Statusof_Tradein_FoodStaples_inEAC_briefOct2016_(7).docx

Status of Trade in Food Staples among East Africa Community Partner States

Annual Brief

October, 2016

ACKNOWLEDGEMENTS

Funding for this work was provided by the United States Agency for International Development (USAID) East Africa regional mission through their support to the Regional Strategic Analysis and Knowledge Support System (ReSAKSS-ECA). We express our special gratitude to various institutions that provided data that was used in preparation of this brief. We thank COMESA for availing formal trade data. We are also grateful to Uganda Bureau of Statistics (UBOS), Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA), East Africa Grain Council (EAGC) and FEWSNET-East Africa from which we obtained informal trade data.

DISCLAIMER

The data from COMESA used in the preparation of this report is provisional. Some changes are expected after the final data is uploaded on the COMSTAT web portal.

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2. Introduction This brief is the second in a series of annual briefs that provide updates on the status of trade in food staples among the East Africa Community (EAC) member states. The first brief discussed trade in food staples from year 2010 to 2014 with 2010 set as the baseline year. The current brief looks at changes in the volume and value of trade in food staples between 2014 and 2015. The food staples considered are maize grain, rice grain, maize flour, wheat flour, beans and pulses, cassava, onions, tomatoes, live bovine animals, milk and cream, bovine meat, fish and crustaceans. The commodities of focus were selected on the basis of availability of trade data from stakeholders. The countries of focus are the EAC partner states i.e. Kenya, Uganda, Tanzania, Rwanda and Burundi.

The changes in trade are reported based on a methodology developed by the Regional Strategic Analysis and Knowledge Support System (ReSAKSS) in 2010 (see Gelan et al, 2009). The approach tracks changes in the volume (in metric tonnes) and the value (in US dollars) of staple food trade in the region and constructs commodity-by-country trade flow matrices for formal, informal and total trade in the region. The changes in value and volume are compared with the previous time period by calculating the percentage change between the two periods. Construction of the trade matrices relies on mirror records of trade statistics reported by the trading partners. For any two trading partners, the export figures are compared with import figures and the higher of the two is taken as the correct trade figure for the two trading partners. This procedure is meant to correct any trade data discrepancies that may be observed between any two trading partners.

The existing systems of trade data collection do not have the capacity to capture and record all trade taking place in the region. The bulk of the trade occurs informally across the porous borders (see Pannhausen and Untied, 2010) and cannot be captured in the official records. Through border monitoring by different agencies, however, part of the informal trade data is being captured. Thus, our analysis integrates data from both formal and informal sources. The brief tries to cover as much data as possible to provide a good indicator of the direction of trade in food staples in the EAC region. The year 2010 is retained as the base year.

The change in value and volume between any two years is computed as follows:

The formal trade data for Burundi, Kenya, Rwanda and Uganda used in this brief were obtained from COMSTAT data portal (http://comstat.comesa.int/). Data for Tanzania were obtained from Tanzania Revenue Authority (TRA) since Tanzania is not a member of COMESA thus its trade not reported in COMSTAT. Informal trade data were obtained from Uganda Bureau of Statistics (UBOS), Eastern Africa Grain Council (EAGC) and the Famine Early Warning Systems Network, Eastern Africa (FEWSNET-EA).

3. An overview of performance in food staples trade in EAC region (2010–2015) This section presents the observed trends of trade in food staples in the region for the period 2014-2015. We discuss the results of formal trade and informal trade separately before presenting the combined results i.e. total trade.

2.1 Formal trade

The trend of the volume and value of formal trade in the food staples in EAC region for the period 2010-2015 is summarized in Table 2.1. Overall, formal cross-border trade in volume terms in food staples in EAC was on an upward trend between 2010 and 2015 with the exception of year 2012/2013 registering a decline in formal trade among the EAC countries (Table 2.1). The trade in value terms has declined in 2015 by about 5% which is a reflection of negative impact of depreciating domestic currencies in EAC for 2015. All the domestic currencies among the EAC member countries depreciated in 2015 (Annex 5). Trade primary data is collected in domestic currencies and converted to US dollars by use of respective national exchange rates. Thus depreciation of the domestic currency will affect negatively the trade reported in value terms unlike trade reported in volume terms.

Table 2.1: Volume and value of formal intra-regional trade in food staples in EAC, 2010-2015

Source: Authors’ computation based on data obtained from COMSTAT and Tanzania Revenue Authority, 2015 Over 80% of formal cross-border trade in volume terms was in grains and pulses (see Figure 2.1). This is understandable because these are the main food staples in the region.

Figure 2.1: Relative importance of commodities traded among EAC countries in 2015 Maize grain was the main traded staple food in the EAC region accounting for over 70% of total grains and pulses traded in 2015 (Figure 2.2). Maize grain is the main staple food in EAC region.

Figure 2.2: Differentiated importance of grains and pulses traded among EAC countries in 2015 The main exporter of food staples in EAC in 2015 by volume and value terms was Uganda followed by Tanzania (Table 2.2 and Annex 1) while the main importers were Kenya and Rwanda (Annex 2).

Table 2.2: Formal intra-regional exports in EAC in 2015, (MT)

Source: Authors’ computation based on data obtained from COMSTAT and Tanzania Revenue Authority, 2015

2.2 Informal trade

Informal trade in volume terms was on an upward trend between 2010 and 2015 (Table 2.3). However, trade in value terms declined in 2015. Informal trade in volume terms increased by 8% while it decreased by 19% in value terms between 2014 and 2015 (Table 2.3). Informal trade exhibits a similar trend as that of the formal trade in 2015.

Table 2.3: Volume and value of informal intra-regional trade in food staples in EAC, 2010-2015

Source: Authors’ computation using data from UBOS, EAGC, FEWSNET-EA, 2015 Grains and pulses also were the dominant commodities traded informally in 2015 constituting 94% of trade (Figure 2.3). It is important to note that informal trade in food staples remains important in the region despite increasing trade liberalization. Most probably, this is attributable to trade for subsistence among the cross-border communities, involving small per trader volumes (but cumulatively large volumes) that are not captured by the customs authorities.

Figure 2.3: Relative Importance of different commodities traded informally in EAC, 2015 The main exporter of informally traded food staples in volume and value terms in 2015 was Uganda, accounting for over 65% of the volume and 70% of the value, respectively (Table 2.4 and Annex 3). UBOS conducts comprehensive collection of informal trade data between Uganda and its neighbours and it is the main source of informal trade data used in this brief. Therefore any changes in trade between Uganda and it neighbours weighs heavily on the observed trade flow measures. The main importer of food staples in 2015 was Kenya (Annex 4) accounting for 62% of total imports among the EAC countries.

Table 2.4: Informal intra-regional exports in EAC countries in 2015, (MT)

Data source: UBOS, EAGC, FEWSNET-EA, 2015

4.3 Total intra-regional trade in food staples

In this sub-section we combine formal and informal trade figures to provide the overall trade patterns. Table 2.5 provides a summary of the total trade volumes and values for the different years. Total trade in volume terms in 2015 in EAC region amounted to 1,584,914.3MT (Table 2.6) with a value of US$324.12 million. Total trade in volume terms increased by about 8% while the total values decreased by about 8% (Table 2.5). This trend is similar to that reported separately for formal and informal intra-regional trade in food staples (see Tables 2.1 and 2.3). The decrease in intra-regional trade in value terms could be attributed to the depreciation of domestic currencies in the region. In particular, between 2014 and 2015, domestic currencies depreciated significantly in the main staple food exporters in EAC; that is in Tanzania by 34% and by 30% in Uganda. Because trade data is collected in domestic currencies and converted to US dollars by use of respective national exchange rates, when the domestic currencies depreciate from one year to the next as happened in this case, the values decline relative to the volumes.

Table 2.5: Total trade volumes and values in EAC, 2010-2015

Source: Authors’ computation based on data obtained from COMSTAT, UBOS, TRA, EAGC, FEWSNET-EA, 2015

Table 2.6: Total trade exports in EAC countries in 2015 (MT)

Source: Authors’ computation using data from COMSTAT, UBOS, EAGC, FEWSNET-EA, 2015 The main commodities traded in EAC year 2015 are grains and pulses accounting for 87% of the total of formal and informal trade (Figure 2.4).

Figure 2.4: Main commodities traded in EAC region, 2015

Further, among the grains and pulses, maize grain is the most traded commodity in EAC region, in volume terms, accounting for 65% of the total trade in grains and pulses, Figure 2.5.

Figure 2.5: Main grains and pulses traded in EAC region, 2014

4.4 Trends of trade of specific food staples in EAC region, 2010-2015 Maize trade flow Tanzania and Uganda are the main exporters of maize grain in EAC in value and volume terms (Figures 2.6 and 2.7). This implies that any change related to trade in these two countries, Tanzania and Uganda will highly affect EAC regional trade.

Figure 2.6: Exports of maize grains (formal and informal) in 2010-2015, (US$ ‘000)

Figure 2.7: Exports of maize grains (formal and informal) in2010-2015 (MT)

Livestock/product trade flow Trade in livestock and livestock products in value terms has been increasing since 2010-2014. The main exporters are Uganda, Kenya and Tanzania. However, the trade decreased in Kenya and Uganda in 2015 but it increased in Tanzania (Figure 2.8).

Figure 2.8: Exports of livestock and livestock products (formal and informal) in 2010-2015, (US$’000) Vegetables trade flow Vegetables include tomatoes and onions. Tanzania’s exports in vegetables increased in value terms in the period 2010 to 2014 but decreased in 2015 (Figure 2.9). The exports increased in volume terms between 2014 and 2015 in Burundi, Tanzania and Uganda (Figure 2.10). The main exporters of vegetables in the regional are Tanzania and Uganda (Figure 2.9 and 2.10).

Figure 2.9: Exports of vegetables (formal and informal) in 2010-2015, (US$’000)

Figure 2.10: Exports of vegetables (formal and informal) in 2010-2015, (MT)

4. Discussion of findings The brief has analysed changes in the volume and value of trade in food staples for formal, informal and total trade. Total trade in volume terms increased by about 8% while the total values decreased by about 8% in 2015. The observed apparent contradiction between the direction of volume and value of trade is largely explained by the large depreciation against the US dollar of the local currencies of the trading partners. All the local currencies depreciated against the dollar between 2014 and 2015. (Annex 5) Trade data is collected in domestic currencies and converted to US dollars by use of respective national exchange rates. Thus depreciation of the domestic currency will negatively affect the figures reported in value terms unlike the figures reported in volume terms. Domestic currencies for the two top trading partners, Uganda and Tanzania, depreciated by 30% and 34%, respectively between 2014 and 2015. This to a large extent explains why trade in volume terms increased while in value terms it decreased.

It is noted that the bulk of trade in EAC region in volume and value terms consists of grains and pulses. This implies that this commodity category drives the observed trade in food staples in EAC and any major change in trade in this category will have a proportionately higher impact on the overall trade.

In terms of specific commodities, maize is the main staple food that is formally and informally traded in the region. This in turn implies that any significant change in maize trade will have a proportionately higher impact on the overall pattern of intra-regional trade.

The main exporters of food commodities traded formally and informally in both value and volume terms in 2015 were Uganda and Tanzania with Kenya being the main importer.

5. Conclusion Between 2014 and 2015, the volume of intra-regional trade among EAC partner states increased. Over the same period however, intra-regional trade in value terms declined by the same magnitude. The somewhat contrasting findings are largely explained by the depreciation of the local currencies against the US dollar in which the values are reported. As noted, everything else being equal, depreciation of the domestic currency will negatively affect the magnitude of trade reported in value terms relative to trade reported in volume terms. The main commodities traded in EAC are grains and pulses, with maize grain being the most traded commodity among the grains. Tanzania and Uganda are the main food exporters in EAC region while the main importer of food commodities is Kenya.

6. References Gelan, A., Gbegbelegbe, S., Wanjiku, J., Karugia, J., and Massawe, S., 2009. A Methodology for Tracking Trade in Selected Food Staples in COMESA. A Technical Report Submitted to USAID/EA regional Mission, Nairobi, Kenya.

Pannhausen, C., and B. Untied., 2010. Regional Agricultural Trade in East Africa: A Focus on Kenya, Tanzania and Uganda. Eschborn, Germany: Deutsche Gesellschaft für Technische Zusammenarbeit. Pannhausen, C., and B. Untied. 2010. Regional Agricultural Trade in East Africa: A Focus on Kenya, Tanzania and Uganda. Eschborn, Germany: Deutsche Gesellschaft für Technische Zusammenarbeit.

7. ANNEXES

Annex 1: Values of formal intra-regional exports in 2015, (US$ '000)

Source: Authors’ computation based on data obtained from COMSTAT and Tanzania Revenue Authority, 2015

Annex 2: Volumes of formal intra-regional imports in EAC in 2015, (MT)

Source: Authors’ computation based on data obtained from COMSTAT, UBOS and TRA, 2015 Annex 3: Values of informal intra-regional exports in 2015 (US$ '000)

Source: Authors’ computation based on data obtained from UBOS, 2015

Annex 4: Volumes of informal intra-regional imports in EAC in 2015, (MT)

Source: UBOS, EAGC, FEWSNET-EA, 2015

Annex 5: Exchange rates of local currencies against US Dollar (2010–2015)

Source: http://www.oanda.com/currency/historical-rates/

Grain & pulses Livestock/products Processed flour Roots & tubers Vegetables 82.829972660473004 5.1301683526161126 2.1472840109296789 6.9443707446000369 2.9482042313811681

Dry legumes & pulses Maize grain Rice grain 23.720259777900502 72.029897172775236 4.2498430493242552

Grains and pulses Livestock and products Processed flours Roots and tuber Vegetables 94.04089919477326 1.0909580203255342 2.5094069517141984 1.5193769541141495 0.83935887907288198 grain & pulses livestock/products processed flour roots & tubers vegetables 87.369429389604448 3.4946371173346624 2.2939125179748157 4.747716927239658 2.0943040478464345

2010 Burundi Kenya Rwanda Tanzania Uganda 383.4 4558.1499999999996 1892.67 4867.5600000000004 320728.62 2011 Burundi Kenya Rwanda Tanzania Uganda 1125.8699999999999 6837.91 1108.52 94548.91 145734.24 2012 Burundi Kenya Rwanda Tanzania Uganda 5899.73 4447.6099999999997 3867.95 343651.41 281313.99 2013 Burundi Kenya Rwanda Tanzania Uganda 270.39999999999998 24138.37 2323.21 76448.88 270512.34000000003 2014 Burundi Kenya Rwanda Tanzania Uganda 76.77 22780.55 35200.18 406177.37 445257.36 2015 Burundi Kenya Rwanda Tanzania Uganda 2.73 21359.686000000002 4115.357 245007.56200585936 623911.95300390618 2010 Burundi Kenya Rwanda Tanzania Uganda 141.53 12063.51 39.81 7840.66 25320.34 2011 Burundi Kenya Rwanda Tanzania Uganda 223.57 12868.91 271.8 10037.59 31441.97 2012 Burundi Kenya Rwanda Tanzania Uganda 224.02 14886.66 302.66000000000003 11415.09 33942.58 2013 Burundi Kenya Rwanda Tanzania Uganda 142.97 13044.44 707.36 12559.84 41502.75 2014 Burundi Kenya Rwanda Tanzania Uganda 178.09 18704.89 384.75 15163.73 41163 2015 Burundi Kenya Rwanda Tanzania Uganda 230.39172406005861 10120.782297161102 126.59759028625487 19481.065454256059 38451.44178317261

2010 Burundi Kenya Rwanda Tanzania Uganda 45.14 173.56 49.96 844.29 1100.43 2011 Burundi Kenya Rwanda Tanzania Uganda 23.92 200.28 13.21 1846.9 1735.13 2012 Burundi Kenya Rwanda Tanzania Uganda 76.03 268.31 27.38 3091.95 2440.4 2013 Burundi Kenya Rwanda Tanzania Uganda 185.66 182.03 57.63 3147.95 1192.6600000000001 2014 Burundi Kenya Rwanda Tanzania Uganda 234.9 360.75 321.88 4327.58 1353.43 2015 Burundi Kenya Rwanda Tanzania Uganda 188.06087890625 271.89269119262696 118.98866271972656 4070.2505390625001 1439.3526984405516 2010 Burundi Kenya Rwanda Tanzania Uganda 179.16 779.95 22.72 6881.61 2714.65 2011 Burundi Kenya Rwanda Tanzania Uganda 99.52 1321.98 52.03 8316.48 4451.37 2012 Burundi Kenya Rwanda Tanzania Uganda 282.02 1670.5 6.98 16056.12 6979.18 2013 Burundi Kenya Rwanda Tanzania Uganda 709.89 3032.43 118.72 21074.86 3881.99 2014 Burundi Kenya Rwanda Tanzania Uganda 804.56 2258.94 1217.8599999999999 21079.84 3403.68 2015 Burundi Kenya Rwanda Tanzania Uganda 929.58100000000002 1573.076 526.72800000000007 25303.352999999999 4860.1869999999999 image2.png image3.jpeg image4.wmf oleObject1.bin image1.png