ZNFU seeks to expand export market

02 March 2010, The Post
URL: http://www.postzambia.com/post-read_article.php?articleId=6532

Lusaka:  The Zambia National Farmers Union (ZNFU) has said it has become urgent to find new markets for exports as the domestic market is too small for the country’s many agricultural produce. And Zambia Development Agency (ZDA) director for exports Glyne Michelo has observed that there is immense potential for a competitive agricultural export sector.

ZNFU president Jervis Zimba said in an interview that it was easy for farmers in the country to increase production but the domestic market was too small. “It has become urgent now more than ever before to access export markets. Unless Zambian agricultural products can penetrate export markets in the region, increasing production will continue to cause oversupply on an already small domestic market,” Zimba said. “Besides this, there is need for local producers to become aggressive in seizing the regional market opportunities that are available and in some cases are being tapped into by countries that are further away from these markets.”

Adding to the call for expanding agricultural exports, Market Access Trade and Enabling Policies (MATEP) chief of party Dr Scott Simons has urged farmers in the country to take advantage of the tinned baked beans manufacturers in the region.  “There is so much demand for small white beans by baked beans manufacturers in the region and this country has a lot of it,” Dr Simons said. “In the past, the specific variety that is used for baked beans was not known but now we know it. Why not take advantage of the huge demand for beans exports?”

He said MATEP was working with some farmers to export beans and the first 30 tonnes of beans was exported last week.

Dr Simons also advised Zambia to expand her exports to the Democratic Republic of Congo (DRC).  “As MATEP, we have been working closely with companies like Capital Fisheries to penetrate the Congolese market and the response from that country is overwhelming,” he said, “Capital Fisheries is now overwhelmed with orders! The DRC don’t produce much and the population is large. That is a ready market for Zambian exports.”

The ZNFU has engaged the government to push for the signing of the Zambia/Congo DRC bilateral agreement.

On Friday, ZNFU commodity committees & associations, corporate members, large scale and agribusiness members had a meeting to come up with an agricultural produce list for exports which the union will present to the government this week.

And Michelo said the country had an excellent natural resource base which was an advantage for agricultural exports.  “There is immense potential for a competitive agricultural export sector as the country has an excellent natural resource base,” Michelo said. “There is also potential in downstream processing industries for value addition: industries that can add value to primary commodities that we have been exporting for decades on end with little or no value addition.”

Michelo said exporters should take advantage of the newly introduced US $5 million export development fund to increase their exports.

Meanwhile, the Central Statistics Office (CSO) disclosed that the Southern African Development Community (SADC) was the largest export market for Zambia during the month of January.  CSO has also reported that Zambia recorded a trade surplus of K316.3 billion in January, which means that the country exported more than it imported in value terms.

During the CSO monthly update on Thursday, acting director Peter Mukuka disclosed that SADC accounted for 14.7 of exports in January.  Mukuka said South Africa was the largest export market for the country within SADC with 40.3 per cent share of the total exports to the region.

He said other key markets in the region were Congo, which commanded a market share of 39.5 per cent, while Zimbabwe, Malawi and Tanzania accounted for the remaining market share.  He said Asia was the second largest market for Zambia’s total exports accounting for 13.3 per cent in January.  Common Market for Eastern and Southern Africa (COMESA) was in third place with a total of 9.2 per cent of exports.  The European Union (EU) was fourth with 7.5 per cent with the United Kingdom accounting for 38.4 per cent of the total Zambian exports to that region.

Mukuka disclosed that the five major export products in January were copper and other base metals, salt, sulphur earth and stone plastering material, lime and sugar.

And the World Trade Organisation (WTO) has warned that the Doha Round of trade negotiations may not end this year.  Giving an update on the agricultural negotiations in the WTO, director of trade and policy review Clement Boonekamp said negotiations could have been completed this year but proved to be difficult in some sectors.  Boonekamp said negotiations were proving to be more difficult in the sectors like NAMA (Non-Agricultural Market Access).

The Doha Round of trade negotiations are now in the ninth year with seemingly no end in sight.  Boonekamp said progress was being made in agriculture along two tracks - the ‘technical’ negotiations, and the ‘substantive’ negotiations.  The technical negotiations are to make sure that the data for implementing an agreement is correct.

Negotiators have been drawing up “templates” for scheduling cuts to tariff and subsidies.

The ‘substantive’ negotiations on the modalities of commitments for further trade liberalisation will be the basis for the new WTO Agreement on Agriculture. There appear to be ten issues in the agriculture text that still need to be agreed.

The 10 outstanding issues at the centre of the negotiations include the creation of new tariff quotes for sensitive products, liberalisation of trade in tropical products, special safeguard mechanism and the timeframe.  Other issues include tariff simplification, special differential treatment for developing countries, market access, cotton, domestic support and exceeding of caps limits.

On market access, WTO reports that member countries are seeking solutions through bilateral discussions.

It has been proposed at the Doha Round of trade negotiations that all countries would be able to name a maximum of four per cent of its agricultural tariff lines as ‘sensitive’.

These would be subject to lesser tariff cuts. Canada wants to designate six per cent of its tariff lines as sensitive products and Japan wants eight per cent. They would have to pay for this increased coverage by making further concessions in other areas.

Switzerland and Japan are demanding that certain developing countries should be allowed to exceed the maximum tariff levels to be set down in a new agriculture agreement.

The two countries have also proposed that the countries that would qualify for this should pay for the advantage with concessions in other areas.

It is also an issue of negotiation that in addition to identifying sensitive products for reduced tariff cuts, developing countries would also be able to specify up to 12 per cent of their agricultural tariff lines for lesser reductions, and five per cent of agricultural tariff lines which would not be subject to any reduction commitments. It seems likely that these percentages will be agreed by the negotiators.

A thorny issue in the negotiations is the special safeguard mechanism (SSM), which was at the heart of the failure to agree on agricultural modalities in July 2008.

The main agricultural importing developing countries grouped in the G-33 are battling the main agricultural exporting countries such as Australia, Brazil, the USA and Uruguay on how a special safeguard mechanism should work. Negotiators are therefore looking at the architecture of the SSM, including: what level of price decline, and what level of surge in import volume would trigger a temporary increase in import tariffs of a certain amount to protect local farmers.

Time frame is also a contentious issue due to the uncertainty about when the round of negotiations would end.

The WTO has announced that it will undertake a “stock-taking exercise” during the last week of March 2010 to see whether the Doha trade round can be concluded this year.

Agriculture may not be the sticking point for completing the Doha Round. However, with little progress in the NAMA negotiations, and with elections looming in Brazil, Canada, Japan and the USA mid-term elections, it seems that 2011 would be a more realistic deadline than 2010 for completing the Round.