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World Bank Document Public Disclosure Authorized AGRICULTURE GLOBAL PRACTICE TECHNICAL ASSISTANCE PAPER Public Disclosure Authorized MOZAMBIQUE: AGRICULTURAL SECTOR RISK ASSESSMENT RISK PRIORITIZATION Public Disclosure Authorized Kilara C. Suit and Vikas Choudhary WORLD BANK GROUP REPORT NUMBER 96289-MZ AUGUST 2015 Public Disclosure Authorized AGRICULTURE GLOBAL PRACTICE TECHNICAL ASSISTANCE PAPER MOZAMBIQUE: AGRICULTURAL SECTOR RISK ASSESSMENT Risk Prioritization Kilara C. Suit and Vikas Choudhary © 2015 World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved This volume is a product of the staff of the World Bank Group. The fi ndings, interpretations, and conclusions expressed in this paper do not necessarily refl ect the views of the Executive Directors of the World Bank Group or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. World Bank Group encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clear- ance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone: 978-750-8400, fax: 978-750-4470, http://www.copyright .com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, World Bank Group, 1818 H Street NW, Washington, DC 20433, USA, fax: 202-522-2422, e-mail: [email protected]. Cover photo credits from left to right: Peter Casier/UN World Food Programme, Kate Raisz/Bread for the World, and Marcos Villalta/ Save the Children. CONTENTS Acronyms and Abbreviations ix Acknowledgments xi Executive Summary xiii Chapter One: Introduction and Context 1 Chapter Two: Mozambique’s Agricultural System 5 Agro-Ecological Conditions 5 Land and Water Resources 6 Crop Production Systems 7 Livestock Production System 9 Principal Constraints 10 Chapter Three: Agricultural Sector Risks 11 Production Risks 11 Market Risks 18 Enabling Environment Risk 21 Independent Risks Occurring Simultaneously 21 Dependent Risks 21 Regional Shocks 22 Diff erential Impact of Risk 22 Climate Change 22 Chapter Four: Quantifi cation of Losses and Impact of Agricultural Risks 25 Conceptual and Methodological Basis for Analysis 25 Indicative Quantifi cation of Losses 25 Expected Losses and Risk Priorities for Production 26 Impact of Agricultural Risks on National GDP 29 Chapter Five: Stakeholder Risk Assessments 31 Government 31 Producers 32 Vulnerable Groups 33 Chapter Six: Risk Prioritization and Management 35 Risk Prioritization 36 Risk Management 36 References 47 Appendix A: Methodology/Approach to Production Risk Losses Calculation 49 Appendix B: Weather Yield Report 51 Background 51 Rainfall Patterns in Mozambique 52 Risk Prioritization iii Drought and Excess Rainfall Analysis 52 Summary 52 Rainfall—Yield Regressions 54 Maize (Milho) 54 Rice (Arroz) 55 Sorghum (Mapira) 56 Groundnuts (Amendoim) 58 Appendix C: Climate Change Impact Assessment on Agriculture in Mozambique: Literature Review 61 Introduction 61 Principal Findings 61 Brief History of Climate Change Impact Assessments 62 Methodologies and Temperature/Precipitation Projections 62 General Findings 65 Maize 66 Cassava 66 Soy 66 Sorghum 68 Other Crops 68 Conclusion 69 Limitations 73 Appendix D: Vulnerability Analysis 75 Definitions 75 Recent General Trends in Vulnerability 75 Vulnerable Groups and Characteristics 76 Appendix E: Commodity Risk Profiles 81 Poultry 82 Sorghum 84 Tobacco 85 Vegetables 87 Groundnuts 89 Cashew Nuts 91 Cotton 93 Sugarcane 95 Cassava 97 Maize 99 Appendix F: Risk Transfer and Financing Options in Mozambique 101 Microlevel Options 101 Mesolevel Options 102 Macrolevel Options 102 BOXES Box 4.1: Crop Losses According to the Agricultural Census 28 iv Mozambique: Agricultural Sector Risk Assessment FIGURES Figure ES.1: Major Shocks to Crop and Livestock Production: Annual Percentage Growth in Agriculture Value Added xiv Figure ES.2: Acute Food Insecure Population in Mozambique xiv Figure ES.3: Estimated Aggregate Total Losses by Risk Event xvi Figure 2.1: Agro-Ecological Conditions—Mozambique 6 Figure 2.2: Maize Production, 1992–2011 7 Figure 2.3: Rice Production, 1992–2011 8 Figure 2.4: Cassava Production, 1992–2011 8 Figure 2.5: Mozambique Agricultural Export Shares in US$, 2010 9 Figure 2.6: Consumption and Production of Poultry in Mozambique, 2005–09 9 Figure 3.1: Major Shocks to Crop and Livestock Production: Annual Percentage Growth in Agriculture Value Added 12 Figure 3.2: Deficit Rainfall Events Based on Weather Station Data Analysis 13 Figure 3.3: Ex cess Rainfall Events Based on Weather Station Data Analysis 14 Figure 3.4: M onthly Retail Prices of Maize (White) in Key Markets in US$/Ton 18 Figure 3.5: M onthly Retail Prices of Rice in Key Markets in US$/Ton 18 Figure 3.6: In ternational Monthly Prices for Sugar 19 Figure 3.7: In ternational Monthly Prices for Cotton “A” Index 19 Figure 3.8: Ex change Rate Risks—Metical/Rand 20 Figure 3.9: Ex change Rate Risks—Metical/Euro and Metical/US$ 20 Figure 4.1: Estima ted Aggregate Total Losses by Risk Event 26 Figure B4.1.1: Principal Cause of Crop Losses 28 Figure 4.2: Annual GDP Growth and GDP per Capita 28 Figure 5.1: Adverse Impact of Agricultural Risks on Inflation 32 Figure 5.2: Acute Food Insecurity in Mozambique 34 Figure B.1: Provinces of Mozambique 51 Figure B.2: L ocation of Meteorological Stations 52 Figure B.3: Mean Cumulative Rainfall per Month 53 Figure B.4: Drought Events, 1979–2009 53 Figure B.5: Excess Rainfall Events, 1979–2009 54 Figure B.6: Midseason Regression Models for Niassa, Inhambane, and Maputo Provinces 55 Figure B.7: 2008 Rice Surface Sown by Region (hectares) 56 Figure B.8: 2008 Sorghum Surface Sown by Region (hectares) 57 Figure B.9: Sorghum Yield Histogram for All Regions 57 Figure B.10: 2008 Groundnuts Surface Sown by Region (hectares) 58 Figure B.11: Groundnut Yield for All Regions 59 Figure C.1: Annual Cycle of Rainfall, Maximum Temperature, Potential Evapotranspiration, and Potential Moisture Index 63 Risk Prioritization v Figure C.2: Climate Change Effects on Yield for All Major Crops 65 Figure C.3: Change In Yield with Climate Change: Rain-Fed Maize 68 Figure C.4: Maps of Land Suitability and Hotspots Resulting from Climate Change, for Maize 68 Figure C.5: Expected Changes in the Future (2046–65) for Maize (Expressed in kg/ha) under Rain-Fed Agriculture Based on the Median of All Seven GCMs 69 Figure C.6: Change in Land Suitability per Crop Resulting from Climate Change 69 Figure C.7: A. Projected Changes in the Future (2046–65) for Cassava in Percentage of Present Yields. B. Projected Changes in the Future (2046–65) for Cassava in kg/ha 71 Figure C.8: Maps of Land Suitability and Hotspots Resulting from Climate Change, for Soy 71 Figure C.9: A. Projected Changes in the Future (2046–65) of Soybean Yields in Percentage of Present Yields. B. Projected Changes in the Future (2046–65) for Soybeans in kg/ha 72 Figure C.10: Maps of Land Suitability and Hotspots Resulting from Climate Change, for Sorghum 72 Figure C.11: A. Projected Changes in Future (2046–65) for Sorghum (Median of All Seven GCMs), Expressed in Percentage of Present Yields. B. Projected Changes in the Future (2046–65) for Sorghum (Median of All Seven GCMs), Expressed in kg/ha 73 Figure C.12: A. Projected Changes in the Future (2046–65) for Cotton (Median of All Seven GCMs), Expressed in Percentage of Present Yields. B. Projected Changes in the Future (2046–65) for Cotton (Median of All Seven GCMs), Expressed in kg/ha 74 Figure C.13: A. Projected Changes in the Future (2046–65) for Groundnuts in Percentage of Present Yields. B. Projected Changes in the Future (2046–65) for Groundnuts, Expressed in kg/ha 74 Figure D.1: Vulnerable Groups within Mozambique 76 Figure D.2: Vulnerability Characteristics 76 Figure D.3: Provinces Where Vulnerability Characteristic Is More Common 79 Figure E.1: Domestic Price Volatility, Poultry 82 Figure E.2: Domestic Price Volatility, Sorghum 84 Figure E.3: Domestic Price Volatility, Goundnuts 89 Figure E.4: Domestic Price Volatility, Cashew Nuts (with Shell) 92 Figure E.5: Cotton Yields, 1965–2007 (kg/ha) 94 Figure E.6: International Cotton Prices, 2005–10 94 Figure E.7: Domestic Price Volatility, Sugarcane 96 Figure E.8: International Price Volatility, Cassava 98 Figure E.9: Domestic and International Price Volatility, Maize 100 TABLES Table ES.1: Filtering of Risk Management Interventions and Potential for Multiple “Wins” xvii Table 2.1: Number of Agricultural and Livestock Production Units in Mozambique 6 Table 2.2: Agricultural GDP Share in Mozambique, 2009 7 Table 3.1: Summary of Drought Events 13 Table 3.2: Summary of Flood Events 15 vi Mozambique: Agricultural Sector Risk Assessment Table 3.3: Summary of Pest and Disease Events 16 Table 3.4: Summary of Wildfire Events 16 Table 3.5: Summary of Cyclone Events 16 Table 3.6: Projected Changes for
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