This blog is excerpted from a press release as part of the coverage of the 2014 Regional Strategic Analysis and Knowledge Support System (ReSAKKS) Conference.
Africa’s share of world agricultural trade has increased in recent years after decades of decline, and trade among African countries has been on the rise. Both trends have boosted Africans’ ability to access food and distribute it to the neediest during hard times, according to the 2013 Africa-wide Annual Trends and Outlook Report (ATOR). This publication was organized by the African Union Commission (AUC), in partnership with the International Food Policy Research Institute (IFPRI).
The report found that Africa’s agricultural exports accounted for 3.3 percent of world agricultural trade in 2009-2013, up from 1.2 percent in 1996-2000. While still small, the jump represents a threefold increase. Moreover, Africa’s agricultural exports have quadrupled in value terms and doubled in caloric terms. And the share of intra-African trade has doubled: nearly 34 percent of agricultural exports originating from African countries now go to other African countries.
The findings are significant because agricultural trade in general, and intra-African trade, in particular, can be a critical element to ensuring that the poor and vulnerable are able to remain resilient in the face of economic shocks and severe weather events.
“While the situation is far different from that of the 1960s, when African countries dominated global markets, the recent performance indicates that Africa can become a major player again,” said Ousmane Badiane, Director for Africa at IFPRI. ”Now countries need to sustain the policies and institutional reforms and scale up the investments that made this change possible.”
The report attributed Africa’s growing share of world agricultural exports to improvements in trade infrastructure, such as telecommunications, success in integrating global and regional markets through preferential trade agreements, improved economic growth, and an increase in world prices of some raw materials.
It also found that diversity of crops had helped boost trade. At the end of the 1990s, the top 10 agricultural exports made up 51 percent of Africa’s total agricultural exports. Since then, African agricultural exports have become more diversified and more competitive, so that by 2010, the top 10 agricultural exports accounted for 40 percent of total exports.
Fueled by both economic growth and population growth, agricultural imports have risen considerably faster than exports. As a result, the agricultural trade deficit rose from less than US$1 billion to nearly $40 billion. This highlights the tremendous challenge facing African countries and the need to deepen the reforms and scale up the efforts that have accelerated exports over the last 10 years.
“The renewed commitment in Malabo by African heads of state and government to redouble efforts to boost competitiveness and trade, in global as well as intra-African markets, could not have come at a better time,” said Abebe H. Gabriel, director of the Rural Economy and Agriculture Department at the AUC. “It is a step in the right direction.”
The report’s findings show that African countries have become more competitive in regional markets and that faster growth of demand in these markets has also contributed positively to trade performance by African countries. The findings also show that decreasing barriers to regional trade would further boost the recent growth of intra-African trade and allow countries to take advantage of the stabilizing effects that often accompany expanded regional trade. Domestic food markets can be stabilized by expanding regional trade to buffer shocks to individual countries. Regional trade can help mitigate the effects of weather shocks in any one country. The report shows that about 40 percent of the time over the last 30 years (four out of every ten years), the impact of losses in maize production due to drought might have been mitigated by trade.
Trade policies should be aimed at reducing transport and other transaction costs and increasing agricultural productivity to improve the livelihoods of the poor and vulnerable and enhance their resilience to shocks. For instance, the report notes that, in the case of the Economic Community of West African States (ECOWAS) and the Common Market for Eastern and Southern Africa (COMESA) countries, reducing overall trading costs by 10 percent would raise regional cereals exports by about 20 percent on average over the next 15 years. The impact would be at least 2.5 times that much in the case of major staples such as roots and tubers. Raising yields by the same magnitude would have an even bigger impact on regional exports, with increases of at least 30-40 percent across nearly all commodities. Specifically, the report recommends that governments should:
- Expand markets with better transport infrastructure to make it easier to move crops from surplus to deficit zones;
- Invest in science and technology to raise agricultural productivity and enhance the capacity of domestic agricultural sectors to supply local markets and adjust to shocks;
- Eliminate nontariff cross-border barriers to foster market integration at the domestic, regional, and international levels; and
- Invest in social safety net programs and adopt more conducive policies to mitigate the potential destabilizing effects of trade while maximizing its positive short- and long-term benefits for growth and food security.