Fruit and vegetable trade in the Nile Basin countries
Agricultural production and marketing is key to the development of the Nile Basin Region according to a new report published by M.A. Consulting Group in association with Resource Management And Policy Analysis Institute (REMPAI). The Report titled Analysis of Cross- border Trade in Agricultural Products along selected Corridors of the Nile Basin Region which was produced under the auspices of the Nile Basin Initative Secretariat in Entebbe Uganda. This gives new interesting insights on the potential and challenges of modernizing agricultural production and trade along the Nile Basin corridor.
The Nile Basin region comprises of nine member countries, namely: the Democratic Republic of Congo (DRC), Rwanda, Burundi, Uganda, Tanzania, Kenya, Ethiopia, South Sudan, Sudan and Egypt. Over 60 percent of the Nile Basin region’s poor households derive their livelihood primarily from agriculture.
For these households, increased agricultural productivity and trade offer the best means of raising income, ensuring adequate food consumption, and accumulating the assets necessary to survive periodic shocks such as droughts and floods.
The report which was compiled after a comprehensive research about agricultural production along the Nile Basin Corridor concluded that the region has a broad agro-ecological and economic diversity which, together with a huge population of about 380 million people, offer considerable potential for consumer demand and intra-regional trade.
This research was designed to assess and analyse the trade flows for three commodities clusters in five trade corridors: which included fruits and vegetables (Burundi-Rwanda-Uganda-Kenya corridor) among others. The aim of the project was to highlight the opportunities and constraints to trade and their determinants such as types of infrastructure, commodity attributes (e.g. structure and distribution of production and consumption), market structure and policy/regulatory actions.
Fruits and vegetable production on the increase in the Nile Basin
The study according to REMPAI, established that production of fruits and vegetables in the Nile Basin region has generally experienced an expansion in the last decade due to favourable international prices and changes of consumption behavior/patterns among the working class. This latter factor has contributed to increased cross border trade among the Basin countries.
Banana production and consumption areas and directions
Uganda Leading in production of Bananas while Kenya is the biggest producer and consumer of Pineapples. Banana production in the Basin is dominated by Uganda, whose 2010 production was above 10 million tons/year, followed by Tanzania which has also been the leading consumer in the Basin.
The report shows that in Uganda, the banana producing corridor falls within the major banana production area of Ntungamo/Mbarara. Bananas from this region are exported to Kigali and other towns in Rwanda through Katuna border point. They are also exported to Kenya through Malaba and Busia border points to Kisumu, Eldoret, Nakuru and Nairobi. The other major Banana producing area in Uganda is Bududa (near Bushika) in eastern Uganda. Bananas from this region are exported to Kenya through Lwakhakha and Busia border points to Kitale, Eldoret, Nakuru and finally to Nairobi
However, Intraregional trade in bananas and fruits remains subdued largely because of low productivity, subsistence orientation among the smallholders and low levels of value added production. The region recorded the worst performance in merchandise export of bananas with Uganda being its largest exporter of the commodity. Tanzania had the highest average consumption of bananas between 2003 and 2005. It showed an increasing trend in consumption over the years. Burundi is also a relatively big consumer of bananas followed by Egypt.
The study further shows that in Kenya the corridor covers major passions fruit producing areas such as Eldoret East and Keiyo North Districts. Passion fruits from this region are exported to Kampala through Malaba and Busia border points.
Kenya dominates in the production of passion fruits in the region with an average production of 55,116 metric tons in the last five years. The fruits are mainly exported to Europe though some are consumed in the country and also traded in Uganda and other Nile Basin countries. Kenya is followed by Rwanda at an average production of 13,000 metric tons which is mostly sold within the region. With the high demand for the fruit in the European Union, most farmers are abandoning the production of staple foods like maize in favor of passion fruits.
However, a major problem facing passion fruit farmers across the region is an increase in fungal and bacterial diseases, inadequate technical knowledge on crop management and poor post-harvest handling which reduces the quality of the crop. This has forced most growers to stop production altogether. Rwanda has a potential yield of 20-25 tons/ha under normal commercial farming as compared to the current 15 tons/ha.
This low productivity is mainly attributed to too many suppliers, supplying too little quantity which results in uncontrolled primary sourcing and lack of coordinated activities, a problem that is common in the Nile Basin countries. With such uncoordinated production and marketing activities it is not known where and when products are harvested and it is difficult to comply with the stringent quality, hygiene and traceability requirements of the European markets. This implies that opportunities for scaling up smallholder production of passion fruits in the region are very limited.
Kenya according to the report is also the leading producer of pineapples in the region with an average of 61% in the last ten years and is followed by Democratic Republic of Congo with an average production of 26%. Production in Kenya is mainly by large-scale commercial farms with very few small-scale producers. In contrast, pineapple production in Uganda and Rwanda is exclusively done by small-scale farmers. The few small-scale farmers in Kenya are faced with the problem of where to sell the produce because no processor can be licensed other than Delmonte Kenya a subsidiary of Delmonte Royal, USA, because of its monopoly status granted by the Kenya Government.
Rwanda has little comparative advantage for large-scale export of pineapples to the European Union, except in small niche markets or in its dried form. The majority of supplier countries ship pineapples to EU markets by sea. DRC and Rwanda have not been able to compete in the EU prices since they do not meet varietal quality and size requirements in that market. The potential of DRC producing and supplying the region with pineapple is largely untapped.
However, the report reveals that in terms of small-scale production, DRC leads followed by Uganda which is the leading exporter of pineapples to Kenya which is the leading consumer of pineapples in the Basin.
In Uganda, pineapple production has no clearly documented history. Traditionally, the fruit has been grown for home consumption but in the last two decades it assumed commercial importance in some parts of the country; it is now by far the most widely grown commodity in the fruit crop range and value chain. In Uganda, the corridor extends further to cover Kangulumira in Kayunga District which is a leading pineapple producing area. The pineapples are exported to Kenya through Malaba and Busia border towns to consumption towns of Kisumu, Bungoma, Kitale, Eldoret, Nakuru and Nairobi .
Kenya has been the leading consumer of pineapples in the region over the years. This is in line with its production of the crop; it is the largest producer of the crop in the region, followed by DRC and Sudan . Women dominate the retail business of fruits and Vegetables in the Nile Basin region The study found that women dominate the retailing businesses of fruits and vegetables in all the markets of the corridor. However brokers are mainly young men in all the markets and transport is mainly done by male youths of 25-35 years since they have the required strength. The production constraints and trade impediments identified in this report are similar across the study commodities and corridors.
The Key Production challenges
The key production constraints the research notes are lack of certified seeds or planting materials, diseases , lack of storage facilities in the farms, poor roads, expensive inputs such as seeds and fertilizers, lack agro-processing capacity, lack of access to loans, price fluctuations between seasons, and lack of standards leading to legitimization of opportunism by brokers and traders.
Key trade impediments among the cross-border traders include poor road and market infrastructure, lack of packaging standards, and lack of storage facilities in the markets. “ The adverse effect of these trade impediments is exacerbated by numerous and persistent tariff and non-tariff barriers which include different levels of taxation (lack of common tariffs on both sides of a particular border); multiple tax collectors who do not issue (genuine) receipts; local taxes instituted at unofficial crossing points, e.g., the local councils‟ barrier points; „facilitation‟ fee (bribery) paid to government officials; and women being subjected to violence, threats and sexual harassment, “ the report notes.
Available trade opportunities
The study however reveals that despite all the challenges , informal and formal cross border trade in fruits and vegetables , creates employment opportunities to local border communities, for example to work as brokers, retailers and transporters.
“ Cross-border trade has been useful in providing income for purchasing food commodities that are not available in a particular country at different times of the year thus improving food security. Trade also offers opportunities for promoting efficient use of Nile water in terms of supporting transport, irrigation and wet agro-processing but the potential is yet to be tapped fully due to lack of equipment, infrastructure and technical skills.
Informal and Formal Trade
The border with the highest volumes of informal trade for the project commodities was the Uganda-Kenya border especially in the case of bananas, fruits and vegetables. Fruits and vegetables (pineapples, Irish potatoes and bananas) accounting for 3 percent (US$ 5,470,110) of the Cross- Border trade according to the research.
Which are the busiest borders for informal and formal agricultural trade
Pineapple ,though , had the least value of US$ 1,114,008. Overall, the Uganda and Kenya borders were the most active accounting for about 51 percent of total trade of the study commodities in the selected corridors. This was followed closely by the Uganda/Rwanda border which accounted for 28 percent of cross-border trade. The least active border was between Burundi and Rwanda (1 percent) while Burundi and Sudan had very little or no exports to Tanzania and Uganda, respectively.
In all the corridors, informal trade had higher traded volumes than formal trade. This was especially the case along the DRC-Uganda border which recorded 100 percent informal trade for all the commodities, regardless of the direction of flow (whether from Uganda or DRC). Data from the Uganda-South Sudan border showed that trade in vegetables and fruits, which flowed from Uganda to South Sudan, was 100 percent informal. Similarly, key commodities flowing from Uganda to Kenya (i.e. Maize, bananas, and pineapples) were mainly traded informally, recording 57%, 77%, 99% of informal to total trade, respectively.
Non-tariff Barriers (NTBs) to Trade
The report highlights the following typical NTBs that continue to persist in the Nile Basin despite efforts of the regional economic corporations (RECs) aimed at fast-tracking customs unions and free movement of goods and services. The barrier include, physical barriers (poor road and storage infrastructure, poor market infrastructure, poor customs infrastructure especially along the South Sudan border points, lack of telecommunication services);cumbersome administrative procedures; non-tariff fees and taxes; insecurity and movement restrictions. There is also a problem of lack of harmonization of sanitary requirements and other food safety and quality standards. The report provides estimates of the cost implications for these NTBs for different commodities and the borders where they are most prevalent. The NTBs together with other constraints relating to weak institutional capacity, corruption and recurrent civil strife constitute a major hindrance to formal cross-border trade in the region. Other consequences of these constraints are poor producer motivation resulting from limited market access and remuneration; low agri-business competitiveness due to unreliable supply of locally sourced raw materials; high transaction costs; and poor integration between deficit and surplus markets within the region that lead to inability to effectively manage price volatility.
The report recommends that the Nile Basin governments direct more resources towards achieving higher crop productivity by increasing use of fertilizer and high yielding seed varieties and by expanding irrigated crop area.
The report elaborates on two different categories of potential investments to address the constraints to cross-border trade in the Nile Basin. The first category comprises investments that the Nile Basin Initiative (NBI) Secretariat could prioritize for immediate implementation following pre-feasibility studies, namely improving Lake Victoria water transport and landing sites; Strategic earth dams along the live livestock trade corridors (but serving both agriculture and pastoral needs); Storage for fruits and vegetables located strategically along the borders.
The report further calls for the establishment of a Regional agricultural trade training center (administered by the East African Grain Council – EAGC); and wet agro-processing for grains, fruits and livestock.