Agricultural Risk Management Seminar 27-28 June 2018 | Lusaka, - PowerPoint PPT Presentation

Capacity Development Agricultural Risk Management Seminar 27-28 June 2018 | Lusaka, Zambia

Increasing Agriculture Resilience through Better Risk Management in Zambia A Report of findings by IBRD . IDA / The World Bank Group (2018) Presented by Dr. Nalishebo Meebelo PARM Country Liaison Officer (Zambia) Twangale Park Hotel Lilayi Zambia

Attribution Braimoh, Ademola; Mwanakasale, Alex; Chapoto, Antony; Rubaiza, Rhoda; Chisanga, Brian; Mubanga, Ngao; Samboko, Paul; Giertz, Asa; and Obuya, Grace. Increasing Agriculture Reselience through Better Risk management in Zambia. World Bank Washington DC. License: Creative Commons Attribution CC BY 3.0 IGO.

Outline of Presentation • Background/Context • Zambia’s Agriculture Sector • Data and Methodology • Agriculture Risk Assessment • Impacts of Risks on the Agriculture Sector • Risk Prioritization and Management • PARM next steps

Background/Context  Following the rising food prices in 2008  Multi-donor Food Price Crisis Response (FPCR) Trust Fund set up to:  Provide grant funding to low income countries negatively affected by the impact  Support govts design sustainable policies and implement mitigation measures  Help to curb market distortion  With support of FPCR Trust Fund + the Multi-donor Trust Fund on Risk Management  WB conducted a study tilted Increasing Agriculture Resilience through Better Risk Management in Zambia  3 components • Strengthening agriculture policies • Agriculture sector risk assessment (ASRA) • Knowledge exchange and dissemination  This ASRA report:  Is a combination of component 1 and 2 above;  Complements 3 key ongoing WB technical support operations: PROCIDA; CSIP; and, ZIFLP

Background/Context I  Objectives of ASR Assessment/Report  Analyze principle risks facing Zambian agriculture sector  Identify pathways for managing these risks  Definition of Risk  Risk - Possibility that an adverse development will occur that negatively affects the performance of farms or the larger agricultural supply chain  In ARM – Risks – “uncertain events that have the probability to cause losses”  Risk Events – a major factor contributing to a decline in Zambia’s agriculture GDP (8.2% - 2011 to 2015; 5.3% - 2015, El Nino and Fall Armyworm)

Background/Context II  There is a variance between agriculture subsectors and regions  In terms of severity and frequency of impacts due to agr. risk; and effect on food security, rural livelihoods and the broader economy  Principle risks under Crop agriculture identified:  Drought, floods and price volatility  Principle risks under Livestock identified :  Drought and outbreaks of animal disease  Tailored-made risk management systems will effectively limit consequences of the above risks, and others  Useful categories under Agriculture Risk noted :  Production; Market and Enabling Environment Risks

Background/Context III Production Risks  Drought – is most significant risk facing Zambia (e.g. El Nino 1990; Drought 1992 etc., leading to major production losses of approx. $154m, La Nina)  Excess rainfall and floods – (e.g. 2002 - 68% fall in cotton production; 1/3 fall in groundnut and maize prod n ) – $100m  Severe droughts on average occur once every 20 years; smaller and localized droughts and dry spells average once every 5 years  Smallholder reliance on rainfed agriculture has increased exposure to frequent weather shocks and ability to cope with them  Pests and Diseases also cause significant losses (e.g. Fall army worm, maize stock borer; cassava mosaic (Luapula, Central, Western and Northern Provinces; )

Background/Context IV Market Risks  Price volatility – most significant risk facing actors along agr. commodity value chains  Unpredictable output prices discourage investment in productivity-enhancing and income-raising technologies and practices, relevant for poverty reduction  Reduction in international prices (e.g. cotton) is experienced in the local market;  Maize – although price volatility of maize has lessened since early 1990s, government intervenes during some years  E.g. export ban followed by bumper crop led to oversupply and therefore a collapse in farm-gate prices  Price uncertainly due to FRA unpredictable involvement in procuring and disposing of strategic maize reserves

Background/Context V Enabling Environment Risks  Under Structural Adjustment Programme (1980s, 90s)  Macroeconomic and other policy changes (incl. disbandment of input and marketing subsidies, and privatization) impacted GDP enormously  Retrenchment in the civil service, incl. extension workers affected levels of value chains Note: However, it is n ot possible to quantify losses resulting from policy changes due to fluctuations occurring throughout the country’s macroeconomy (e.g. inflation rates, exchange rates)

Zambia’s Agriculture Sector  Agriculture is the main source of livelihood – Popln 1.5 m/60% of households  Huge agriculture growth potential in Zambia  42/74m hectares (58%) of land are suitable for agriculture  Only 14% of land suitable for agriculture is being cultivated  Less than 30% of land potentially suitable for irrigation has been developed  Available land per capita is higher than most southern African countries  Low population density (19.2 persons per km 2 ) reflects in 6 hectares of land available to each person  Sufficient water resources (ground, rain and surface) for rain-fed and irrigated agriculture  Three distinct agro-ecological zones distinguished by temperature, rainfall and soil type  Agriculture policies are best understood in the context of political phases (Republics) in the country’s trajectory 

Zambia’s Agriculture Sector  Despite potential, agr .’s share of overall GDP is small relative to that II of other sub-Saharan African countries  Services and industry contribute more to Zambia’s GDP  However, agr. wields important effects on the larger macroeconomy  2013-2015 - agr. sector experienced negative growth due to extreme weather events – economy slowed down approx. 2%age points.  Farmers remain highly vulnerable to a myriad of agr. risks in Zambia (e.g. effects of El Nino, La Nina)  Zambia Vulnerability Assessment Committee (ZVAC) reported:  38% and 41% reduction in maize production for 2014-2015 and 2015-16, respectively  A decrease in water and pasture available for livestock  Increased incidents of disease outbreaks (e.g. Newcastle disease for chicken)  The above exerts pressure on the country’s limited resources required for investment in other equally important areas

Zambia’s Agriculture Sector Strategic Reserves and Inputs II • 1966, Zambia established the Food Reserve Agency  Originally mandated to administer national food reserves • 2005, FRA Act was amended  To expand its crop marketing activities  Is involved in maize marketing today • 2001 to date  Credit schemes were replaced by Fertilizer Support Programme (to include maize and fertilizer subsidies)  90% of smallholder farmers grow maize as their main crop in Zambia • Above two (FRA and FISP) increased govt spending for maize purposes • Ad-hoc policies concerning maize witnessed

Data and Methodology  An ASRA???  An orderly process to analyze, identify and prioritize risk  Serves as the basis for design of risk management strategies  Zambia ASRA???  Objectives to: • Identify, analyze, quantify and prioritize risk in the ag sector • Identify risk management solutions for scale up and strengthening  Focus of Assessment  Risks affecting agricultural commodities  Together accounting for 80% of the value of farm production in Zambia  Beef, maize, sugarcane, cassava, tobacco, cotton, groundnuts, vegetable, chicken and pork  Levels: micro, meso and macro  Data: Primary and secondary; desk literature reviews; interviews; focus groups

Data and Methodology II  Quantitative Methods were applied to:  Estimate production losses and trade losses resulting from the export ban  Qualitative Methods applied to:  Estimate risks to the enabling environment  Negative deviations from medium to long term yield trends, greater that what can normally expected in agriculture prodution to:  Estimate production losses Value of losses:  Estimated in local producer prices  Expert interviews and published literature  Used to validate key findings  Used to note other areas of ARM warranting analysis

Data and Methodology III  The range of experts and stakeholders consulted :  Reflects the interdisciplinary set of issues at play in ARM  Includes public and private sector actors in:  Policy, planning, economics, livestock development, veterinary services, epidemiology, disease surveillance, agriculture research, irrigation and water, natural resource management, disaster risk management, meteorology, grain trading, agriculture finance and insurance  ARM is a focus of the World Bank through out the developing world