An Analysis of the Grain-Marketing System in Chad
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,t) AN ANALYSIS OF THE GRAIN-MARKETING SYSTEM IN CHAD Prepared for U.S. Agency for International Development Contract No. 624-0510-1-11-7018-00 Eugene Grasberg, Ph.D. Dr. Adly Hassanein. February 1988 DAt Development Alternatives, Inc. 624 Ninth Street, N.W. Washington, D.C. 20001 1 TABLE OF CONTENTS PMc ACKNOWLEDGMENT ................. ... vii EXECUTIVE SUMMARY ................. ix CHAPTER ONE INTRODUCTION ...... ............... 1 BACKGROUND ......... ............................... 1.I FOOD SECURITY AND GRAIN PRODUCTION IN CHAD .... ............ 2 THE GRAIN MARKETING STUDY IN CHAD ....... .................. 3 Objectives ............ ................................. 3 Approach and Methodology .......... .......................... 3 CHAPTER TWO CHADIAN PRODUCTION SYSTEMS ............... 7 GOVERNMENTAL PRODUCTION POLICY ....... ................... 7 Self-Sufficiency Strategies ...... .. .. .......................... 7 Emergency Relief Interventions ......... ........................ 7 Irrigation Projects for Enhanced Cereal Production ...... ................ 8 CEREALS CROP PRODUCTION ......... ........................ 9 CROPS: VOLUMES, VALUES, CONTRIBUTION TO GDP ..... ............ 10 Composition ............ ................................ 10 Value and Contribution to GDP ......... ........................ 11 STABLE PRODUCTION SYSTEMS ...... ....................... .. 12 A Model .......... ................................. .12 Conclusions ............ ................................. 15 CHAPTER THREE COMMERCIALIZATION ..... ............. 17 PRIVATE AND PUBLIC CEREAL TRADE ....... ................... 17 THE NATIONAL CEREALS OFFICE (ONC) ........................ .. 17 ONC Policy ............................................... 17 The Financial Health of the ONC ...... ....................... .. 19 The ONC's Role in the Cereal System ...... ..................... .. 20 Proportions of Marketed vs. Suk3istence Cereals .... ................. .. 24 DISTRIBUTION AND INTE-REGIONAL TRADE ...... ................ 25 Trade Patterns. ........................... .25 Constraints to Inter-Regional Trade ...... ...................... .27 FOOD AID DISTRIBUTION IN CHAD ...... ..................... ... 27 THE MARKET SYSTEMS ........... .......................... 29 Participants ........... .................... ......... .29 The Market Network.... ........................... 31 Private Trade in the Cereals Marketing Channels ............... .. 32 COMPETITION AND SPECULATION IN THE GRAIN MARKET ............ 33 CEREALS MARKETING TRANSACTIONS ..... ................... ... 35 Commercialized Cereals ........ ............................ .. 35 Consumption by the Urban Population of Chad ...... ................. 37 TRADE FLOWS ......... ................................ .. 38 South-North Flow ......... .............................. .. 38 Intra-Regional Flows ........ ............................. .. 38 Seasonal Arbitrage ......... .............................. 40 CHAPTER FOUR PRICES AND PRICE DIFFERENTIALS ............ ... 43 PRICE MOVEMENTS ........ ............................. .43 Year-to-Year Price Movements ...... ........................ ... 43 Short-Term Price Differentials ....... ........................ .. 45 OBSERVATION AND ANALYSIS OF PRICE DIFFERENTIALS .......... .46 Price Differentials Between Not-Very-Distant Locations ................ .. 46 Price Differentials Between Distant Locations ...................... ... 48 Other Price Differences on Intermediate Distances ...... ................ 49 CONCLUSIONS ON PRICES. ....... .......................... .50 Additional Studies ........................................... .. 51 COST STRUCTURE OF MARKETING OPERATIONS .... .............. .. 52 CHAPTER FIVE TRANSPORT AND COMMUNICATIONS ............. 55 'TRANSPORT .......... ................................ .55 Animal Transport ........... .............................. 55 Motorized Vehicles ........... ............................. 56 Reducing Transport Costs ....... ........................... .59 COMMUNICATIONS AND INFORMATION ....... ................... 61 CHAPTER SIX FARMERS' STORAGE AND MARKETING ASSOCIATIONS ....... 63 INTRODUCTION ........ ............................... ... 63 THE SECADEV PROJECT ........ ........................... .. 63 THE "PROJET DE COOPERATIVES"......... ...................... 64 iii CHAPTER SEVEN GOVERNMENT REGULATIONS AND POLICIES . ....... 65 REGULATIONS ......... ............................... .65 POLICIES ............. .................................. 66 CHAPTER EIGHT RECOMMENDATIONS ...... ............ 71 BIBLIOGRAPHY .................. ... 77 ANNEX A SCOPE OF WORK ................. ... A-1 ANNEX B RURAL AND URBAN MARKETS .............. .B-1 ANNEX C PERSONS INTERVIEWED ................. C-1 ANNEX D ACRONYMS .................... .D-1 ANNEX E PUBLIC STORAGE CAPACITY IN CHAD .......... .. E-1 U V LIST OF FIGURES AND TABLES TABLE I ESTIMATED GRAIN PRODUCTION BY PREFECTURE ........ 5 TABLE 2 CEREALS DEFICIT ESTIMATES ...... ............... 10 TABLE 3 COMPOSITION OF THE 1986-87 HARVEST .... .......... 11 TABLE 4 TOTAL VALUE OF FOOD CROPS IN 1986 .............. .. 12 TABLE 5 ORDER OF MAGNITUDE OF CEREAL DEMAND IN CHAD, 1988-89 ...... ...................... .. 13 TABLE 6 ORDERS OF MAGNITUDE OF PRODUCTION AND CONSUMPTION IN THE NEAR FUTURE, 1988-89 .......... 14 TABLE 7 CEREAL BALANCE SHEET FOR A GOOD YEAR IN THE NEAR FUTURE, 1988-89 .................... 14 TABLE 8 PROVISIONAL BALANCE SHEET OF CEREALS PRODUCTION, 1987-88 ....... ................... 16 MAP I LOCATION OF ONC WAREHOUSES ................. ... 22 TABLE 9 ONC FOOD AID SALES, 1984-1987 ................. ... 23 TABLE 10 MONTHLY FOOD AID DISTRIBUTIONS ............... ... 28 FIGURE I DISTRIBUTION AND COMMERCIALIZATION NETWORK OF CEREALS IN CHAD ..... ..................... ... 30 FIGURE 2 TRADE FLOWS, CHAD ....... .................... 39 TABLE I I AVERAGE ANNUAL PRICES OF PEARL MILLET .......... 44 TABLE 12 COST OF TRANSPORT AND RELATED CHARGES MOUNDOU-N'DJAMENA, 605 KM VIA DOBA ............ 58 TABLE 13 HAULING DISTANCES ACCEPTABLE TO THE TRADER AT VARIOUS LEVELS OF TRANSPORT COST . 60 D: vii ACKNOWLEDGMENT In the execution of the survey of the grain marketing system in Chad and in the preparation of the draft of the present report, the authors had the advantage 3f the helpful and friendly support of a number of members of the staff of the USAID Mission in N'Djamena. Their comments as well were helpful. While the team bears full responsibility for any shortcomings the report may have, we hope that the mission will agree with our findings, conclu:ions, and recommendations. Special thanks are due to Lester McBride who gave 'is a most valuable guidance based on his great experience of Chad. Paul Djimdjani was very helpful in the search for, and interpretation of, the statistical data. Kevin Guild facilitated our logistics with efficiency and good humor. The host country officials, members of non-governmental organizations, and private citizens from trades and professions unvariably showed an understanding of our task and a desire to help us in the fulfillment of our mission. While it is not iossible to indicate all persons and institutions, a special mention must be made of Mr. Brahim Tidei, Director General of the Office National de Cereales (ONC) and his associates: Pornaye Beleloun, Zakaria Ali Bonye, Koun Thor Son and Taher Hassaue. iQ I - fj BEST AVAILABLE DOCUMENT ix EXECUTIVE SUMMARY Chad and Its Cereals Chad, with its population of about 5 million, has one of the lowest per-capita incomes in the world. The rural population represents about 80 percent of the total. The country 3xtends over more than a million of square kilometers (some 500,000 square miles), and covers three climatic zones: * The Saharan zone, part of the Sahara desert, with very sparse population; * The Sahelian zone, arid and subject to periodic droughts; and * The Sudanian zone, further south, with 600 mm to 1,200 mm of annual rainfall. The bulk of the country's population is divided between the Sahelian and Sudanian zones. The principal grain crops in Chad are pearl millet (penicillaire), several types of sorghum, rice and maize. Millet and sorghum constitute the base of the Chadian daily diet; their consumption amounts to between a quarter and one half of a kilogram of dry grain per person per day. Rice represents about 10 percent of the total cereal output and has recently been an import item. Its production is concentrated in the southern prefecture of Tandjile. It is of considerably less importance than sorghum and millet, but it is highly visible on N'Djamena's metropolitan market and of course is consumed by producers in the irrigated perimeters. Maize accounts for nearly 5 percent of the total cereal output. It seems to be in high demand. Wheat production is negligible. The total volume of cereal production is volatile, and depends heavily on rainfall. In a good year, such as the agricultural years 1985-86 and 1986-87, the order of magnitude of the total volume of cereals could be above 700,000 metric tons. About 80 percent of the cereals produced internally is consumed on the f.rm. The remaining grain is marketed. Older estimates, dating from the 1960s and the early 1970s set the non-subsistence commercialized volume at some 10 percent or 12 percent of the average total production. In the circumstances of thei" times these estimates might have been right. Our analysis of the current situation indicates that by now, however, in 1988, the commercialized part amounts to nearly