Food Policy, Vol. 23, No. 6, pp.

505–518, 1998
Pergamon  1999 Elsevier Science Ltd. All rights reserved.
Printed in Great Britain
0306-9192/99/$ - see front matter
PII: S0306-9192(98)00058-X

Regional trade and food security in

SADC1

Gavin Maasdorp
Imani-Capricorn Economic Consultants (Pty) Ltd, PO Box 5561, Durban, 4000 South
Africa

A number of pertinent questions on regional trade and food security in southern Africa
is addressed in this paper, namely: Should a country go it alone or should it belong
to a regional trade bloc? Within the SADC region, should countries be content to be
cereal importers? How can free trade be phased in? How can intra-SADC trade be
expanded? Potentially sensitive agricultural products are listed and the sensitivity in
grain milling and cereals is discussed in detail. The major conclusion is that trade in
the region can contribute substantially to provide improved food security. There is
also considerable scope for greater intra-regional trade in grain and other food pro-
ducts, and for greater cross-border investment in agriculture and agro-industry.
 1999 Elsevier Science Ltd. All rights reserved.
Keywords: regionalism, trade liberalisation, free trade, food security, cereal (grain) pro-
duction, southern Africa, non-tariff barriers

Should a country go it alone or should it belong to a regional trade bloc?

Globalisation vs regionalism
The last years of the twentieth century have been marked by growing globalism and
regionalism. Multilateral trade liberalisation, sealed by the Marrakech Agreement of 1994 and
the establishment of the World Trade Organisation (WTO) in 1995, has been paralleled by
the proliferation of regional trade blocs, most of which are still engaged in the difficult process
of tariff elimination. Regionalism has its critics – indeed, it is generally agreed that the optimal
policy for any country is unilaterally to liberalise its trade on a most-favoured-nation (MFN)
basis, and that regionalism is a second-best solution. The WTO allows regional trade blocs
provided they go all the way to free trade areas or customs unions, but such blocs by definition
discriminate against outsiders. However, they do liberalise trade among members and, so long
as its members maintain the impetus of lowering tariffs against third countries, a regional bloc
would be a building block rather than a stumbling block towards free global trade. Moreover,
individual members of free trade areas (although not of customs unions) are able to enter into

1
Parts of this paper draw extensively on consultancy reports of Imani Development (International) Ltd, in which the
author was involved.

505
506 Regional trade and food security in SADC: G. Maasdorp

bilateral free trade agreements with outside countries or blocs. Thus, one may distinguish the
following options for any one country (say, A):
(1) A reduces its tariffs unilaterally against all countries on a MFN basis.
(2) A joins a discriminatory free trade area or customs union (which should nevertheless con-
tinue to reduce tariffs against outsiders).
(3) A joins a discriminatory free trade area but also establishes free trade with an outside
country or countries or an outside regional bloc.
(4) A engages in open regionalism of the APEC type, i.e., it is part of an agreement for
countries unilaterally to reduce tariffs against members but at the same time extending
those lower tariffs to outsiders on a MFN basis.

The position in southern Africa

The countries of southern Africa have opted for regional free trade, i.e., with discrimination
against outsiders. However, there is overlapping membership of different trade groupings in
Africa as well as preferential links with the European Union (EU).
The most recent attempt at trade integration is that of the Southern African Development
Community (SADC). A Trade Protocol was signed by 11 of the then 12 member countries in
1996, and would take effect when ratified by two-thirds, i.e., eight, of the member countries.
A free trade area would then be established within eight years of ratification. At present only
three members have ratified the protocol. A further two countries – the Congo (DR) and
Seychelles – were admitted to membership in September 1997 but have not yet completed all
the formalities. Assuming that the Trade Protocol is able to come into effect in 1999, a free
trade area should be established in 2007.
Southern Africa contains the longest surviving customs union in the world. This is the
Southern African Customs Union (SACU) comprising South Africa, Botswana, Lesotho, Nami-
bia and Swaziland. The trade effects of this arrangement have already worked themselves out.
A customs union is a higher form of economic integration than a free trade area, allowing not
only duty-free trade among members but also imposing a common external tariff (CET) against
the rest of the world. There are some restrictions on trade in agricultural products such as
maize and sugar within the SACU.
Members of the Common Market of Eastern and Southern Africa (COMESA) have already
reduced tariffs on intra-trade by between 60 and 80%. The trade regime has evolved over a
period of 15 years, and the aim is to establish a free trade area in 2000 followed by a customs
union in 2004. COMESA has 20 members, the latest being Egypt. Mozambique has suspended
its membership. The eligible countries which are not members are South Africa, Botswana,
Lesotho (which withdrew at the end of 1997) and Somalia. The COMESA Treaty makes
provision for a multi-speed approach towards free trade, i.e., for certain members to move
more quickly than others. This is often referred to in the literature as ‘variable geometry’.
In the context of eastern and southern Africa, variable geometry is reflected in the Cross-
border Initiative (CBI). This consists of 14 countries: all are members of COMESA and some
also belong to SADC. The time-table for free trade was recently altered to coincide with that
of COMESA. The countries have also agreed to establish a harmonised external tariff in 2000.
This is not the same as the common external tariff of a customs union in that it allows some
scope for flexibility: in the case of the CBI, a member country may adopt a tariff of 0–10–
20% or one of 5–15–25% for raw materials/capital goods, intermediate goods and consumer
goods, respectively.
Regional trade and food security in SADC: G. Maasdorp 507

Southern Africa and the EU

The Lome Agreement between the European Union (EU) and the Africa–Caribbean–Pacific
(ACP) countries expires in February 2000. The EU wishes to replace this arrangement by
‘regional economic partnership’ agreements with sub-regions of the ACP group. One such sub-
region is SADC. At present the ACP countries enjoy non-reciprocal, duty-free and quota-free
access to the EU market for most of their exports. Separate protocols for sugar and beef are
likely to be continued, and the details of the agreements will be influenced by WTO negoti-
ations on agriculture opening in 1999.
Possible adverse effects of reciprocal partnership agreements will be felt by industrial and
agricultural producers. Especially vulnerable are industries established behind high protective
barriers to serve the domestic market. Such operations risk closure if they are unable to adjust
and compete with duty-free imports from the EU. The main problem in SADC agriculture
relates to subsidised EU products; sugar-related industries, beef, wheat farming, grain milling
and chicken production are especially vulnerable. Other adverse effects could be on government
revenue (the loss of customs revenue) and on exporters in poor SADC countries which would
then face competition from South African goods in EU markets (South Africa at present is
only a partial member of Lome). Possible beneficial effects would be gains to consumers from
lower prices, a stimulus for increased efficiency and competitiveness of industries, and a more
attractive climate for investment.
Mention must also be made of a further possible free trade agreement, i.e., the one between
South Africa and the European Union. This will have some important consequences for South
Africa’s partners in regional trade blocs, and studies have been done of the consequences for
the SACU countries. South Africa and the EU have been locked in negotiations since 1996.
In the latest (March) tariff offer of the EU, the effect was to increase to 94% the list of tariff-
free products from South Africa (up from 90% in January and just over 70% in the original
offer). But the original mandate which excluded 45% of South Africa’s farm products (the
mainstay of its exports to Europe) still stands. The new concessions did not affect any sensitive
products which remain excluded from the EU free trade offer. South Africa feels that it will
not budge further until the EU changes its attitude on this point. In the last South African
offer (of late-1997) the list of tariff-free products from the EU was increased from 55 to 81%.
The goal is a list of tariff-free products of 85% for South Africa’s offer and 95% for the EU’s
offer so as to approximate a 90% mean which would meet WTO criteria.

Food security and regionalism

There are two strong arguments for regionalism in the food security field in southern Africa.
First, the primary staple food is white, not yellow, maize. This is the traditional consumer
preference throughout the region: during extensive fieldwork covering most SADC countries
at the time of the 1992 drought, the author encountered consumer displeasure at the use of
imported yellow maize. The rest of the mainland SADC countries usually obtain their import
requirements from South Africa in the form of white maize but, when South Africa is in deficit,
the region has to import yellow maize from the rest of the world since it is yellow maize
which is traded on world markets. Whilst importing from the rest of the world does not neces-
sarily increase the cost, it does involve the substitution of unpopular yellow for white maize.
However, a free trade area could encourage the development of a regional market, with the
most efficient producing areas taking advantage of economies of scale. The resultant intra-
trade would be in white maize so that individual countries would have access to adequate
stores of this product under regional free trade and a food security programme.
508 Regional trade and food security in SADC: G. Maasdorp

Second, as Koester (1996: 9) points out, regional integration can increase food security
because, for the landlocked countries of SADC, the difference between the import and export
parity prices for trade outside the region is large owing to high transport costs. Moreover, the
time factor should also be taken into account, regional stocks clearly being made available
more quickly than imported cereals from overseas.

Country self-sufficiency vs regional self-sufficiency

The theory of comparative advantage states that a country should export those goods which
it produces relatively more efficiently, and import those goods which it produces relatively
less efficiently, than the rest of the world. This holds true for individual countries in the region.
However, as pointed out earlier, international trade is in yellow maize whereas the consumer
preference in the SADC region is for white maize. Thus, there is strong argument for regional
self-sufficiency to satisfy consumer preferences. Individual countries should then be prepared
to import from those member countries with comparative advantages in the production of
cereals. Work in Swaziland and Lesotho showed that it would be better for peasant households
to concentrate on higher-value cash crops and purchase maize than to grow maize for their
own needs (Low and Fowler, 1980). It is important to convince subsistence farmers as to this
alternative, while governments have to show the political will to change from the production
of a staple product and to become dependent on imports instead.
Low (1997), showed that, where wage employment was available in Swaziland in the 1970s,
it generated incomes which were usually higher than those from cash cropping, and it reduced
uncertainty. Thus, rural homesteads allocated their most productive labour to wage employment
while the less productive were allocated to the subsistence production of maize. Low concluded
that, unless employment opportunities were to worsen substantially so as to alter the relation-
ship between returns to labour in traditional agriculture compared to those in wage employ-
ment, there would be no surplus subsistence production for sale. In many countries opport-
unities for wage employment have indeed diminished, and this brings into focus Low’s further
contention that the production of high-value crops such as cotton and tobacco, which are more
labour-intensive than maize cultivation, would stop rural-urban migration. Policy, therefore,
ought to be to shift rural homesteads away from the production of maize in areas not suited
to cultivation of that crop.
Namibia is an example of a country where the local production of maize and wheat is not
internationally competitive. According to the Namibian Agricultural Union, only 35% of the
present area of production can produce maize economically. Past price controls and quantitative
restrictions have brought into production land which is not suitable for the economic growing
of grains.
All countries, however, will continue to produce a certain amount of cereals: maize growing
is a traditional household activity in rural areas; old habits die hard; and the purchase of their
staple food may be regarded by those households as too expensive. But if governments can
accept regional cooperation, in time the locus of cereal production should shift northwards and
the contribution to the SADC food store would come from the north. If the north is the lowest-
cost producer (and transport costs do not offset this advantage), then it should in any case
supplant South Africa as the net exporter of cereals in SADC, and liberalisation of food markets
under free trade would make it possible for the lowest-cost producing countries to sell through-
out the region.
Regional shortfalls during droughts mean that countries either have to establish national
stockholdings or else import from world markets. There is a strong argument in the context
Regional trade and food security in SADC: G. Maasdorp 509

of the liberalisation debate (based on comparative advantage) that countries should import
whenever they require, thereby reducing or obviating the need for national stockholdings. But
the experience of the 1991–93 drought showed that the costs of meeting high import needs
(measured in terms of port, storage and transport infrastructure costs) will have to be compared
with the costs of holding stock at a national level. In practice some form of stockholding will
continue to be desirable.

How can free trade be phased in?

Treatment of agriculture in regional integration arrangements

When a free trade area is established, the member countries have to agree on a schedule for
reducing tariffs to zero levels. In terms of the GATT as well as the Marrakech Agreement,
free trade means ‘substantially all trade’. This is not clearly defined and there is some dispute
as to what it entails, but it has been taken as meaning approximately 90% of trade by value
in all sectors.
In any free trade agreement there are always exclusions as member countries seek to protect
sensitive sectors. It has been the common experience of regional integration arrangements
worldwide that the agricultural sector gives rise to the major negotiating difficulties in the path
of free trade.
In the original schedule for establishing the ASEAN free trade area (AFTA), for example,
unprocessed agricultural products were on the permanent exclusion list while meat products
were exempt for an undefined period. It was subsequently decided, however, that all agricul-
tural products would be included in AFTA, although the time-table for inclusion has not yet
been decided. As in many parts of the world, agriculture is extremely sensitive both economi-
cally and politically for many member countries. Thus, whilst Indonesia and the Philippines
wish to delay for 10 years the inclusion of rice and sugar, Thailand, the world’s largest producer
and exporter of rice, argues that any delay would hurt the credibility of AFTA.
Agriculture has also been the laggard in the European Free Trade Association (EFTA).
Although free trade was achieved at the end of 1966 when all import tariffs and duties as well
as quantitative restrictions were eliminated on intra-trade, the protective measures were allowed
to remain for agricultural goods. Trade in agricultural products among member countries was
very small compared with that in industrial goods, and the agreement merely provided for the
encouragement of greater trade in agricultural goods although it stipulated that direct and
indirect subsidies were to be abolished.
In the Common Market of the South (Mercosur) in South America, the list of temporary
exclusions from tariff reductions was confined mainly to sensitive agricultural and industrial
products. One product in which there is as yet no free trade in Mercosur is sugar. This is
principally because it is subsidised in Argentina. Brazil, which is an efficient producer, had
alternative markets so that the exclusion of sugar from free trade did not present a problem.
In its free trade agreement with Mercosur, Chile negotiated for the phasing out of tariffs on
a small number of sensitive agricultural products over 15–18 years. By comparison, the eight-
year time frame set by SADC might appear optimistic.

Defining sensitive products

Since WTO acceptance of a free trade area requires that ‘substantially all trade’ be free, it
follows that the list of excluded products should be small. Moreover, it is generally agreed
510 Regional trade and food security in SADC: G. Maasdorp

that permanent exclusion should be avoided, and that it would be preferable to double the time
allowed for the phasing-in of zero tariffs on sensitive products. But there must be some yard-
stick by which to define whether or not a product is sensitive and hence whether or not it
should qualify for the exclusion list. A product could be regarded as sensitive on one or more
of the following grounds:
(1) It might yield a substantial part of the government’s revenue from customs or excise duties.
Historically, tariffs have been a major part of central government revenue in less-developed
countries, but they will be of declining importance as tariffs are reduced in line with
global trade liberalisation. Governments, therefore, are having to find alternative sources
of revenue.
(2) It might be important for reasons of national security. In agriculture, food security is an
obvious issue as all southern African countries have realised in the face of recent drought.
(3) It might be of great political and social importance if it is labour intensive. The down-
scaling or closure of the industry concerned would then lead to a significant increase in
unemployment and to social hardship. However, employment is not regarded by the WTO
as a good yardstick for exclusion since, under a free trade area, some new companies will
open and some existing ones will close: what is lost on the swings might be gained on
the roundabouts.
(4) It might be critical in the country’s balance of trade. This happens only in small economies
(such as island economies in the Caribbean) where a single industry might account for a
large proportion of total export revenue, and its failure would then have important balance-
of-payments repercussions.
(5) It might be in a sub-sector which is inefficient and which depends on tariffs for its survival.
In many less-developed countries, import-substituting industrialisation policies led to the
establishment of industries for which the country had no comparative advantage. If tariffs
were to be removed, the industry would fail or, in some cases, determined efforts might
be made to restructure it by means of various measures, the South African clothing and
textile industry being a good example. In agriculture, producers of a particular commodity
might not be able to survive if subsidies were withdrawn or tariffs lifted.
(6) Obviously, the more heavily protected sectors are more likely to be sensitive than those
with low nominal tariffs. Moreover, a producer is likely to be more vulnerable if it has
low profit margins and high tariffs, or if scale economies are important in which case a
fall in production would have a more than proportionate effect on profit.

SADC trade protocol

In the SADC Trade Protocol study (Imani, 1997b), the terms of reference called for only the
main traded commodities to be analyzed in order to identify sensitive products and formulate
a tariff reduction schedule. Thus, the study did not cover the entire agricultural sector.
Data on the 20 major commodities traded by each country within SADC were collected for
the years 1993–95, although for some countries the full data set for the three years was not
available. For each country the top 20 commodities included some agricultural items. In listing
them, forestry and fishing products have been excluded as have the category ‘food preparation’
(which covers processed foodstuffs) and beverages, wine and juices. Agro-industrial products
such as refined sugar, meat and flour have been included. The major commodities traded are:
Meat and live animals
Regional trade and food security in SADC: G. Maasdorp 511

Grain products – wheat, maize, edible flour and meal

Sugar-cane, raw or refined
Tea
Tobacco
Cotton and cotton seeds
Rice
Fruit – citrus, apples.
Mozambique, Zimbabwe and Malawi are the countries for which agricultural commodities
comprise the largest number of the top 20 regional exports, while Botswana and Namibia have
the smallest number.
The SADC ministers have decided, in line with the Imani recommendations, to proceed
as follows:
(1) Member countries will identify, at the six-digit HS level, products which could fall into
the following three categories:
(a) immediate liberalisation list, i.e., products currently traded within SADC for which
immediate zero tariffs would not be problematic;
(b) temporary exclusion list, i.e., products which a country considers sensitive; and
(c) gradual liberalisation list, i.e., all products not in the other two lists and for which
tariffs would be phased out gradually (over a maximum of eight years).
(2) For the last two lists, tariffs will be reduced on a linear basis to zero at the end of eight
years after the Protocol takes effect. However, some highly sensitive products may require
a longer period. Reductions for sensitive products will start later than those for products
on the gradual liberalisation list.
(3) The reductions will be asymmetric because of South Africa’s trade dominance. Thus,
SACU tariffs will be reduced more rapidly than those of the non-SACU countries. To
offset this, the non-SACU countries will liberalise their tariffs towards the BLNS countries
more rapidly than towards South Africa.
Negotiations have yet to start on the categorisation of product lines. However, a high pro-
portion of intra-SADC trade is already duty free, largely through the SACU but also through
bilateral free trade or zero-rated raw material imports. For the non-SACU countries a significant
proportion is about to become duty free under the CBI and COMESA, and presumably such
trade will fast-track the SADC tariff reduction schedule. Most of the tariffs which will need
to be reduced in fact relate to non-SACU countries’ imports from South Africa, with a smaller
volume of trade comprising SACU (especially South African) imports from the non-SACU
countries.
A major problem with a differential (more rapid) reduction of tariffs by non-SACU countries
against BLNS than against South Africa could relate to trade deflection, for example, the
evasion of duties by goods from South Africa entering BLNS under SACU free trade and
then being re-exported to a non-SACU country without adequate rules-of-origin identification.
Clearly, appropriate implementation of rules of origin will be necessary, although this is
unlikely to be a significant issue with regard to trade in agricultural commodities.

Implications for agriculture

During the course of the SADC Trade Protocol Study, an attempt was made to compare the
findings of studies on intra-regional trade liberalisation in southern Africa.
512 Regional trade and food security in SADC: G. Maasdorp

The IDC (1996) identified sensitive products on the basis of high import tariffs. On this
basis the only agricultural product which showed up was tobacco (for Zimbabwe, Zambia,
Tanzania, Mozambique and Malawi).
Evans (1996) used an economic policy model to estimate the effects of SADC free trade
on output, trade, employment and customs revenue for 27 traded goods for the member coun-
tries in 1993. He pointed to the data difficulties and warned that the results should be treated
with caution. Moreover, his quantitative model was not complemented by significant field
interviews, and this also affected his results. The agricultural sector was not disaggregated by
tariff line so that no sensitive products were identified. For the agricultural sector as a whole,
however, there was some modest creation and expansion of production.
The effective rate of protection (ERP) (defined as the proportionate increase in domestic
value-added as a result of the tariff structure) has been calculated in some SADC countries,
and these calculations were used in the course of the Trade Protocol study. The analysis showed
that the most sensitive agricultural commodity was sugar, while dairy, cereals and milling, and
tobacco were also sensitive. However, the issue of cereals, particularly maize, is complicated
by the political sensitivity of it being the staple food in the SADC region. Many countries
have administrative controls over the import of maize, and changes in the maize price have
led to social unrest on occasions. Thus, this is an issue which has to be approached with
caution. The list of potentially sensitive agricultural products is given in Table 1.
Botswana, Lesotho and Mozambique did not appear to have any agricultural commodities
which were sensitive to SADC free trade, while it was impossible, given the absence of data,
to determine Angola’s position. Mozambique and Angola, in fact, are in a rather different
position to the rest of SADC as a result of civil wars and their transition from command to
market economies. The main areas of sensitivity for them will be those in which efforts are
being made to resuscitate food production and estate crops as well as to reconstruct and
rehabilitate physical infrastructure. Both countries wish to reduce their dependence on agricul-
tural imports, and argued that this would require short- to medium-term protection. Examples
are milk in Mozambique during the period that farmers are purchasing cattle to restock their
herds, and maize in both countries. The manufacturing sector, including agro-industry, at
present consists largely of infant industries because of the scale of rehabilitation required.
Van Zyl et al. (1997) have studied the effects of domestic market liberalisation with and
without import liberalisation for the Western Cape. In the case of domestic market liberalisation
with no imports allowed, the liberalisation of the Western Cape wheat market would cause an
ouput decline. Land would be transferred from wheat to other crops such as barley or oats or
to livestock production, and employment would increase. If import controls were abolished,
Table 1 Potentially sensitive agricultural products

Product Country

Grain milling products Malawi, Namibia

Tobacco Malawi, Mauritius, South Africa
Edible fruit and nuts Mauritius
Coffee, tea and spices (Malawi), (Mauritius)
Meat Namibia
Dairy produce South Africa, Zambia, Zimbabwe
Sugar (Malawi), South Africa, Swaziland, Tanzania
Cereals Malawi, Zambia, Zimbabwe

Source: Imani (1997b).

Regional trade and food security in SADC: G. Maasdorp 513

the fall in the price of wheat would be sharper and wheat production would decline more
rapidly. The production of export products such as wool and mohair would increase. Consumer
welfare would increase as would total welfare even though producer welfare would decline.
Again, employment would rise.
The effects of SADC free trade on agricultural trade and production would be essentially
in the long term. Shifts in production due to comparative advantage could occur but there
would be a need for better infrastructure. Some South African agricultural companies could
relocate or form joint ventures with local companies, while South Africa would increase its
imports of agricultural products from the rest of the region.

Sensitivity in grain milling and cereals

The present position is that several countries apply quantitative restrictions to grain imports
while others have liberalised their agricultural marketing systems.
Botswana applies quantitative restrictions on a seasonal basis on the import of agricultural
products. There are no restrictions on imports of raw maize, but 50% of milled requirements
must be purchased from local millers.
Lesotho has liberalised imports of maize and sorghum but, for other agricultural products,
the Ministry of Agriculture has to give its sanction whenever local farmers have surplus pro-
ducts. This system gives local producers access to markets although consumers would benefit
if trade were fully liberalised. Lesotho’s small agricultural sector cannot guarantee food secur-
ity, and hence the importation of certain foods has been deregulated so that food can be
obtained as cheaply as possible from any source. Lesotho has little or no comparative advantage
in the production of crops and livestock except perhaps in some high-value crops such as
asparagus.
In Namibia maize and wheat are controlled products. Quantitative restrictions are adminis-
tered by the Namibian Agronomic Board in order to protect the local milling industry. A 100%
quantitative restriction is in force until all local output is marketed, i.e., the market is effectively
sealed off as long as local maize and wheat are available. A tariff reduction schedule over
eight years would probably be sufficient to enable the milling industry in Namibia to restructure
and to compete in a free trade area.
In Mozambique the policy is to provide protection to the maize and grain milling industries
so that they can be rebuilt before they are opened up to free trade. Millers felt that they could
be competitive if they were given time to improve the quality of their products, build relation-
ships with bakeries and develop brand loyalty with customers. They were also concerned with
the problem of countering dumping within a free trade area. Mozambique’s resource endow-
ment is such that these sectors should be able to compete in a free trade area.
That cereals is a sensitive sector in southern Africa is shown by the fact that, despite a
customs union, there are controls on the imports of grain by the BLNS countries in order to
protect local producers and millers. South Africa liberalised its market in 1997, traders and
firms no longer having to work through marketing control boards, but Zambia in September
1997 halted the import of wheat flour from South Africa and Swaziland. It reduced its imports
by 85%, accusing South Africa of dumping. A major South African grain milling and baking
group has stated its exports have fallen as Zambia, Swaziland and Mozambique have closed
their borders to South African flour exports because they wanted to protect their mills.
Grain millers in the smaller economies such as Malawi face two major problems: they do
not enjoy economies of scale, and there are no effective anti-dumping measures. Thus, they
would be unlikely to be able to withstand competition from larger mills in South Africa and
514 Regional trade and food security in SADC: G. Maasdorp

Zimbabwe. Also vulnerable are the small-scale peasant maize growers who lack the marketing
and management skills to compete with commercial producers in South Africa and Zimbabwe.
The severity of the threat to these growers could be determined with accuracy only if there
were a comparative price study in the SADC region.
In other studies of this sector in the SADC region, Takavarasha et al. (1996) found that
maize production in Zimbabwe is efficient for domestic but not for export markets except
perhaps for immediate regional markets because of the high transport costs associated with
such a bulky commodity. Of the producing regions in South Africa itself, Jooste et al. (1996)
found that only the Highveld under irrigation had a comparative advantage. Kafuli and Mawele
(1996) quote World Bank calculations of domestic resource costs (DRCs) for Zambian maize
production, all well below unity indicating a comparative advantage.2 Despite this finding, the
Bank’s policy recommendation was that Zambia should not concentrate on exports since other
agricultural activities could make better use of domestic resources.
However, the position of maize relative to these other crops could be strengthened if world
grain prices rise under the WTO as predicted by the FAO. This would further strengthen
Zambia’s regional prospects. In addition, from the point of view of food security – a high
priority for SADC – there is a good regional reason why Zambia should increase its production
of cereals. There are significant annual variations in grain supplies in the various SADC coun-
tries, and this could be mitigated by the development of new areas of production in, for
example, north-eastern Zambia as well as Angola which are less susceptible than the rest of
SADC to drought. Moreover, only the southern and eastern African region itself can supply
the type of maize, i.e., white maize, which is demanded by consumers; as Weeks and Subasat
(1996) point out, the resistance of local consumers to imported yellow maize has been a persist-
ent problem in emergency food aid programmes.
It is interesting to note that studies on the proposed EU-South Africa Free Trade Agreement
have shown that duty-free access of EU agricultural products to the South African market
would have significant adverse effects for the livestock and meat products industry in Namibia,
Botswana and Zimbabwe, sugar in Swaziland and grain milling in all countries (Imani, 1997a).
This is so even given the existence of free trade within the SACU. The reason for the adverse
impact is that the EU pays high producer subsidies (49%) as well as export subsidies in the
agricultural sector. According to Goodison (1996), this system of producer and export subsidies
will remain in place so long as the EU retains its Common Agricultural Policy (CAP). Stevens
(1997) argues that there will be no significant changes to this policy for the next few years.

How can intra-SADC trade be increased?

Extent
Trade data in the SADC countries as a whole are most unsatisfactory with regard to availability,
quality and comparability. Nonetheless, data collected for the SADC Trade Protocol Study
confirm some features which have been reported in other work. The most notable are:
(1) The bulk of intra-regional trade occurs within the SACU area. The BLNS countries
together account for 65% of intra-SADC trade, and almost all of this is from South Africa.

2
The DRC measures the economic competitiveness of enterprises in the absence of trade policies. It is the opportunity
cost of using a factor of production to produce one unit of output divided by the international value added by producing
that unit.
Regional trade and food security in SADC: G. Maasdorp 515

Of total intra-regional exports, South Africa and the BLNS countries together account for
80%, and most of this is among themselves.
(2) If trade with South Africa was to be excluded, intra-regional trade among the remaining
countries would amount to no more than about 4–5% of their total foreign trade. For all
SADC countries their intra-regional trade is dwarfed by comparison with their trade with
the ROW, and this position will not change materially in a free trade area. Like many
other regional blocs, SADC approaches a free trade area from a low base.
(3) Apart from the SACU countries, the only other significant contributor to intra-regional
trade is Zimbabwe. The three-year period for which data were collected is too short for
any trend to be discerned, but there appears to have been a substantial growth in the value
of reported exports. About 75% of this growth was attributable to South Africa. This
probably reflected the easing of political barriers to trade with some SADC countries, and
hence the opening of new markets by South African exporters.
(4) South Africa is the only country which enjoys a favourable balance of trade with the
region, and this imbalance in favour of South Africa is the major problem which the rest
of SADC is anticipating will be dealt with in a free trade area together with other protocols
for trade in power and water. In the field of agriculture, South Africa imports over $1
billion annually from international markets. This presents an opportunity for sourcing from
SADC countries under free trade especially with regard to meat and textile fibres.
Excluded from the above, of course, is informal cross-border trade. A number of studies
undertaken for COMESA (Kallungia, 1997; Chirwa et al., 1997) of cross-border trade involving
several SADC countries did not quantify its extent, but Ndlela (1996) mentions estimates of
informal trade of between 15 and 50% of total official trade. He refers to a 1994 study conduc-
ted at border posts which shows that cereal and grain products, sugar, beans, meat, vegetables,
fruit and dairy products are all traded across SADC borders. Informal trade was stimulated by
political instability and drought. It would decline as political instability is overcome, tariffs
are reduced, marketing and prices are deregulated, exchange controls are lifted, and other non-
tariff barriers are broken down, but its very existence indicates that there is a demand for intra-
regional trade in these products.
Constraints
Free trade theoretically should enable each country to exploit its comparative advantages. Pro-
tectionism prevents this: it favours domestic producers and keeps out goods from more efficient
producing countries. But free trade also requires the removal of subsidies and non-tariff bar-
riers (NTBs).
South African agricultural subsidies are lower than those in all OECD countries except New
Zealand and Australia (Absa Bank, 1996), and are being phased out so that this should not
be a major problem for SADC free trade. The position is different with regard to other NTBs,
however, and the establishment of a SADC free trade area differs from that of many other
integration schemes in that it starts from a position of significant polarisation among member
countries in so far as the geographic coverage of the transport network, the standards of physi-
cal infrastructure, and the operational efficiency of transport modes are concerned. South
Africa, with a transport sector comparable in sophistication to that of industrialised countries,
is at one end of the spectrum; at the other end are other countries (Zambia, Tanzania, Angola
and Mozambique) in which the infrastructure is woefully inadequate, decayed or destroyed.
Inadequate transport networks present a substantial non-tariff barrier in these countries yet they
have enormous agricultural potential. If all SADC countries are to take advantage of free trade
516 Regional trade and food security in SADC: G. Maasdorp

in agriculture, farmers must be able to obtain their inputs and market their outputs with assur-
ance, and improvements to the transport infrastructure are therefore critical. Prevailing patterns
of intra-regional trade in agricultural commodities are distorted by these transport differentials.
It is not just farm production costs but also distribution costs which influence competitiveness
in a free trade area; so long as transport NTBs exist, therefore, transport costs will be high
and will prevent farmers and agro-industries in a country such as Zambia from reaching
their potential.
Poor transport systems, however, are not the only NTB to increased intra-trade in agricultural
commodities. Storage facilities for grain are important, and farmers also need access to credit,
long-term finance to tide them over the natural disasters to which the region is prone, and
reliable telecommunications. A SADC (1997) workshop found that poor telecommunications
were rated as the major NTB.
Financial, technical and marketing support is especially important for small-scale farmers.
The development of small-scale peasant agriculture is an important policy aim in most SADC
countries yet this segment is often ignored in studies. In Malawi, for example, small-scale
peasant farmers growing maize and soya have found it very difficult to compete with commer-
cial growers from Zimbabwe under a bilateral free trade agreement. SADC governments, there-
fore, should pay careful attention to the impact of free trade on emerging small farmers. These
farmers are a diverse group, operating under varying tenurial, agro-climatic and economic
conditions in the SADC region. Free trade in agriculture could be a sensitive issue not only
for commercial producers but also for the small-scale sector. Strict rules on dumping will be
required in the SADC free trade area to ensure that small farmers are not further disadvantaged
vis à vis large producers.
A report on transport and communications (SACG, 1997) found that importers and exporters
in five countries regarded the most important NTBs as customs and other border procedures,
transport problems and lack of market information. Other NTBs listed were import and export
licensing requirements, trade finance, foreign exchange availability, levies, customs and other
border charges, institutional arrangements, domestic content requirements and quota restric-
tions. The major NTBs are related to administrative and bureaucratic inefficiency rather than
to legal restrictions or the results of trade policy. In future, product standards and technical
requirements could become more important as NTBs. The liberalisation of exchange controls
in the region has diminished the problem of payment for imports.
Dynamic aspects of free trade are not quantifiable but also have to be taken into account.
They include positive effects on demand, investment and the emergence of new types of pro-
duction and directions of trade; efficiency gains through greater competition; gains from the
lowering of administrative barriers; and benefits from technology transfer. There will be some
sensitivities in the negotiations on the phasing out of agricultural tariffs but many of SADC’s
traditional agricultural exports are to non-regional markets anyway, and the move towards
free trade could open up new possibilities for the sector and bring about greater regional
food security.

Increasing intra-trade
In order to increase intra-SADC trade in cereals and other agricultural commodities, more
effective marketing, pricing and transport systems are required. It has already been pointed
out that the major potential for increasing cereal output lies in the northern countries, but
these are precisely the countries where basic infrastructure such as roads, water supplies and
telecommunications require the largest investments for development. It is essential that the
Regional trade and food security in SADC: G. Maasdorp 517

northern countries should adopt policy and investment strategies which will enhance their
becoming exporters to the region.
The ADB (1993) report stated that some commercial farmers would be displaced from agric-
ulture in South Africa and Zimbabwe. It recommended that their farming skills be retained
for the region through organised land swaps. A move northwards of these farmers was rec-
ommended, and it was stated that ‘encouraging such cross-border investment in farming devel-
opment should become a linchpin of regional integration strategy in agriculture’ (Vol. 1: 347).
Indeed, some commercial farmers from South Africa have already moved to Mozambique
and Zambia.
Large South African agricultural companies have already made inroads into the rest of
SADC. A recent example is that of a major South African sugar company, Tongaat-Hulett,
which has purchased a controlling interest in the Mozambican company, Xinanane, in a joint
venture with the government of Mozambique. It has also purchased Tambankulu Estates in
Swaziland, and has a management contract for another Mozambique mill. According to the
group’s statement, its policy is to increasingly move into low-cost sugar producing areas.
Another major producer, Illovo Sugar, in 1997 took over Lonrho’s interests in Swaziland,
Mozambique and Malawi. In Mozambique, however, there will be no immediate increases in
output as it will take up to three years to rehabilitate fields and the mill in the case of Xinanane
while Tongaat-Hulett have stated that two mills in the north could be upgraded beginning in
approximately 7–10 years time at a cost of $140 million after the surrounding infrastructure
has been rebuilt.

Conclusion
The questions in this paper have focused on grain products; this is also the main focus of the
SADC Food Security Programme and the National Early Warning Units in the various coun-
tries. SADC as a whole has the potential to be self-sufficient in coarse grains of which white
maize is the most important. It also has the potential to be self-sufficient in a wide range of
other food crops which would provide a balanced diet to its population. In terms of economic
efficiency, the freeing of agricultural product markets should allow the principle of comparative
advantage to influence the location of production of the various crops especially if distortions
and non-tariff barriers are removed. There is considerable scope for greater intra-regional trade
in grain and other food products, and for greater cross-border investment in agriculture and
agro-industry.

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