GLOBALIZATION
AND ITS IMPACT ON
POST-HARVEST SECTOR IN AFRICA.
Presented by,
Kenya National Farmers Union
During,
Global Forum For
Agricultural Research (GFAR) &Global Initiative on post harvest Technology (GIPHT)
Entebbe, Uganda
17th to 19th
September 2001
1. INTRODUCTION
Globalization refers to the process of making ‘global’, meaning being present worldwide, at the world stage or at the global arena. This brings in the sense of visibility, immediacy and availability. An issue is thus globalised either through commerce, production, politics, and media of mass communication or information technology, social-cultural exchanges and many more. Globalization talks of the presence worldwide, on what is considered as important global centres. As such we talk of spread or universalization of artifacts, issues, ideas, lifestyles and movements. Globalization has also been defined as a concept, which refers to the compression of the world and intensification of consciousness of the world as a whole. This compression could be explained as containing different elements operating at all the levels of culture, consciousness, civilization, knowledge production and spread and that of economic relations with a wide range of impacts, generating multiple and diverse expression and reactions. Agricultural products are as such as diverse as the regions from which they are produced.
The emphasis has been the emerging system characterized by inter-dependence, flows of exchanges, modes of new technologies, the integration of the markets, the shrinking of time and space and so on. In particular, globalization has been linked with intensification of worldwide social-economic relations, which link the distance localities in such a way that local happenings are shaped by events occurring miles away and vice versa.
Globalization refers
essentially to the stretching process, in so far as the modes of connections
between different social contexts or regions become networked across the earth
surface as a whole.
Local transformation is as much part of globalization as the lateral extension of social connections across time and space. For instance, considering a city like Nairobi whatever happens in the neighborhood or within the city is influenced by such factors as the world money, and commodity market- operating at an indefinite distance away from the neighborhood itself.
In terms of economic and finance, globalization can be defined as the broadening and deepening linkages of national economies, into a world wide market for goods, services and especially capital.
Globalization in essence manifested itself in the 1980’s with the setting up of the global strategies for multinational undertakings, as well as organization of international trade. This led to financial globalization hence mobility of capital. The 1990’s saw the expansion of international competition to enhance increased financial services, transport, audio-visuals, and telecommunication. Currently, what matters is the speed of transfer of information in order to reduce time over space.
2. GLOBALIZATION AND POST- HARVEST
The most prominent face of globalization is the rapid integration of financial markets over the last decade. Agricultural productions coupled with the innovations in communication and information technology have made possible a vast array of new financial instruments and risk-management technologies. The result is a greater resources financial or otherwise, and expansion of cross-boarder trade and communications. This in most cases lead to a changed environment for both the producer and consumer such that the consumers are able to have their demands met in terms of quality, timeliness and agronomic practices under which their preferred products are produced. There also is an increased flow of international capital from the consumers to the producers. This is however limited to a few cases where the producers are able to meet the exact demands of the consumers unlike the case in this region. There is an increase in competition due to the lifting of the preferential treatment, lowering the harmonization of the trade barriers thus adding to the many problems of post-harvest some of which in Kenya include:
Poor access to local regional and international markets.
Few market channels
High post-production costs and inefficient marketing
Value added to raw produce.
Inadequate financing of marketing activities.
Changes in economic policy across a wide range of countries, have led to dramatic increase in:
(i) Trade linkages between agricultural producers and consumers.
(ii) Cross boarder capital flow.
(iii) Raised change in form, structure and location of production especially agricultural related production.
(iv) A growing tendency towards a universal homogenization of ideas in post-harvest handling.
(v) Growth of new supernatural policy regimes such as World Trade Organization, The Global Environmental Faculty (GET) and many other global conventions.
(vi) Re-alignment of older policy regimes such as the Breton Woods Institutions, Organization for Economic Co-operation and Development (OECD) and the United Nations.
The key elements of financial globalization can therefore be summarized as deregulation, by passing financial intermediaries and removal of market barriers, which are all, interlinked. If we may consider each in turn, deregulation has to do with dismantling or decontrol of prices, banking services, and exchange interest rates. By passing financial intermediaries means avoiding the institutions like banks by international operators or having a direct access to the financial markets. Removal of market barriers has to do with opening up of national markets on liberalization. Each of the three factors has its pros and cons.
MARKETING COSTS, THEIR INFLUENCE ON FARM –GATE AND CONSUMER PRICES.
In this region, traders in Agricultural produce face high production, transportation and other transactional costs due to various inefficiencies such as poor roads, unscrupulous middlemen, and high price disparities mainly leaving the farmer more disadvantaged.
Farmers in this region have had trouble in increasing their productivity mostly due to public goods’ deficit both at the local and national; level. This is attributed to the failure by the national governments to provide such essential public goods such as internal peace, rule of law, protection for individuals or communities’ property, adequate rural infrastructure (e.g. feeder roads to serve the interior farming communities) and sufficient investment in agricultural research. These missing public goods at the national level are holding the farmers in the region back. In some cases, farmers either do not have the appropriate technological know-how or simply hesitate to invest more in productive farming techniques so long as under-funded national agricultural research and extension agencies. Are unable to demonstrate the promise of those techniques. The advent of globalization is therefore skewed in that there is no even or fair playing ground especially for the small-scale resource poor regional farmer. As a result production is impaired.
From the argument above, the market share by the developing countries in other words those basically in this region in quite low. From the FAO data on per capita food production between 1970 and 2000 that of the Sub-Saharan African region declined by 9 percent while in the other developing countries it rose by 51 percent.
Unfortunately, whatever is then produced under the conditions described above the ends up facing stiff competition from similar goods from the other parts of the world, as a result of globalization.
Efficiency and cost reduction in marketing of agricultural produce is therefore of paramount importance to the success and survival of the agricultural sector in the region. The horticultural sector in Kenya for instance, faces numerous challenges. The domestic market has been opened up to imports from all over the world that flooding of the markets has persisted. The farmers are already in panic asking for government intervention in banning especially the importation of onions, oranges, potatoes and other products as they threaten their livelihood of the relevant practicing farmers. The question is, in this era of globalization and rationalization, which interventions would save the situation?
The marketing costs have made the Kenyan horticultural sector uncompetitive. These include storage, transportation, local and national Government levies less, taxes, market levies, broker charges that arise from the nature of the horticultural produce.
Pushing for the price increase to cover production costs has been a Kenyan Agricultural policy strategy for a long time.
However, with opening of markets and changing consumer preferences, only low costs producers connected to low cost marketing chains will get a market for their produce.
The costs of transportation and handling due to poor roads means that traders reduce their collection points therefore having farmers bear heavy post-harvest losses.
The current problem of maize prices is a reflection of lack of policy in ‘self –sufficiency’. The hunger that persists even after a bumper harvest is great concern and the Governments should deliver more public goods to the citizens to raise their rural incomes. These include internal peace, rule of law protection for individual property, adequate infrastructure, and sufficient investment in Agricultural research.
Besides good policy, these are the fabrics upon which rural development and post- harvest losses will be reduced.
Lack of clear agricultural policy is a big draw back in most of the African countries. The policy lags behind reality and the industry finds itself in a furry confusion.
After liberalization the agricultural sector has lost direction and the farmers are finding themselves operating in a macro-economic environment in which they are poorly prepared.
In Kenya over the last three years Government policy in the Agricultural sector has focused on changing legislation to catch up with liberalization that has taken place .The Agricultural sector has 65 pieces of legislation needing amendment in different sectors.
This means while it is the responsibility of Government to dictate the way forward in food production, the Nation is controlled more by cross-border trade and unless a comprehensive policy is in place, there will continue to be great losses at harvest and hunger in times of less rain.
The Government should still institute food self-sufficiency policies not based on international trade, which could be done through:
¨ Improved infrastructure there reducing the transportation cost of produce.
¨ Encouragement of storage at local and National levels, by use of properly maintained silos, which in most countries in the region are in place.
¨ Producer support back up that will allow them to hold produce at harvest dispose at a more appropriate time in the market.
¨ Reduction of production costs by reducing taxes, levies and handling costs
.
¨ Regulation of the supply of farm inputs, to ensure that they are available to the producers at reasonable prices thus reducing in the production costs.
¨ Establishment of cold storage facilities for the perishable products.
¨ Increased provision of public goods especially research and extension to farmers.
¨ Introduction of processing to stop dealing only on raw materials.
Globalization, according to information from IMF gives opportunities for countries to develop. Both developed and developing countries benefit from the state of globalization.
Trends from 1980’s show that those countries, which took to opening up their economies, have done better in terms of growth. They receive more in terms of foreign investments, such as Asia’s 65% as compared to Latin America’s 27% and Africa’s 5%. This indicates that the market is directly responsible for financing development.
To give some exemplary performance, Asia has developed at three times the rate of Latin America and five times that of Africa in the last 25 years (IMF report). This has been apparently seen in, the reduction in inequalities with a sustained economic growth implementation of agricultural reforms, improvement in education, and an existence of a broad element of development strategy based on market economy.
In Africa, there have been some changes in the right direction such that there is spread of democracy; availability of competitive workforce, exchange controls by market and privatisition is gathering pace. However as these changes take place, they do not do so evenly. In this region for instance, many factors as mentioned above, hamper the advent of globalization. The most important being whether the national policies can stand in this era of liberalization without invoking on agreements.
The other factor to consider is the fact that developing countries even if they would like to cannot subsidize their Agriculture. As a result they cannot compete on a level ground with the other countries that, with inherent problems have even higher than normal production costs.