Tag Archives: commodity

Changes in beef market regulations open opportunities in southern Africa

Last month at the OIE (World Animal Health Organisation) Assembly in Paris, changes to international regulatory standards around Foot and Mouth Disease were adopted. This has long been argued for, and will make a big difference to livestock producers across southern Africa.

The updated OIE Terrestrial Animal Health Code makes it possible for African countries with wild species like buffalo that naturally harbour foot and mouth disease (FMD) viruses to be able to trade beef without necessarily requiring the physical separation of wildlife and livestock through the extensive veterinary cordon fencing that has characterized animal disease management in southern Africa since the colonial era.

Steve Osofsky,  Wildlife Conservation Society  AHEAD Coordinator,  commented “we’ve reached a critical turning point in regards to resolving the more than half century-old conflict between international beef trade policy based on foot and mouth disease control fencing in the southern African context and the migratory needs of free-ranging wildlife in the region and beyond”.

In Zimbabwe, with large populations of FMD-carrying buffalo, this has long been a major challenge. In the past, a massive amount of funding was spent on trying to keep buffalos and livestock separate and thousands of kilometers of fencing erected, in order to gain access to international markets. The European Union invested considerable sums in creating a zoned arrangement, with ‘disease free’, ‘buffer’ and ‘infected’ areas to allow exports to European markets under special agreements that existed under the Lome agreement. This was a lucrative trade for those beef farmers able to comply. However, it also excluded many beef producers in large parts of the country. In addition, it diverted huge amounts of aid funds, as well as government resources, in the inevitably vain attempt to create FMD disease freedom.

In southern Africa, where the FMD virus is endemic, this was an unscientific and expensive policy. But pressure from European nations and others in the OIE prevented any change in international regulatory policy until now, despite excellent arguments from African researchers, including from Zimbabwe, that safe trade alternatives exist. In many ways it was a scandal – a huge waste of time and public money, distorting markets and creating benefits for the few not the many in the name of ‘development’ and ‘aid’.

Now quarantine-based value chain approaches to beef production (also known as commodity-based trade) can become a routine option.  AHEAD Guidelines show how this policy change offers the unprecedented possibility of access to new beef markets for southern African livestock producers. As Osofsky says, it also “unlocks the potential for restoring migratory movements of wildlife and thus enhancing prospects for long-term wildlife populatioon viability within individual countries as well as in transboundary landscapes like the KAZA Transfrontier Conservation Area”.

As argued in earlier research convened by the ESRC STEPS Centre and supported by the Wellcome Trust, commodity-based trade for beef will help open up markets within Africa, as well as Asia, and  make these markets available for a wider range of producers. A journal article and associated commentaries mapped out the options. Complying with safe trade regulations requires upgrading value chain infrastructure and support, but it means that a small-scale livestock producer in the new resettlements or communal areas can now access high value markets, boosting ecoomic opportunity and improving livelihoods. Land reform has restructured markets as well as land, and the’ real markets‘ for beef allow multiple opportunities (see also our recent ‘making markets’ film on beef).  This policy change will therefore make a massive difference to people and economies across the region.

The old era of fencing and absurd and unachievable ‘disease free’ zones is now over, and we can now accept that livestock production in southern Africa must live with the FMD virus, but in a way that allows for safe trade and careful regulation. Sometimes the long, hard slog of evidence-based policy research does pay off, despite plenty of interests stacked against it. Congratulations to the 180 national members – and especially the African contingent – at the OIE Assembly!

This post was written by Ian Scoones and first appeared on Zimbabweland

 

 

 

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‘Resource nationalism’: a risk to economic recovery?

 In a recent presentation, Southern Africa: Economic Prospects 2012, Professor Tony Hawkins from the University of Zimbabwe, offered some notes of caution about Zimbabwe’s economic recovery, despite the high growth rates being recorded recently.

 He argues that Zimbabwe is becoming “increasingly resource-reliant with the share of GDP of agriculture and mining together now virtually double that of manufacturing”. This structural change is illustrated in a table, contrasting the share of GDP and percentage of exports in 1990 and 2010-11.

SHARE   IN GDP 1990 2010
Mining 4% 9.1%
Agriculture 15% 13%
Manufacturing 22% 11.5%
EXPORT   SHARES 1990 2011
Primary 82% 94.5%
Manufactures 18% 5.5%
Exports:GDP 28% 50%

Exports he explained “now contribute half of GDP – up from 28% – while the share of primary exports is up 95% from 82%. This reflects the de-industrialization of the economy”. He continues: “…if Zimbabwe is to re-industrialize, firms will need to have very different business models from those of the past”. But, he says policymakers are fixated “on capacity utilization, strategic industries, import substitution, self-sufficiency and local ownership”. This, he says, is “more likely to accelerate de-industrialization than reverse it”.

This is overlain with what he calls a “toxic cocktail of resource nationalism and the resource curse”. He explains: “The two interact as politicians, desperate for revenue and votes, prioritize wealth exploitation over wealth creation. The resource curse is evident where policymakers use diamond revenues to finance current – not capital – spending”.  Policymakers, he says, “argue that Zimbabwe is not a poor country – its diamond, gold and platinum wealth could – and should – be used to repay our foreign debt, rather than seeking debt relief. This is a political – sovereignty – argument, not an economic one. Those who tout this argument believe not just that Zimbabwe can – and should – go it alone, but also that this is a means of escaping the governance and structural reforms implicit in HIPC debt relief.”

He argues: “Resource nationalism takes many forms ranging from higher mining taxes to indigenization and local ownership laws. Regardless of what form it takes resource nationalism fails unless its long-run focus is on wealth generation, not asset ownership and short-termist wealth exploitation”. Reflecting on the statistics, he comments: “Today the Zimbabwe economy is recovering – not growing – by consuming its wealth. The country has increased its reliance on resource-depletion growth, while failing to diversify production and exports and invest in the future”.

He concludes that policy needs to shift the focus

  • “From consumption to investment
  • From asset ownership and wealth consumption to wealth creation
  • From needs-based remuneration to productivity-based earnings
  • From reviving uncompetitive firms that have passed their sell-by date to start-ups and new entrants.
  • From near-term income growth, reliant on wealth depletion and consumption, to long-term growth sustainability based on investment and competitiveness”.

These are all certainly good aims, and the note of caution about how mineral and agricultural riches can be fragile, if not reinvested is important. But the commodity boom driving economic growth across Africa is not going to go away. Africa is resource rich, and the demand for these riches is growing, particular in Asia. The new geopolitics reflects this as China, India, the Middle East, Brazil and others seek out alliances in Africa in order to secure access to resources to fuel their own economic growth.

This new world order is what Hawkins calls the ‘new normal’. Rethinking the political economy of growth in the era of the commodity boom will require accommodating these new realities, but also guarding against the risks, making sure the new riches are broadly shared and appropriately invested, and keeping the new investors accountable  and avoid dependency in a new periphery.  This will be a major challenge for future economic policy, in Zimbabwe and beyond; one that will require some major rethinking.

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