Download Role of the Ministry of Agriculture in the Trade

FEATS Project National Inception
Meeting Panafric Hotel, Nairobi, Kenya,
14th October, 2008.
ROLE OF THE MINISTRY OF AGRICULTURE IN THE TRADE
POLICY MAKING PROCESS
PRESENTED AT THE NATIONAL INCEPTION MEETING
ON
“ FOSTERING EQUITY AND ACCOUNTABILITY IN THE TRADING
SYSTEM (FEATS) PROJECT 14TH OCTOBER, 2008, PANAFRIC
HOTEL, NAIROBI KENYA
BY
ELIAZAR B. MUGA
ECONOMIST – MINISTRY OF AGRICULTURE
OCTOBER, 2008
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The presentation in this paper is divided into seven
sections:
Overview of the Agricultural Sector;
Introduction;
Extent of Consultation with the Ministry of Agriculture
during the Trade Policy Making Process;
Ministry of Agriculture’s actual experience in Trade
Policy Making process;
Ministry of Agriculture Initiative on Trade Policy issues
and Linkage with Ministry of Trade;
Challenges in Trade Policy Making Process;
Conclusions;
1. Overview of the Agricultural
Sector:
1.1 The Agriculture, Livestock, Fisheries and Rural
Development Sector comprises the Ministries of
Agriculture, Livestock Development, Fisheries
Development, Forestry and Wildlife, Water and
Irrigation, Lands, Regional Development Authorities,
State for Development of Northern Kenya and Other
Arid Lands, Environment and Mineral Resources,
State for Special Programmes, Co-operative
Development and Marketing and State for Planning,
National development and Vision 2030.
1.2 The agricultural sector dominance in the economy has
remained strong as reflected by its share in the
national economy, job creation, food security, and
linkages with other sectors including industrial
development. In 2006, the sector directly contributed
23.6% to the Gross Domestic Product (GDP); slightly
lower than 25.2% recorded in 2003; attributed to a
gradual shift in the country’s economic mix towards
other sectors including a buoyant services sector. This
is the scenario envisaged where focus shifts towards
commercialization of agriculture as expected in a
modernizing economy.
1.3 A further 27% of GDP is realized through
linkages with manufacturing, distribution and
other service related sectors. Moreover, it is
estimated that 45% of government revenue is
derived from agriculture, while the sector
contributes over 75% of industrial raw
materials and 60.0% of the export earnings
apart from being the largest employer in the
economy, accounting for over 60% of the total
employment.
1.4 In the past five years, the Government has
embraced broad-based growth and
development strategies in the agricultural
sector to address food security and hunger,
unemployment, poverty and enhance
national equity through the Economic
Recovery Strategy for Wealth and
Employment Creation (ERS 2003-2007).
Accordingly the sector recovery thrust has
centered on the Strategy for Revitalizing
Agriculture (SRA)
SRA was launched in March 2004 and
which provides the necessary policies
needed to transform the sector to
effectively provide food and nutritional
security, increased incomes and gainful
employment, promotion of farmers’
productivity and lowering of the cost of
agricultural inputs.
1.5 Agricultural crop production is undertaken by
over 5 million smallholders subsisting on an
average of 2-3 hectares and engaged in
different types of agricultural activities in the
country. Out of these, 2.9 million are resource
poor who subsist on less than 1 ha and are
usually entrapped in a poverty cycle, lack
capacity and resources to enable them produce
and up-scale current efforts. Horticulture and
food crops make up to 65% of agricultural GDP,
while horticulture and industrial crops account
for 90% of agricultural exports.
1.6 Livestock production is one of the major activities in
the sector. It is practiced in all parts of the country
either under the pastoral extensive system in the Arid
and Semi Arid Lands (ASALs) or under intensive,
ranching and smallholder systems. The pastoral and
commercial ranch systems traditionally contribute to
the supply of beef and small stock meat. Livestock
production in the ASAL accounts for nearly 90% of the
employment opportunities and nearly 95% of the family
incomes. It also accounts for about 40% of the
Agricultural GDP and about 30% of the farm gate
value for agricultural commodities. In the high rainfall
areas of the country, dairy production is a key source
of income to over 600,000 households.
1.7 Fisheries production is a major source of
livelihood for communities living around
Lake Victoria and the coastal regions of
Kenya. It employs over 60,000 fishermen
directly while over 600,000 people
depend on the sub sector indirectly for
their livelihood through linkages in fish
processing and trade. Kenya currently
earns an average of Kshs. 4 billion
annually through fish exports.
1.8 Despite the great potential of the livestock and
fisheries sub-sectors, the majority of livestock farmers
and the fisher folk have remained poor and food
insecure mainly due to low productivity, high cost of
inputs, poor market access and stringent quality
requirements in international markets. Therefore, there
is need to revitalize the sub sectors and increase their
productivity through improving marketing systems and
infrastructure, enhancing livestock disease control and
extension services and encouraging private-public
partnerships in the provision of extension and
veterinary services for both the sedentary and pastoral
animal production systems.
2. Introduction:
2.1 The mandate of the Ministry of
Agriculture is to:
 promote and facilitate production of food
and agricultural raw materials for food
security and incomes;
 advance agro-based industries and
agricultural exports and
 enhance sustainable use of land
resources as a basis for agricultural
enterprises;
2.2 The vision of the Ministry is to be the
leading agent towards:
 the achievement of food security for all;
 employment creation;
 income generation and poverty reduction;
2.3 The Mission is to improve the
livelihood of Kenyans by promotion of
competitive agriculture through:
creation of enabling environment;
provision of support services; and
ensuring sustainable natural resources
management;
2.4
According to the First Medium Term Plan
2008-2012 of Vision 2030 under the
Economic Pillar, six priority sectors have
been targeted to raise the national GDP
growth rate to 10 % by 2012.
These sectors include:
 Agriculture and Livestock;
 Tourism;
 Wholesale and Retail Trade;
 Manufacturing;
 Business Process Outsourcing and
 Financial Services;
2.5 The trade in Agriculture and Livestock
products is therefore key to the
achievement of the targeted 10%
national GDP Growth rate by 2012.
2.6
The subsequent sections in this paper will
discuss among others:- the extent to which
the Ministry of Agriculture has been
Consulted during the Trade Policy Making
Process; actual experience of the Ministry in
Trade Policy Making process; the Ministry
involvement in developing the country’s
position for the WTO and the ongoing EPA
negotiations; the Ministry’s linkage with the
Ministry of Trade on Trade Policy issues;
challenges in Trade Policy Making Process
and a conclusion.
3.
Extent of Consultation with the Ministry of
Agriculture during the Trade Policy
Making Process:
3.1 The World Trade Organization (WTO) is the
umbrella international organization responsible
for the administration of global rules of trade
between nations. WTO provides the principal
contractual obligations determining how
governments frame and implement domestic
trade laws and regulations. It also provides a
platform for negotiations amongst members on
trade matters on a continuous basis through
periodic rounds.
3.2 The WTO is a product of the Uruguay
Round of Multilateral Trade
Negotiations and a successor to the
GATT.
3.3 The main objectives of the WTO
Agreement on Agriculture are:
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Country Schedules;
Market Access;
Domestic Support; and
Export Subsidies;
3.4 The Ministry of Agriculture is a member
of the National Committee on World
Trade Organization (NCWTO). The
Ministry of Agriculture has not only
effectively participated in Trade Policy
Making Process but also chairs the
National World Trade Organization
(WTO) Sub-Committee on Agriculture.
3.5 The National WTO sub-committee on
Agriculture co-ordinates a wide
consultation with the stakeholders while
revising or making any relevant change
in the country’s position in WTO.
3.6 Furthermore, the Ministry of Agriculture
plays a major responsibility in the WTO
notifications on Agriculture.
4.
Ministry of Agriculture’s actual
experience in Trade Policy Making process
4.1 The WTO Agreement on Agriculture is
central to Kenya’s economic
development as Agriculture is the
backbone of Kenya’s economy.
4.2 The Ministry’s experience is firstly, the
over reliance on agricultural commodity
trade in the world market by Kenya in
competition with the Developed
Economies agricultural products which
are heavily subsidized, in itself make
the trade policy making process very
challenging.
4.3 Secondly, the terms of trade is
unfavorable towards agriculture, thus
making trade policy negotiations
process very difficult.
4.4 Thirdly, the existence of a large
amount of surplus production in the
Developed Economies markets leading
to depressed World Market Prices often
delay the agreement in policy making
process.
4.5 The Ministry as chair to the National
Sub-Committee on Agriculture coordinates the development of the
National Position on Agriculture in the
WTO.
4.6 The National WTO sub-committee on
Agriculture chaired by the Ministry also
identify and develop position on the
Special and Differential Treatment
(S&DT) component of the domestic
support pillar.
4.7 Regarding the Economic Partnership
Agreements (EPAs) negotiations, the
Ministry of Agriculture chairs the cluster
on Agriculture under the Kenya Post
Lome Trade Programme
(KEPLOTRADE) which coordinates the
EPA negotiations process in Kenya.
5. Ministry of Agriculture Initiative on Trade Policy
issues and Linkage with Ministry of Trade
5.1 The Ministry of Agriculture through the
respective National WTO SubCommittees develop and prepare
comments and views on trade policy
issues for submission to the Ministry of
Trade.
5.2 The Ministry of Trade formulates trade
policies while the Ministry of Agriculture
participate effectively at certain levels
during the formulation process.
5.3 At the Regional level, the Ministry of
Agriculture regularly participate in the
Trade Policy under the WTO after
every two years.
5.4 Currently, the Ministry of Agriculture
together with the Ministry of Trade are
participating on EAC-EC EPA
negotiations which is discussing Market
Access, Economic and Development
Cooperation, Trade and Sustainable
Development and Trade in Services.
5.5 The Market Access Issues under this
negotiations is concentrating on
Customs and Trade Facilitation,
Sanitary and Phyto-sanitary Measures,
EAC-EC Market Access offer Schedule
and Technical Barriers to Trade.
5.6 The Economic Development
Cooperation include Agriculture and
Livestock, Fisheries, Natural Resource
and Environment as well as capacity
building and EPA institutional
development among others.
6. Challenges in Trade Policy
Making Process:
6.1 National Committee on WTO lacks the
legal mandate to effectively execute it's
mandate and it strongly recommended
that the NCWTO be given legal status
in order to make it effective in it’s
operations.
6.2 There seem to be a number of
negotiating groups on various trade
issues within the ministry of trade and
industry and therefore recommended
that the groups be harmonized in their
operations.
6.3 The Ministry of Trade should work
towards strengthening linkages
between the negotiating frontiers for
better information sharing between
various negotiating teams.
6.4
There is need to enhance the role of parliamentary
Committee on Trade, Finance, Planning and
Tourism as well as the Parliamentary Committee on
Agriculture, Water and Irrigation, Natural Resource,
Lands, and Co operative Development to be
regularly involved and briefed at all stages of the
negotiations. The parliament has a very critical role
to play and in particular oversighting the process of
the negotiations by the Executive Arm as well as
Enacting and Ratifying Appropriate Policy and
Legislative Framework to implement the results of
the negotiated commitments and obligations.
6.5 The is need to strengthen collaboration
between the key Government Ministries
e.g Ministries of Finance, Agriculture,
Livestock Development, Fisheries
Development, Transport, Information,
Trade and Industry etc and in particular
with respect to Trade Policy issues.
7. Conclusion:
In conclusion, the Ministry of Agriculture has
been and will continue playing an active role
in Trade Policy Making Process in a more
enhanced and a participatory manner at all
levels.
8. REFERENCES:
1.
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6.
7.
Kenya Vision 2030 of 2008, A Globally Competitive
and Prosperous Kenya
Dr. Otieno – Odek, The World Trade Organization
(WTO) Agreements: Their Impact on Kenya.
Friedrich Elbert Stiftung publications1999, World Trade
Organization (WTO), Agreement on Agriculture.
Ministry of Agriculture, Strategic Plan of 2006 –2010
A. Nhara, 2002, What is the World Trade Organization
(WTO)
First Medium Term Plan (2008), 2008-2012 of Vision
2030
Ministry of Agriculture, Livestock and Fisheries
Development (2004), Strategy for Revitalizing
Agriculture 2004-2014
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