Soybeans 1 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 21/22 23/24 Source: Unpublished FAPRI-MU baseline update, October 214

16 Million tonnes World Crop Use (total) Maize Wheat Milled rice Soybeans 2 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 21/22 23/24 Source: Unpublished FAPRI-MU baseline update, October 214

17 Million tonnes World Crop Use (per-capita) Maize Wheat Milled rice Soybeans 2 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 21/22 23/24 Source: Unpublished FAPRI-MU baseline update, October 214

18 World population, million Africa s population grows faster than that of other regions change change World 6,121 6, , Africa 818 1, , Asia 3,43 3, , All other 1,9 2, , Source: IHS Global Insight, October 214 Notes: Africa s population is still growing by more than 2 percent per year, roughly double the global average. The percentage annual rate of growth in Africa s population is slowing, but the absolute number of people being added to Africa s population each year is still increasing. In Asia and the rest of the world, not only is the annual percentage rate of growth in population declining, but the absolute number of people being added each year is also declining. Africa accounts for about one-sixth of the world s population, but will account for about one-third of the global increase in population this decade.

19 U.S. Export Prices for Wheat and Maize Dollars per tonne Wheat Maize 1 5 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 21/22 23/24 Source: Unpublished FAPRI-MU baseline update, October 214

20 Maize price, dollars per bushel 214/15 U.S. maize yields and prices FAPRI-MU stochastic baseline, March Maize yield, bushels per acre

21 Maize price, dollars per tonne 214/15 U.S. maize yields and prices FAPRI-MU stochastic baseline, March Avg. of March estimates: 1.3 tonnes/ha. and $164/tonne Maize yield, tonnes per hectare

22 Maize price, dollars per tonne 214/15 U.S. maize yields and prices FAPRI-MU stochastic baseline, March October USDA estimates: 1.9 tonnes/ha. and $134/tonne Avg. of March estimates: 1.3 tonnes/ha. and $164/tonne Maize yield, tonnes per hectare

23 Dollars per tonne U.S. Farm Prices for Maize Actual/average 1 5 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 Source: FAPRI-MU stochastic baseline, March 214

24 Dollars per tonne U.S. farm prices for maize yield in #5 is unusually low, similar to Actual/average # /6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 Source: FAPRI-MU stochastic baseline, March 214

25 Dollars per tonne U.S. Farm Prices for Maize Actual/average #5 #25 # /6 7/8 9/1 11/12 13/14 15/16 17/18 19/2 Source: FAPRI-MU stochastic baseline, March 214

26 Dollars per tonne U.S. farm prices for maize Actual/average 9th percentile 1th percentile 5 Source: FAPRI-MU 5/6 7/8 9/1 11/12 13/14 15/16 17/18 19/2stochastic baseline, March 214

27 Final comments Recent swings in global maize prices are largely due to U.S. weather, which lowered yields in 212 and raised them in 214 U.S. ethanol and China have been major sources of demand growth China may continue to grow, but U.S. ethanol may not Longer-term price trends depend on relative rates of growth in technology (yields), population, and per-capita demand We expect maize prices to average above recent lows, but below peaks But in any given year, weather and other unpredictable factors will cause price volatility

28 Thanks! FAPRI-MU website: To contact Pat Westhoff: FAPRI-MU team: Julian Binfield Sera Chiuchiarelli Deepayan Debnath Scott Gerlt Lauren Jackson Willi Meyers Wyatt Thompson Jarrett Whistance Peter Zimmel

29 Eastern and Southern Africa Maize Outlook:

30 US $ / ton Regional Outlook: Prices transmission World Price South Africa - Randfontein Kenya - Nairobi Zambia - Lusaka Tanzania - Arusha Malawi - Lilongwe Mozambique - Maputo DRC - Kinshasa Source: ReNAPRI Outlook, November 214

31 US $ / ton Regional Outlook: Prices transmission World Price South Africa - Randfontein Source: ReNAPRI Outlook, November 214

32 Regional Outlook: Maize Price Transmission Country specific price-setting mechanisms: South Africa Consumption Household Consumption Livestock Industry Exports: Maize product 128, t Exports: Maize grain 1,812, t Retailing Formal & Informal Retailing Processing Informal (Gristing) Millers Volume = 62, t Formal millers: Human consumption Volume = 4,147, t Animal Feed Animal Feed Volume =? Trading Domesticstorage and trading Delivery volume = 9,913, t Independent Trader Storage SAFEX Production Subsistence Farmers Volume = 564,335 Commercial Farmers Volume = 1,36, tons Imports Volume = 341, tons May 212 to April 213 Source: SAGIS, 213

33 US $ / ton 4 Regional Outlook: Prices transmission World Price South Africa - Randfontein Mozambique - Maputo Source: ReNAPRI Outlook, November 214

34 US $ / ton Regional Outlook: Prices transmission World Price Zambia - Lusaka Source: ReNAPRI Outlook, November 214

35 Regional Outlook: Maize Price Transmission TRADE FLOW MAP OF GRAIN AND GRAN PRODUCTS IN ZAMBIA Consumption Household Consumption Maize Grain Exports Livestock Industry Mealie meal exports Retailing Processing Farm retention for home consumption =5,tons FRA (national reserved food) Volume=5, tons small scale millers Volume=2, tons Formal & Informal Retaiers Breweries Volume Large scale millers Volume Animal Feed Volume Vertically integrated (production, storage, processing, retailing and exporting) Trading Small scale grain traders and assemblers Private Grain Traders Storage Production Small holder Farmers Volume = 2,532,8 tons Imports Volume= Commercial Farmers=Volume =66,576 KEY flow of maize gain flow ofmealie meal or beer for human consumption flow of maize product for animal feed Maize figures from 212/13 season

36 US $ / ton Regional Outlook: Prices transmission Zambia - Lusaka Malawi - Lilongwe Source: ReNAPRI Outlook, November 214

37 US $ / ton Regional Outlook: Prices transmission World Price Kenya - Nairobi Source: ReNAPRI Outlook, November 214

38 Regional Outlook: Maize Price Transmission 5% Country specific price-setting mechanisms: Kenya Consumption Household consumption Retailing Retained for Home consumpti on =753,37M T Purchases for Strategic Grain Reserve=57, 862MT Wholesale & retail outlets Retail outlets Processing Large Scale Millers Medium & Small Scale Millers Trading 2% NCPB Large scale traders Small Scale traders Storage Production Large scale farmers production=1,56,614mt Small and Medium Scale Production=2,259,922 MT Notes 1. Thick lines indicate volume flows during normal years 2. Dotted lines indicate rarely used channels. Mostly seen in lean years 3. Red lines indicate flow from large scale producers and traders, green is for small and medium scale producers /213 Marketing Year Imports=252,75 MT

39 US $ / ton Regional Outlook: Prices transmission Kenya - Nairobi Tanzania - Arusha Source: ReNAPRI Outlook, November 214

40 Regional Outlook: Maize Price Transmission Country specific price-setting mechanisms: Tanzania Maize Value Chain Consumption Household Consumption Exports: Maize produt Volume = Livestock Industry Exports: Maize grain Volume = Retailing Processing Trading Farm retention for home consumption Volume = 231, t NFRA (national reserved food) Volume = 2, t Formal & Informal Retailing Small scale millers and trading Delivery volume = 2,121,17 t Large scale millers Volume = Animal Feed Volume = Private Trader volume: 86,639 t Vertically integrated (production, storage, processing, retailing and exporting) volume= t Storage Production Subsistence Farmers Volume = 5,14,248 tons Imports Volume = Commercial Farmers Volume = KEY flow of maize gain flow of maize product for human consumption flow of maize product for animal feed Maize figures from 211/12 season

41 US $ / ton Regional Outlook: Prices transmission World Price South Africa - Randfontein Kenya - Nairobi Zambia - Lusaka Tanzania - Arusha Malawi - Lilongwe Mozambique - Maputo DRC - Kinshasa Source: ReNAPRI Outlook, November 214

42 Thousand tons Regional Outlook: Production, Consumption & Trade 45, 4, 35, 3, 25, 2, 15, 1, 5, -5, Consumption - Feed Consumption - Food Production Net trade Source: ReNAPRI Outlook, November 214

43 Thousand tons Regional Outlook: Consumption 12, Consumption - Feed 1, 8, 6, 4, 2, Source: ReNAPRI Outlook, November 214 Consumption - Feed

44 Real GDP per Capita (constant local currency) Regional Outlook: Consumption SA Real GDP per capita (constant ZAR) Rising per capita GDP and changing consumer diets underpinning increase demand by feed sector Zambia (ZMW) Mozambique (MZN) Tanzania (TZS) Kenya (KES) Source: ReNAPRI Outlook, November 214

45 Thousand tons 4, Regional Outlook: Consumption 35, 3, 25, 2, 15, 1, 5, Consumption - Feed Consumption - Food Source: ReNAPRI Outlook, November 214

46 Millions Regional Outlook: Consumption Population growth driving demand for human consumption South Africa Zambia Mozambique Tanzania Kenya Malawi DRC Source: ReNAPRI Outlook, November 214

47 Thousand tons Regional Outlook: Production & Consumption 45, 4, 35, 3, +/- 928 t/year 25, 2, 15, 1, 5, Consumption - Feed Consumption - Food Production Source: ReNAPRI Outlook, November 214

48 Thousand ha Regional Outlook: Production Key Factors underlying production: Maize area harvested South Africa Zambia Kenya Tanzania Malawi Mozambique DRC Source: ReNAPRI Outlook, November 214

49 t/ha Regional Outlook: Production Key Factors underlying production: Maize yields (t/ha) South Africa Zambia Kenya Tanzania Malawi Mozambique DRC Source: ReNAPRI Outlook, November 214

50 Thousand tons Regional Outlook: Production & Consumption 45, 4, +/- 876 t/year 35, 3, +/- 928 t/year 25, 2, 15, 1, 5, Consumption - Feed Consumption - Food Production Source: ReNAPRI Outlook, November 214

51 Thousand ha Regional Outlook: Production Key Factors underlying production: Maize area harvested - baseline South Africa Zambia Kenya Tanzania Malawi Mozambique DRC Source: ReNAPRI Outlook, November 214

52 t/ha Regional Outlook: Production Key Factors underlying production: Maize yields (t/ha) - baseline South Africa Zambia Kenya Tanzania Malawi Mozambique DRC Source: ReNAPRI Outlook, November 214

53 Thousand tons Regional Outlook: Trade 2,5 Net trade 2, 1,5 1, , -1, Net trade Source: ReNAPRI Outlook, November 214

54 Thousand tons Regional Outlook: Trade Deficit Producer: DRC 3, 2,5 2, 1,5 1, , Consumption: Feed Consumption: Food Production Net Trade Source: ReNAPRI Outlook, November 214

55 Thousand tons Regional Outlook: Trade Deficit Producer: Kenya 6, 5, 4, 3, 2, 1, -1, -2, Consumption: Feed Consumption: Food Production Net Trade Source: ReNAPRI Outlook, November 214

56 Thousand tons Regional Outlook: Trade Surplus Producer: South Africa Consumption: Feed Consumption: Food Production Net Trade Source: ReNAPRI Outlook, November 214

57 Thousand tons Regional Outlook: Trade Surplus Producer: Zambia 5, 4, 3, 2, 1, -1, Consumption: Feed Consumption: Food Production Net Trade Source: ReNAPRI Outlook, November 214

58 Thousand tons Regional Outlook: Trade Self-sufficient Producer: Mozambique 3, 2,5 2, 1,5 1, , Consumption: Feed Consumption: Food Production Net Trade Source: ReNAPRI Outlook, November 214

59 Thousand tons Regional Outlook: Trade Self-sufficient Producer: Malawi 4, 3,5 3, 2,5 2, 1,5 1, , Consumption: Feed Consumption: Food Production Net Trade Source: ReNAPRI Outlook, November 214

60 Thousand tons Regional Outlook: Trade Self-sufficient Producer: Tanzania 7, 6, 5, 4, 3, 2, 1, -1, Consumption: Feed Consumption: Food Production Net Trade Source: ReNAPRI Outlook, November 214

61 Thousand tons Regional Outlook: Production, Consumption & Trade 45, 4, 35, 3, 25, 2, 15, 1, 5, -5, Consumption - Feed Consumption - Food Production Net trade Source: ReNAPRI Outlook, November 214

62 Farm level analysis

63 ReNAPRI Modeling Framework Global Models: FAPRI and OECD-FAO GDP Exchange rate Interest rate Oil prices Sector level Models: ReNAPRI Partial Equilibrium Grains and oilseeds Livestock Regional prices Weather Regional Policy Population Farm Level Models: Household Survey data agri benchmark FINSIM

64 Methodology Farm level models consist three tools: Household survey data Agri benchmark FINSIM 216 Household survey data Kenya Tegemeo Agricultural Policy Research and Analysis (TAPRA), 21 Tanzania National Panel Survey, 21/211 Malawi Third Integrated Household Surveys, 21/211 Zambia Rural Agricultural Livelihood Surveys, 212 South Africa Census of Commercial Agriculture, 212 Agri benchmark Prototype farms Standardized methodology Annually updated

65 Methodology Survey Data and Agri benchmark locations

66 Case Study: Kenya

67 tons per hectare Case study: Kenya Yields Land prep: Mechanized 5. Land prep: Manual Household-Survey: National (21) Household-Survey: District (21) agri benchmark: Smallscale surplus producer (212) agri benchmark: Largescale producer (212) Yield t/ha

68 Fertilizer: kg per hectare Case study: Kenya Fertilizer & Seed Seed: kg per hectare Household-Survey: National (21) Household-Survey: District (21) agri benchmark: Smallscale surplus producer (212) agri benchmark: Largescale producer (212) 2.5 Fertilizer application rates kg/ha Seed application rates kg/ha

69 US$ per hectare Case study: Return Indicators US$ per hectare $2, $1,8 $1,6 $1,4 $1,2 $1,153 $1,748 $1,6 $1,4 $1,2 $1, $1, $8 $8 $6 $4 $2 $43 $89 $686 $128 $314 $313 $6 $4 $2 $- Household-Survey: National (21) Household-Survey: District (21) agri benchmark: Small-scale surplus producer (212) agri benchmark: Large-scale producer (212) $- Gross Returns Combined cost: Seed & Fertilizer US$/ha Margin above seed & fertilizer US$/ha

70 Case Study: South Africa

71 Case Study: South Africa Specific case study in KwaZulu-Natal, South Africa - Same type of small-scale producer in the same area - Same size / same area - Difference: Mentorship (GSA vs. traditional)

72 Difference: Production Systems

73 Difference: Production Systems Lime application: 1 ton per hectare on farm with access to the support program - no lime application on farm that followed traditional methods Plant protection on the supported farms was done using chemical treatments while traditional methods included only the use of hand hoes with manual labour A basal and top dressing fertilizer application on the farm that had access to support while the traditional approach only had a basal application. The total NPK was less on the traditional approach as on the farm who obtained support. The type and amount of land preparations differed between the two groups of farms

74 Case study: Return Indicators

75 Regional agri benchmark prototype farms network

76 agri benchmark - Southern & Eastern Africa Farms & Locations

77 Regional Comparison: Yield

78 Nitrogen application & costs

79 Establishment cost & subsidies

80 Scenario Planning & Strategic Foresighting: Impacts of a Zambian maize export restriction

81 The scenario Zambia puts in place restrictions that reduce its 215 maize exports by 2, tonnes All other policies in Zambia and in other countries remain as in the baseline

82 Impacts on Zambian maize markets in Change from baseline, 1 tonnes Change from baseline, percent Exports Food use Feed use Ending stocks Exports Food use Feed use Ending stocks -27 Price

83 Impacts on regional maize markets in Change from baseline net exports, 1 tonnes Change from baseline prices, percent Zambia S. Africa Kenya Malawi Moz. DRC

84 Impacts on Zambian maize in 215 and Percentage change from baseline Price Production Food use Feed use Ending stocks Exports

85 Some lessons Lower prices in Zambia hurt producers, help consumers Reduced Zambian exports raise prices in other countries Exporters export more; importers import less Higher prices benefit producers, hurt consumers Changes in relative prices provide incentives for unsanctioned trade Effects can last beyond the year of the export restrictions

86 Shukran Political Context: Critical Questions Nkosi Critical Questions: Obrigado How do we achieve these targets? Merci What is the Road-map to Implementation? Thank you Regional Network of Agricultural Policy Research Institutes (ReNAPRI) Offers a multifaceted approach to policy analysis: