Grain Business to Business Trade Facilitation


Event Details

  • Date:
  • Venue: Hilton

The USAID East Africa Trade and Investment Hub in partnership with the Eastern Africa Grain Council (EAGC) is working for the establishment of a long-term mechanism for facilitating Business to Business (B2B) grain trade between Eastern and Southern Africa buyers and sellers on March 7, 2017 at the Addis Ababa Hilton in Addis Ababa, Ethiopia. Confirmed participants in the B2B event include over 40 public and private sector grain traders and buyers, including strategic grain reserve agencies and large and small millers and grain traders. The B2B meeting will avail Ethiopia’s bumper maize and other grain harvest with buyers from draught stricken regions of Eastern and Southern Africa. Logistics and financial institutions will be invited to provide their services.  Attempt will also be made to establish logistics costs and terms in advance of the event.

This year’s drought in the Eastern and Southern Africa poses a major challenge to the region’s food security outlook.  Many countries in the Eastern and Southern Africa are facing severe food shortages due to historically low rainfalls.  In 2016 alone, an estimated 40 million people in Eastern, Southern and Central Africa faced hunger due to El Niño conditions.[1] The fragile food security situation in the region is expected to continue in 2017 and has prompted WFP, FAO, FEWSNET and other humanitarian agencies to issue food security alerts.[2] Despite the adverse impact of the drought, some countries are doing well. Ethiopia for instance has been able to produce surplus maize and other cereals. Ethiopia’s maize production this year rose to 6.30 MMT (Dec/Jan 2016/17), an increase of 1.25 MMT or 24.75% from last year’s harvest of 5.05 MMT (Dec/Jan 2015/16).[3] The Ethiopian Agricultural Transformation Agency also estimates that about 1 MMT of this year’s production is surplus and can be exported.[4]  The export of most of this maize at fair market value is important for Ethiopia’s farmers. Maize in Ethiopia is not a staple; it’s a cash crop. Small amount of maize is traditionally consumed in Ethiopia on the cob at harvest and the majority of the harvest is sold to regional traders. Income from the maize trade is used by farmers to supplement their nutritional needs. Therefore, the successful trading of the surplus maize in Ethiopia also affects the food security situation of Ethiopian farmers. In addition to maize, Ethiopia produces other high quality grains such as sorghum, various beans, soybeans and pulses for export to the international market. Unfortunately, very little, if any of these grains are formally exported to other African countries.

The East African Community (EAC) and the Southern Africa Development Community (SADC) regions are both a destination and source of staple crops but the potential for intra regional agricultural trade growth has yet to be realized. The overwhelming majority of regional grain exports and imports are managed by small informal traders. There is, however, a small but growing group of national and regional large scale grain traders. These traders could be both local and international companies and buy or sell both for the local and international market and play an important role in the regional grain trade sphere. Formal grain trade in the region, however, is largely limited to the EAC region (mostly Uganda and Tanzania selling to Kenya).  There is a need to expand the traditional grain market in the region to broaden access to traditionally surplus staple grain producing countries outside of the EAC.

Ethiopia’s bumper harvest creates an opportunity to mitigate the ongoing food crisis in Eastern and Southern Africa. With insufficient food availability in local markets, prices of staple foods such as maize and beans have increased dramatically in most affected areas.  Maize prices in the EAC have reached record high in January, mostly reflecting the reduced harvests and a tight supply due to low production and reduced inflows from traditionally surplus countries such as Tanzania and Uganda which have been affected by drought as well as an export ban in the case of Tanzania. Supply constraints and price shocks have led Kenya to openly explore the possibility of importing maize from as far as Mexico.[5]

[1] http://mgafrica.com/article/2016-02-12-africa-food-crisis-2016-the-scary-numbers

[2] http://reliefweb.int/disaster/dr-2015-000137-mwi

[3] https://apps.fas.usda.gov/psdonline/circulars/production.pdf (see page 15)

[4] WFP’s regional office has a different estimate. They believe only about 200,000 MT is available in the market for export. (Discussions with WFP Regional Office in Nairobi, Kenya).

[5] http://www.farmerstrend.co.ke/kenya-to-import-maize-from-mexico-to-ease-the-current-supply-shortage-as-neighbours-block-export/