Rice Trade and Value Chain Development in West Africa: an Approach for More Coherent Policies
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Making policies work DISCUSSION PAPER No. 283 Rice trade and value chain development in West Africa: an approach for more coherent policies By Fabien Tondel, Cecilia D’Alessandro, Ibrahima Hathie and Clarisse Blancher October 2020 The development of the rice sector in West Africa represents a significant policy challenge. Following the 2008 food price crisis, West African countries succeeded in boosting rice production. Yet, with little improvement in the competitiveness of the sector, they continued to import increasing amounts of rice, exposing them to international market volatility. Trade policies have contributed to this outcome. Low import protection, compared to Asian producers, has been a major factor, as smuggling activities between countries with different tariff levels show. Tax exemptions often arbitrarily granted to rice importers have undermined the stability of domestic markets. Weak enforcement of quality and food safety norms have allowed for the importation of substandard rice, unfairly competing with West African farmers. Besides official policies, complex and interlocking interests among private and public actors drive rice trading activities. The importation and distribution of rice, which generates sizable rents, is supported by powerful economic and political actors. Nonetheless, recent developments suggest that progress in the regulation of rice markets and the development of competitive and inclusive value chains is achievable. It requires an alignment of interests, the promotion of coherent policies linking a stricter regulation of imports to the structuring of domestic markets, and incentives for private investment. Building on existing dynamics in cross-border regions, trade facilitation could further contribute to the emergence of modern value chains and food security. Scaling up promising experiments in market and trade regulation, while developing the rice sector as part of more sustainable agri-food systems, also depends on the interests of different states in better coordinating national rice policies and implementing regional trade agreements. Table of Contents Acknowledgements ....................................................................................................................................................... iv Acronyms ........................................................................................................................................................................ v 1.Introduction ................................................................................................................................................................. 1 1.1. Rice, a major sector of the West African agri-food system .................................................................... 1 1.2. A study to shed light on policy challenges surrounding rice trade......................................................... 2 1.3. Methodological approach ....................................................................................................................... 3 1.4. Structure of the report............................................................................................................................ 5 2.Aggregate rice market and trade trends ..................................................................................................................... 6 2.1. Consumption, production and trade data .............................................................................................. 6 2.2. Consumption trends ............................................................................................................................... 7 2.3. Production trends ................................................................................................................................. 10 2.4. Import dynamics ................................................................................................................................... 12 2.5. Import dependency............................................................................................................................... 13 3.Sub-regional structures and dynamics of rice trade ................................................................................................. 14 3.1. Consumption patterns .......................................................................................................................... 14 3.2. Overseas rice importation systems ...................................................................................................... 17 3.3. Intra-regional trade in locally produced rice ........................................................................................ 28 3.4. Effects of climate change on rice production and trade ...................................................................... 46 4.Analysis of policy and institutional factors ................................................................................................................ 47 4.1. Regional overview of recent rice policy developments ........................................................................ 47 4.2. Central trade basin ................................................................................................................................ 50 4.3. Eastern trade basin ............................................................................................................................... 69 5.Cross-country insights and synthesis ........................................................................................................................ 82 5.1. Low competitiveness and high import dependency as central issues ................................................. 83 5.2. Effectiveness of rice trade policy .......................................................................................................... 84 5.3. Domestic market organisation and stabilisation .................................................................................. 90 5.4. Intra-regional trade dynamics and obstacles ....................................................................................... 92 6.Towards measures to better regulate trade and promote the development of the rice sector.............................. 93 6.1. Lessons learned from recent policy developments in Senegal ............................................................ 93 6.2. A possible approach to promoting an enabling rice trading environment .......................................... 95 6.3. Economic and food security implications, preconditions for reforms and critical risk factors ............ 98 6.4. Concrete steps towards policy formulation and implementation ..................................................... 103 7.Concluding remarks ................................................................................................................................................. 105 References .................................................................................................................................................................. 108 i List of Figures Figure 1. Illustrative problem tree for the rice trading systems in West African countries ........................................ 4 Figure 2. Rice consumption in West African countries, 1980 – 2017 .......................................................................... 8 Figure 3. Per capita rice consumption in West African countries, 1980 – 2017 .......................................................... 9 Figure 4. Rice production in West African countries, 1980 – 2018 ............................................................................ 10 Figure 5. Rice net imports in West African countries, 1980 – 2017 ........................................................................... 12 Figure 6. Rice import dependency ratios of West African countries, 1982 – 2017 (three-year moving average) .... 14 Figure 7. Rice imports in (a) eight selected West African countries and in (b) the central and (c) the eastern trade basins, by origin, 2013 – 2017 ..................................................................................................................... 17 Figure 8. Rice import and transhipment flows in West Africa ................................................................................... 20 Figure 9. Average difference over a five-year period between Asian exports to West Africa and West African imports from Asia, 2013 – 2017 .................................................................................................................. 24 Figure 10. Three-month moving average rice price differentials (imported rice minus locally produced rice) at the wholesale or retail level in major West African urban centres, 2006 – 2019 ............................................. 25 Figure 11. Rice production and cross-border trade flows in the central trade basin .................................................. 30 Figure 12. Informal trade flows of locally produced rice from Burkina Faso to Mali, 2011 – 2019 ............................ 31 Figure 13. Seasonal trends in informal trade flows from Burkina Faso to Mali, 2012 – 2019 (2014 – 2018 five-year average) ....................................................................................................................................................... 32 Figure 14. Locally produced rice prices and informal trade flows in the western Burkina Faso-eastern Mali basin, 2011 – 2019 ................................................................................................................................................